London-Listed TyraTech Inc is a life sciences clean-tech company focused on nature derived insect and parasite control products. In a pre-close trading statement ahead of the results for the six months to end June, the company was again upbeat following a break-through year in 2015.

­Although still­­­­­ loss-making the final results for the 12 months ending December 31 2015 showed the company had what it calls a ‘step change’ year with a large increase in year-on-year revenues and healthy gross margins.

TyraTech’s Vamousse shampoo gains market traction

Gross revenue was US$7.4 million in 2015 up from US$4.9m in 2014. Gross profit increased to US$4.6m with gross margin s of 68.9 per cent (2014:US$3.5m and 74.9 per cent).

Net loss before and after taxes, significantly reduced to US$2.3m (2014: US$5.1m). Cash and cash equivalents at December 31 2015 increased to US$4m (2014:US$2.2m) and operating costs and expenses reduced to US$7.1m (2014:US$8.5m).

The reason for the change after ten years of research, was the significant market penetration of the flagship Vamousse head lice treatment and shampoo formulations.

The expansion extended to cover 24,000 stores in the US including Walmart, Walgreens, CVS in 2015 with Rite Aid, the fourth largest pharmacy chain in the US, joining in the post reporting period. In the UK sales were made in 7,800 stores including Boots, Sainsbury’s Tesco’s and Morrison’s.

The update statement is largely positive in saying the upward trend in sales seems likely to continue throughout the second half. But it does sound what looks like a note of caution in that it does not quantify any of the progress being made.

Also there have been some suggestions that TyraTech is at present a one product company and is suffering from the vicissitudes that can arise without diversification. But this is hardly likely to be the case for TyraTech going forward.  The company says there are more than 10 quintillion insects in the world (that is 10 with 18 zeros) – and growing. And though many of those insects are beneficial to our ecosystem, others can cause serious diseases like Malaria and the Zika virus.

The decade of research and development has resulted in 28 granted patents and 36 pending and today the company says it has the scientific expertise and patented technology platforms to respond to global needs.

The company has plans to diversify geographically with the Vamousse core product entering France and Germany while adding two new products Vamousse Protective Shampoo and a new product, Vamousse Elimination Powder.

The company has said that during 2015 it continued to develop several products both for personal care and animal health markets and in the case of the latter it announced in early January this year the launch of its PureScience brand initially targeted at the poultry production facilities in the US.

Commenting on these results house broker Allenby Capital ­­­­said: “We expect 2016 to show further progress in product revenue growth as Vamousse treatment gains further traction and we see initial sales from animal health, although we would not expect this to be contributing fully until 2017”.

It added: “With regard to forecasts, we are taking a more prudent approach, reducing 2016 from a loss of US$0.5m to US$1m and for 2017 from a profit of US$0.6m to break-even but which still delivers strong year-on-year growth”.

The shares were standing at 4pence on April 17 2016, having seen a a 52 week high of 5.50p and a low of 2.25p. Allenby did not give a target price in its April 12 2016 note but indicated that at 4 p the shares seemed to have lots of upside.

Stewart Dalby (30/04/2016)