TyraTech is a London quoted corporate minnow focused on nature derived insect and parasite control treatments. For years, like other small clean-tech and renewable energy groups, the company battled to clear seemingly interminable regulatory hurdles and establish commerciality for its products. This put pressure on its cash resources to the point of exhaustion.
The group’s interim results for the six months to 30 June 2017, were released in late September 2017. They showed that the company had finally achieved breakthrough for Vamousse, the group’s flagship range of shampoo and head lice prevention products, in the important US market. Vamousse had provided a positive direct contribution margin of US$2.2million in the period from net sales for the period of US$6.6m (virtually all the company’s revenue).
On the face of it therefore, it should have come as a surprise that just when Vamousse had gained traction in the US, the group, through its interims report, announced the company had agreed to a disposal of the Vamousse range. But it was not a surprise, not really. The company, despite the better margins was still loss-making in September and short of cash.
The group had been pondering its options through a strategic review set up in February 2017. By September 2017 with the interim results spelling out the extent of the financial pressures the company continued to be under, the Board concluded that the group lacked the necessary resources from operating cash flow alone to fully extract value from both its human and animal health businesses.
The Board decided that in the medium term more value could be realised by focusing on the larger animal health sector. Because Vamousse had become an established brand, its divestment could release value for shareholders and realign the shareholder base towards investors more interested in the agriculture and animal health markets.
TyraTech’s own figures indicate that animal health parasite control alone represents an addressable market estimated at more than US$6billion, whereas human health insect and parasite control is limited mainly to two categories (head lice and insect repellent) representing less than US$800m combined.
The animal health market represents unmet needs to feed a growing number of people – the world’s global population is predicted to grow to 9bn from a current around 7bn over the next 30 years. TyraTech has a strong portfolio of patents (36 granted 32 pending) with most applications in animal health.
On 23 May 2017 TyraTech released its Results for the Year Ended 31 December 2017. It is just a few months since the Vamousse sale and the new direction the company planned were announced, so shareholders can hardly expect the company to have completely re-invented itself in such a short time. But these latest results do show significant progress is being made in re-focusing the company.
On 4 December 2017 TyraTech closed the deal for the sale of its Vamousse brand to the AIM- listed Alliance Pharma plc for an initial cash consideration of US$13m. The sale agreement stipulated that the company could also be entitled to further payments of up to US$4.5m based on the achievement of agreed sales performance targets for Vamousse in 2019 and 2020.
In January 2018, post period US$8.4m was given to shareholders by way of a tender offer at 3 pence a share. This represented a 118 per cent premium to the closing mid-market price for the company’s restricted shares and an 85 per cent premium for the company’s unrestricted shares as at Friday 1 December 1 2017. This reduced the cash pile at the bank of US$13.7m. But there was still US$5.2m to spend on continuing operations in 2018.
The company continued to be loss-making through to 31 December 2017, but the net loss from operations was reduced by US$0.6m to US$3.9m. Overall income was modest but increased by 169 per cent to US$1.2m from US$0.7m. Product revenue from continuing operations was US$0.9m against US$0.3m in 2016. This increase was primarily due to TyraTech’s full launch of its OutSmart equine fly repellent and the expansion of distribution of its PureScience product to control mites in the poultry sector.
In comments on the outlook for the company, TyraTech said in 2018 the commercial focus would be to expand to new significant producers its poultry and equine products in the US and in selected European countries. Also, the company has a pipeline of least 15 new products in various stages of development targeting the animal health market. These products will also be pushed along in the rest of 2018.
The share price for the £3.96m market cap company was 2.45pence last evening Friday, with a 52-week high of 3.15p and a low of 0.90p.