Eden Research describes itself as a company that provides natural microencapsulation technologies to the global agrochemicals, animal health and consumer products industries. Eden was floated on London’s AIM in 2012.
After spending a lot of money (around £12million) proving up products, overcoming regulatory hurdles, establishing markets and enduring losses, Eden early in 2019 (when we last wrote about them) looked as if it really was gaining recognition and investor interest, in in that it was seeing sharply rising income, falling losses and a good share price increase.
The reason was that its first flagship agrochemical product that was called 3AEY (now known as Mevalone) which is a fungicide that targets botrytis, a mould that causes diseases in grapes, had started to become commercially viable.
Early in its life as a listed company Eden had depended on technology licencing for its revenue. By late 2018, however Eden had realised that this method could not deliver in terms of meaningful cash flow and it started to evolve from licencing to a system of sales to distributers and partners.
This brought on quicker payments and improved gross margins and in the first half of 2019. Eden had become competent in managing its own supply chain. Eden’s partner and main distributor Sipcam, the Spanish agrichem group had become responsible for distributing Mevalone in 12 wine producing countries, including the three biggest, France, Italy and Spain and had signed a contract distribution in five new markets in central Europe including Germany and Poland.
But, a trading update for the year ended on 31 December 2019 issued on 14 January 2020 shows there had been big hiccup in the company’s progress in the middle of 2019, which meant revenue was going down while losses were rising and the share price was sinking.
According to the update, revenue for 2020 is expected to be approximately £2m (2018: £2.8m) with a loss before tax and statutory operating loss of approximately £1.4m (2018: £0.5m). So what happened?
The problem was the well-publicised hot and dry growing conditions across southern Europe during the peak growing season negatively affected the development of Botrytis and this resulted in botryticide usage generally being impacted.
But the trading update was not all gloom and doom. It said the crop protection market is well known for its sensitivity to growing conditions, but as the company’s geographical footprint and product portfolio expand, it expects to become more insulated from the variability of the weather.
Moreover Eden determined not to be a one product company and would develop in other markets while continuing to enhance Mevalone’s development. The still robust revenue figure meant it could grow its Mevalone business from the said 12 countries plus where approvals have been given, but it would also be able to enter commercial agreements in other sectors such as human and animal health. ‘
In terms of this diversification, Eden has made progress. In October 2018 Eden announced its associate company Terpene Tech had received approval for its head lice product in the European Economic Area (EEA); and their activities have progressed into 2019.
Eden through its distributor Eastman has been granted approval from the Italian government for the use of Cedroz. Cedroz is a bio-nematicide that targets plant -parasitic nematodes; which are microscopic soil-dwelling worms. The nematode population can cause considerable damage to a wide -value vegetable crops and horticultural species. Eden has received its first authorisation for Cedros and awaits further pending approvals for Cedroz, its second commercial product across Spain, France, Belgium, the Netherlands and the UK,
Finally, post year end Eden signed a one year exclusive Evaluation Agreement with Corteva (NYSE : CTVA) the fourth largest agriculture input company in the world, covering seed treatment. These deals are yet to be quantified as to their impact on the bottom line.
Meanwhile, the share price of the £17.87m company’s shares are sanding at 8.62 pence against a 52-week high of 11.50p and a low of 7.12p.