Stewart Dalby

On 21 July last year (2020) year we published an article which said, “Eden Research suffered a blip in its fortunes in 2019, but expects better times in the rest of 2020”. According to the Year-end trading update released on 11 February this year (2021), however, Eden’s fortunes do not appear to have improved in the last five months of 2020. On the contrary, they seem to have deteriorated. .

Eden Research, which was floated on London’s AIM in 2012, describes itself as a company that provides natural micro-encapsulation technologies to global agro-chemicals, animal health and consumer products industries. After spending a large amount of money (around £12 million) proving up products, overcoming regulatory hurdles, establishing markets, creating patents and enduring losses, in 2018 Eden came up with a winner. This was initially called 3AEY but became known as Mevalone.

The fungicide Mevalone targets botrytis, a grey mould that causes diseases in grapes. By promoting Mevalone as the company’s flagship product Eden found  it was gaining recognition and investor interest during late 2018 and early 2019; in that the company was seeing sharply rising income, falling losses and a good share price increase.By mid-2019 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 were in discussions with five new markets in central Europe including Germany and Poland.

The problem that caused a blip in these positive developments for Mevalone was well-publicised. Extremes of hot and dry weather during the peak growing season badly affected conditions across southern Europe. This meant the use and development of Mevalone to tackle Botrytis was badly negatively impacted. The company maintained, however, that not everything was gloom and doom. It felt that the crop protection market was well known for its sensitivity to growing conditions and extreme weather situations. Things would get better for Mevalone, the company said. The company felt that as its geographical foot-print and product portfolio expanded, the group’s operations needed to become more insulated from the variability of the weather.

Moreover, Eden had long determined not to be a one-product company. It claimed it would develop in other markets while continuing to enhance Mevalone’s development. The revenue figure for 2019, though battered, was robust enough to grow its Mevalone business further. It would also be able to enter commercial agreements in other sectors such as human and animal health. ‘

On 7 May 2020 Eden released its Final Results for 2019 report. One of the things the report said was that in terms of diversification, the company had made progress. In particular, the company had been active in promoting Cedroz as its second commercial product. 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 range of value vegetable crops and horticultural species

Then in January 2020 Eden signed a one-year exclusive Evaluation Agreement with Corteva Agriscience, the fourth largest agriculture input company in the world which, Eden thought, should move the business into a key, new area of seed treatments, that should engender significant revenue potential. Finally, Eden successfully completed a £10.4m (gross) fundraise in March 2020, which puts the company in a position to capitalise on all the initiatives that have been launched.

All this progress seems to have been vitiated, however, by what the news in the 11 February end of year (2020) trading updateThe update reported that product sales were affected by Covid-19 in various ways. The pandemic affected the hospitality industry, which, in turn impacted on wine grape production and, inevitably, the widespread use of crop protection products Also, travel restrictions affected the ability of distributors to work effectively, and regulatory approvals were delayed.

The effect of all this, the report said, was that revenue for 2020 is expected to turn out at approximately £1.6m (2019: £2.0m) with a loss before tax and statutory operating loss of approximately £2.6m (2019: £1.4m). The board of Eden put a brave face on these figures saying that the £10m (gross) fundraise saw multiple new institutional investors joining the share register.

This has provided Eden with the financial resources, the company says, to invest in the development of its insecticide and seed treatment products. Well, maybe. Clearly though, these investments are not going to bear fruit overnight, Nevertheless, the share price of the £69.03m Eden seems to holding up. The price at the close of trading last evening was 18.155p against a 52-week high of 19.85p and a low of 5.05p.