By Stewart Dalby
On 21 July last year (2020) we published an article which said, “Eden Research suffered a blip in its fortunes in 209 but expects better times in 2020”. According to Preliminary Results for the Year Ended 31 December 2020 released on 30 June 2021, however, Eden’s fortunes do not appear to have improved materially in 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 for them (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 in12 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 the broadness of its geographical foot-print would help insulate Eden against the variability of the weather.
Moreover, Eden had long determined not to be a one-product company. It felt it would be able to enter commercial agreements in other sectors such as human and animal health. In 2020 the company did diversify. In May 2020 Eden announced that during the year first sales were being made in Mexico of Cedroz as a 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.
Early in January 2020 Eden signed a one-year exclusive Evaluation Agreement with Corteva Agriscience, the fourth largest agriculture input company in the world, to evaluate seed treatment applications of Eden’s products and ‘Sustaine ’technology. In August 2020 there was approval of Melavone in Australia as the first approval of Eden’s products in the Southern Hemisphere. Finally, Eden successfully completed a £10.4m (gross) fundraise in March 2020, which put the company in a position to capitalise on all the initiatives that had been launched.
All these positive developments seem to have been vitiated, however, by the news in the Preliminary Results Report for 2020. The update reported that product sales were badly 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 was that the financial highlights for 2020 were pretty dim. Revenue was £1.4m (2019:£1.8m) and product sales were £1.1m (2019: £1.4m). The loss before tax was £2.5m (2019:£1.5m)-. The board of Eden probably put a brave face on these figures given there was £7.3m net cash against £0.5m in 2019.
The share price of the £34.7m market cap Eden was not looking particularly perky last evening at 9.13p. It was above the 52-week low of 6.53p admittedly, but well above the high of 20.25p.