Latest Results

Final Results


This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).

Eden Research plc (AIM: EDEN), the AIM-listed company that provides breakthrough natural bio-control products and microencapsulation technologies to the global agrochemicals, animal health and consumer products industries, announces its preliminary results for the year ended 31 December 2016.

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Financial highlights

  • Revenue of £0.4m (2015: £0.9m)
  • Operating loss of £1.9m (2015: £1.1m)
  • Operating loss, before non-cash share based payment charge and amortisation, of £1.1m (2015: £0.2m)
  • Loss before tax of £1.9m (2015: £1.3m)
  • Loss per share of 1.03p (2015: 0.74p)
  • Net cash of £1.5m (2015: £0.15m)
  • Equity accounting adopted in 2016 for Eden's investment in its associate, TerpeneTech, with prior period restated accordingly.
  • Successful placing of £2.6m in March 2016

Operational highlights

  • Lead agrochemical product 3AEY approvals granted for table and wine grape protection from botrytis in Spain, Italy and Bulgaria
  • First commercial sales of lead agrochemical product, 3AEY, in Greece, Spain and Italy
  • Exclusive commercialisation agreement with Eastman Chemical signed for Eden's nematicide product B2Y in nearly 30 countries representing a high percentage of the global nematicide demand
  • 3AEY label extensions in Greece, Spain and Kenya for new crops and disease targets
  • Appointment of Michel Villeneuve, as Senior Strategic Commercial Advisor, and Peter Watson, as Regulatory Strategy Advisor

Post Period end

  • 3AEY approval granted in France for table and wine grape protection from botrytis
  • First commercial scale order of 3AEY from SumiAgro in France
  • Ongoing 3AEY sales in Kenya, Greece, Spain and Italy
  • Extension of patent protection in Greece

 

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Chairman's Report

Introduction

I am pleased to report that the Company has made significant progress in 2016 in its commercialisation.

Our Chief Executive Officer, Sean Smith, will provide more details in his report but I will first give an overview of this progress.

Commercial

Early in 2016, Eden received approval for its first agrochemical product, 3AEY, a fungicide which targets botrytis on grapes, in both Spain and Italy. This allowed Sipcam, our commercial partner in those territories, to sell 3AEY on a commercial scale following the successful marketing campaign which Sipcam had undertaken.

Since the year end, France has also given its approval for 3AEY, which means that approvals are in place for 3AEY in three of the largest grape producing countries in the world.

In addition to the sale of products, which exceeded Sipcam's initial forecasts, "3logy®" (the name under which 3AEY is sold in Italy) won an award for Innovation at the prestigious Macfrut Exhibition in Rimini, Italy.

Towards the end of the year, we announced that Eden had signed an exclusive, global commercialisation agreement with Taminco BVBA, a subsidiary of Eastman Chemical Company's global crop protection division, for Eden's nematicide product which will be marketed by Taminco as "Cedroz™".

This is an important product and agreement for Eden. We are very pleased to have Taminco as a partner as they have a global reach and have invested, and continue to invest, significant resource into Cedroz™ to achieve success in a large market which is seeking such a product.

Personnel

During the year, the management committee comprised of:

Tom Lupton - Non-Executive Chairman
Robin Cridland - Non-Executive Director
Sean Smith - Chief Executive Officer
Alex Abrey - Chief Financial Officer

In 2016, we added to the team at Eden through the appointment of two key advisors:

Michel Villeneuve, who has over thirty years' experience in a variety of senior commercial, regulatory and management roles with major multinational companies involved in plant protection. Michel is supporting Eden with strategy and business development.

Peter A. Watson, who was employed by the UK National Pesticide Competent Authority before holding various senior regulatory roles with Dow AgroScience Services. Peter's role is to act as our Senior Regulatory Strategy Advisor.

We welcome both Michel and Peter to the team at Eden. We will continue to grow the team, as we increase commercial and development activity.

Outlook

With approvals of 3AEY having been granted in Spain, Italy and France, we expect to see a significant increase in product sales in 2017. The revenue from existing agreements will now be in the form of product sales to existing (and new) partners, following the progression of Eden's business model to include product supply as well as licensing.

The adoption and acceptance of biological products, such as 3AEY, continues to increase throughout the world and Eden is well positioned to benefit from this trend. We are focussed on exploiting this situation by leveraging the valuable intellectual property, in the form of patents, know-how and regulatory dossiers, that Eden has invested in. To that end, Eden will continue to enter into agreements with partners in new territories for 3AEY as well as other products that Eden continues to develop.

 

T G Lupton
Chairman

19 May 2017

 

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Chief Executive Officer's Report

I am pleased to provide shareholders with an update on the progress that we have made in 2016 in respect of regulatory approvals, IP protection and increasing commercial success, as well as outline the evolution of our sales model and strategy to ensure profit maximisation and higher quality revenue streams over the longer-term. Whilst this has had some impact on our 2016 financial performance, Eden is now better positioned to benefit from our past product and technology development investments.

Strategy & financial results

As I described in my report last year, Eden has for many years adopted a technology licensing model. However, in 2015 we refined our commercialisation strategy to a product sales approach which allows the Company to derive more value from the products and technologies that it has developed.

In the short term, this approach has seen a reduction in upfront licence payments, however, in the medium and long term, this model will lead to greater returns and allow us to build brand value by establishing greater visibility in our end-use markets, and to have greater control over our supply chain. Looking forward, we anticipate that revenue and profit lines will grow at a greater rate than when compared with a pure licensing model.

Financial results

Revenue for the year ended 31 December 2016 totalled £0.4m, and, whilst lower than the previous year, this level is a reflection of the short-term impact of the evolution of our business model from technology licensing to product sales.

In previous years, the majority of our revenue has come from fees associated with licensing our technology (2015: £0.74m, £0.6m of which was from TerpeneTech), however the change in our sales model resulted in just £0.13m in licensing revenues in 2016. Also, as expected, fees from milestone payments were less prominent, being £0.05m compared to £0.06m in 2015. Evaluation fees also fell slightly to £0.03m (2015: £0.05m) as evaluation studies, such as the nematicide trials conducted by Eastman, concluded successfully and matured into commercialisation agreements, outlined below, which will yield future revenues for the Company.

Whilst commercial sales are still modest, they are growing and are now the largest contributor to overall revenue. Revenue received from commercial sales, both from direct product sales and royalty revenue, were £0.19m compared to £0.04m in the previous year. These sales include the first royalties received from sales of 3AEY in Italy, Greece and Spain which, at distributor level, were in excess of €1m with over 85,000 litres sold in total, and were comfortably greater than what our partners and we had forecast for first year sales in these territories.

Operating loss increased to £1.9m (2015: £1.1m). Operating loss excluding Share Based Payment Charge of £0.1m and Amortisation of £0.6m was £1.1m (2015: £0.2m). Loss for the year increased to £1.9m (2015: £1.3m). Loss per share (both basic and diluted) increased to 1.03p from 0.74p.

In March 2016, the Company raised £2.6m before expenses demonstrating continued support from existing and new institutional shareholders. The proceeds have provided the capital to accelerate our expansion without the funding constraints under which the Company had traditionally operated, as well as being able to expand the Company's product portfolio and geographical footprint for both existing and new products. Cash at the year-end was £1.5m.

Regulatory product approvals

The early part of 2016 saw the Company receive authorisation to sell its first product 3AEY, for use in the prevention and treatment of botrytis in table and wine grapes, in numerous territories. EU approvals were granted in Spain, Italy and Bulgaria increasing the geographical footprint of sales in the 2016 growing season.

The year also saw the first examples of how our products can gain regulatory clearance outside of the initial authorisation for the prevention and cure of botrytis on table and wine grapes. In June we announced the granting of label extensions in Spain to target the control of vine powdery mildew, one of the most challenging and widespread fungal diseases affecting grapevines around the world. In Greece, the authorities expanded the use of 3AEY in the treatment of botrytis beyond grapes to field and greenhouse grown aubergines, kiwis, pomegranates and fresh onions. Combined, these crops cover more than 14,000 hectares in Greece. We also received label extensions during the year in Kenya which expanded the use of our products to include the treatment of roses as well as certain edible crops.

At the year-end we were disappointed not to have secured regulatory approvals for 3AEY from both France and Portugal, and whilst our uncertainty on the timing of regulatory approval in Portugal remains unchanged, we were delighted to announce in January this year regulatory approval in France, one of the leading wine producing nations of the world, in time for the 2017 season. In addition, whilst they are not major markets in terms of size, we were nevertheless pleased to receive regulatory approvals from Albania and Cyprus with authorisations in Romania and the Former Yugoslav Republic of Macedonia still pending.

In addition, there are a number of other on-going regulatory approvals being sought for both 3AEY and Cedroz™ in important areas such as the USA.

Commercial progress

i. 3AEY - botrytis & powdery mildew treatment

We have made significant commercial progress this year following receipt of the necessary approvals to sell our lead product 3AEY, which focuses on plant protection, via our distribution partners. Below is a summary of our commercial progress and current geographical footprint:

Country 3AEY Brand Partner Approved use Commercial launch
Italy 3logy® Sipcam Botrytis in grapes Yes
France Mevalone™ SumiAgro Botrytis in grapes Pending - 2017
Spain ARAW® Sipcam Botrytis in grapes & vine powdery mildew Yes
Greece Mevalone™ Redestos Botrytis in grapes, field and greenhouse aubergines, kiwis, pomegranates & fresh onions Yes
Bulgaria Mevalone™ Redestos Botrytis in grapes Pending
FYROM Mevalone™ Redestos Botrytis in grapes Pending
Malta TBD TBD Botrytis in grapes Pending
Cyprus Mevalone™ Redestos Botrytis in grapes, field and greenhouse aubergines, kiwis, pomegranates & fresh onions Pending - 2017
Albania Mevalone™ Redestos Botrytis in grapes, field and greenhouse aubergines, kiwis, pomegranates & fresh onions Pending - 2017
Kenya Hawk™ Lachlan Botrytis and powdery mildew in peas, beans and cucurbits, and roses Yes
Romania Mevalone™ Redestos Pending Pending - 2017
Balkans Mevalone™ Redestos Pending Pending

As mentioned above, the 2016 results benefitted from the first sales of 3AEY in Italy, Greece and Spain. In total, 2016 sales of 3AEY (at the distributor level) were in excess of €1m with over 85,000 litres sold throughout the year. This was comfortably above what our partners and we had forecast in these territories, which is encouraging, particularly in light of the fact that botrytis was not especially prevalent this last season and authorisation in Italy was granted somewhat later than required for full promotion via certain product catalogues. Nevertheless, in some regions our products achieved a market share of approximately 20%, which is a remarkable achievement for a new product to market.

ii. B2Y - nematode treatment

In December 2016, we signed an exclusive commercialisation agreement for our nematicide product, "B2Y", with Taminco BVBA, a subsidiary of Eastman Chemical Company's global crop protection division ('Eastman') following a series of successful field trials and market evaluations conducted by them between 2014 and 2016.

Eastman will be responsible for developing our nematicide formulation, to be marketed as Cedroz™, across multiple territories covering 29 countries worldwide including some of the largest markets for nematicide products globally. Eastman are aiming to launch Cedroz™ commercially in 2019 or sooner, where allowed. Under the agreement, Eastman has paid Eden an upfront fee and will make annual milestone payments until 2019. Eastman will take on the responsibility for the registration of Cedroz™ in each territory whilst Eden retains responsibility for the registration of the active ingredients. Furthermore, and consistent with its evolved business model, Eden will supply Eastman with its product requirements globally from its global network of contract manufacturers and raw material suppliers.

iii. Animal health

Eden's partner for animal health applications in North America, Bayer Animal Health, continues to make steady progress with the four products that it is commercialising: a shampoo, a conditioner, a spray and an otic flush.

A significant amount of work, including in vitro and in vivo studies, has been undertaken with some further in vivo and formulation work required. As such, it is forecast that sales of product will be likely to commence in 2018. Eden remains confident that the products, once commercialised, will command a strong market share in the large North American market for companion animal health products.

iv. Human health

Over the past year, TerpeneTech, which is an associate of Eden through Eden's shareholding of 29.9%, has undertaken a second successful round of clinical trials and has been preparing its regulatory submissions to both the US and EU authorities for approval of its head-lice treatment product.

Since the head-lice treatment product is expected to be a medical device, once the regulatory submission has been made and TerpeneTech has satisfied itself that it has met the regulatory requirements, it will be possible to commence sales of that product. It is expected that this submission will take place in the next few months.

In parallel, TerpeneTech has been negotiating with a number of different parties to distribute the head-lice product in the UK, initially, and then the rest of the EU and USA. It is expected that sales will commence this year.

With regard to the other biocide applications using Eden's technology and know-how, TerpeneTech continues to negotiate with a number of potential partners, though Eden understands that less focus has been placed on these opportunities in the past year due to the focus on commercialising the head-lice treatment product. Once the submission for the head-lice product has been made, it is understood that these other areas will be prioritised by TerpeneTech.

In addition, TerpeneTech, which is listed as a registered supplier under the EU Biocides Directive of a terpene called geraniol, has been selling geraniol to third parties which Eden understands has helped TerpeneTech to achieve revenues of £0.14m in 2016 and an operating profit of £0.01m. Whilst there is room for growth, TerpeneTech's use of its position as a notified supplier of geraniol illustrates one additional way in which its assets can be leveraged commercially.

Intellectual Property ("IP")

Following the agreement signed between Eden and Intellectual Ventures' Invention Development Fund (now called Xinova LLC) towards the end of 2015, the two parties have been working together to expand the breadth of Eden's intellectual property base with some exciting and interesting opportunities starting to come from this collaboration.

Also, following the year end, we successfully extended our patent protection in Greece for 3AEY, until May 2030, through a successful application for a Supplementary Protection Certificate from the Patent Office.

People

This financial year we welcomed Michel Villeneuve, as Senior Strategic Commercial Advisor, and Peter Watson, as Senior Regulatory Strategy Advisor, to the team at Eden. Michel has over thirty years' experience in a variety of senior commercial, regulatory and management roles with major multinational companies involved in plant protection. Peter has worked for the UK's National Pesticide Competent Authority and Dow AgroScience Services in a number of senior regulatory roles. Both gentlemen bring tremendous experience, insight and drive to our efforts to accelerate commercialisation of our first products.

Outlook

We believe the decision to evolve Eden's business model to one which is primarily product sales based will maximise the returns to shareholders in the long term. However, even in the short term, we expect to see revenues rise significantly in 2017 from those in previous years based upon the sale of 3AEY mainly in France, Spain and Italy.

Following on from the successful launch in 2016 of 3AEY in Italy, where it is sold as 3logy®, we have received strong interest from distributors looking to sell the product outside of the EU. We expect to conclude arrangements in a number of these territories over the next twelve months.

Already this year we have undertaken an increased amount of research and development work which will continue apace throughout the rest of 2017 and 2018. This will strengthen the commercial viability of Eden's product portfolio which to date has been progressing at a slower pace than we would have liked due to restricted resources.

We are also investing further this year in regulatory approvals which will ultimately result in a number of Eden's products being sold throughout the world thereby increasing the inherent value of Eden's intellectual property and helping to build our business on a global basis.

 

S M Smith
Chief Executive Officer

19 May 2017

 

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Statement of Profit or Loss and other Comprehensive Income
For The Year Ended 31December2016

    2016 2015
      As restated
(Note 2)
       
  Notes £ £
CONTINUING OPERATIONS      
Revenue 4 391,958 883,312
Cost of sales   (28,560) (98,708)
       
GROSS PROFIT   363,398 784,604
       
Amortisation of intangible
assets
  (680,385) (655,304)
Other administrative expenses   (1,439,670) (1,019,957)
Share based payments   (129,707) (247,973)
       
OPERATING LOSS   (1,886,364) (1,138,630)
Finance costs 6 (15,483) (20,486)
Finance income 6 1,278 247
Share of profit/(loss) of equity accounted investee, net of tax 11 (12,418) (99,494)
LOSS BEFORE INCOME TAX 7 (1,912,987) (1,258,363)
Income tax 8 81,895 101,260
LOSS FOR THE YEAR   (1,831,092) (1,157,103)
OTHER COMPREHENSIVE INCOME   - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR   (1,831,092) (1,157,103)
Earnings per share expressed
in pence per share:
9    
Basic   -1.03 -0.74
Diluted   -1.03 -0.74

 

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Statement of Financial Position
As at 31December2016

    2016 2015
As restated
(Note 2)
       
  Notes £ £
ASSETS      
NON-CURRENT ASSETS      
Intangible assets 10 5,211,892 5,543,092
Investments in equity-accounted investee 11 811,165 823,583
       
    6,023,057 6,366,675
       
CURRENT ASSETS      
Trade and other receivables 12 240,505 164,416
Cash and cash equivalents 13 1,532,341 148,360
    1,772,846 312,776
LIABILITIES      
CURRENT LIABILITIES      
Trade and other payables 14 965,286 752,552
       
NET CURRENT ASSETS/(LIABILITIES)   807,560 (439,776)
       
NON-CURRENT LIABILITIES      
Trade and other payables 14 67,462 -
       
NET ASSETS   6,763,155 5,926,899
       
SHAREHOLDERS' EQUITY      
Called up share capital 17 1,846,542 1,587,583
Share premium 18 29,139,654 26,860,972
Merger reserve 18 10,209,673 10,209,673
Warrant reserve 18 614,713 735,453
Retained loss 18 (35,047,427) (33,466,782)
       
TOTAL EQUITY   6,763,155 5,926,899

 

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Statement of Changes in Equity
For The Year Ended 31December2016

  Called up
share capital
Retained
loss

As restated
(Note 2)
Share
premium
Merger
reserve
Warrant
reserve
Total
equity

As restated
(Note 2)
  £ £ £ £ £ £
             
Balance at 1 January 2015 £1,541,430 (32,346,353) 26,014,049 10,209,673 524,154 5,942,953
Balance at 1 January 2015 restated £1,541,430 (32,346,353) 26,014,049 10,209,673 524,154 5,942,953
             
Changes in equity            
- Issue of share capital 46,153 - 846,923 - - 893,076
- Total comprehensive income - (1,157,103) - - - (1,157,103)
- Options granted - - - - 247,973 247,973
- Options exercised/lapsed - 36,674 - - (36,674) -
             
Balance at 31 December 2015 1,587,583 (33,466,782) 26,860,972 10,209,673 735,453 5,926,899
             
Changes in equity            
- Issue of share capital 258,959 - 2,278,682 - - 2,537,641
- Total comprehensive income - (1,831,092) - - - (1,831,092)
- Options granted - - - - 129,707 129,707
- Options exercised/lapsed - 250,447 - - (250,447) -
             
Balance at 31 December 2016 1,846,542 (35,047,427) 29,139,654 10,209,673 614,713 6,763,155

 

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Statement of Cash Flows
For The Year Ended 31December2016

    2016 2015
       
   
Cash flows from operating activities      
Cash used by operations 19 (983,364) (185,635)
Finance costs paid   (15,483) (20,486)
Tax received   81,895 101,260
       
Net cash used by operating activities   (916,952) (104,861)
       
Cash flows from investing activities      
Capitalisation of development expenditure and intellectual property costs     (237,985) (132,006)
Interest received   1,278 247
       
Net cash used by investing activities   (236,707) (131,759)
       
Cash flows from financing activities      
Issue of equity shares   2,668,540 -
Share issue costs   (130,900) (30,000)
       
Net cash from/(used by) financing activities   2,537,640 (30,000)
       
       
       
Increase/(decrease) in cash and cash equivalents   1,383,981 (266,620)
Cash and cash equivalents at beginning of year 20 148,360 414,980
       
Cash and cash equivalents at end of year 20 1,532,341 148,360

 

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Notes

Notes to the Financial Results are available in the pdf download

 

Page last updated: 22 May 2017