Eden Research (LSE:EDEN) — Full Year Results

0:01 Good morning, ladies and gentlemen, and welcome to the EDEN RESEARCH PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it is appropriate to do so. These will be available via your investor meet company

0:33 dashboard, and we will notify you by email when these are ready for your review. Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Sean Smith. Good morning, sir. Good morning, everyone. Thank you very much, and, thank you for your interest in, time and joining us today. I'll begin, this presentation just to serve a bit of context is the, preliminary results presentation that, we have presented to a number or are in the process of presenting to a number of institutional investors. Focus of this presentation is actually to provide a fairly minimal amount of background and content assuming that, most of the, viewers of the presentation will be familiar with the company and its business. We do provide some context.

1:23 Rather, we're trying to highlight a good number of the opportunities that we have, in the pipeline at the moment, current activities, some of the strategy around building the business, both in terms of the core business as well as growth opportunities and some of the strategy that should represent an opportunity for longer term. With that said, at a higher level, just to remind everyone, EDEN RESEARCH is a name quoted company focused on sustainable biopesticides. And in fact, we're the only company quoted our name whose sole focus is the development

1:57 of biopesticides and plastic free microencapsulation technology for three key business areas. Our focus today will be on the crop protection business. That is our core business this year in which we focus most of our time and attention over the course of the last seven years. We don't touch too much on animal health or consumer products, but there is ample opportunity, to review our interest in those areas on our website, which is eatonresearch.com. So without further ado, I'll hand over to Alex, our CFO, to talk about, the financials. But before I do that, I'll just cover a few highlights, for the 2021 year. An important highlight for us is that, in as you may be aware, 2020 and 2021 were very challenging conditions for people in our industry, in particular, those companies who have a focus on high value food and vegetables as we do.

2:54 2020, as you may know, the year of the pandemic, severe travel restrictions and other restrictions, limited, holiday making, limited, entertainment opportunities. And as a consequence, there was a significant fall off in the consumption of wine as a classic example. In fact, it's not estimated that wine consumption will resume pre COVID levels until at least 2023 or perhaps 2024. Why that's important to EDEN is, as you are probably aware, the core of our business is a grapevine fungicide that targets a disease called detritus. During the course of 2020, as demand for wine grapes fell off of a cliff, what we saw was growers not choosing to invest in, their crop at the point of harvest. And indeed, a good number of growers were leaving grapes to rot on the vines because they didn't want to spend money on labor to harvest those grapes. In in a context such as that, it is, understandable that growers would also not be investing in high value crop inputs such as our product, Mevalon.

4:06 And as a consequence, we had a direct impact on revenue in 2020, with 2021 representing some growth over the prior year based on the fact that, some of the restrictions were easing and due to some of the factors that Alex will talk about in a moment. Key for us during the course of 2021 was that we entered into a comprehensive agreement with Corteva Agriscience. If you're not familiar with Corteva, they are the world's largest agriscience pure play company. There is a they're a business that was formed from the combined agro science interests of Dow Chemical and DuPont. So they're a comprehensive business that expands everything from crop protection through seeds, etcetera, and ancillary services.

4:52 The agreement that we entered into that with, with Corteva followed a couple of years of of collaborative development work on a seed treatment, and we'll elaborate a little bit more about that opportunity later on in the presentation. But the point to make here is that this isn't just a a development agreement, but in fact, it's a development and commercialization and distribution agreement that anticipates future pricing, defines future pricing, annual volume requirements, etcetera. So there's no more negotiation to be done with Corteva around this. In addition to that, we have been focused very, very intensely on the diversification and strengthening of our overall business. For those that are familiar with the story, you'll recognize that a number of years ago when we launched our first product, we were only able to fund, the registration

5:41 of that first product on a very limited number of crops and the number being one and targeting one particular disease in the Southern EU. Now the the reason for that is because the ability to, register a product on a very wide range of crops and in a wide range of territories against a wide range of diseases is very much linked directly to availability of capital to invest in the biological efficacy dossiers that are required by the by the regulators in a good number of countries, including all of Europe and The UK. So for us, we had to focus our efforts in an area where we recognize that there was a significant problem, which is a fungal pathogen that affects grapes and some other high value fruits.

6:28 And we focused on that area with the view that we would launch the product, gain commercial traction, and then work very hard to diversify. We've been doing that. I'm pleased to tell you that, during the course of 2021, the list of authorized crops from Evolene grew fourfold and the number of disease targets more than doubled. What this really means when we talk about the label for one of our products is we're really talking about the addressable market. And later in the presentation, we'll talk to you in some detail about current opportunities as well as future opportunities for further growing our addressable market. In addition to that, I just wanted to highlight that Eastman Chemical received authorization for the sale of our second product, pleased the twenty twenty twenty one, we saw in product sales revenue flat on a sterling basis, but we did see an increase of 4% by volume and 6% on a constant currency basis.

7:37 In terms of admin expenses, we were slightly up compared to last year. We completed a successful fundraise in March 2020, and part of that part of the plan at the time is to increase the internal resource that we have at EDEN. And so we have opened up a laboratory with r and d capabilities. That's basically meant that we could bring in house, those expertise, which we had previously, used CROs for. So it's meant meant that we are much more in control of our destiny with all of that expertise in house. In terms of cash, we ended the year at 3,900,000, which was actually in line with our previous forecast when we did the fundraise back in March 2020. We have been keeping costs to a minimum over the past couple of years. Sales have not quite been what we hoped they would be for some of the reasons Sean's already outlined and which I'll come on to in a sec.

8:28 So this is the sales picture, the mevalone sales picture for EDEN selling to our customers, and you can see that there was quite a drop off in 2020. The specific reason for that was that we had what's called the postseason sales push where we sell to our customer, and they then start stocking the distribution channels in advance of a growing season. At the end of '19, that was very normal and a good postseason sales push, expecting that 2020 would be also a good season. And, unfortunately, of course, due to the reasons we all now understand, that wasn't the case. And so, unfortunately, we saw that and apologies for the background noise. Not somewhere ideal. So forgive me.

9:16 There was no postseason sales push in 2020 at all, and so that really did affect our sales in that year. 2021 is slightly recovered, and that was, made slightly better as well by the addition of new countries where we could sell. So Australia and Portugal were added to the list, and you can see that we did have a bit of an increase in '21 compared to 2020. But the demand for grapes, as Sean was talking about, has generally been lower, much lower than had been the case in '18 and '19. We do expect to come back to a much better level in 2022. In addition to all of the COVID issues, we also had unfavorable weather conditions. So we had frosts in early twenty one, which affected great production.

10:02 And in addition, we had a hot not we, not The UK, of course, but in the rest of Europe, we had a hot, dry summer '21 as well and indeed 2020, which is the exact opposite of what you need for a disease like Botrytis to become prevalent. However, if we look at this graph, what we've got is the sale of Mevalone by our customers. So this is the distributor selling to the end user. And you can see that overall, the picture is actually much more positive. So this shows that there is good adoption of the product. The sales are actually increasing 14% year on year compared to the industry average of around 12% during the same period. So whilst the picture doesn't look quite so good as you saw on the previous graph, actually, for the end user level in terms of adoption, the picture is much better. And again, we expect that to further increase in 2022.

10:54 I'll go ahead and carry on from here. So to remind those of you who are familiar with the story and for those of you who aren't, when we look across our products and we're talking here about our first two commercial products, Mevalon and Cedros, they share some common features. And these features will also be present in our subsequent products, including the seed treatment as well as the insect icide that are under development, and then we'll talk about it a little bit. These common, factors across all the products are driven by our use of a polymer free or plastic free microencapsulation technology, which we've developed for crop protection and other applications. That's a technology that we've branded as sustain, and so you'll see it referred to as that, later in the presentation.

11:41 The products are also, inherit their characteristics from the portfolio of three registered active ingredients, that EDEN has actually registered and developed in Europe, and we're in the process of doing so across the world. Those active ingredients, to remind you, are derived from plants themselves. They make up a part of the plant's immune system, and they allow us to formulate products that have characteristics such as tackling resistance build up. And I'll focus on that a little bit later because resistance build up is a real differentiator for us. So just as in human antibiotics in crops, both insects and fungal pathogens as well as bacterial pathogens, all and and actually, also includes weeds when it comes to, herbicides.

12:28 Organisms are able to acquire, resistance to, products that are harmful to them. And so what that means is in human therapy, antibiotics, we develop resistant strains. Everybody's heard of MRSA as an example. Exactly the same thing happens in crops. Now how is it that EDEN helps to fight resistance? Well, our active ingredients work through a very different mechanism, and that mechanism means that organisms are unable to acquire resistance because our products actually work through a physical mode of action rather than through some, kind of elaborate interference with enzymes and and metabolic pathways. And so, this is a key attribute of our products. Some of the others include the fact that, we are polymer free. This is a major issue in the EU at the moment. The EU, has begun the process of regulating the use of plastics or polymers in a whole range of products, including crop protection products. So everyone is familiar with the fact that microplastics are in the news quite a lot these days, and most of us attribute and and indeed the media attributes the presence of microplastics in human breast milk, in animal tissue, in fish, from even remote parts of the world. We associate that with pollution from plastics in the environment. As those plastics break down, they contribute to formation of microplastics, which then become persistent in the environment.

13:56 What most people aren't aware of is that a whole range of formulated products from consumer products to things like pesticides, slow release fertilizers, etcetera, all intentionally add plastics to them to help deliver the active ingredients that make up the important part of that formulation. Why why would you micro encapsulate an active ingredient? To make it more persistent in the environment, to improve its efficacy, really to make that product better. So these are these are these are added for a very good reason. Now our technology, Sustain, is totally polymer free. It's plastic free. It's biodegradable readily in the environment. And in fact, it is the core of two commercial products at the moment, mevaline and Sandros.

14:44 Finally, and last but not least, our products are residue free. And what does that mean? Well, you know, it's not hard to find lots of articles in the media about pesticide residues and everything from wine to food, to to baby formula. Pesticide residues are a major issue for consumers. And consequently, they're a major issue for governments and the regulators around the world. What does this mean? Well, it means that the direction of travel is away from conventional synthetic chemistry and toward much more sustainable approaches. And I'm very pleased to remind you that EDEN is absolutely at the heart of that movement, that this is a situation where the wind is blowing in our direction, and it's not just a wind. It's a very, strong wind at that.

15:30 Moving on. So looking at organic growth, and and we classify growth for the business in two different ways. There's organic and then there's growth through acquisition or potential acquisition. How how are we going to do that? Well, you know, as we look at the core products, we look at our opportunity to expand that addressable market, as I mentioned earlier. What that means is the addition of new registrations or an expansion of the label into more major crops than we've registered on previously into new territories. And so there are a good number of applications that are pending at the moment for the registration of Mevalon and Cedros in some key territories such as The US, The UK, Germany, Poland, New Zealand, etcetera.

16:17 That's not a comprehensive list. The list goes on a bit from there. In addition to that, I should mention that there are applications that are undergoing preparation at the moment for both Mevalon and Cedros in a good number of additional territories. So regulatory activity is important to us both in terms of adding new countries, but also in terms of adding new crops that are high value, and we'll we'll address some of those in a moment. To give you an example of the pipeline, and we'll talk about each of these in some detail, seed treatments, insecticides, danny mildew aside, opportunities on can cannabis, potatoes as well. And so we'll we'll move on from there. Just to highlight that we are working very actively with a number of partners to develop the use of sustain with their active ingredients. So to remind you, not only are we using sustain as the core of our products, but we are promoting the use of sustain to deliver conventional and other biochemicals to benefit other products and help the formulators of other products, get away from the use of microplastics.

17:24 So metal and biofungicide. This just illustrates the dramatic increase in the number of countries in which we have authorization and the crop targets. Now I apologize. This is actually a slightly earlier version of the presentation that was submitted. Along the x axis, as you look at the bar chart, that should actually be 2019, 2020, and 2021. I can assure you that this was corrected in a subsequent version. But in any case, you see 2021, the number of crop targets grows dramatically. And again, we actually began to see the impact of that in 2021, particularly when we look at Spain, where we had a major crop label expansion during the course of 2021, which translated almost immediately into increased sales in Spain. And if you go back a few slides, I won't do that now in the interest of time, but if you go back a few slides and you look at product sales in Spain from our distributors to their customers, you'll see a significant increase in the Spanish market already.

18:30 As I mentioned, we are awaiting approval in The US and New Zealand, and we're awaiting, authorization number of Central European countries as well as The UK. The elephant in the room has been US approval. And for those of you who followed the story, you'll recognize that we submitted an application for authorization by the US Environmental Protection Agency about four years ago. The official timelines for the EPA authorization of new pesticides is eighteen months. Unfortunately, those timelines are somewhat unrealistic. And as a consequence of that, we find ourselves more than four years later still awaiting authorization. What I will tell you is that there are a number of reasons for that, and I will also tell you that although it won't give you or us any comfort, we're not the only company that is in such a position.

19:22 EPA has historically been under resourced and in fact, quite significantly under resourced. And as a consequence, this process has taken significantly longer than we or I think even they had anticipated due to the resourcing issues. And frankly speaking due to COVID, which did complicate work processes for a good number of agencies around the world, not just the US EPA. So as a consequence, I'm to say to you that we have reason to believe that we are approaching US EPA authorization. We believe it's realistic to expect that during the course of 2022. We have an active, constructive, productive dialogue with EPA who are more than willing to engage with us. We recognize the complexity of the process that they have to run through. We also recognize the value that they bring in protecting consumers and the environment from potentially harmful chemicals.

20:17 So, as much as we would like to see the process move more quickly, it is what it is. And ultimately, we'll benefit from a robust regulatory regime globally, frankly. So with that said, I'll move on to the next point. Cedros, we'll talk a little bit here about Cedros and where we stand.

20:40 To be frank, the commercial commercialization of Cedros has been, suboptimal in in our view and also Eastman's view. There are a good number of reasons for that ranging from production related issues to COVID related issues. In any case, we still expect authorization for Sentra's in The US as well, and Sentra's is a very major market, as you'll see from the top table in the lower right hand side. So this is a very good product. It's very effective. We're working very closely with Eastman to expedite the commercialization of SoDos in key territories, not the least of which is The US. And we look forward to updating you on further commercial progress later in the year this year. So returning to sales growth, this particular chart, and I'll I'll highlight for you 2022.

21:32 We are not forecasting no set gross sales. We're just simply using the, same cost forecast,

21:39 which combined both product revenue. So you'll see that we expect a 28% growth year over year when compared to 2021, and we believe that 2023 and beyond will look even more encouraging. Now this is growth. It's a forecast built up from our core business. It does not anticipate in the '22 numbers any significant contribution from The United States, either from Evolent or for Cedars nor does it anticipate some of the deals that we have in the pipeline that are likely to be revenue generating for us. So it's a conservative forecast that we believe is imminently achievable subject to any return to significant restrictions globally. So organic growth coming from new products. We've already talked a little bit about the seed treatment project.

22:31 I just wanna highlight a few points. So, our collaboration with Corteva began about three years ago where we began jointly targeting an opportunity in the seed treatment market. So if you're not familiar with seed treatments, seed treatments are coatings that are applied to seeds that deliver a whole range of functional benefits from insecticidal properties, fungicidal properties, repellency properties, pneumaticidal properties. So there's a a range of of, characteristics that seed treatments have, including nutrition and and plant growth regulators to to help increase the yield, to help increase the emergence of the crop, and to deliver for the farmer more impact from the seeds that they put in the ground.

23:18 We have been focused with Corteva on one particular crop, and we are focused on one particular functional effect. And we look forward to elaborating further on what that is at an appropriate time. In '20 well, it was about a year ago, just a bit more than a year ago, we signed this agreement with Corteva, which as I mentioned, is really a commercialization and distribution agreement that covers the period from 2021 and well into the future.

23:44 Our initial focus markets in The EU and The UK, this is driven by regulatory matters. And so to remind those of you that that are aware and for those of you who aren't aware, there is a regulatory situation in The EU and The UK, which has removed two incumbent products from the market. We are seeking to replace those incumbent products in a formulated seed treatment part, product,

24:12 And we are working very hard with Corteva to get that off the ground as quickly as possible. So here, the guidance we've given thus far is that we anticipate, sales to Corteva in time for the 2024 growing season. And I would say rest assured that we're working very actively with Corteva to make that happen as quickly as humanly possible. Now just a a slight health warning on this one. In our industry, the amount of time that it takes to produce successful trials can take longer than anticipated or than hoped. And the reason for that is, in the EU, for example, the regulators require two seasons of good product efficacy.

24:57 So we have to prove to them that our product works. That's quite different than The US and some other territories around the world, but let's focus initially on The EU. As we talk about this, what that means we have to do and Corteva have to do is we have to go into the field. We have to run trials for two consecutive growing cycles, and we have to have data arise from those trials that shows the regulator that they'll that they work. In some situations, and it happens far more often than anybody would like, and this is just a very well known fact in our industry. In some situations, you can go into the field, run a trial, and not get conclusive results. There are almost an infinite number of reasons why that might happen. And that explains why sometimes, this process takes more than two growing cycles.

25:45 It might take three. It might take four. So this sets the context for you. Again, rest assured, we're working very actively with Corteva to advance this as quickly as humanly possible. Just to remind everybody of the overall opportunity here, and these numbers are given in each of these cases in the lower right hand quadrant of slide. The addressable market for us is, as you'll see, quite significant. And this is obviously an explanation as to why this is one of our highest priority projects across the group. Moving on to the insecticide. At the time we did a fundraise back in 2020, also included in the use of proceeds was the development of insecticide.

26:33 I'm pleased to say that we're currently making very good progress after some challenges that faced us in the development process early on. We are in the field for the second growing season in a row, both in Europe and The U. S. We're seeing some very encouraging results come from those trials. And we are preparing to put these, lead formulation candidates into the hands of our partners. What I'm happy to say about the trials thus far is that we have shown that both of our lead formulation candidates, and there

27:04 are two, show very good efficacy when compared with the conventional chemistry standards as well as the biochemical or biopesticides standards. And this is what we're really looking for. We're looking for a product that clearly differentiates itself in the market. As I said, one of the ways that we work out how that differentiation can be positioned in the market is by running an extensive number of trials to accumulate data that helps us to show statistically how the products are better than the competition.

27:35 And again, I'm very happy to say that we have a very long list of potential distribution partners who have requested samples, and we are in the process of providing them the samples so they can run their own trials to support the point that we've been making with them. So Downy Mildew is is another area that if we rewind a couple of years ago, this is a major use label extension for mevalon. So in addition to tackling botrytis and a growing number of other diseases, dammy mildew, as you'll see from the table in the lower right hand corner, represents a very significant addressable market of about €2,400,000,000 globally. This is obviously, an interesting area for us. Downy mildew affects a wide range of crops, but one of the key crops that can affect our grapes.

28:25 And so, obviously, we have established, certain distribution relationships and access to the market with mevalon already as we target botrytis.

28:35 The reason we didn't pursue this a few years ago is that the dynamic has changed quite a lot. Very recently, one of the key products that's used to tackle Danubelda has been removed from the market. And so if we reconsider the resistance discussion that we've had earlier, One of the key reasons that that product had been used was as a resistance management strategy. As that product disappeared from the market, the suppliers to the industry and farmers themselves were faced with concerns over the emergence of resistance based on a limited portfolio of fungicides available to them. So we've been approached by commercial partners who are interested in addressing that and using Mevolone to to help address that. And I'm happy to tell you that we ran trials a few years ago with some very encouraging results, so stay tuned.

29:29 Again, this represents a very significant opportunity for us approaching €40,000,000 a year in terms of product sales to EDEN.

29:40 Sustain, we've talked about this already to some extent, but just to remind you, we are looking at a number of projects, using third party active ingredients. Just as many things in our industry take time, these also take time as we have to prove to potential partners that Sustain is doing a good job of delivering our active ingredients in stable formulations that are effective in the field. As as I mentioned, a good number of projects ongoing, and we look forward to updating the market as soon as we possibly can in terms of progress. And last but not least, additional growth opportunities really from emerging from the core business. Some examples of that are treatment of fungal pathogens on cannabis. Here, we're focused on the legal recreation recreational and medical use cannabis markets in The US and Canada.

30:32 We've actually been approached by a potential commercial partner who has a very strong business in cannabis, in The US. That partner, about 40% of their overall revenue in The US is made up of products, that are used by professional growers in The US, primarily, California, but a number of other states as well. We are working with them to help tackle botrytis and powdery mildew on cannabis, and, we're working very hard to get that underway. In addition to that, we've identified several other key target areas ranging from black on banana to potato blight and potato cyst nematode. In each of those cases, we have good supporting evidence to support claims of high levels of efficacy of our products with mevalon and centros in this case, and we are working very hard to bring those forward.

31:30 So growth through acquisition. As many of you will recognize, over the course of the last seven years, we have been focused on the growth of our core business in crop protection. And we've done that through focusing on our current assets and, what is available to us in terms of data, patent protection, and commercial opportunities. And as you will recognize in our industry, we work in a very conservative and very highly regulated industry, organic growth takes time. Now I'm pleased to say we're making progress and there's far more to come. But in the meantime, as we build a team that are focused on the crop protection business, from a regulatory perspective and from a technical perspective, we see that there are opportunities to accelerate growth across the group in several ways.

32:21 Looking at growth opportunities, what does the ideal profile look like for a potential, acquisition candidate? Well, frankly speaking, we'd be looking for somebody who is already, generating revenue and who at an EBITDA level is also ideally, cash generative. We would be looking for opportunities where there are synergies, particularly in the area of r and d and in the areas of regulatory compliance. And we'd be looking for opportunities where we were able to leverage perhaps our micro encapsulation technology and some of our other expertise in house, where there might be some opportunities for cross pollination, very similar to the opportunities that we have internally within EDEN at the moment for cross pollination from crop protection across to consumer products and animal health. So to remind you, our current consumer products business has emerged from, our associate company, Terpene Tech, where we derive a royalty from their sales of Geraniol into biocidal applications in Europe. Now that's a nice business. It's a growing business. It's a profitable business.

33:33 But we see that there are significant opportunities in that and in some other areas to accelerate growth. And so we see acquisition as an opportunity to bring in house expertise, existing customer base, and associated growth opportunities. And so that is what we are turning our attention to this particular area. And what do some of the ideal consumer product target companies look like? Well, they would ideally be UK based or at least European, and they would have patented technologies. They would have registration dossiers and authorization. For example, if we're working in the area of biocides, we would also require regulatory clearance. Ideally, they would have some tall manufacturing and or supply chain capabilities.

34:21 Perhaps, sustain would represent an opportunity for them to encapsulate their own active ingredients, and I've touched on the others already. This is a project that, we are looking at. We have a number of, potential candidates in in mind. We are working through a process to look at those and to really scrutinize whether they represent the opportunities that we that help they do. And last but not least, we just want to give you some insight into the team that we've been working on. Prior to the fundraise, we were a team of four individuals, including Alex and myself. And since the fundraise, we've been able to bring a lot of the activities that we were outsourcing previously in house.

35:07 I hope the reasons for that are obvious, but, frankly speaking, up to that point, outsourcing absolutely everything that we're doing, was a a real challenge. But it's a challenge from a a time, speed, focus perspective, but also, a challenge in terms of overall management. So bringing a team of people together who are focused on EDEN and our business has proven to help us dramatically accelerate the time to not only product registration, but all and and label extensions, for example, but also to accelerate the development of new products, and existing products for new applications. You'll see we've heavily invested in the area of r and d. We have a small but perfectly formed team that are focused on the entire development process from analytical chemistry, compound identification, quality control, all the way through to formulation development, and then ultimately biology.

36:06 So in house, we're rearing insects that we're we're treating nicely, but we are evaluating the efficacy of our products against those insects. We're able to grow plants. We're able to do microbiological screening and, ultimately move those into the field. And that's where our development team leader, who's recently joined us is focused. We obviously also have in house regulatory capabilities with, the addition of a very experienced gentleman who spent most of his career in our industry and knows the ins and outs of it. And as you see, rest supporting functionality. Okay. The board of directors, there's plenty about us on on our website, so I won't belabor the point there. And, in terms of innovation capabilities, as I mentioned a minute ago, bringing a lot of these functions in house has been, truly very helpful for us. By the way, these are photos of our team. They're not actually photos of stock images. Those are our labs and our team members.

37:08 The labs are are GLP ready, which brings a lot of credibility to us. We've chosen not to go down the GLP route at this particular stage due to the cost and resource requirements associated with that, but we do operate to GLP standard. And in fact, a lot of the costs that we were incurring with CROs previously have been offset by the deployment of our own team. In terms of regulatory position, I think we've touched on a number of these again, just to remind everybody in terms of The US, we are expecting authorization in the course of 2022 for our first two products and, critically, all three of our active ingredients. Now that's important to remember because once our active ingredients have authorization at the federal level in The US, the registration of subsequent products such as our insecticide and potentially our seed treatment that are based on those same active ingredients is a much more straightforward process.

38:08 And with that said, we're happy to take questions at this point. There have been a number that have been Sean. Yes. That's great. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while Alex and Sean take a few moments to review those questions submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Sean, Alex, as you can see, we've received both a number of pre submitted questions as well as a number of questions that have been submitted throughout today's presentation. Firstly, can I thank all of the investors for submitting their questions? And Sean, Alex, if I could just hand back to you to run through that q and a tab and where it's appropriate to do so, if you could just please read out the questions and give your response, and then I'll pick up from you at the end, that would be great. Thank you. So I think the first question we're looking at is one for Alex.

39:02 Alex, if you don't mind tackling that one. Sure. It's got a long one as well, so bear with me. It's the chairman refers to meaningful product sales growth in 2022. Cortiva's seed income is anticipated early twenty four, maybe sooner. EDEN slash cash forecast sees EDEN through '23. And your report highlights possibility of a fundraising '23. Can you allay a shareholder fears and concerns around this issue and look to other financing arrangements to see you through to '23 if necessary, see you through '23 if necessary, such as bank financing partner deals so as not to unnecessarily dilute shareholders for what would be a short term need. So quite a few questions in there and probably quite a few answers, but I'll try and keep it brief. The short of it is that Sean already mentioned in our forecast or in the forecast, we have been conservative. We haven't allowed for a good number of opportunities, some of which we have talked about here. So the likes of sustained, the powdery mildew, for example, and various others.

39:54 So there are there are a number of opportunities where we believe we could bring in additional revenue in 2022, which would obviously help the cash position. All of that said, you're absolutely right. The annual report does refer to the possibility of a fundraise. Of course, that's always a possibility, and that's part of the reason that you have a listing. And so we wouldn't ever say that we will never do that, not least in terms of a a an acquisition that might be where a fundraiser would be appropriate, but we shall see how these things go. Okay. Thank you. Question number two, and I'll read it out. Can you paint us some pictures to what investor communications will look like immediately post EPA approval so as to encourage US investors to buy shares on the open market and help drive the share price upwards? So you. It's a great question.

40:47 Just to remind you, if you weren't or if you weren't aware, a number of months ago, EDEN entered into a cross trading arrangement with the OTC capital markets in The US. This is a mechanism through which we can put EDEN shares into the hands of US based investors with, it's not a dual listing. It's not a a ADR. What it is is just a cross marketing arrangement where we are not forced down the path of, regulatory compliance in The US as long as we are quoted on a on an allowed exchange. So we we do fit that criteria as an aim listed company. And so, this for us is about, boosting, shareholder visibility to The US market.

41:38 It's about putting EDEN shares potentially in The US investors who we believe the story for EDEN will resonate quite clearly with them. So we're we're working with the New York based investor relations firm to ensure that investor communications in The US are appropriate and tailored to The US audience. Communications in both The US and The UK will be coordinated between our our UK based IR firm and The US firm to ensure consistency and clarity to ensure that we're we're not, you know, recreating the wheel, that we're able to use materials on both sides of the pond. So, you know, we do we do a piece once, and we we use it across, both markets. We'll be targeting a range of trade, financial, and mainstream media outlets and offering interviews for both live and prerecorded, forums.

42:29 And, we'll be holding investor meetings and have, in fact, held investor meetings, which began a few weeks ago in The US, and those will continue for the foreseeable future in order to build our profile and what are, you know, the largest capital markets in the world. Okay. Hope that helps. Question three, Eastman, appears to have failed over a four point five year period to have secured many regulatory approvals for Cedros. Will, they be our Cedros US distribution partner post EPA? If yes, how might we expect to hit product sales targets given the very low level of so far. So I I take exception to the characterization as this is a very low level of success. I think one also has to take context into consideration.

43:20 And, you know, we can't forget that the past two years have been very challenging years in our industry and very challenging years in terms of dealing with regulators. But I will highlight the fact that Eastman had so far secured authorization in 10 countries. Okay? That's not a trivial exercise. And those authorizations cover both indoor and outdoor uses in many countries. Those are separate processes or separate registrations in most countries, including the EU. So this isn't a trivial exercise. There are also additional registrations pending, including, obviously, The US. And as a matter of routine practice when it comes down to distribution partner management, EDEN requires our distribution partners to achieve both regulatory milestones and minimum purchase quantities in order to retain their rights to distribute EDEN products.

44:14 So minimum purchase quantities don't become effective, obviously, until after product registration. So what that means is in The US, there is no opportunity for anyone to fail to meet their performance requirements until after that registration happens. In all cases, where a partner fails to meet their obligations, we will evaluate our strategic options, and we'll exercise our rights where we deem that to be necessary. Okay. Next question. The report stated throughout the year, the company remained debt free, with no long term debt and lending facilities in place or expected to be required. Do you expect to fund the revenue how do you expect to fund the revenue shortfall?

45:01 Alex, do you wanna tackle that one? Yeah. I think I've already answered that to an extent, and that we do have a number of opportunities which are available to us in this year and where we would expect to see milestones upfront, etcetera, which we've seen in a good number of deals that we've done in the past. So there there are plenty of opportunities for us to be able to run to fill that gap, which would mean that we don't need to do and concern ourselves with lending facilities, etcetera. Yeah. Okay. Thank you. So next question. When will shareholders receive a progress update on products utilizing sustain with conventional chemistry? It's a great question. As you might expect, we're very eager to tell people about the progress we've been making in that front. But, actually, as you would reasonably expect, the details associated with the partner's evaluation of sustain are strictly confidential.

45:57 You know, we are working with the IP and key assets of third parties, most of whom are major multinationals. And so what we can and can't say is very limited. We will absolutely up to update the market as soon as it's appropriate to do so. But, of course, this will always require the agreements of our partners. So just in terms of general messaging, we try very hard to manage expectations. And so we try very hard not to talk about projects until we have a reasonable level of confidence that they're going to be successful. In some cases, as the insecticide, we want to give people insight into what we're doing, and we're very open about where we stand in the development process, including talking about some limitations to our earlier formulation.

46:47 So hopefully, people will recognize that and react accordingly. So one of the questions relates to disappointment of sales development and and also quite a long list of regulatory label extensions And we're excited publicize have been for past. Minor excited uses or minor in crops. And so I'll give you a great example. A good number of years ago, we announced that we have authorization for the use of Mevalon on kiwi, pomegranate, and a number of other high value fruit and vegetables.

47:36 I mean, these are great to have. They do mean there are overall addressable market. And by the way, should mention that's in Greece. It also is true now in several other territories around the world, particularly particularly in in Europe. Europe. The point is that minor use and minor crop extensions are I'll call them, sorry for the pun, low hanging fruit. Basically, these are not particularly time consuming or costly processes, and they're typically data free. In other words, for these types of label extensions, we don't have to submit regulatory dossiers that it's that do apply for major new uses and major crops in in in Europe in particular. And and by the way, the submission of efficacy data. So when we have to do that, of course, we produce a thorough business case. We look at the cost and benefit of each submission, the time required.

48:32 But it is absolutely the case that for most major use extensions, we do expect these to move the needle significantly, whereas extensions on kiwi and other minor crops, they they help build resilience into the business where if there's a a poor year on our core product, on our core crop, being Greg's, they can help even that out a little bit. Our our focus very much is about building resilience into the existing existing business. And hopefully, you can see that with when we were immediately launching or initially launching Mevula into the petrified market for grapevine, you can see that we were very much subjected to the vagaries of that market. So in in one season, a farmer might apply our product once, in the next season, they might apply it four times.

49:24 And so effectively, in that scenario, your addressable market fluctuates between one and four x, sometimes year over year. So all of these even minor extensions help to to level that out a bit, and major extensions build real resilience into the business. Okay? Let's see here. Some other questions. Apologies. Let me pull that back up. Let's see here. Alex. So I'm struggling with the interface a little bit here. So one of the questions is the partnership Yeah. Go ahead. Sorry. That was the one I The partnership with Corte Sorry. The partnership with Cortiva is probably related to seed treatments.

50:12 It definitely is. What are the potential upsides of this relationship in the next few years? Any specific territory crops targeted? So, yes, specifically, Cortiva and the agreement that we've announced is for a specific use within seed treatments. There are indeed other opportunities over and above the specific application that we're concerned with under that agreement within treatments. There are also other potential opportunities with Cortiva and the like, which we are investigating and we'll we'll hopefully talk about in due course. Okay. Thank you. The next one. When you talk about possibly selling product with Corteva in time for the 2024 growing season, would that be sales in late twenty twenty three or late twenty twenty four?

51:07 Thank you. I'm afraid it's a slightly less than satisfying answer in the sense that the answer is it very much depends. So we we've been intentionally a little vague around that one because as you will have experience with EPA, for example, product authorizations almost always take a bit longer than what the published guidelines are. In some cases, they take a lot longer than the published guidelines. So I'm sorry. I can't give you a very definitive answer. What I will say to you is absolutely both EDEN and Corteva are focused and very strongly focused on product launch as soon as humanly possible.

51:53 Again, subject to the vagaries of the regulatory process and our ability to produce two seasons of of good strong efficacy data in two subsequent seasons rather than relying on more than that. The next one, Alex, do you want to tackle that one? Yes. So please, can you tell us what the profit margins are for your products? As you'll appreciate from a commercial perspective, it's not particularly sensible to be highlighting specific margins for products that we're selling to our distributors because that might give them some cause for negotiations. So we don't highlight that for each of our products and certainly not by country. But overall, generally, our products and certainly the ones we're selling at the moment are around 40% margin.

52:39 Other products, we are hoping and expecting to command a larger profit margin. Okay. Next one is, do you know if other firms or competitors are developing plastic free technologies? Example, are are there developments in synthetic biology? Yeah. It's a good question. It would be shocking if there weren't other companies focused on this opportunity. We know that there are several others. The the barrier to entry microencapsulation is a is a as a market, and and you could look at it as a market in itself that ultimately services a very wide range of end uses. But microencapsulation as a tool is widely used across consumer products, architectural coatings, crop protection chemicals. I mean, the the list goes on and on and on. It's a it's a very well known technique to help improve product formulations to make them more stable or more efficacious, etcetera.

53:38 And it's almost right to say that there are almost as many microencapsulation microencapsulation technologies as there are problems facing formulators. So it it's hard to compare apples and apples. I would say to you very clearly is that with microencapsulation, with our microencapsulation technology, you know, we we know we don't run afoul of the potential, regulatory action in The EU and in other territories as that emerges. We know we are readily biodegradable. Our microencapsulation technology, just to remind you, is derived from yeast. So we're using yeast cell walls to to do the job. And it is currently deployed in two commercial products. So it's a real differentiator for us.

54:29 To remind you as well, prior to the regulatory action dealing with microplastics in The EU, we were promoting the use of sustain for its technical benefits as well. It's only the emergence of the likely regulatory, restrictions in The EU that have further accelerated that development as regulators look to bat or severely restrict microplastics. So I think the next one is for you. Yep. And I think probably the last one as well. When does the board expect the company to be EBITDA EBITDA positive, which is a fair question and one we get asked quite a lot, of course. You'd appreciate there's only so much we can say on this one. You'll also know that the SENCOSS forecast is out there, which only takes us to 2023.

55:19 So they're the only published numbers that we have in the market. The short answer is if we come if we if if a lot of the things that we hope and expect to happen over the next two years, I '22 and '23, to come in, then we would be in good shape in 2024. What would be EBITDA positive then possibly? We have to see how things go over the next couple of years. Alex, that's great. And Sean, if I may just jump back in then. Thank you very much indeed for taking the time to address all of those questions that came in from investors this morning. And of course, if there are any further questions submitted today, we'll make these available to you immediately after the presentation has ended for your review. Ladies and gentlemen, we'll publish all those responses where it's appropriate to do so on the Investor Meet company platform, and you'll be notified by email when they're ready for your review. Sean, perhaps before redirecting those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, I could please just ask you for a few closing comments to wrap up with, that'd be great.

56:21 Yeah. Thank you. Great. Well, first of all, we all appreciate your interest in the company. For those of you who followed us and supported us through your investments for for a long time in some cases, we are very grateful. As you'll see, we have a a lot of opportunities in front of us. We have, anticipated growth in revenue coming over the next subsequent years. We have some very strong partnerships that hopefully help to demonstrate to you the industry's confidence in what we are doing. And including among our our our investor base, we have sit down who hold just under 10% who are large and well recognized commercial partner as is, of course, Corteva. We look forward to continuing to proceed the business and develop the business, and we appreciate your interest and engagement.

57:12 Sean, that's great. And Alex as well, thank you very much indeed for taking the time to update investors today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of EDEN RESEARCH PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.