Eden Research (LSE:EDEN) — Interim Results

0:00 Good afternoon, and welcome to the EDEN RESEARCH PLC interim results investor presentation. Throughout the quarter presentation, investors will be in listen only mode. Questions are encouraged and will be sent at any time by the q and a tab that's situated in the top right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question that receives in the meeting itself. However, the company can review all the questions submitted today and publish responses when it's appropriate to do so. Before we begin, I'd like to submit the following poll.

0:27 I'd now like to hand you up to Sean Smith, CEO. Good afternoon to you, sir. Good afternoon. Thank you very much, and thanks to everybody for your interest and for your time. I'm very happy to present today along with our CFO, Alex, our 2024 interim results. And without further ado, we'll go through a very short introduction to the company, provide some detailed information on the highlights for the period in which we're discussing. And then for those who are not familiar with the story, we'll go into some in-depth presentation on our existing and future development products as well as future opportunities. For those of you who are not aware, EDEN RESEARCH is a leader in sustainable biopesticides for professional agriculture and horticultural applications.

1:13 In fact, we're the only listed company that's operating in this space. We're based in The UK with a team of about 25 people based in South Oxfordshire doing everything from regulatory to product development to commercialization of our products.

1:29 I'm Sean Smith. I've been with the company just over ten years now as chief executive officer. My background is in the specialty chemicals industry where I've had a a good long number of years, more than I want to admit, of experience bringing new products and new technologies to market.

1:46 Alex? I'm Alex Avery. I'm the CFO. I've been with the company for over thirteen years now. I listed the company on AIM in 2012. I have an audit background, and I joined private equity in around 2004, and then eventually became a full time CFO of EDEN in 2011. Okay. So to give you a very high level overview of the business, as I mentioned earlier, we're a company that's very much focused on developing sustainable solutions for professional agriculture and horticulture. Our go to market strategy is basically to partner with well recognized, well established global, regional, or local partners in each of the countries or regions in which we're operating.

2:32 We work with these individuals to develop the product in each market to promote the product, and ultimately, to supply farmers with the products that they require to solve problems that they face on a day in and day out basis. I see here you can see a number of our partners, some of which are are names that'd be well recognized, such as Corteva, Eastman, Sumiagro, etcetera. Some key statistics for the business is that right now, we have regulatory approval in 24 different countries, and that list is growing all the time. We have well over 100 different crop uses that have been approved, and we'll explain a little bit more about what that means. But, ultimately, one can think of crop uses as addressable opportunities for our individual products.

3:20 And, ultimately, we have over a 130 granted or pending patents in our portfolio. The drive towards sustainable agriculture is very much powered by consumer sentiment and concerns over pesticides, pesticide use on both human health and the environment itself. Consumer concerns are driving regulatory approvals and or restrictions for products in the pesticide segment as a whole. Consumers are very concerned about the presence of pesticide residues in the food in which they eat and for very obvious reasons. And as a consequence, regulators around the world are taking action to reduce, restrict, or even eliminate certain conventional pesticides that are present in the food supply chain.

4:10 Key for us, and and this will become clear throughout the course of the presentation, but regulatory status for us is is very much a double edged sword. In fact, regulatory changes drive opportunity for us, but, of course, the regulatory, let's say, compliance is an issue for us, which requires a significant amount of time and investment to ensure that our products meet the standards set by regulators around the world. The opportunity for the overall biopesticide industry is quite substantial. As you can see, there are estimates that say that the global biopesticides industry be worth approximately $11,000,000,000 per year by 2027.

4:57 And that growth rate, which is substantial at 15% per annum, is being driven by the regulatory changes that I've mentioned earlier, which, of course, are being driven by consumer demands. Farmers, of course, are not in a position to produce in any less of an efficient way. And so as a result, farmers cannot simply accept the removal of pesticides from the market because, ultimately, what that does is impact their bottom line through increased food waste and through decreased yields in the crops that they're producing. So moving right along to the first half business highlights, I want to highlight a few key areas, and one, of course, is ongoing authorizations for our products in key markets. A key among these is authorization for our first product, which we'll explain a bit more about in the second half of the presentation.

5:50 This is a product called Mevalone, which is initially a grapevine fungicide. We have now received approval by the state of California. California should be considered almost the equivalent of a of a European country or or even more so in that California produces approximately just north of 80% of The US grape production across the entire country. And so by itself, California, in fact, is larger than, I believe, it's eight of the next largest grape producers across The US. And, of course, while we're starting with approval for Mevalon on grapes in California, the opportunities to expand the label and, therefore, the addressable market in California are substantial. And we'll show you some examples of what we've been able to achieve in European countries in which we've had authorizations for a bit of a longer period of time. You'll see the progress that we've made in expanding the addressable market. And, of course, that progress is being now reflected in in the results that we're presenting and, of course, future results.

6:57 Mevalon is also now authorized for use on a wide range of new crops and new fungal pathogens in Spain. This is the result of the efforts of our commercial partner in Spain, Cipcam Oxen, expand the label in order to bring these solutions to a much longer list of crops and against a much longer list of fungal pathogens. We see this expanded label for the product or the expanded list of addressable markets for the product contributing substantially to the growth in Spain. And those efforts are being replicated across Europe, and of course, ultimately, they'll be expanded across the countries in which we operate, including The United States. Of course, we continue our work to develop our third commercial product, which in or fourth, depending upon how you look at it, which is an insecticide.

7:48 This insecticide is still under development. And in 2024, the second consecutive year, we've been working with a list of potential commercial partners to run field trials to assess the performance of the product on a very wide list of insect pests and on a very long list of crops. So far, we've been very pleased with the results received last year, and the results that we've received this year so far are very encouraging. And last but not least, the authorization for Mevalon has been received in Germany and The Czech Republic.

8:23 This is very good progress indeed as last year you'll recall that we spoke about the authorization of Mevalon in Poland. Germany and The Czech Republic have followed, and we expect other Central European countries to grant their authorization in the coming months. In terms of corporate highlights, the first half of the year saw a significant strengthening of the company's financial position and our team. There are a few nice to to names. It was being named ESG company of the year at the small cap awards. But in terms of focusing on the company and its development, we're very pleased to announce the appointment of Derek McCallen as nonexecutive director and chairman of the audit committee. This is a part of the board's normal succession planning process where Rob Cridland had served in this role for nine years.

9:12 It a requirement to maintain independence as a nonexecutive director and chairman of the audit committee prompted us to recruit Derek to the board. Derek joins us as a with a very long and successful career in audit as our audit partner for a number of well recognized firms. And last but not least, of course, we've worked very hard to strengthen our commercial team with the appointment of two new colleagues to help drive commercial progress, both from a purely commercial perspective in terms of sales and business development,

9:44 but also in terms of product marketing and positioning, which will ultimately contribute to underlying growth. Alex? So in terms of the financials for the first half of the year, we saw a really good increase in overall revenue by 65% on compared to the first half of twenty twenty three. The key driver for us, one of the key metrics, of course, is our product sales where we saw an increase half year on half year, by 51% up to 1,700,000. Operating loss did, widen slightly from 1.2 to 1.3 for a couple of reasons. And, actually, Andrew has already asked a question on the q and a about the gross margin. We did see a bit of a drop in the gross margin. Margin is driven by a couple of things in this first half, one of which is the the mix of products.

10:33 So, we have our three commercialized products at the moment, Mevalone, Sedroz, and EcoVelix. They all have different margins. And so depending on the mix of products that we happen to sell in any one period of time, the margin will will vary. Obviously, over time, that will start to, even itself out. In the second half, we expect to, see that margin come back up, towards the end of the year. And the other thing is, as Sean already mentioned, we've taken on additional staff to strengthen the team, we have seen an increase in overheads as envisaged. But in terms of cash at the bank, we've finished the half year with 4.9. Generally, we are in line with our market expectations through our broker note, and we continue to be a a debt free company, which we feel is important. It makes puts us in a strong position.

11:21 Right. So talking a little bit about upcoming news flow, we'll highlight a few key points here. And and as you might imagine, there are a number of other projects underway. But, of course, what we're expecting to see through the balance of the year, and I mentioned this earlier, is further authorizations from Mevalon in the European Central Zone. For those of you who who are have not followed the story thus far or for those of you who might need a bit of refresher, a in Europe, regulatory authorizations are granted on a on a zonal basis. This application relates to authorization for the use of Mevalon across across the Central European Zone, and that includes countries like Poland who acted on behalf of the other concerned member states within the zone. And, of course, Germany and The Czech Republic are two examples of concerned member states that have granted their authorization subsequently.

12:14 There a number of key countries in which we're still awaiting authorization. Hungary is a very good example of that. Austria is another good example of that. And what's very nice to see is that here we are securing authorizations for for not just use on grapes, but also for use on grapes and apples against apple storage disease. And as mentioned earlier, following the the path that we followed in Spain, Italy, and a number of other countries, we do expect to further expand this label to include a much longer list of crops in some of these countries that are significant producers of a a range of different horticultural crops. So stay tuned on that one. Commercial agreements for the insecticide that I mentioned is under development. And, for the second half of this presentation, we'll get into the details around the products themselves. But these commercial agreements have been under discussion for some time now, and and we expect these conversations to come to a head toward the end of this year and or early next year.

13:14 There's a a reasonably long list of companies that are interested in bringing our insecticide to market. And, of course, what we are looking to do is find the optimal set of relationships to do so. As an example, a number of opportunities exist. One is that we could do a large global deal with one, for example, major multinational party, or we could build each of these up on a country by country or regional basis. In other words, partnering with the ideal candidate in country a, b, c, d, e, etcetera. What that might do is give us an opportunity to really optimize the distribution position. In reality, ultimately, what we were likely to pursue is some form of a hybrid between those two.

14:00 In other words, not just one part partner on a global basis, but probably a a mix of different partners depending upon the country, the region, and what the marketing plans might be that they present. In any case, these are these are lengthy conversations. They're complicated, but ultimately, what we're most cheered by is the reality of the situation, which is that we have a good number of potential partners that are interested in the product based on the very good results that we saw last year and what we believe will be good results again this year based on preliminary feedback from the trials, some of which are still ongoing. Of course, we are pursuing again a temporary approval for the use of EcoVelix in Europe to repel birds on maize seed.

14:48 The application for that has been submitted and we await the decision of the regulatory authorities in relevant countries. We are also pursuing a commercialization agreement for the use of our products in the Home and Garden segment. And this is a relatively new set of opportunities, albeit although we have looked at these opportunities in the past. The regulatory complexities in the home and garden segment are exactly what you might imagine them to be in a scenario where regulators are concerned about consumer safety and the use of pesticides. We believe we're mapping out a successful leap forward and look forward to saying more about this in due course. We're also continuing to pursue major label expansions for mevalon in a range of countries.

15:35 The best example I can give you this is France where we are very eagerly awaiting the label extension for mevalon from,

15:44 betray this on grapes and apples for storage disease control to a much wider list of ultimately, a much longer list of crops and disease targets, with the first of those being the major use extensions for the treatment of powdery mildew and downy mildew on grapes. That opportunity alone, we believe, will grow the addressable market for us in France by a factor of tenfold. So in some cases, these label extensions are relatively minor. In this particular example, it is a very substantial increase and very much in line with an opportunity that our distribution partner in France, Corteva, has identified and is very, very eager to pursue. The demand for a product such as that in the French market is anticipated to be extremely strong.

16:34 And with that said, we'll move on to the second portion of the presentation. This provides a bit more background on what we're doing, how we're doing it, and what some of the opportunities are. And so in the interest of time, I'll I'll continue to move at a pace, but, of course, we're wanting to for enough time at the end to answer questions. So to remind of those that know the story and and for those that don't, to give you a bit of an overview, our product focus is very much based around combination of two platform technologies. The The first first technology is a portfolio of active ingredients that we have registered in Europe, The US, Australia, New Zealand, and a growing list of countries around the world. Those active ingredients form the basis of our products, which we formulate to achieve different end results. And in doing that formulation, we rely upon our second platform technology.

17:30 That we have branded SUSTAIN, which is a naturally derived yeast based microencapsulation technology that allows us to take our active ingredients, to package them up in products that are easily used by our customers, ultimately by farmers, and that are as effective as conventional chemistry whilst having much more favorable environment health and safety profiles whilst maintaining efficacy because, of course, first and foremost, farmers are concerned that they're gonna be able to continue to produce their crops with the efficiency that they have based on historic use of conventional chemistry. Today, our products fit into four different categories, fungicides, nematicides, insecticides, and seed treatments.

18:17 Fungicide is probably more self explanatory. Of course, that's Mevalon, and that was our first product.

18:23 Second product treats soil dwelling microscopic nematodes, which are worm like creatures, some of which are plant parasites and that affect a very, very broad range of different plants, reducing their yield and overall the the crops crop health. The third product that we've actually brought to market, I'll skip one here, is the seed treatment called EcoVelix. This is the product that was developed in conjunction with Corteva that we have brought to market under a

18:53 temporary approval last year, and we're hoping to do so again this year to repel birds and ultimately increase the yield of the seeds that farmer plants. And then last but not least is the insecticide, which I've mentioned already. That is a product that is coming to the fore in in due course. Ultimately, all of these products are exempt from pesticide residue limits. They're allowed for use in organic agriculture in The EU and several other countries around the world. They can be used right up to the point of harvest, which is a a feature of their safety profile. And, of course, ultimately, they are equally effective to conventional chemistry. Again, a little bit more on the product characteristics, and I'll I'll I'll just leave this out there. This gives you a good impression of how the products are actually competing in the marketplace.

19:48 Again, key for a grower is that the product is effective, but it's also very nice when the product happens to be residue free. Residues are a major issue that growers are having to manage these days with the retailers such as Aldi, Little, and others driving the reduction for elimination of pesticide residues from crops. But, of course, the solution isn't as simple as banning pesticides. If one were to ban pesticides, the ultimate outcome of that would be a significant loss in in yield for farmers and a very strong pressure to increase the dedication of land toward agriculture, which, of course, we know globally is not an ideal outcome. Over to Alex.

20:34 So for each of the products that we've either commercialized or are in the process of commercializing, we've created this table on the right hand bottom right hand side, which just gives an indication as to the sort of revenues we might reasonably expect, to ultimately derive from each product. So when I say ultimately derive, that means that we have registered the product, that we are at peak sales, which generally, with some exceptions, takes

20:58 around three years. So if we look on the left hand side, we have, EDEN sales of mevalone in the Southern EU at around €3,000,000. So we are heading towards that nicely, at the moment. The US is slightly highlighted because, of course, we've only just recently received the, Californian approval, but we can see it's a similar sized opportunity to that, that we see in the Southern EU. Central EU, again, happening now. We have very recently received, or started to receive those approvals as well. So we will, see some meaningful sales as of next year, albeit with smaller sales this year as well, and then the rest of the world just covering some of the other key territories. But overall, we see Mevalone as a €15,000,000 opportunity at peak. And, again, a lot has happened over the past half year, so approvals over the past year or so with the approvals in the likes of New Zealand, which again will start to kick in towards the end of this year, we have many submissions pending in the likes of Brazil, South Africa, Chile, and Argentina. So there's still a lot of value that we can ultimately derive from that product. And just to explain, on the bottom left hand side, you can see the various approvals, the number of approvals, number of crop uses, and the, disease number of disease targets for mevalon. You can see that's increased quite significantly over the past four or five years. That directly equates to our addressable market.

22:20 And so there is then a lag from getting those approvals through and then starting to see the revenue, but they really are starting to kick in, which is why we've seen a nice increase in revenue in the first half of this year. And then if we move on to results, Sean, do you wanna talk about the results? Yeah. Absolutely. Thanks. So the the the key point that we've made a couple of times here, so not to repeat myself too much, is to say that when a farmer goes to look at Mevalone and looks to consider replacing an existing fungicide either voluntarily or because the regulators have taken it away from from the farmer, what they're really looking at is efficacy. And so here in these charts that you can see on the right hand side, these are actually from registration trials. So these these aren't derived from from marketing use. They are actually from datasets that were submitted to regulators to to justify the use of Mevalem in the EU.

23:17 And ultimately, if you look at the first incidence of disease, this is how strongly is the disease present. In other words, what is the incidence of disease and what happens when you don't treat the crop versus what happens when you bring, for example, Mevalon or conventional fungicides to bear. In this particular instance, what

23:35 we're showing is that Mevalon has a positive impact compared to the two conventional products in terms of reducing the incidence of of disease. And then, of course, we we also look at overall control, and and and that's measured by overall efficacy. And what we're seeing here is that, again, very similar to the other control overall with Petrite is versus the two conventional products is there or thereabouts the same. This, again, is a key. And one point I would like to make is that here, we're comparing ourselves to conventional pesticide chemistry. Right? So in some cases, products that sell hundreds of millions of euros per year. And what we're doing is we're we're finding that our performance is at least as good in many, many cases.

24:24 And that that, in particular, is helping us to drive sales as soon as we're able to expand the label. And then this is our second product that we've started to commercialize with Eastman Chemical, who is our distribution partner. They hold the right to sell the product in 29 different countries around the world. Again, we recently received over the last couple of years The US approval and then subsequently California approval as well. So we will, hopefully start to see some meaningful revenue on that front. But overall, we see this as a a similar sized opportunity, so around €14,000,000 at peak, for this product.

25:04 And now that Sean has explained, some of what this data means, I'll just quickly go through this. So this is showing on the left hand side, the severity of root damage. So, again, as Sean explained, nematodes are microscopic worms that live in the soil, and they attack the roots of plants. So in this case, in the graph on the left hand side, what you want is lower number as possible. And so you can see that Sedrose, once again, compares well with the, compared to the the standard product. And on the right hand side, this is about yield, and so it's the other way around. We want a higher number, the better. And then once again, you can see that we're extremely comparable with, the standard product. And then seed treatments again, Sean. Do you wanna Yeah. Just just to give an overview of what seed treatments are and how they work. Ultimately, seed treatment is a coating that's applied to seeds in order to give that seed the best start in life. And these are not simple coatings. They're they're formulations that are put together and involve an awful lot of development work to ensure that they're both safe and efficacious.

26:11 And the a seed dreamer might contain multiple different types of active ingredients or formulated products in order to combat insects, to combat nematodes, to combat fungal disease, to provide additional nutrients or or stimulatory effect on the seeds themselves. The the whole objective here is that what we're trying to do is help ensure that a farmer gets the most out of the seeds that they buy. And you you have to keep in mind that seeds are one of the most important, most expensive inputs that a farmer buys. In fact, I believe outside of labor, it is a farmer's most expensive input. And so what we want is for a farmer to plant a 100 seeds and to get a 100 seedlings emerging out of the ground and developing into plants that are productive and healthy.

27:02 One of the things that gets in the way of that is predation by birds and by other pests. And and it is right to say that birds have are are a long well known problem for farmers, hence, the presence of scarecrows and all kinds of weird and wonderful devices to help reduce bird damage on crops. However, over the course of the last several decades, in fact, it was realized that the application of certain pesticides to seeds can help repel or reduce bird predation. However, more recently, regulators have been banning the use of a good number of these bird repellents on the basis that they are you know, well, they have unfavorable tox and ecotox profiles.

27:52 And so what has been happening in the seed treatment segment is that we have seen the the product that was formerly the incumbent product in Europe used to repel birds was banned outright. That product was replaced by another product, which is also under severe regulatory pressure and has already been banned in a number of countries, including The UK, for example. And those products are being pushed out. And the industry is looking for a solution, and we're very happy to to say say that in working with Corteva, we have been we've identified the opportunity and, in a very short period of time, have developed a completely new approach to repelling birds. If you look in this in this slide and you look in the right hand side there, you see a photograph of what are actually six trial plots that are being run side by side. This photo is from real trials that were run last year.

28:51 And just to illustrate the extent of the damage, the plots that are on either side of that outlined rectangle are looking at various things such as different ranges of EcoVelix concentration applied to the seed, some competitive products, etcetera, etcetera. And the area that's outlined in white is actually a trial plot that was run as a control where there was no bird repellent whatsoever. And as you can see from this photograph, if if there's a presence of very strong bird pressure and no effective bird repellent, what you wind up seeing is a very significant impact on yield. In this particular instance, if this was a a commercial production situation, the farmer would actually have to replant the seed because there's obviously, there's very little there upon which to rely.

29:45 This gives you a quick overview of the EcoVelix bird repellent opportunity for us. And so, Alex, do you wanna talk through the opportunity slide? Yeah. So this is one of the exceptions to the rule because of the drivers that Sean just talked about with incumbent products either having been banned or in the process of being banned or heavily restricted in use. So, overall, we see this as an opportunity that's actually bigger than mevalone and Cedros put together, so around €34,000,000. In The EU, UK alone, we're looking at about €3,600,000 at peak for this particular use. We expect that to be a shorter time frame than three years to peak because of those same drivers. And we're very far through the process of seeking full approval for the product. We've talked about the emergency use authorizations, one of which we successfully received last year, which led to a material sale of product, to Cortiva. So this is a big one for us. We're very excited about it. We've made a good amount of progress, and that's it's been a really good project that we've undertaken with Cortiva.

30:56 Okay. And then in terms of the yeah. A simple summary of 16 trials that we've done with. Again, this one, the bigger the number, the better. So this is showing that we are very much in line with current, which is the incumbent product throughout Europe, albeit under serious regulatory pressure. Okay. And moving right along, we'll highlight some of the opportunities related to the insecticide. So, Alex, do you wanna talk through this slide as well? Sure. So we've talked about the, a bit of the background, what's going on at the moment in terms of all the, trials that we have. As Sean's already mentioned, we've got a number of interested parties, with him. We're at varying, levels of negotiation at the moment, We expect to make announcements on that front towards the end of this or next year.

31:48 We have regulatory submissions starting to be put together as well, so we expect those to be made in the not too distant future. But, again, this is a really big opportunity for us. Again, mainly driven by the the banning or restriction in use of incumbent products around the world, but as is always the case primarily in the EU, which then filters out to the likes of The US and then other other territories as well. But we see this as around a €30,000,000 opportunity for us. And, again, actually, somebody on the q and a is saying that the the sort of percentages that we're looking at in terms of our likely sales versus addressable markets It's quite heavily nuanced, as to why we or how we end up with, what we think we will, be able to sell at peak. This, for example, is a $1,900,000,000 opportunity, and we're talking about €30,000,000 of sales. There are, of course, still significant, levels of generic products in the market.

32:44 There are lots of other alternatives available as well, but the point here is that, we know that there are specific opportunities that we can address, not least the certain pests that we're looking to address as well with our products. And that's been validated through the 280 or more field trials that have been done over the past few years. So it could be that the opportunities for us are even more significant than this, But, initially, this is what we see the the opportunities being.

33:11 Okay. So just talk a little bit about the efficacy of the insecticide and and why we are so confident about the the future for this particular product. Here, we're gonna look at efficacy against a number of different insect targets. And the the key here is that we are targeting a class of insect that is known as sucking insect pests that relates to how the insect feeds. So they they tend to insert a part of their their mouth into the crop, withdraw the the good stuff inside. In the process of doing so, they are spreading disease, and they are also ultimately stressing the crop, which ultimately reduces the yield for that particular crop. In this particular example, here, we're looking at efficacy.

34:01 So a 100% efficacy would be best, 0% efficacy, of course, would be the worst. And, ultimately, what we're looking here are insect pests called spider mites, which are a major pest across a very wide range of different crops, particularly horticultural crops, but not just limited to horticultural crops. And here, we're comparing ourselves against the biocontrol standard. Each of those colored bars represent a different time interval during the trial in which we are evaluating the efficacy. And what we're looking for here is basically increasing efficacy over time until we get far enough away, in other words, fourteen days plus after treatment, increasing control and, of course, control that is equal to or better than the current standard product that's available.

34:50 Here, we're looking at a different life stage. So the the previous slide was looking at spider mite eggs. Here, we're looking at whitefly eggs. So different insect pests, major again, major pests on a very wide range of different crops. And, of course, here, we're comparing ourselves in this slide to biological standards, but also conventional chemical standards. And the the key point here is that, in fact, one of the nice attributes of this product that's a development product here called I n o 20. I n o 20 has very good efficacy against multiple life stages of the insect. And why is that desirable? Well, ultimately, the aim is to reduce the total insect count.

35:35 But as you may or may not know, insects don't grow in just one life cycle throughout the season. There are multiple life cycles ongoing depending upon the pest. And so we we see that the aim is to reduce the total number of pests across the crop. And in targeting multiple different growth stages, we're able to reduce those numbers more effectively over time.

36:01 So moving on to talk a little bit about our overall growth and and growth strategy. A key for us, and I I won't go into all the details here, but a key for us has been to divest diversify our business. If you rewind a number of years ago to when we received the first approval for our first product, Mevalone, that approval was on one disease on one crop. And what that meant was, although it's a significant opportunity, and that's botrytis on grapes, the issue was and will continue to be that if there isn't a strong amount of disease pressure in a given region during a given year, one might not expect to sell as much as you would in a year in which there was a lot of disease pressure. And so divert yeah. In that very simple example, one can see that if we have all of our fortunes tied to one crop or one disease target or one region, we are opening ourselves up to a significant amount of fluctuation year over year. And so as a as a private company, that might be manageable, but as a listed company, we have investors, as you know, who have high expectations, who want to see growth, and who want to see some level of consistency year over year. And so we've been working very, very hard. We've gone from one product, one product category to today, really two and a half commercial products with with a a fourth along the way or a a

37:31 second a half and a and a fourth along the way. And rest assured that our development pipeline is stronger than it's ever been, and we are continuing to work on second generations for existing products and completely new product category development, having a look at some of the bigger opportunities that are out there and available to us in crop protection with a portfolio of products and active ingredients and formulation technologies that allows us to develop industry leading products to replace conventional chemistry as and and when required. We have continued to to grow our team, albeit modestly. We're up to about, in total, about 25 people, just short of 25 people at the moment. Our focus is very much around the development and commercialization of our of our products. And based on our existing technology, this is where we're investing heavily, and this is where we're seeing quite significant progress. It would be absolutely right to say that EcoVelix would not exist had we not invested in internal capabilities to develop and register products and ultimately to commercialize them.

38:44 And, of course, the insecticide also wouldn't exist without that investment that we've made. So we are very much looking forward to further benefits from those investments in the short, medium, and long term. Ultimately, the outlook for growth is very much around an ongoing list of new opportunities. So while we talk a little bit about the label extension for Mevalon, and that might sound to to sort of the untrained ear a bit like more of the same. In reality, we are constantly coming across new opportunities, new applications for our product, even new product, let's say, delivery approaches. Say, for example, using the product in combination with partner products in the market to combat things like resistance or to combat things like increasing regulation and and registration pressures on existing chemistry.

39:42 It seems as if there's an ongoing list of these things, which is only accelerating in reality. And so while we remain very focused on the high priority activities and we can't chase everything down, there is a very long list of new opportunities that are being presented. And, of course, you know, we are always looking five to ten years down the road with regulatory changes and new commercial opportunities coming onto the scene. Downy Mildew is a very good example of that, and and I think I've already touched on this to quite an extent. But just to give you a good illustration of how simply adding two new disease targets onto an existing product label has a substantial impact on the opportunity for, in this case, mevalone, well above and beyond our current addressable market.

40:34 And and, you know, I've seen in some of the questions that have been popping up, and and it's a it's a perennial situation. People will ask reasonably, you know, what's the addressable market for your product? How do you see this fitting in? Unfortunately or unfortunately mostly unfortunately, in our industry, it is a very nuanced answer to to what is, in fact, a question that every investor wants to know. What's the opportunity for this product? So the best way to describe that is if we we break it down to its component parts and we say, what is the market for a dani mildew aside in France, and how can we go after that? So this slide gives you some good illustrations of how we see that part potential wrapping up with a simple label extension for Mevalon and the right commercial partner, Corteva, in France.

41:27 Oops. Sorry. One example that we haven't talked about, one set of real opportunities that we haven't talked at length about at this point is our formulation technology and the opportunities that are associated with the further development of that. To remind you, Sustain is our brand name for a formulation technology that is based on yeast cell walls and the encapsulation of active ingredients. Now we have a portfolio of products increasingly that have been formulated with Sustain that form the basis of our commercial product portfolio. However, as we've said in the past and will reiterate here, we can use this same technology with third party active ingredients.

42:13 And although there are substantial opportunities here, I'll have to say that, you know, some of these projects are rather slow in developing. There's a lot of requirement around demonstrating that a newly formulated product has the same characteristics of the incumbent products. But I'm very happy to tell you that there remains a significant interest in this, and we've recently made a few changes in the lab to allow us to pursue these activities with a bit more resource behind us and hopefully giving us the opportunity to accelerate the development of products based on third party active ingredients based upon our sustained formulation technology. And to remind you, the issue behind this opportunity is primarily the removal or restriction of the use of microplastics in crop protection and a wide range of other markets where microplastics had previously been used to encapsulate active ingredients.

43:12 Will no longer be allowed in a number of years in The EU, in less than five years in the EU. And what that means is that alternative encapsulation technologies have real opportunities, and I look forward to providing more information on this one as and when we're able to do so. And that effectively wraps up the presentation. I think we can move on now to a series of questions that we've received. I think maybe we'll just try to tackle a few of these, and I'll I'll I'll read these off to Andrew or Alex will read some of these off to you. Andrew asked a question on the application to the ESSA for the renewal of EDEN's three active ingredients. Is this a standard thing? And and the answer in short is yes.

43:59 Registered pesticides and active ingredients in the EU must be renewed every ten to fifteen years. So we are going through a standard process of renewal for our portfolio of three active ingredients now, and we will then move on to the renewal of each of the formulated products across the EU as well. Fortunately or unfortunately, this is these are the rules that we have to play by. And the the one point I will make here is that it actually does provide us with an opportunity to keep some newly generated data as confidential, thereby helping us to extend our favorable position when it comes to product registration in The EU. Alex, you wanna take one?

44:44 Yep. So we have one. Syngenta says it takes ten years and $300,000,000 to bring in new pesticide to market effectively valuing that successful product developed at 300 plus million dollars. What value does EDEN place on its successfully developed biopesticides at the same point in time? So regulatory approval presales. That's quite a big question. It's a very nuanced answer, I'm afraid. There's obviously inherent value in our portfolio of ingredients, of which Sean's just mentioned we have three, not least because it forms the portfolio of products that we have either already commercialized or under development. Each of those products has its own inherent value as well depending on the market opportunity. And, again, we've been through some of those numbers to give an idea as to what that might look like. It really depends on a number of things.

45:31 The $300,000,000 does pertain to, synthetic traditional chemicals. They generally take around ten or twelve years, I think it actually is, to get to market. We have spent a lot less, to get our three actors registered in The EU, The US, and other parts of the world, as well as the the products. We've spent around 20 or so million, sterling to get to the point that we are today. So you could look at it in terms of cost. Cost isn't, of course, necessarily the same as value. The the industry is absolutely placing a lot more value on biopesticides. The the market for our products is very significantly different to ten years ago where the demand was very little. None of the bigger players in our industry were particularly interested ten or fifteen years ago in biopesticides or biorationals or bio anything else.

46:18 So it is a a a changing picture all the time, to our benefit, as to what we see value wise. Ultimately, I think it depends on, how how good a job we do and how much sell we of our products. And at the moment, things are going well, and we're growing as we would hope and expect. Great. I'll take I'll tackle a couple more here. One is would you be researching sugar beet flea beetle solution? We we are looking at opportunities on sugar beets. Those are actually aphid related rather than flea beetle related. But there is a very significant opportunity for our insecticide to help control aphid infestations on sugar beets. And you you may or may not be aware that it was the banning of neonicotinoids across the EU and ultimately has translated into The UK that caused farmers a lot of grief. And in fact, there's been a lot of political discussion, really, around ongoing emergency authorizations for neonicotinoids in The UK to help control the aphids that are infesting sugar beets.

47:32 Yes. This is something that's of interest. It is one of the targets for our insecticide. We are looking at this quite actively at the moment. And I am happy to say that in general, we have pretty good activity against aphids. They are a notoriously difficult pest to target, and yet under the right conditions and right use conditions, we do see some good activity. Another one here. As you continue to receive approvals for your formulations and orders come in, what are your manufacturing capabilities like? So some of you may not be aware, but we we rely on contract manufacturing network of producers that are capable of producing our product. Historically, we've maintained two qualified contract manufacturers at all times.

48:21 Within the last year, we've actually doubled the number of contract manufacturers that we have qualified to produce our products. And as we continue to learn more and build capabilities within our team, we're raising the standards all the time in terms of what we we require from our contract manufacturing partners. Today, we have four qualified contract manufacturers across The UK and Europe. We have, in the past, qualified contract manufacturing in The US, and we'll do so again as and when the case requires it. So in terms of manufacturing cape capacity, we're we're not particularly concerned about that. Our products are one of the nice attributes about them is that they're not particularly complex to manufacture.

49:07 It's also one of the nice attributes is that they're not particularly complex to use. There's a lot of know how behind it, but we have maintained and developed that know how, and we can transfer that know how to third parties as and when is necessary. Another one here is is the cost of our products deterring buyers? That that's a really good question. When we are targeting horticultural crops, in other words, specialty crops, we are positioning our product to value. So we do have the ability to compete on price. But quite often, we choose the segments in which we're able to command a premium for our product or where we operate at the premium end of the market, and we'll continue to do so.

49:55 You know, we are taking flexibility to pursue opportunities, new opportunities through price reductions as and when that's appropriate, when the business case makes sense. But as a default position, you know, our our mantra remains price to value. But the interpretation of what pricing to value means is different for each segment of the market that you might pursue. So apologies. It's a little bit of a complex answer, but where we have the need to compete on price, we can do so. And where we want to look for margin play, we can do so as well based on the attributes of the products. So I have another question saying EDEN's revenue grew 65%, but margin dropped from 37 to 31. What factors might explain this, and how can EDEN improve margins while growing? So, yes. You're right. We grew by 65%, which we're very happy with. The gross margin, we're obviously less happy with. The reason for that, as I mentioned earlier, is primarily the, product mix. So we of our three commercialized or two at least fully commercialized and then EcoBellix sold under emergency use. They have very different margins, even just amongst those three.

51:04 So it's partly that. Sean also mentioned a minute ago about the fact that we've taken on a third manufacturer. There have been some one off costs that we have also taken on board in the first half of the year. So that has also been included as a cost of sale, and so that also contributed to the the drop in margin. How can we improve margins while growing? Well, economies of scale, certainly, we have seen better pricing on the raw materials that we buy in, of course, because we're buying more and more as we grow. So that's one of the things that we can do. And, also, having three toll manufacturers now means that we have a competitive environment. So we do look to try and reduce costs wherever we can. And in terms of the selling prices as well, it's set pretty much year on year, in some cases, for longer than that. But, of course, as you would hope and expect when we're looking at our customer forecasts, then we always look to negotiate the best pricing that we can get.

52:00 Right. And then I think perhaps the last question, unless there are any more that pop in, are there any opportunities for your fungicide or nematicide to be used as seed treatments? It's a very good question, and the answer is yes. You probably caught as the basis of your question that our active ingredients, depending upon how they're formulated, can have nematicidal, fungicidal, insecticidal, and repellent properties associated with them. You know, seed treatments are very complex mixtures, as I mentioned earlier, but there certainly should be an opportunity to formulate these products in such a way that they bring fungicidal and or pneumaticidal and or insecticidal benefits to seeds themselves. Right now, we are very focused on bringing the bird repellent EcoVelix properties to the market, working with Corteva initially on maize. But what I will say is that we've also seen some really significant benefit on sweet corn as well. So this is not forage maize, but but sweet corn for human consumption, which is, believe it or not, quite a different crop.

53:09 And the ultimate benefit of that was very, very clear. EcoBellix is very clear, very strong benefit to growers of sweet corn. And as it turns out, birds happen to love sweet corn. So we have some very positive aspects there. And for future development, looking at additional attributes associated with the product to broaden the appeal of the product on related and new crop targets such as sunflower, etcetera. Perfect. Sean, I'll let you so much jump in then. Thank you for answering all those questions from investors. Of course, the company can review all the questions submitted today, we'll publish those responses on the investor meet company platform. Just before redirecting investors, provide you with their feedback, and it's particularly important to you both. Sean, could I just ask you for a few closing comments? Yeah. Absolutely. Well, first of all, thank you everybody for your time and for your interest and and for following the story. It is important to us that our story is is understood and that we've communicated effectively, and so, you know, thanks as always for your feedback and questions.

54:09 You know, we are today a very different entity than we were even a year ago. The opportunities in front of us continue to to unfold, and we continue to make good progress. And and whilst, you know, watching the kettle boil sometimes feels like it takes a very, very long time, We are quite encouraged by as we look back even over the last three years, how much progress we've made, not just with new products, but with existing products, and and how much our capabilities have grown over that same period of time. So thank you. I I hope the story I believe the story will continue to get stronger and more interesting. We are very much looking to a world in which the pressure on conventional pesticides increases and creating more opportunities for us. And, yeah, thank you very much again.

55:01 Sean, Alex. Thank you once again for updating investors today. Can I please ask investors not to close the session? That should now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. This then take a few moments to complete, but some should be greatly valued by the company. On behalf of the management team of EDEN RESEARCH PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.