Eden Research plc (AIM: EDEN), the AIM listed company that develops and supplies breakthrough biopesticide products and natural microencapsulation technologies to the global crop protection, animal health and consumer products industries, is pleased to provide the following unaudited trading update for the year ended 31 December 2018.
The Company has delivered a pleasing year of growth with revenue for the year expected to be in the region of £2.8m, up 48% from £1.9m in 2017, with a loss before tax of approximately £1.0m (2017: loss of £0.8m). Statutory operating loss is expected to be c.£0.9m (2017: loss of £0.6m). Operating profit, excluding share-based payment charges, exceptional royalties refund and amortisation, is expected to be c.£0.02m (2017: loss of £0.6m). The majority of revenue was product sales which doubled in 2018 to c.£1.6m from £0.8m in 2017. The balance of the revenue in 2018, being c.£1.2m, was made up of upfront, milestone and other payments and royalties (2017: £1.1m). The Group's cash position remains strong with cash at the year-end of c.£2.5m (2017: £3.7m).
In December, the Company's commercial partner, Sipcam Oxon SpA ("Sipcam"), exercised its option over the exclusive distribution rights in all ten countries covered under the 2017 Evaluation and Option Agreement, for which a fee of €0.9m (£0.8m) has been paid to Eden. As a result, Sipcam will be the exclusive distributor of Eden's fungicide product, known as Mevalone, in twelve countries including Italy, Spain, USA, China, Brazil and Japan.
During the year, Eden made an application to the US Environmental Protection Agency (EPA) for the regulatory approval of Mevalone, Cedroz (a nematicide product being marketed by our partner, Eastman Chemical) and three active ingredients in the USA. The EPA's scientific reviews are expected to be completed before the end of 2019. The USA is the largest market in the world for crop protection products and is a major producer of grapes, and the addition of this important country to our commercial footprint is expected to contribute meaningfully to the Company's revenue in the years to come. Now, with commercial partners in place, we only await the regulatory clearance before sales can commence. Additional product commercialisation opportunities for new products are expected to be possible once approval of the three active ingredients is granted.
Given the considerable importance of regulatory approvals to the growth of the Company's business, Eden submitted its application for authorisation of Mevalone in Australia and received approval for authorisation in the Republic of Macedonia. Furthermore, Eden's partner, Eastman, is actively pursuing registration of Eden's second product, Cedroz, in a total of 29 countries. Initial authorisations are anticipated in 2019, but the precise timing is subject to the successful completion of the regulatory review process in each country.
On 10 October 2018, the Company announced that TerpeneTech, Eden's associate company, had received regulatory clearance to sell its head-lice product in the European Economic Area. TerpeneTech is now working with its distribution partner to launch that product in the U.K. in 2019. TerpeneTech is also actively working to establish distribution partners in new territories including elsewhere in Europe and also the United States.
The launch of animal health products in the USA by Eden's partner, Bayer Animal Health ("Bayer"), has been delayed due to a recently-identified need for additional formulation work on one of the three initial products Bayer has developed. It is now anticipated that the launch of these products will take place in 2019, subject to successful completion of the additional formulation work. Bayer and Eden are working closely together to expedite matters.
Sean Smith, Chief Executive Officer of Eden, said: "2018 showed continued growth in the sale of Mevalone in southern Europe despite low disease pressure attributed to another hot, dry summer. We are encouraged by the doubling of Mevalone sales during the year as this reflects the increasing acceptance of Mevalone in the market, the optimised product positioning initiated by our partners and its adoption and continued use by growers.
The opportunities in Eden's core crop protection business are growing well. In addition to the products that Eden has developed and is commercialising through its partners, there are a number of pipeline products which are in the process of being tested by potential partners including several candidate insecticide products which would represent our first entry into the insecticide segment. Whilst it is early in the development of these formulations, initial results have been encouraging.
Sustaineä, Eden's patented, natural micro-encapsulation technology, is being evaluated by an increasing number of parties, including Sipcam, on a large and growing number of active ingredients used in crop protection. This technology represents significant medium-term potential for the Company, and we are pleased with the attention it is receiving in the hands of current and new collaborators.
We are pleased with the overall performance of the business in 2018 and believe that we have established an excellent platform from which we can continue to grow both in 2019 and, importantly, the medium and long term."