TyraTech, Inc., a natural life sciences company, today provides the following trading update to its shareholders.
2011 Product Sales
Terminix, the Company's primary commercial partner in the North American insect control market, has recently informed the Company that it is currently in the process of re-calibrating its product strategy and that is has suspended distribution of the Company's SafeShield product to its customer base. The Company has been informed that this was not a product performance-related decision. Due to slower than expected product sales and distribution through the established channels and markets, Terminix has informed the Company that it is working down inventory levels of the Company's other products prior to recommencing orders of these products. TyraTech believes that Terminix is not meeting its contractual obligations under the current agreement and has informed Terminix accordingly.
Due to these factors, the Company intends to re-negotiate the terms of its current seven year contract with Terminix, originally signed in October 2010. The Directors of the Company believe these re-negotiations have the potential to strengthen the Company's position in the professional pest control, institutional and consumer marketplaces.
As a result of these unexpected developments, the Company now estimates its total revenues for the year ending 31 December 2011 to be approximately US$7.0 million and its year-end cash position to be US$0.8 million. However, the Company continues to expect pre-tax losses to be approximately US$2.8 million in line with market expectations. The Company expects that these events will also impact its 2012 revenue and operating results and at this time is seeking greater clarity from Terminix as to the likely demand for future orders.
Product Development Pipeline
During 2011, the Company continued its strategy of expanding its product pipeline and widening its market opportunity. The Company considered this a priority in order to mitigate the risk inherent in being reliant on a single market or customer. This included advancing product development programmes in each of the Company's three key areas of focus - Insect Control, Human Health and Animal Health as well as beginning to expand the geographic reach of its products.
Over the past twelve months, the Company has continued to develop its pipeline of products across a range of commercial segments. The pipeline now includes eighteen products at various stages of development, with several entering the registration process in the short-term. Because of the rapid registration pathway for the Company's products, the Directors expect that several of these products are in a position to begin generating revenue within 2012, subject to the Company's ability to raise adequate funding to support its product development efforts. These additional products will allow the Company to diversify its product offering and customer base, reducing its dependence on Terminix. This strategy has resulted in the availability of new products for the human personal care and animal health markets in particular.
TyraTech continues to expand its natural insect control products and markets. In 2011, the Company delivered four new products to its North American Insect Control partner, Terminix, resulting in US$1.4 million of milestone payments to the Company. Further, the recent registration of the Company's aerosol products in Germany and France and the hiring of its head of European operations are the first steps towards the launch of the insect control product line in the European marketplace. As part of its global market push, the Company will continue to register additional products in key countries within Europe. The Company's current portfolio includes ten products within the institutional and professional pest control segments which are in the commercialisation stage, and a number of products in the consumer pest control segment which are in the process of product registration. These product lines feature TyraTech Nature's Technology®, the Company's proprietary natural technology platform. The Company is currently in discussions with global market leaders in order to distribute these products in the European market.
In order to further expand its insect control offering, the Company has two early stage development programs. The first is a floor and surface repellent for retail and institutional markets.
The second is through TyraChem, the Company's joint venture with McNeel International. This venture is focused on developing innovative insect control and repellency platforms that incorporate TyraTech's Nature's Technology® in plastics. These plastics would have applications in the agriculture, commercial, institutional and consumer retail markets.
Human Health & Wellbeing
The Company is focused on three areas:
- Human Functional Food to control the level of harmful intestinal parasites: The Company has a strategic partnership in the human health market for the development of functional foods with Kraft Foods. Results of the technology have been promising and we are identifying ways in which to accelerate the monetisation of the value of this project.
- Head & Body Lice control: The Directors believe that the recent announcement of the engagement of Destum Partners to assist the Company in seeking partners for its head lice product is an excellent example of the Company's commitment to bring a wide range of novel products to the marketplace. The Company is excited about the most recent results of its in-vitro lab tests of its product on synthetic-resistant head lice. These tests indicate that the Company's natural product, TyraTech Nature's Technology®, has superior efficacy as compared to leading synthetic products currently in the marketplace.
- Personal Repellents: The Company is developing a range of personal repellents featuring TyraTech Nature's Technology® to meet the unmet global need for safe and highly effective alternatives to the synthetic products currently on the market.
The Company is developing several products for both the companion and production animal markets, a number of which are in the process of product registration. Discussions have begun with several global market leaders for each of these segments of the market.
In Animal Health the Company is focussed on:
- Companion Animal - TyraTech's companion animal product pipeline includes products to kill and repel flea and tick infestations in dogs and cats. The Company has also developed and is in the final steps of registration of a highly effective and uniquely safe product to control and repel horse flies. In addition to this, the Company is developing functional foods to control intestinal parasites in dogs and cats.
- Production Animals - The Company's pipeline also includes products to treat production animal premises (e.g. chicken houses for Darkling Beetle) and also the birds themselves for mites and lice. Additionally, the Company is developing a product for the control of internal parasites in pigs and has started studies in anthelmentic resistant intestinal parasites in horses.
As a result of the shift in demand which has occurred with Terminix, the Directors have determined that the Company will require additional funding in order to adequately capitalise the business so that it may continue to develop the line of products currently in its pipeline whilst continuing the re-negotiations of the current contract with Terminix. The Directors are presently evaluating the Company's funding options and will update the market on both this and the discussions set out above, as required.
The Directors of the Company remain positive about the Company's medium and long-term prospects due to the potential of the Company's technology, as evidenced by the breadth and depth of its product development pipeline and the continued interest in its products from high calibre partners.