Half yearly Report

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

23 September 2024

Eden Research plc

("Eden" or "the Company")

Half Yearly Report

Eden Research plc (AIM: EDEN), a leader in sustainable biopesticide and biocontrol technology, announces its interim results for the six months ended 30 June 2024.

Financial highlights

· Revenue for the period of £1.9m (H1 2023: £1.1m)

· Product sales of £1.7m (H1 2023: £1.1m)

· Operating loss for the period of £1.3m (H1 2023: £1.2m)

· Cash and cash equivalents of £4.9m (H1 2023: £0.5m)

· On track to meet 2024 market expectations for revenue and operating loss

Business highlights

Expanding regulatory approvals in key territories, including the US, new commercial agreement, and new product areas

· Authorisation for Mevalone® received in the key state of California

· Mevalone® authorised for use in new crops and fungal pathogens in Spain

· 140 insecticide field trials run by potential distribution partners so far in 2024, following significant interest in the evaluation of Eden's developmental insecticide

· Authorisation for Mevalone® received in Germany and Czechia (post period-end)

Corporate highlights

Strengthening of the Company's financial position and team to allow the business to grow apace

· Eden named ESG Company of the Year at the prestigious 2024 Small Cap Network Awards in recognition of its commitment to environmental, social and governance matters and contribution to the green economy

· Appointment of Derek McAllan as Non-executive Director and Chairman of the Audit Committee

· Strengthening of the Commercial Team with the appointment of Humair Tariq as Global Commercial Lead and Daniel Mulas Garcia as Global Product and Marketing Lead

Lykele van der Broek, Chairman of Eden Research, commented:

"Eden continues to grow, as evidenced by increased sales of 65% compared to the first half of 2023 and product registrations received across target geographies. To support this growth and ensure the business can capture its significant future potential, we have expanded the team in the first half of the year, welcoming Humair Tariq as Global Commercial Lead, Daniel Mulas Garcia as Global Product and Marketing Lead and Ilshad Moulan as Head of Regulatory Affairs. We were also delighted to appoint Derek McAllan as Non-executive Director and Chairman of the Audit Committee.

In the background, the Company is working flat out developing novel formulations and commercialising products in order to fully exploit the vast bank of intellectual property and expertise that Eden has created over the past four years in particular, since it opened its laboratory facilities in mid-2020.

Be in no doubt, the potential for Eden is huge.

Aside from having a great team and a strong product portfolio, Eden is very much in the right place at the right time.

Regulators continue to restrict, or ban, existing chemistry, whilst at the same time making it increasingly difficult for new active ingredients and products to come into the market with ever-increasing regulatory requirements.

Farmers continue to demand choice and flexibility in their use of pesticides with an ever-reducing set of tools available to them, due to the diminution of old chemistry.

Consumers and supermarkets are increasingly demanding residue-free, organic produce, which Eden can help growers to deliver.

All of this means that demand for products like Eden's will continue to increase, something which is backed up by market forecasts that predict a Compound Annual Growth Rate of the global biopesticides market of 15.9% over the next seven years.

I remain very confident in the future success of Eden and would like to thank our shareholders for their continued support and belief in us."

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Chief Executive Officer's Statement

The first half of 2024 was characterised by strong regulatory momentum, including a number of significant approvals in key geographies, and also the expansion of our team to increase our capacity to capture future opportunities. These efforts have enabled us to meet our growth objectives, supported by increased product sales across our existing portfolio and our commercial partnerships with some of agriculture's largest players.

Financial performance

Revenue for the period increased by 65% to £1.9m from £1.1m in H1 2023, of which product sales made up £1.7m (H1 2023: £1.1m).

The Operating loss for the period was £1.3m, a slight increase on H1 2023 when it was £1.2m. This was a reflection of a reduction in gross margin (31% in H1, 2024 vs 37% in H1, 2023), as well as an increase in staff costs as the Company increased its headcount of both commercial and laboratory staff.

At 30 June 2024, Cash and cash equivalents stood at £4.9m, up from £0.5m at 30 June 2023 following completion of the last fundraise in the second half of 2023.

In the twelve months to 30 June 2024, Eden has invested £2.3m in intangible assets including development and regulatory costs.

Overall, the Company is pleased to report that it is on track to meet its 2024 market expectations for revenue and operating loss, the key financial metrics of the business.

Expanding territorial reach, growing the label

With the industry's regulators creating high barriers to entry, our approach to regulatory affairs and approvals is integral to Eden's growth proposition and offers a great potential reward to investors willing to back our innovative technology. Despite the high regulatory hurdles and long lead times for adoption, we have recently managed to successfully gain important approvals which expand both the geographies and the range of crop applications and addressable markets.

2024 began with the welcome news of regulatory authorisation for Mevalone® in California. To put this one approval into context, California is the US's largest wine region, accounting for approximately 84% of the nation's total production and, in comparison with the rest of the US, has much stricter agricultural regulations geared towards sustainable farming practices. Given the timing of this regulatory approval, we have been able to commence distributing to grape growers across the state via our commercial partner, Sipcam. We expect to make meaningful revenues in 2025 as we continue to develop the commercial and marketing strategy.

In June, Eden received notification from the Spanish regulators that Mevalone, marketed as Araw® in the region, had received a label expansion to include 22 new crops on 4 new fungal diseases. This newly expanded label makes our biofungicide one of the most versatile and reliable solutions available to Spanish farmers to prevent fungal diseases in many crops under both organic and conventional agriculture. The new approval extends to a large number of high-value crops that weren't previously on the label, but most notably, includes almonds which are the third largest tree crop in Spain after olives and grapes. Furthermore, Spain boasts the largest cultivated area of almond trees in the world and ranks third in terms of overall production.

Post-period end in August, we were delighted that Mevalone received regulatory authorisation in Germany, applicable for use on grape vines to control Botrytis and apples to prevent storage diseases. Germany is widely considered in the biocontrol markets as one of the strictest regulatory environments across the EU and more broadly, and our regulatory success here is a great validation of the strong efficacy of our product, as well as its flexible and environmentally friendly qualities.

In September, Cedroz was granted, according to Reg. EU/1107/2009, a temporary approval in Greece for use on potatoes against wireworms for the 2024 growing season.

New products, same technology

Eden's development pipeline remains active across a number of different projects, all using the same proprietary terpene technology and underlying microencapsulation technology, SustaineÒ. These products are based on a desire to replace, or work alongside, conventional pesticide chemistry with plant-derived alternatives. We have the capacity, capability, and flexibility with our in-house laboratory facilities and team to be able to adapt our development to meet the demands of the industry and to also pursue new market opportunities as they arise.

This in-house expertise has allowed us to accelerate the development of our new bioinsecticide which would have otherwise been a much longer process had we needed to contract the work. In June, we announced encouraging results of our new bioinsecticide which has involved more than 30 laboratory trials and more than 140 field trials conducted in Europe and the United States. Results show strong efficacy against all life stages of key pests such as aphids, spider mites and whiteflies and demonstrate equivalence or superior performance when compared with registered biological reference products produced by some of the world's leading biochemical companies.

Eden is now working towards regulatory submissions of our new bioinsecticide in the US and Europe, which we anticipate will happen in 2024 and 2025, respectively. Subject to authorisation, first sales of the product could be achieved as early as 2025 in the US, given our active ingredients have already been registered at a federal level.

We are also working towards including downy mildew on the Mevalone label for the first time with an application already submitted in France. With key competitor products being removed from the market, or in some cases, already withdrawn, we see a significant opportunity to address an unmet need. We anticipate a positive verdict in early 2025, subject to regulatory timelines.

Strengthening our team

Driving sustainable innovation through the development of new products using our unique, patented technologies is a fundamental aspect of creating value for shareholders. Since our move to Oxfordshire in 2020, we have benefited tremendously from the ability to bring our biopesticide and biocontrol development in-house and accelerate timelines that would have otherwise been significantly slower. To continue to accelerate growth, we have elected to make key hires across specific mandates.

The first of these key appointments came in June 2024, when we appointed Humair Tariq as our Global Commercial Lead. Humair joined Eden from Syngenta where he spent the past 12 years working across a number of remits across the firm's pesticide division. Humair assumes a new role which is specifically dedicated to fostering the Company's existing partnerships, developing new relationships with potential partners, and driving revenue growth through both the expansion of our existing business and the pursuit of new opportunities.

Since the end of the first half, we are also pleased to welcome Daniel Mulas García as the Company's new Global Product and Marketing Lead. Daniel holds a wealth of industry experience from his time working as a product manager of biostimulants and biocontrol for one of Eden's most important commercial partners, Sipcam Oxon. Daniel's focus at Eden is on ensuring that our current and future products are well-aligned with the needs of farmers in an ever-changing regulatory and commercial environment, as well as maximising revenue growth through the pursuit of ongoing expansions of the Company's product portfolio.

Finally, Ilshad Moulan joined Eden as our new Head of Regulatory Affairs last month. Ilshad worked at a specialist product registration consultancy where he led a team of nine, focusing on regulatory affairs. Ilshad succeeds Dr Mike Carroll who will retire at the end of a handover period. Mike has served as Eden's first-ever regulatory leader and played a key role in not only establishing Eden's in-house regulatory capabilities but also in successfully securing the many regulatory authorisations the Company now holds.

At a Board level, we saw the appointment of Derek McAllan as a new non-executive director and Chairman of the Audit Committee. He takes over from Robin Cridland who has undertaken this duty for the past nine years. Robin continues to advise the Board in his capacity as a non-executive director. At the start of the year, we also saw the departure of Richard Horsman who stepped down as a non-executive director following an 18-month stint, during which he made significant contributions to the Company at a pivotal time.

Outlook

We anticipate the remainder of the year will provide plenty of reasons for excitement. Eden is exploring various options to reintroduce its sustainable seed treatment, Ecovelex, on an emergency authorisation basis following success in Italy in 2023. We anticipate full Ecovelex authorisation in the EU in 2025. We are also looking into the potential for deploying Ecovelex on other grain and cereal crops such as sweetcorn.

On the regulatory front, Eden is working closely with Sipcam towards submitting regulatory applications for Mevalone and Cedroz in new frontier markets such as Argentina, Brazil, and Chile. We expect to update the market with our progress in due course.

Ahead of the launch of our bioinsecticide, we expect to appoint a commercial partner to help prepare the product for regulatory submission in the coming months. This has been a highly competitive process which has so far involved more than 11 potential partners covering a range of global opportunities.

I'd like to take this opportunity to thank our team for all their effort so far this year in what has been a very busy period for the Company. I would also like to extend my gratitude to all our shareholders and the Board for their continued support.

Sean Smith

Chief Executive Officer

20 September 2024

Eden Research plc - Consolidated Statement of Financial Position as at 30 June 2024

Eden Research plc - Consolidated Statement of Changes in Equity as at 30 June 2024

Eden Research plc - Consolidated Statement of cash flows for the six months ended 30 June 2024

Cash and cash equivalents comprise bank account balances.

Notes to the Interim Results

1. Reporting Entity

Eden Research plc is a public limited company incorporated in the United Kingdom under the Companies Act 1985. The Company is domiciled in the United Kingdom and is quoted on the Alternative Investment Market (AIM).

These condensed consolidated interim financial statements ('Interims') as at and for the six months ended 30 June 2024 comprise the Company and its Subsidiaries (together referred to as 'the Group'). The principal activities of the Group are the development and commercialisation of encapsulation, terpenes and environmentally friendly technologies to provide naturally occurring solutions for the global agrochemicals, animal health, and consumer product industries.

2. Basis of Preparation

These Interims have been prepared in accordance with IAS 34 'Interim Financial Reporting' and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2023 which were approved by the Board of Directors on 2 May 2024 and have been delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

The Interims do not include all of the information required for a complete set of financial statements prepared under UK-adopted International Accounting Standards and do not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

Comparative information in the Interims as at and for the year ended 31 December 2023 has been taken from the published audited financial statements as at and for the year ended 31 December 2023. All other periods presented are unaudited.

The Board of Directors and the Audit Committee approved the interims on 20 September 2024.

3. Going Concern

The Directors have, at the time of approving the Interims, a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the approval of the financial statements. Thus, the Interim financial statements have been prepared on a going concern basis which contemplates the realisation of assets and the settlement of liabilities in the ordinary course of business.

The Group has reported a loss for the first half of the year after taxation of £912,881 (H1 2023: £5,876,058). Net current assets at that date amounted to £6,440,728 (H1 2023: £757,716). Cash at that date amounted to £4,947,303 (H1 2023: £492,766). The Group is reliant on its current cash balance to fund its working capital.

The Directors have prepared budgets and projected cash flow forecasts, based on forecast sales provided by Eden's distributors where available, for a period of at least 12 months from the date of approval of the Interims and they consider that the Company and Group will be able to operate with the cash resources that are available to it for this period. 

The forecasts adopted include only revenue derived from existing contracts. They do not include potential upside from on-going discussions and negotiations with other parties not yet contracted, as well as other 'blue sky' opportunities.

In addition, the Group has relatively low fixed running costs and, while mitigating actions are not forecast to be required to support the going concern basis, the Directors have previously demonstrated their ability to postpone certain other costs, such as Research and Development expenditure, in the event of unforeseen cash constraints and are willing and able to delay costs in the forecast period should the need arise.

Furthermore, in July 2023, Eden completed a firm Capital Raising of £1.1 million and Retail Offer of £0.4 million (July 2023) together with a Conditional Capital Raising of £7.9 million, all before expenses.

Consequently, the Directors are confident that the Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the half year report and therefore have prepared the half year report on a going concern basis.

4. Adoption of new and revised standards and changes in accounting policies

These condensed consolidated Interims have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2023.

The accounting policies have been applied consistently for the purposes of preparation of these condensed Interims.

5. Principal risks and uncertainties

The Company's prime risk is the on-going commercialisation of its intellectual property, which involves testing of the Company's products, obtaining regulatory approvals and reaching a commercially beneficial arrangement for each product to be taken to market. This is measured by comparing actual results with forecasts that have been agreed by the Company's Board of Directors.

The Company's credit risk is primarily attributable to its trade receivables. Credit risk is managed by running credit checks on customers and by monitoring payments against contractual agreements.

The Company monitors cash flow as part of its day-to-day control procedures. The Board considers cash flow projections at its meetings and ensures that the Company has sufficient cash resources to meet its on-going cash flow requirements.

Due to the nature of the business, there is inherent risk of infringement of Eden's intellectual property rights by third parties. The risk of infringement is managed by taking (and acting on) the relevant legal advice as and when required.

There is also inherent uncertainty surrounding the regulatory approval of products in terms of both timing and outcome. This risk is managed by retaining appropriately experienced staff and contracting with expert consultants as needed.

Full details of the principal risks and uncertainties can be found in the Strategic Report in the Company's 2023 Annual Report.

6. Ukraine

Eden does not currently have any business activities in Russia or Ukraine and, as such, has not experienced, nor does it expect, any direct impact on its business.

The knock-on effect of the conflict on other countries is still being understood, though we do not envisage significant disruption to the current business in the short term.

7. Earnings per share

Loss per share - basic has been calculated on the net basis on the loss after tax of £912,881 (30 June 2023: £5,876,058, 31 December 2023: £6,491,936) using the weighted average number of ordinary shares in issue of 533,352,523 (30 June 2023: 380,912,474, 31 December 2023: 420,921,123).

Diluted earnings per share has not been presented as the Group is currently loss making and as a result, any additional equity instruments have the effect of being anti-dilutive.

8. Reconciliation of loss before income tax to cash used by operations

9. Intangible assets

Impairment review

Full details of the impairment review and subsequent charge in 2023 can be found in the Company's 2023 Annual Report and Accounts.

Given that the Company has recently completed an impairment review as part of its 2023 audit and since there have been no indicators of impairment subsequent to that, as well as positive events, such as the authorisation of Mevalone in California, Germany and Czechia, and label extension for Mevalone in Spain, the Board is satisfied that an impairment review is not required at this point.

The Board will continue to assess the carrying value of its intangible assets on a regular basis to check for any indications of impairment.

10. Investment in associate

11. Subsidiaries

Non-controlling interests

The following table summarises the information relating to the Group's subsidiary with material non-controlling interest, before intra-group eliminations:

12. Property, plant and equipment

13. Right of use assets