SMALL CAP IDEAS: Eden Research could be pick of the crop after inking Corteva deal
The focus of crop science on protecting plants from seed to harvest is changing as it faces environmental and regulatory challenges.
Key among them is the issue of polymer-based coatings used to preserve and protect seeds that are adding to the microplastics problem.
Two years ago, the European Union initiated restrictions on the use of these tiny pollutants in cosmetics and most experts believe the agri-sector has no more than five years before it is subject to similar strictures.
Crop science is preparing for a regulatory crackdown on microplastics
And while this appears to give the industry some leeway, one should remember that once a replacement for traditional encapsulation technology is found, the whole process of registration and field trials kicks in, adding at least two years to the process.
Bearing that in mind, it shouldn’t be a surprise to learn that the world’s largest chemicals businesses are casting around for ready-made solutions.
It also explains why Corteva Agrisciences, the American giant valued at US$21bn, has teamed up with a UK small-cap that appears to have cracked the microplastics problem.
Eden Research PLC’s (LON:EDEN) Sustaine encapsulation technology is free from plastics, is derived from a natural source, and is suitable for use with both sustainable biopesticides and conventional synthetic pesticides.
Indeed, it is this technology that has enabled the commercialisation of Eden’s own biopesticides, which are used to protect grapevines and various other crops.
On January 8, Eden revealed it had signed a one-year exclusive evaluation agreement with Corteva – the former’s first foray into the seed market.
While the exact details of the evaluation haven’t been released, Eden chief executive Sean Smith confirmed Sustaine would be used on a ‘significant crop’.
Success would provide a big commercial kicker. That’s because Corteva, a combine of the agri-assets of Dow Chemicals and DuPont, would then assume exclusive distribution rights in the EU, Russia, Ukraine and Turkey.
According to CEO Smith, there are other, more big wheels from the world of plant science talking to Eden about its terpene-based products.
It already has two products on the market, Mevalone (a bio-fungicide) and Cedroz, which protects against soil-based pests called nematodes.
Its existing partnerships with industry big hitters such as, Eastman, Sipcam Oxon and SumiAgro have opened the doors to deals in Mexico, Portugal, Italy and the Benelux countries to name a few.
But, as the company’s broker Cenkos pointed out, the Corteva tie-up brings with it a certain cachet.
‘We see this agreement, following positive field trials, as a strong endorsement of Eden’s Sustaine technology,’ said analyst Chris Donnellan.