Last checked at 16 Jul 2018 07:00
16 July 2018
PLANT HEALTH CARE plc
("Plant Health Care" or the "Company")
Trading Update
Plant Health Care®, a leading provider of novel patent-protected biological products to global agriculture markets, provides the following update on progress.
Highlights
Commercial products:
- On track to achieve full year revenue expectations, which would represent 30% growth over 2017.
- Successful launch of Harpin αβ in sugarcane in Brazil, supported by demonstration plot yield increase of 20% or more; the Board expects significant progress from this crop over the coming years.
- Contract for a Harpin αβ product to be used on corn in the USA, leading to significant first sales in the second half of 2018.
New Technology:
- The main focus has been on field trials of InnatusTM 3G, added to chemical sprays for the control of Asian Soybean Rust (ASR) in Brazil.
- In contrast to previous years, conventional chemical sprays worked well this season, so Innatus 3G added only marginal value to disease control.
- Results indicated that Innatus 3G increased soybean yield by 6-7%, even at low application rates.
- The Company is in discussion with partners on plans for further trials in South American soybeans in the 2018/19 season.
- As a result, the Company no longer expects to conclude a licence for rights to Innatus 3G in South American soybeans in 2018.
- The Company is working with multiple partners evaluating PREtec on more than 10 different crops in three regions around the world.
- The Company continues to have high confidence in the value of PREtec.
The Company's cash reserves at 30 June 2018 were $6.1 million. Strong growth of our Commercial business in 2017, together with new launches in 2018, give us confidence that the Company will be cash positive in 2020, within existing cash reserves, and is not reliant on income from New Technology to achieve this.
The Company expects to announce its interim results for the period ended 30 June 2018 in mid September 2018.
Commercial
In Brazil, Harpin αβ was launched in February 2018 for use on sugarcane, through Coplacana, a leading cooperative. In 2018, demonstration field trials showed an average yield increase of over 20%. Initial demand from growers has been very encouraging. We confidently expect sales in Brazilian sugarcane to build over the coming years.
In the USA, the Company has concluded an agreement which will give Harpin αβ access to the large corn seed treatment market. First sales will be in the second half of 2018 and, with the planted area of corn now reaching 90 million acres in the USA, we expect significant growth thereafter.
Innatus 3G trials in Brazilian soybeans
In 2017, the Company conducted trials of Innatus 3G which demonstrated the benefit of peptides for the control of ASR, a devastating fungal disease of soybeans in Brazil. Farmers spent US$1.7 billion on soybean fungicides in 2016 in Brazil*. ASR resistance to chemical fungicides has been a major challenge.
Based on these results, the Company conducted expanded field trials of Innatus 3G peptides in the 2017/18 Brazilian soybean crop. Four partners, which between them represent more than 80% of this fungicide market*, also agreed to carry out tests, as did EMBRAPA, the Brazilian Ministry of Agriculture research organisation.
Unexpectedly, in the 2017/18 season, conventional chemical spray regimes delivered good control in most areas. While Innatus 3G did show disease benefits on top of chemical fungicides, these benefits were not substantial. However, trials also showed increases of 6-7% in the average yield of soybeans treated with Innatus 3G, even at low application rates. This effect was particularly evident in areas where there was less disease. This suggests the potential for a dual positioning of Innatus 3G as an early treatment to boost yield where disease pressure is low, and also as a late treatment to extend disease control when chemical fungicides start to break down.
In light of these developments, the Company has decided not to seek an Innatus 3G licence for South American soybean rights this year. The Company is in discussion with partners about field trials in the next soybean crop. These trials will be designed to test both disease management and yield promotion benefits of Innatus 3G. Meanwhile, progress continues to be made towards a product registration of Innatus 3G in Brazil.
Progress with PREtec peptides
While the Company has focused resources on Brazil, good progress continues in other areas. In 2018, three of our partners have so far reported positive results in a range of more than 10 crops, uses and regions. Partners are currently discussing trials of PREtec in further specialty and broad-acre crops because of the potential they see in our technology.
Internally, work on the production of PREtec peptides has advanced substantially. We are now achieving yields from fermentation and processing of Innatus 3G peptides well ahead of our targets, reinforcing the cost efficacy of peptides. Our laboratories have also developed a new formulation that will be easier to use than the existing experimental formulations; this has been produced at pilot scale and will increasingly be used in future trials.
The Company continues to have high confidence in the value of PREtec and is actively pursuing opportunities to monetise it.
Chris Richards, Interim CEO and Executive Chairman, commented:
"The acceleration of our Commercial business is exciting and reinforces our confidence in bringing the Company to cash positive within our existing cash reserves. We anticipate that the Commercial business will generate significant cash during 2018, thereby reducing the Company's cash burn. We are confident that the Company will be cash positive in 2020.
"It is clearly disappointing that we were not able to demonstrate significant disease reduction with Innatus 3G against ASR in this last season. The yield benefits were encouraging, as were the low application rates. We continue to believe that Innatus 3G has significant potential to add value to South American soybean growers, which we intend to test in the coming crop year.
"Outside Brazil, our partners continue to generate positive results with PREtec peptides. While the specific results remain confidential at this stage, partners are seeking to expand their evaluations and build closer relationships with Plant Health Care.
"Our Commercial business is now on a firm growth track and we remain confident about the long term future of PREtec.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information, please contact:
Plant Health Care plc
Chris Richards, Executive Chairman and Interim CEO Tel: +1 919 926 1600
Jeffrey Hovey, Chief Financial Officer
Liberum Capital - Nomad and Broker
Clayton Bush / Chris Clarke Tel: +44 (0) 20 3100 2000
Arden Partners plc - Joint BrokerJohn Llewellyn-Lloyd / Dan Gee-Summons Tel: +44 (0) 20 7614 5900
IFC Advisory - Financial PR
Graham Herring / Miles Nolan / Zach Cohen Tel: +44 (0) 20 3934 6633
Company website: www.planthealthcare.com
*Source: Phillips McDougall 2016 Market data - AgrAspire database.