Eden Research yesterday announced that is has signed a global deal with Eastman Chemicals, a global supplier of speciality chemicals to address the issues that Nematodes (worms and alike) cause to plants and crops. This will deliver an upfront payment fee and annual milestone payments for the forthcoming two years which should have a near immediate impact on Eden's cash position. Eastman will service 29 countries, including the biggest markets in the world for Nematicide products and the market which Eden's products will address is worth $500 million annually. In the RNS of yesterday, Eastman confirmed that Eden's "green profile product has a consistent effectiveness and is a very valuable product"
Should Eastman be able to penetrate the Nematode market to the tune of 20% as Eden's 3AEY product treating the grape disease botrytis has done (in certain areas), in its first year and as highlighted in yesterdays Trading Update RNS, then this deal could be a game changer and transformational for Eden and its shareholders.
Furthermore, in yesterday's RNS's, Eden said that its business model will change with immediate effect from 2017 from one of royalties and licencing to manufacture and supply. As recently as the 26th June 2016 at this years AGM, Eden gave an example of how this change in model will effect income streams. This is illustrated on slide 11 of the presentation and shows a projected 800% increase in income. Given that Eden has such a low operational cost base, it is reasonable to assume that profits will be delivered on an exponential basis too. It is not stated whether manufacture will be through toll manufacturers of whether Eden will manufacture direct, presumably out east somewhere, but it is likely safe to assume that this was accounted for in the AGM income change projections.
With Sipcam Italia and Iberia already on board with 3AEY, it is likely that stock will be purchased in bulk and will provide the opportunity for Eden to show a real increase in revenue, cash and quite probably their P and L in the half year report for the trading period to June 2017. Distributors will not want to be caught short on Eden's award winning product that can be used for a preventative measure or to address the onsite of the problem at a latter stage.
Similarly, the Eastman deal which is significantly bigger and strategically very powerful, will…
