Amoeba — Building on an exceptional year

The company is not yet revenue generating. Grant income was €0.1m lower year-on-year in FY22 and total operating costs were €0.2m higher year-on-year, resulting in a widening of EBIT losses by €0.3m to €5.8m. Industrial deployment costs increased as the company began to prepare for the establishment of its production facility. R&D expenses were higher as the activity related to field trials intensified, while sales and marketing costs were higher year-on-year because the company began to prepare for the commercial launch of the product. General and administrative costs, however, were lower year-on-year because of lower third-party fees. The losses were slightly wider than our €5.7m estimate, which had modelled grants and operating costs at double H122 levels.

During FY22, Amoéba concluded its debt restructuring process by fully repaying the €6.8m balance of the loan (which included interest) from the European Investment Bank and purchasing the warrants associated with the loan for €0.2m. During the year Amoéba generated €10.6m cash (net) from the issue of the fourth, fifth, sixth and seventh tranches of convertible bonds associated with the finance programme with Nice & Green.

At the end of December 2022, Amoéba had €5.5m cash (€7.3m end-FY21) on its balance sheet and €2.4m debt (€12.5m end-FY21) of which €2.1m related to the bonds issued but not yet converted by the year-end (these have since converted) under the convertible bond agreement with Nice & Green and €0.3m related to lease obligations.

In January 2023, Amoéba announced that it was terminating its convertible bond issue contract with Nice & Green and would not be issuing the optional eighth and final tranche of convertible bonds under the contract as initially planned. Instead, the company signed a contract with independent advisory firm Redbridge Debt & Treasury Advisory to assist it in its search for securing €45m finance to fund operations and site expansion over the next three years. Because it will take time for Redbridge to secure this funding, Amoéba agreed a new bond financing agreement with Nice & Green that will generate up to €8.4m cash net through the issue of three equal tranches of bonds between 30 June 2023 and 1 March 2024. The arrangement has enabled Amoéba to get started on its manufacturing scale-up programme (see below).

During FY22 Amoéba secured regulatory approval from the Environmental Protection Agency (EPA) in the United States and a recommendation for approval in the European Union for the active substance used in its innovative biological fungicides. The active substance is a lysate derived from W. magna (Willaertia magna C2c Maky) amoebae. The EPA confirmed that the active substance was exempt from maximum residue limits and any restrictions on how close to harvest the active substance could be applied to crops, provided it was applied in accordance with instructions for use and good agricultural practices.

The company was involved in over 120 field trials during winter 2021 and summer 2022. This most recent phase of trials (1) generated efficacy data for future marketing authorisations in Europe, Brazil and California (which has a separate regulatory framework from the rest of the US); (2) evaluated the potential of the company’s formulations on new targets such as soybean rust, black sigatoka on bananas, scab on apple trees and powdery mildew on tomatoes and cucumbers in greenhouses; and (3) ascertained the optimal application dose for treating mildews on vines (alone and in combination with copper), late blight on potatoes and several diseases on wheat. Two main formulations were tested: a suspension concentrate and a dispersion in oil.

Amoéba needs to obtain marketing authorisation from the EPA for individual formulations or products containing the active substance. It intends to apply to the EPA for market authorisation for products containing W. magna lysate in 2023 and expects that the approval will be awarded in 2024.

Regulatory approval: EU

The next steps are: (1) peer review (to be completed in Q323) in which representatives from several other member states review the information in the dossier assembled by Austria; (2) publication of the review by the European Commission and implementation of regulation approving the active substance (H124); and (3) decisions on the authorisation of products containing the active substance in the three individual geographical zones that the EU is split into (2024).

Amoéba intends to undertake over 100 trials this calendar year. These will focus on (1) completing and generating data for future marketing authorisation dossiers in the EU and California; (2) confirming the results from studies on new targets carried out in 2022 (see above); (3) carrying out further field trials in the EU with potential early adopters of its products and approved contract research organisations to determine the optimal product formulation and application regime for treating vines and vegetables.

One of the performance evaluations taking place during 2023 is with Nissan Chemical Corporation under the framework of a Material Transfer Agreement. Nissan has started a performance evaluation study using a mixture of its established Leimay product with an experimental biocontrol product from Amoéba to control downy mildew on grapevines. This mixture has already been used in two trials in Italy during 2022, which showed that the mixture was more effective than either of the two products used on their own as well as showing significantly better performance than the conventional copper hydroxide treatment.

Management intends to build a new production plant dedicated to biocontrol products capable of manufacturing 200 tonnes of finished product annually. This is equivalent to 40 tonnes of active substance per year, which would treat 100,000 hectares of crops. Management has identified a suitable location in Cavaillon in the south of France and applied for a building permit for the site. It plans to start construction work at the site later this year, subject to receiving planning approval, and to begin production there by early 2025. Amoéba will require €45m over the next three years to finance the Cavaillon production site and to continue its operational and research activities. In total, €23m of the financing will be for capital expenditure and the remainder for funding field trials, supporting the regulatory approvals process, registering products, establishing sales channels and adding production staff. Management is considering constructing an extension to the facility, which would double output and cost another €10m. The French public investment bank BPI France is providing Amoéba with a €3.6m subsidy and a €2.4m recoverable advance to support the expansion programme.

In December 2022, the EPA approved both live W. magna as an active substance and the Biomeba products containing it for use in closed cooling systems for the control of microbial slime, microbially induced corrosion and general microbial flora. Management intends to work with third parties who will take over production and/or marketing of Biomeba in the United States. Management has initiated the withdrawal of the biocidal active substance applications in Canada and Europe to conserve cash for commercialising biological control products.