Could this ASX-listed small cap be the next big agtech innovator?
Special Report: A year ago, bug killer Bio-Gene listed on the ASX with a goal to test its natural insecticide and win clients.
Today, it has a portfolio of data and patents and a stack of willing global agriculture and chemistry behemoths keen to try out products that Bio-Gene (ASX:BGT) says solve some of the big issues facing agriculture today.
Bio-Gene’s technology does not, as the company name might suggest, feature genetic engineering but comprises a purely natural product – Qcide, made from an oil extracted from a eucalyptus species — and Flavocide which is a lab synthesis of a natural compound.
In the last 12 months, Bio-Gene has proven its effectiveness against a range of insects, including 10 out of 12 key global problem pests.
And with insects destroying an estimated 18 to 26 per cent of annual crop productions worldwide and resistance being reported across all existing classes of insecticides, it’s Bio-Gene’s test data that is interesting to those multinationals.
“In the middle of this year we took about nine months of data and began introducing ourselves and the technology to global agriculture and chemistry companies around the world,” says managing director and CEO Richard Jagger.
“The first thing they validated was our assumption about what the market needed.”
That need is a product that actually works while also addressing the problem of insecticide resistance and reducing the impact on beneficial insects like bees.
Despite insecticide-resistance rising — 586 insect species are now resistant to at least one insecticide class — new insecticides are proving hard to find.
As a result, Bio-Gene has signed “numerous” non-disclosure agreements (NDAs) and Mr Jagger hopes to turn those into evaluation agreements in the near future and then commercial agreements soon after that.
An experienced team
Bio-Gene is a small company with a market cap of just $15.5m but it’s attracted the attention of said multinationals through a combination of good tech and connected people.
Mr Jagger and his colleague Peter May, who runs the research and development side of the business, have decades of experience in commercial agriculture in Australia and the US.
Advisors like Doug Rathbone, former head of Nufarm, and Purdue University entomology professor and expert in vector biology Catherine Hill have been essential in opening doors in both the corporate world and in connecting to other researchers.
Bio-Gene is also collaborating with CSIRO on its manufacturing process, with the help of a former colleague of Mr Jagger’s who is an organic chemist and an expert in designing processes for making products in labs and factories.
A year of growth
It hasn’t all been smooth sailing for Bio-Gene, but the lessons learned have set the company considerably further ahead than they expected a year ago.
Mr Jagger says that before the IPO, the business signed an evaluation deal with French animal health giant Virbac.
“It was exciting. We were a little company and a global business was interested in evaluating our technology. We gave them some product to look at, but we were green. We let them manage the process,” he said.
Virbac decided in March it didn’t want to take its testing any further.
Mr Jagger says while it was disappointing at the time, the experience set them up as a better business as they know now to retain a tighter hold on the testing process.
“Now, we are doing things differently. We will work more closely and in more detail with future collaborators, and we plan to co-fund research.
“We learned a lot about how we want to move forward with our technology, and we’re also a lot more knowledgeable about our own product having done that extra year of research.”
That extra year enabled them to secure two extra patents, one of which was on how the technology interacts with other insecticide chemistry being used today.
“We can bring a lot more to the party now than we could a year ago,” Mr Jagger said.
The commercialisation plan
The patent on how the technology interacts with other types of chemistry is also incredibly important to Bio-Gene’s commercialisation strategy.
Bio-Gene is not turning its products into eponymous products but is offering them as an additive into existing products or for large companies to licence in order to build their own product around it.
Besides its ability to address resistance, there’s great potential based on the synergistic effects it can have when added to another product.
“This is when small amounts of product added to other chemistry can greatly increase the benefits of both products, you get a 1+1=3 effect,” Mr Jagger said.