Innovative Bio-based Products for Pest Management in Agriculture and Water. August 2014

Transcription

1 Innovative Bio-based Products for Pest Management in Agriculture and Water August 2014

2 Safe Harbor Statement Forward-Looking Statements This presentation may include forward-looking statements. These statements reflect the current views of the Company s senior management with respect to future events and financial performance. These statements include forward-looking statements with respect to the Company s business and industry in general, including statements regarding potential market size of Company products, anticipated product launches, target geographic markets, factors for the barriers to entry into the market, and strategies for growth. Statements that include the words expect, intend, plan, believe, project, forecast, estimate, may, should, anticipate and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. Forward-looking statements address matters that involve risks and uncertainties such as the timing of and costs associated with the launch of products, the difficulty in predicting the timing or outcome of product research and development efforts and regulatory approvals. Accordingly, there are or will be important factors that could cause the Company s actual results to differ materially from those indicated in these statements. The statements made herein speak only as of the date of this presentation. Page 2

3 Page 3 Delivering the Next Generation of Biopesticides

4 Corporate Overview Company Highlights Founded April 2006 in Davis, CA 4 commercially available products, 3 add l submitted for EPA registration Library of 18,000+ proprietary microorganisms 150+ FTEs (20 Ph.D.; 70 in R&D) Strategic investors: DSM & Syngenta Ventures Wholly-owned, operational fermentation facility in Bangor, MI Revenue growth in 2013 of 104% Listed on NASDAQ as MBII August 2, 2013; Followon June 6, 2014 Commercial Products Today Marquee Partners / Distributors Robust Pipeline HAVEN plant health product targeted launch 2 nd half 2014 Flagship pipeline products: two nematicides, a systemic herbicide, a biofumigant, a fungicide and two biostimulants Many more earlier stage candidates across all categories 10 US, 20 foreign patents issued; more than 300 patents pending Page 4

5 Quarter 2 Update The Challenges Agricultural products market challenges in all our US regions Compressed bloom in FL citrus (fewer sprays) Severe drought in California (fungicide market down significantly) Delayed planting in Midwest (few in-season re-orders) Peer companies and total market likely flat to down First and Second quarter financial results disappointing No recoupment of first half shortfall (our revenues are not yet highly diversified) Little to no restocking of Grandevo in FL accounts (most of Q2 miss) Doubling of revenues for 2014 has become unlikely Organizational changes Abrupt resignation of COO leaves a temporary gap in the Sales leadership Prompts temporary suspension of guidance Stock down 42% on day following second quarter earnings call Page 5

6 However, Fundamentals Remain Strong Challenges in agricultural products market are temporary Southeast will recover; better Grandevo formulation Strong adoption rate increases in California across many crops Expect to outperform peer companies and market averages in annual revenue growth, acreage adoption, and new product launches (with meaningful revenues) Execution continues as planned on several fronts: new product introductions, pipeline development, international and crop expansion Page 6

7 Expect Strong Fourth Quarter 2014 revenues were always expected to be heavily weighted to Q4 Page 7 Regalia Biofungicide Customary 4 th Q seasonal purchases for midwest and midsouth row crops Southeast vegetable market, Western fall/winter vegetable market CA bee-friendly bloom sprays Entry into winter wheat markets Growth/entry LATAM countries (via FMC); Turkey & South Africa (via Syngenta); First sales in Brazil (via FMC) Grandevo Bioinsecticide Continued adoption on CA specialty crops (following initial wide adoption across 90 crops) Southeast (citrus) (new formulation) and CA (nuts) bee-friendly bloom sprays Continued roll-out of Venerate First sales in CA Haven launch First sales expected Southeast vegetables First Zequanox sales in open water

8 The Bridge to 2015 Looks Good Broader crop mix and new segments for Regalia First sales into cotton and canola Further expansion into wheat and rice in US; wheat in Canada Expansion of Brazil label for row crops/plant health Seed treatment and In-furrow Further ramp up of Regalia in LATAM Brazil, Colombia, Mexico, Guatemala and others Continued market share growth of Regalia in US corn and soybeans Venerate, Grandevo, Haven growth across a broad range of crops Venerate process improvements may allow row crops segmentation Bee-friendly applications Haven expansion (US/LATAM); first confirmation of row crops efficacy New product line launches MBI 304/5 nematicide into specialty crops MBI 507/508 biostimulant into specialty crops and some row crop Significant new partnerships (commercial and technical) that drive add l revenues M3 capacity utilization should benefit margins

9 Operations are Under Control Chief Operating Officer transition will be smooth Scott Peoples, VP Marketing, assuming temporary leadership of sales organization (19 years in Monsanto and BASF in various roles including sales, business management, marketing and global marketing) Manufacturing running smoothly under experienced M3 plant manager (now reports to Jim Boyd) Partnerships, international distribution agreements and development initiatives are wholly unaffected Page 9

10 Select Financial Items (USD, in thousands) H 2014 Total Revenues $ 5,251 $ 7,140 $ 14,543 $ 6,419 Cost of product revenues 2,172 4,333 10,736 4,501 Gross profit 3,079 2,807 3,807 1,918 Gross margin % 59% 39% 26% 30% Operating expenses: Research and development** 9,410 12,741 17,814 8,546 Selling, general and administrative*** 6,793 13,904 15,018 12,319 Total operating expenses* 16,203 26,645 32,832 20,865 Income (loss) from operations $ (13,124) $ (23,838) $ (29,025) $ (18,947) *For each period, operating expenses include share-based compensation o $ 271 $ 662 $ 2,300 $ 2,722 **Includes patent expenses ***Includes non-cash charges associated with convertible debt

11 Short Term Path Forward is Clear Maintain strong customer relationships, education and service effort No impediment to shipping on-time at expected quantities Haven launch and ramp up of Venerate proceeding as planned New field trial data on major crops is highly compelling Reassign COO duties on interim basis and proceed with search All functions already reassigned with highly engaged senior team Search underway with good candidates emerging quickly Stay focused on paths to progress that are already in motion Pipeline prioritized for new flagship products International development effort well underway Strong results in underlying data for all products Revisit guidance provision as soon as possible Verification of projections should happen quickly Our fundamental view of our business and opportunity has not changed Page 11

12 What Hasn t Changed 1 Several Commercial Products with Significant Market Opportunity Already Launched 2 A Strong Pipeline of New Products Ready for Launch Within Two years 3 Attractive Financial Profile Low Capital/Strong Margins/Fast Revenue Growth 4 Strong, Recognized Distribution and Development Partners 5 Valuable Library of Patents and Intellectual Property 6 Experienced Management Team with Successful Track Record Only Pure-Play Public Company in this Disruptive, Technology-Driven Market Page 12

13 Q2 Progress M3 & Existing Products Fully operational M3 plant producing Regalia, Grandevo and Zequanox. EPA approval of Venerate ; Sold out of inventory; California approval imminent. Increased acreage adoption rates for all products and significant broadening of crop mix for Regalia and Grandevo in a down market. Compelling results from field studies on effectiveness of Regalia for yield enhancement of cotton. Received EPA approval for open-water environment use of Zequanox molluscicide. Successful Zequanox demo in Mexico water treatment plant. Secured two patents for Grandevo, covering insecticidal compound and root treatment for corn rootworm and other pests. Page 13

14 Near-term Pipeline MBI s Prioritized Product Pipeline Products diversify revenues and fuel growth Discovery Pre-Development Development Regulatory 1 st Launch fungicide / plant health 2009 Near-term Pipeline Commercial MBI-005 * MBI 507/8* MBI 304/5 MBI 011 MBI 601 MBI 302 Insecticide/miticide aquatic molluscicide for invasive mussels herbicide insecticide anti-transpirant plant yield enhancer/crop stress reduction nematicide herbicide biofumigant nematicide EPA approved Pending EPA approval Pending EPA approval Pending EPA approval MBI 010 herbicide Submit to EPA MBI 110 MBI 303 fungicide / plant health Submit to EPA 2014 nematicide Candidates of lower priority 2016 Page 14 *Does not require EPA registration when used as a plant enhancer.

15 Progress on Core Pipeline Review and prioritization of highest potential pipeline products (~$40 billion addressable market), which can enter market in next two years. Positive efficacy data and tox. MBI-010 is 1 st of its kind bioherbicide for organic production and glyphosate resistant weeds Haven (reduces sun/drought stress) - faster to market model (no EPA) MBI-507 and 508 (biostimulants) - faster to market model (no EPA) MBI-304 and 305 (bionematicides) already EPA registered. Superior efficacy on soybean cyst MBI-110 (biofungicide) 1 st of its kind biological for downy mildews Use of proceeds from Follow-on: Building seed treatment capability and expanded field trials; Combined addressable market of ~$2.5 billion. Page 15

16 Additional 2Q Progress International Expansion Brazil authorities advanced Regalia for approval. Received Columbia registration for Regalia, triggering milestone payment from FMC. Regalia Europe regulatory advancement triggered milestone payment from Syngenta. Submitted Regalia for canola and other row crops in Canada. Began regulatory approval process for Grandevo in Europe and Brazil; began official efficacy trials. Began European trials for MBI-110 on grape downy mildew, with favorable results. Successful Regalia trials against all wheat diseases in Europe in combination with chemicals Page 16

17 Additional 2Q Progress New Collaborations Monetize IP Assets and Expand Revenue Potential Agreement with Evogene leads to monetization of MBI s IP/platform (upside revenues). Agreement with DSM Food Specialties leverages MBI s IP and products into entirely new sectors (upside revenues) Collaborative agreement with Valagro, the leading global biostimulant company, accelerates international market penetration (upside revenues). Page 17

18 Page 18 Business Model

19 Demonstrated Ability to Bring Products to Market Cheaper & Faster Discovery EPA Develop US Launch Release Years: 3-4 Cost $3 6mm (USD) Shorter statutory timeline for EPA approval of biopesticides Reduced toxicology requirements if no direct toxic effects MBI s experience allows shorter development time Average Chemical Pesticide Discovery Development EPA Release Launch Development Time & Cost (1) Years: ~10 Cost $256mm (USD) (1) Source: Crop Life America. Page 19

20 Our Competitive Advantages In-house Discovery & In-licensed Technology Internally-discovered break-through products Access to others technology at earlier stage. Add IP to in-licensed technology Biopesticide Company with the Broadest Screen 18,000+ microorganisms 350+ plant extracts Screening against a broad range of targets insects, weeds, nematodes, plant pathogens, algae The only co. screening for bioherbicides Natural Product Chemistry Advantage Identify and patent natural compounds Proprietary compound analytics for higher efficacy and consistency Stronger IP Rapid Development & Commercialization Targeted launch with key large growers Highly bio-specialized commercial team Commercialized multiple products in record time Formulation, Fermentation & Manufacturing Formulation expertise = performance > chemicals Early elimination of strains that won t scale Process optimization capabilities yields attractive prices/margins 30 Issued Patents and More Than 300 Patents Pending Page 20

21 Strategy for Solid Growth + Launch of New Products + New Market Segments + Additional Geographies + Additional Crops + New Customers + Pocket Share Target 4 Specialty Crops Ornamentals 18 Specialty Crops Ornamentals Turf In-Pipe Water Treatments 22 Specialty Crops Ornamentals Turf Row Crops In-Pipe Water Treatments 30+ Specialty Crops Ornamentals Turf Row Crops Home & Garden In-Pipe Water Treatments Open Water Treatments Page 21

22 Our Ag Sales, Marketing & Distribution Strategy North America International Distributor/Retailer Distributor/Retailer Branded Manufacturer Signed letters of intent; in negotiations for definitive agreements Distributor/Retailer Grower Grower Grower Page 22

23 Marrone Michigan Manufacturing (M 3 ) Control IP Flexible, Faster Scale-up Better Margins, Cost Controls, ROI Bought facility in Bangor, MI for $1.5 million Operating permits, utilities, waste treatment in place Phase 1 (3 X 20,000 liter tanks): Capital spend of $15 million Inoculum/media prep & QC lab Centrifugation Rapidly scalable with demand; ample acreage for drying & warehousing

24 Page 24 Commercially Available Products

25 REGALIA - Proven Yield Results Just 1 pint of REGALIA boosts performance of synthetic fungicides Adding REGALIA to the mix helps: Improve plant health Increase plant growth Enhance yield bu = bushels per acre Page 25

26 REGALIA Rx on Corn: Corn Weight (2013) REGALIA Rx added to program produced bigger ears and higher test weight compared to program with fungicide only. Page 26 (L) Fungicide 5 oz. (R) Regalia Rx 1 pt w/fungicide 5 oz. (L) Regalia 1 pt w/fungicide 5 oz. (R) Fungicide 5 oz.

27 3 DAA 7 DAA GRANDEVO - Unique, broad spectrum mode of action (No. of Nymphs per Flush) Asian Citrus Psyllid, Eurofins Oakland, FL, 2012 Delegate Not statistically different - Treatment applied Feb Treatments evaluated on Mar 3 and Mar contract researcher. Untreated Control UNTREATED Source: Company data Efficacy in controlling resistant, invasive bugs such as Asian Citrus Psyllid Broad uptake in the first year on 90 crops in California Significant increase in treated acres year over year on key specialty crops in California; used by the largest veg growers New data confirm dramatic reduction in zebra chip disease spread by invasive potato psyllids Confirmatory data on many other key pests Trials/regulatory activities for international expansion in Mexico, Canada, Brazil, and Europe Safe to to bees can be be used when bees are actively flying Page 27 27

28 VENERATE Performs as well as, or Outperforms, Synthetic Insecticides % Damaged Fruit Number of Nymphs per Shoot Aug 25 Sep Sep 8 1 Sep 15 Brown Marmorated Stink Bug in Stonefruit Asian Citrus Psyllid on Citrus Rutgers Agricultural Research & Extension Center, NJ P. Stansly, University of Florida, FL Danitol 2.4EC Untreate d Control 0 Agri- Flex Danitol 2.4EC Untreated Control Page Good efficacy on hard to kill sucking bugs Initial demand exceeded supply Launch in CA imminent Non toxic to bees; no negative effect on pollination and fruit set

29 ZEQUANOX - Leveraging Our Platform Economic & Ecological Destruction Marrone s Solution (molluscicide) Continued to build a pipeline of customers Treating repeat customers Continued success in Hoover dam demo Successful demo at Mexican water treatment plant In-Pipe/ In-Pipe/ Enclosed Enclosed Systems Systems Lakes Lakes & & Recreation Recreation Received open water EPA approval High interest from lake associations

30 Our Management Team is Strong Pam Marrone, PhD CEO/Founder CEO/Founder AgraQuest; Founding President Novo Nordisk Entotech; Head of Insect Biology at Monsanto Page 30 Jim Boyd CFO Scott Peoples VP Marketing (Acting VP Sales) Alison Stewart, PhD Sr. VP R&D, CTO Keith Pitts VP Regulatory Affairs Linda Moore General Counsel 30 years in Finance; 12 as a public co. CFO; CFO, ESS Technology and Silicon Storage Technology 19 years in Monsanto & BASF in various roles including sales, business management, marketing and global marketing Acclaimed researcher and global authority on beneficial microorganisms; Director, Bio-Protection Research Centre, New Zealand Special Assistant to two Ag Secretaries, Staff to House Ag Committee; National Academy of Science Board on Ag; Pew Charitable Trusts Ag Specialist General Counsel and Chief Compliance Officer for Merix Corp., Phoenix Technologies, and Jabil Circuit; co-founder and principal of The Moore Group

31 Key Investment Highlights 1 Several Commercial Products with Significant Market Opportunity Already Launched 2 A Strong Pipeline of New Products Ready for Launch Within Two years 3 Attractive Financial Profile Low Capital/Strong Margins/Fast Revenue Growth 4 Strong, Recognized Distribution and Development Partners 5 Valuable Library of Patents and Intellectual Property 6 Experienced Management Team with Successful Track Record Only Pure-Play Public Company in this Disruptive, Technology-Driven Market Page 31

32 Page 32 Thank You!