Biologics may seem like an emerging field in the agtech space but for at least one company it’s been a decade in the making. Just like the biblical parable of the humble mustard seed, which happens to be the origin of its active ingredient, the company is hoping to grow into a titan in the biopesticide space.
“We have an excellent biologic technology that is not only natural and organic but just as effective as synthetic chemicals. We had proven this effectiveness years ago but few were interested in agriculture investment or the fact that our technology has the potential to replace synthetic chemicals at that time,” Corey Giasson, CEO and director of MustGrow Biologics, tells AFN.
The Saskatoon, Canada-based startup launched in 2008 and has invested $10 million and completed over 110 independent trials to prove that the mustard seed-derived active ingredient in its product, AITC, is an effective biopesticide. It claims that its studies have demonstrated the same level of efficacy as methyl bromide, a commonly used chemical pesticide, in controlling nematodes, for example.
Since it began its journey in 2008, quite a bit has changed in the biologics space, however.
“Consumers and farmworkers are demanding a safe and sustainable food supply. Regulators are deregistering and banning some harmful chemicals, and even producers are wanting to use safer alternatives. Investors are seeing this and realizing that ag biologic technologies are solutions for the future to help grow a safe food supply, but it is important to note that they are not all the same and some can be ineffective.”
As for the Covid-19 pandemic, Giasson is concerned about potential slowdowns in government approvals, as well as not being able to perform trials as planned. With shelter-in-place orders, workers responsible for starting, maintaining, and overseeing the trials may not be able to move about as needed. For now, MustGrow is exploring using more local facilities to drive its data.
Read on to learn more about how this startup is hoping to make its mark on the biopesticide space.
Tell us about your product.
Our product is looking to fill the gap in demand as more and more chemicals found in pesticides are being banned worldwide and linked to terrible diseases. They are natural biopesticides derived from the components within the mustard seed. Basically, we use the natural components of the mustard seed which are then used to defend against pests and disease We harness these and convert them into different forms so they can be commercialized for use in high-value crops such as fruits and vegetables.
Statistics show that there are roughly $60 to $65 billion spent annually on agricultural chemicals but only an extremely small portion of that goes towards natural solutions. As more chemicals are deregulated, growers will be in need of more natural alternatives to safely grow crops and feed the world without harming people and the environment. This is our target audience.
How has your product evolved over the years?
This granular product had EPA and PMRA registrations as a biopesticide, but it was bulky to transport and not in a form that fruit & vegetable growers wanted so that they could apply it through drip lines. As such, we have come up with a second-generation liquid formulation that is complete and fully patented. It is more concentrated than the granular product, which is what fruit and vegetable growers need as it can be applied through a dripline. We are now going to leverage the granular registrations to fast-track the new liquid product registrations, which is estimated to take 1 to 2 years.
What are some challenges that you’ve faced and how did you overcome them?
Being a pre-cash flow disruptive company with a new technology, having enough capital has always been the largest hurdle. We have overcome this issue and now have approximately three years of adequate capital. For several years, the company raised enough capital from early-stage investors to complete over 110 independent studies which show the technology’s effectiveness at controlling soil-borne diseases and pests. We are fortunate to have a large database of information on the effectiveness of the active ingredient and technology.
A few years ago, the company was at a crossroads. It had limited capital to finalize its new liquid formulation. We decided to restructure the company and take it public (CSE: MGRO and OTC: MGROF) to help raise capital to finalize the liquid formulation and get registrations. We were fortunate enough to be able to do this and now have enough money to get our new liquid formation, which was finalized last year and registered in North America with the EPA and PMRA.
Have any mentors assisted you along the way?
We have surrounded ourselves with people who have achieved success before in the bio agricultural technology space. Colin Bletsky, our COO, has 30 years of experience in agriculture from being a farmer and spent 10 years with Syngenta and another 10 years with Novozymes. He has a tremendous amount of experience in the global ag chemical and biological market.
Todd Lahti, who is our CFO, previously ran a bio ag company called MCN BioProducts. This company had a technology that converted canola meal into various bioproduct streams, including protein and customized fiber protein products for feed, food, and cosmetics markets in Canada and internationally. The scientist that came up with MCN’s technology, Dr. David Maenz, is the scientist that came up with the idea of our second-generation liquid formulation. As you can see, our team is highly equipped with some of the best individuals in agtech.
Tell us about your fundraising experience and decision to go public.
MustGrow is a publicly-traded agricultural biotech company on the CSE (MGRO) in Canada and the OTC (MGROF) in the US. Our fundraising experience has been great. At the end of 2019, we were able to raise $3.9 million. We have a tight capital structure with about 37 million shares outstanding, of which around 22% are owned by management, directors, and advisors. We have lots of investors that have supported us for the last several years, and now we have had an influx of new investors that believe in the agriculture story of a heathy and safe food supply and the increased use for natural products that are sustainable. They are interested in what MustGrow has to offer, just like they are interested in other agricultural tech plays.
How have your investors added value beyond capital?
We do have some investors that have provided lots of value beyond just capital. One of our largest investors and biggest supporters is Jamieson Bondarenko, who is also our capital markets advisor. Jamieson had a tremendous amount of experience in the capital markets industry and was an investment banker in Toronto, which were qualities we looked for in an investor. He left his day job to focus on his own personal active investing in three companies that he believes in, and MustGrow is one of them. He has been a great addition to our team in helping us raise capital and make sure the company is navigating the capital markets in a proper way.
Any advice for other startups out there?
It all starts with a good idea, an asset, and a plan. From there, you need to surround yourself with key people that are experts in their respective fields to help make your startup successful. You can’t do everything yourself and connections in your field of interest are extremely important.
