Bayer: Strong Agricultural Quarter, but Regulatory and Legal Risks Weigh on the Stock
Bayer is feeling regulatory headwinds in the capital market. Following the vote by EU member states, the shares lost around 10% of their value within seven trading days. At the same time, proceedings in Missouri and cautious third-quarter expectations weighed on the shares. Yet according to company figures, the Crop Science agricultural division increased its EBITDA before special items by 30.2% to EUR 902 million in the second quarter of 2026, on revenue of EUR 4.91 billion. The margin climbed to 18.4%. However, ongoing litigation continues to weigh on the valuation. Bayer is funding the regulatory registration and development of MustGrow Biologics’ biological crop protection product TerraMG™ for Europe, Africa and the Middle East. According to MustGrow, upfront and milestone payments, along with development work, could together reach USD 35 to 40 million over several years. This cooperation reduces risk for the junior partner and gives the group early access to a potential alternative against nematodes and soil pathogens.
BASF: Spin-off and IPO
Ludwigshafen-based rival BASF is relying on acquisitions to reduce its dependence on synthetic active ingredients. The group completed the acquisition of biological insect control specialist AgBiTech back at the end of March 2026. AgBiTech uses naturally occurring baculoviruses, which are generally regarded as low-risk active ingredients under European law and would therefore be exempt from the planned time limits. With the acquisition of AgBiTech, BASF secures bio-based technologies. At the same time, BASF is preparing its Agricultural Solutions division for a stock market listing by mid-2027.
MustGrow: Natural Mustard Seed Active Ingredient Sees Rising Demand
MustGrow Biologics is an example of the industry’s realignment. The company uses the pungent essence of mustard seed to combat nematodes and soil-borne diseases and mustard plant extracts to feed the soil microbiome. According to peer reviewed scientific journals, these nematodes and pathogens cause crop losses worth around USD 500 billion worldwide each year. Studies show that the natural active ingredient AITC in the pre-registered crop protection product TerraMG™ breaks down in the soil within a few days and leaves no measurable residues in the subsequent harvested crop. As MustGrow announced at an investor conference on October 7, 2026, the organic biofertility product TerraSante™ has been largely sold out since June 2025. By mid-August 2026, the company had generated around CAD 0.9 million in revenue from TerraSante™, about 46% more than in all of 2025.
The bottleneck is currently production at the contract manufacturers: they are supplying around 800 bags per month, while nominal capacity is 2,000 bags. TerraSante™ primarily targets high-value crops such as strawberries, potatoes, leafy vegetables and tomatoes. According to in market farmer field trials, the company sees yield and quality benefits in these crops. In Canada, MustGrow is seeking market entry for the pre-registered biopesticide TerraMG™ to combat clubroot. According to MustGrow, the disease affects about 10% of roughly 9 million hectares of canola acreage in Canada alone. The company says there are no effective chemical countermeasures to date. TerraMG™ has not yet achieved full commercial registration anywhere; in the US and Canada, proceedings are under way at the EPA and PMRA.
MustGrow: Profitable Thanks to Licensing Revenue?
The figures confirm the positive operational development. According to the quarterly report, MustGrow generated CAD 0.4 million in net profit from continuing operations in the second quarter of 2026, up from a loss of CAD 0.9 million in the prior-year period. Licensing revenue of CAD 1.4 million from the first development milestone in the Bayer partnership was instrumental in the move into profitability. MustGrow reported receipt of the payment in August. Product revenue from TerraSante™, by contrast, fell to CAD 75,000 in the quarter, due to changes at the contract manufacturers. At the end of June, cash amounted to CAD 4.4 million, while management is targeting a sustainably positive cash flow for 2027. A portfolio of around 110 granted patents and patent applications protects the technology.
EU member states’ decision to reject indefinite approvals for synthetic crop protection products shifts margin potential toward biological active ingredients. While Bayer is investing millions to secure European approval for TerraMG™ and BASF is shifting its portfolio toward biological solutions, MustGrow is benefiting from continued growth in market demand. Remaining operational risks include scaling up contract manufacturing. It also remains unclear whether MustGrow’s active ingredient will qualify as a low-risk substance in the EU. If it does, it could be exempt from time-limited authorisations, potentially opening up a multibillion-dollar market for MustGrow. This makes the stock worth watching.
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