MustGrow Biologics (TSXV:MGRO, OTCQB:MGROF) has reached its first development milestone under its collaboration with Bayer, marking another step in the advancement of its TerraMG biological crop protection technology toward potential commercialization.
In this episode of The Capital Compass, MustGrow Chief Operating Officer Colin Bletsky joins Ricki Lee to discuss what the milestone means for the technology and the strategic value of having Bayer lead development across Europe, the Middle East and Africa.
Bletsky explains that the relationship allows MustGrow to pursue a significant international opportunity while maintaining a capital-light approach. Bayer is responsible for much of the development, regulatory and market work required to advance TerraMG in the region, while MustGrow remains focused on commercializing its Terrasante biofertility product in North America.
The conversation also looks at what comes next for TerraMG, including the regulatory pathway and potential expansion into additional markets within Bayer’s territory. Longer term, MustGrow is exploring partnership opportunities for regions including Asia-Pacific and Latin America as it works to expand its biological agriculture platform globally.
Watch the full interview above to hear more about the Bayer collaboration, TerraMG’s path toward commercialization and where MustGrow sees its next opportunities for growth.
MustGrow reaches Bayer milestone as TerraMG advances
This transcript has been lightly edited for clarity and readability.
Ricki: What does it mean when one of the world’s largest agricultural companies starts paying you for hitting development milestones?
Hello, I’m Ricki Lee, and this is The Capital Compass. Today, we’re taking a closer look at MustGrow Biologics, a Canadian ag-tech company developing biological and regenerative agriculture solutions derived from mustard.
The company has just reached an important milestone in its collaboration with Bayer, receiving its first development milestone payment under an agreement focused on MustGrow’s TerraMG biocontrol technology across Europe, the Middle East and Africa.
For MustGrow, it’s an important step in moving the technology along the path from development toward potential commercialization.
Joining me now to unpack what this milestone means, where the Bayer relationship goes from here and the longer-term commercial opportunity is Colin Bletsky, Chief Operating Officer of MustGrow Biologics. Colin, great to have you with us.
Colin: Thank you for having me, Ricki.
Ricki: Thank you for joining us again. If we could start with the news, you’ve now received your first development milestone payment from Bayer, tied to the progress with the TerraMG technology. What does reaching that milestone tell you about the partnership and the technology itself? How are they progressing?
Colin: Ricki, I would say it does two different things and tells us a number of things around both the partnership and the technology.
First off, on the partnership, Bayer’s done a tremendous job. We are so lucky to have an organization that is focused on working with us and working with other biological companies to really progress their pipeline.
To have these milestones and the commitment from an organization like Bayer — a multi-billion-dollar organization, I believe a US$26 billion organization, that is really focused on the crop protection space — to promote, be a part of and drive our technology in Europe, Africa and the Middle East is critically important. They’ve done a tremendous job. That’s on the partnership.
On the technology side, they wouldn’t be doing this if the technology didn’t work. This is what we’ve always said. We have a unique product portfolio and a product that Bayer is utilizing. We have the ability to have a major impact on the synthetic chemical and fertilizer space globally.
Having Bayer continue to move this project along, hitting this first milestone payment and having this opportunity for the technology to move forward, we say it’s a significant feather in our cap. The technology works. If it wasn’t working, and if Bayer didn’t see that activity and the way it works, they wouldn’t move this forward.
It’s twofold: a great partnership, a great partner investing a lot of money, capital and time, and a great product. When you put the two together, it has a lot of opportunity for success going forward.
Ricki: That sounds like a no-brainer from this point of view. The broader relationship, though, could represent significant value to MustGrow through upfront and milestone payments alongside Bayer-led development work over the coming years. How should investors think about the financial and strategic value of having a global company like Bayer advancing the technology in these markets?
Colin: At MustGrow, we’re focused mainly on the North American market, driving our TerraSante portfolio and product line in the U.S. and hopefully moving into other areas. We don’t have the scope, scale or resources to target a market like Europe, the Middle East and Africa.
To put it in perspective, to get a synthetic chemical registered in those regions, you’re looking at anywhere from US$200 million to US$250 million of capital investment. A biological is significantly less, but still requires a significant amount of capital to get those registrations — anywhere from the €30 million to €40 million mark to get a registration in those markets.
For us as an organization, and for our shareholders, we have an organization like Bayer that has the development expertise, registration knowledge, regulatory knowledge, market knowledge, sales and marketing capabilities, and field trial expertise. They’re taking our technology and moving it into that region without any capital investment from our side.
Once registered and once we get through this process with Bayer, MustGrow will have access to roughly 30 per cent of the high-value crop market globally, which is a significant amount. Europe specifically is a very large producer of high-value fruits and vegetables for the globe.
Having Bayer take this on and move it forward drives a tremendous amount of value for our shareholders because MustGrow is not putting in any capital, except my time, a few others’ time and product. This is where the partnership with Bayer comes in. They have done a tremendous job, and we’re very excited to see where this goes.
Ricki: Fantastic news. And I’m biased here, but we do have good apples in the UK, I’m just saying.
Bayer is responsible for much of the development, regulatory and market work needed to move TerraMG toward commercialization in EMEA. What are the next major milestones in that process, and what should investors be watching for from here?
Colin: We don’t really talk about the milestones, the milestone process and where we’ll be moving forward. I would say, if you look at it, the next stages will be about getting the product through the registration process and into that regulatory system.
Even with a biological product — we have food-grade mustards; we can eat our technologies on both sides — we still have to go through a full regulatory approval and scientific process within the European Union. That’s a significant timeframe and a lot of capital investment. That is a key aspect for us, number one.
Number two is moving away from the key region of Europe and then expanding into other areas. I think of the opportunities in South Africa, Kenya, Egypt and Morocco, and into other regions within their territory.
Bayer wants to see this work. They want to see the technology work in certain areas, and then they’ll progress and move that forward to other regions.
As an investor, what I would say to look for would be progress down the regulatory pathway and, moving forward, the potential to enter other markets within that region as well as the expansion of Bayer’s territory.
Ricki: Colin, the business model doesn’t stop at development milestones, right? If TerraMG reaches commercial sales, MustGrow could also benefit from royalties and manufacturing sales. How significant could that recurring revenue opportunity become for the company over the longer term?
Colin: We don’t discuss this at all. These are Bayer sales. These will be going through Bayer’s system.
I have to put it in perspective: if it’s significant enough for a US$20-billion-plus company to take this product to market and see the value in it, it’ll add significant value for MustGrow.
That’s all I would leave it at. We can’t discuss it, but if Bayer’s moving this forward, obviously they see a market, they see a need, they see profitability, and they see the ability to move this into the marketplace in a very profitable way.
Ricki: Finally, Colin, TerraMG is only one part of MustGrow’s broader technology portfolio. As you look beyond the Bayer relationship, what are the biggest opportunities you see to commercialize the platform and build MustGrow into a larger biological agriculture business?
Colin: We’ve started this already in North America, specifically the U.S., launching our biofertility product, TerraSante, and that’s moving along very well.
Moving TerraSante into other regions around the world would be another key area of growth and opportunity for us.
Also, on TerraMG, Bayer has the rights to Europe, Africa and the Middle East. We are still working, accessing and discussing opportunities with other partners for Asia, Asia-Pacific, Latin America and other parts of the world.
It is a broader portfolio, and we’re looking for the right partners to help us drive those models in different regions. As a small organization, we always say: keep it capital-light and work through partners to help drive that.
It’s really about expanding the portfolio on a global scale and accessing that US$380 billion marketplace that we have an opportunity in. Bayer’s a great first step. It shows the product works, it shows a large organization is willing to commit, and then that could move forward into other regions with other partners or potentially with Bayer.
Ricki: Thank you so much for your time today, Colin, and for walking us through the latest milestones for MustGrow Biologics.
Colin: Great, Ricki. Thanks for having me.
Ricki: For more information, you can visit MustGrow’s website. I’m Ricki Lee, and this has been The Capital Compass. Thank you for watching, and we’ll see you again next time.