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The co-development deal for stevia with Cargill and the CHF31.3m equity raise in March have transformed the prospects of Evolva. In Cargill, Evolva has the ideal partner to maximise the potential of its most valuable programme. Evolva could now also achieve sustainable profitability without issuing more equity, following the fund-raising. Material recurring product revenues from resveratrol and vanillin should start in FY14 and from stevia at the end of FY15. We value Evolva at CHF1.58 per share.
Evolva to co-develop stevia with Cargill
Evolva has partnered its stevia programme with Cargill, a major food producer and trader. Evolva could receive $7.5m in milestones and has the right to in the commercialisation of the sweeteners (up to 45% profit share), or it could choose to receive royalties (up to low double-digit). Cargill has also made a CHF4.5m equity investment in Evolva. The sweeteners could be launched at the end of 2015.
Potential of stevia
Stevia sweeteners (based on Reb A) are the fastest growing class of high-intensity sweeteners as demand for low-calorie, natural sweeteners rises. This is despite the bitter/liquorice aftertaste associated with Reb A and it costing considerably more than other high-intensity sweeteners to produce. Evolva’s yeast production process promises to solve the taste issues and lower manufacturing costs. We currently estimate that Evolva/Cargill will gain 10% of the $4bn beverage market.
Source: Edison Investment - read full article at http://www.edisoninvestmentresearch.com/NEXT ARTICLE
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