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New focus starts to bear fruit

Update | Food & Drink | 12 Mar 2019

Evolva's FY18 results demonstrate that the actions undertaken over the past 18 months are starting to come through into the numbers. Innovation has led to the expansion of ingredients systems with new variants and new markets, and the product pipeline continues to develop. The customer pipeline is progressing, and the maiden royalty payment from EverSweet was received, albeit small. The EPA registration of nootkatone for pest control applications was delayed by the US government shutdown, but is expected in the next couple of months. Our fair value reduces marginally to CHF0.56/share from CHF0.58/share.


Everything EverSweet

Update | Food & Drink | 13 Nov 2018

Evolva’s Q3 trading statement is mixed, but overall we believe it contains more positive than negative news. The announcement that Cargill and DSM are to form a new joint venture to produce fermentation-based stevia under the EverSweet brand is not a threat to Evolva’s position and indeed could potentially accelerate growth of the market that is still in its infancy. We note that revenue guidance is somewhat less bullish than at the H1 results and we therefore trim our forecasts slightly. We also update our forecasts for FX and overall our fair value remains unchanged at CHF0.58


Commercialisation on track

Outlook | Food & Drink | 14 Aug 2018

Evolva’s H1 results were in line with expectations and confirm that the current strategy is working to deliver an increased focus on commercialisation. The restructuring is nearing completion and will be fully implemented by the year end; we believe the new CEO Oliver Walker is unlikely to change the strategy in the shorter term. Importantly, EverSweet is now being shipped to customers, in line with expectations for a launch during 2018, and we expect it will start to contribute to revenues during H218. We have rolled forward our DCF to commence in 2019 and have cut our revenue forecasts in line with guidance. Our fair value edges down to CHF0.58 (from CHF0.60).



Update | Food & Drink | 22 Mar 2018

The announcement that Cargill has officially started producing EverSweet brings commercial reality to Evolva’s stevia product, after years of R&D. In line with its new focus on a capital-light strategy, Evolva is not participating in a JV with Cargill, but will rather draw down a royalty stream. This allows a positive contribution to be made more rapidly, and significantly reduces the financial demands on Evolva. We adjust our model to account for this, and also trim our forecasts for FY18. As a result, our fair value moves to EUR 0.60 (from EUR 0.65).


Capital restructuring

Update | Food & Drink | 05 Jan 2018

On 2 October, Evolva announced equity financing plans with the aim of raising CHF80m (gross) proceeds in two separate transactions in October and November 2017. The funds will be used to continue investing in R&D, and in commercialisation of the products. The company has not ruled out further debt financing in the coming months to meet its contractual obligations to its partner, Cargill. The new equity financing plans should have raised enough cash (CHF86m) to allow the company to reach break-even, expected around FY21. Our fair value is CHF0.65 per share (previously CHF0.69) and we believe this remains an attractive investment.


Transformation evolving

Update | Food & Drink | 17 Aug 2017

Evolva is transforming itself into a product-based company, and the new CEO is evaluating the organisational structure and operational strategy. R&D-based revenue is likely to fall due to the transformation. EverSweet remains on track for 2018 launch, nootkatone is on track for US regulatory approval in pest control in H218, and resveratrol revenues were up strongly. Our fair value falls to CHF0.69 as we cut our sales forecasts, but we continue to believe the current share price offers a good entry point.


Agreement reached

Outlook | Food & Drink | 09 May 2017

EverSweet is due to be launched in 2018 following the recent, much-awaited collaboration agreement with Cargill. Evolva is due to participate in the JV at the 30% level, and will also benefit from a new state-of-the-art bioprocessing facility for its other products. Our fair value is CHF0.81 per share and we believe the current share price offers a good entry point.


Headroom improves

Update | Food & Drink | 16 Mar 2017

Evolva has secured equity financing of up to CHF30m. This is a fully flexible arrangement with relatively good terms, which if drawn down in full would give the company about one year's worth of cash. As an interim arrangement this allows headroom to increase considerably and should help management's negotiating position with its partner, Cargill, as details of the stevia JV are yet to be agreed. Our valuation of CHF0.87/share remains unchanged.


A cloudier picture

Update | Food & Drink | 16 Jan 2017

The much-awaited stevia update has confirmed that EverSweet is still on track to be launched in 2018, and there is a new production plan. That said, talks with Cargill are ongoing and the option to enter into a JV has not yet been exercised, so the risk remains this may not occur. Moreover, FY16 revenues are now expected to be c 30% lower than previous guidance due to a milestone not being reached and customer conversion continuing to take longer than expected. We have adjusted our model to reflect these changes and our new fair value is CHF0.87/share (previously CHF1.10).


On track

Update | Food & Drink | 01 Sep 2016

H116 results confirmed Evolva is on track: following the stevia delay announced in March, the company has identified bottlenecks and is making good progress towards addressing them. As expected, production constraints with resveratrol have been resolved and nootkatone remains a strong proposition as an insect repellent. Our updated fair value of CHF1.10 per share (previously CHF1.14) reflects a slight move in FX rates and a slight increase in FY16 revenue forecasts, and represents 67% upside from the current share price.


Positive stevia newsflow

Update | Food & Drink | 07 Jun 2016

Evolva has received two important pieces of good news: first, on 26 May it was granted a pivotal patent for the commercial production of fermentation-derived steviol glycosides, which is key to the expansion of stevia and demonstrated that Evolva is ahead of the competition. Second, on 1 June it was issued with a US FDA GRAS no objection letter for EverSweet. This news should serve as a reminder that EverSweet remains a key part of the Evolva investment case.


Stevia delayed

Update | Food & Drink | 06 Apr 2016

The key headline that the launch of the stevia EverSweet product has been delayed is disappointing, but the investment case still stands. A short-term catalyst has been removed and the delay has implications for the valuation, but the long-term business case is unchanged. The changes in our assumptions lead to a reduction in fair value from CHF1.87/share to CHF1.14/share.