Biotech firm’s ASX launch turns into a fizzer
THE gang from Queensland agricultural biotech firm Terragen Holdings jetted down to Melbourne and uncorked the good stuff with their bankers yesterday to celebrate the kick off of trading on the ASX.
Unfortunately for them, the debut of the Coolum-based outfit was a bit of a fizzer.
Shares issued at 25 cents to raise $20 million in the IPO ended up losing ground, finishing the day at 20 cents. They only managed to hit a high of 26 cents earlier in the session.
But boss Justus Homburg believes there's huge untapped global potential for the company's range of biological products, which use live microbes instead of chemicals to address issues such as soil health and the productivity of farm animals.
Terragen already has two products in the Australian and NZ markets, soil conditioner "Great Land'' and feed supplement "Mylo''.
Work is also under way on several veterinary medicines as the company looks to use some of its new cash injection to establish a foothold in the US and Europe.
Market analysts expect the natural, bacteria-based goods to resonate in an era when there's a heightened consumer focus on organics, gut health and the need to reduce reliance on traditional synthetic fertilisers and pesticides.
Homburg, a native of Holland who ironically spent nearly 15 years with chemical giant Monsanto, believes the company is the first of its kind to list anywhere in the world and will help improve sustainable agriculture.
"Terragen is well placed to help unlock a new future for farming,'' he said.
But substantial hurdles remains.
The company suffered a net loss of more than $3 million in each of the last three financial years even though revenues soared nearly 50 per cent to $981,000 over that period.
That was enough for auditors to warn about a "material uncertainty'' hanging over the company's prospects for survival, although, of course, this was before $20 million in fresh funds landed in the bank.