Evolva agreement with Cargill unimpacted by major sweetness tie-up
09 Nov 2018 --- Biotechnology and fermentation innovator Evolva has responded to news of the DSM and Cargill sweetener joint venture announced yesterday. The Swiss-headquartered company has stressed that Evolva’s royalty rights on EverSweet and their existing agreement with Cargill will remain unchanged as a result of the upcoming joint venture. In a business update, the company says that it expects full-year 2018 product sales to grow at a high double-digit percentage rate. At the same time, their sales development pipeline continues to gain momentum, supporting further growth in 2019.
“Our optimism regarding sales growth is driven by increasing commercial interest and orders. This confirms there’s clear demand for our products, leading to continuing growth going into 2019," Paul Verbraeken at Evolva tells FoodIngredientsFirst.” “Our royalty position and agreement with Cargill remain unchanged. Longer term we believe the impact of the tie-up could be positive for us. Our development pipeline contains some very interesting products that are around 2 years away from launch,” he adds.
In April 2017, Evolva entered into a major collaboration agreement with Cargill for the production and commercialization of EverSweet, a next-generation stevia sweetener. In March 2018, production of the product came on-stream.
EverSweet is a next-generation stevia sweetener that is promoted as solving challenges in both stevia taste and Reb M & Reb D scalability aspects. EverSweet is brewed to produce large quantities of sought-after sweetness ingredients found in the stevia leaf, Reb M and Reb D. The stevia leaf contains only minute quantities of these ingredients. EverSweet is also marketed as delivering better sweetness intensity, faster sweetness onset and improved sweetness quality – without the bitterness or off-note aftertaste common to existing stevia sweeteners. Evolva estimates the total addressable market to be worth around US$4 billion.
EverSweet next generation sweetener is initially being produced at a fermentation facility on Cargill’s Blair, Nebraska campus that will be retrofitted for this purpose.
Yesterday, it emerged that Cargill and Royal DSM had formed a new sweetness joint venture known as Avansya. The move will combine both companies’ technologies for producing steviol glycoside products made through fermentation and will market its products under one brand name, EverSweet.
Together, the companies will produce highly sought-after, sweet-tasting molecules, such as steviol glycosides Reb M and Reb D through fermentation. The move is aimed at giving food and beverage manufacturers an even more scalable, sustainable and low cost-in-use solution than if these same molecules were extracted from the stevia leaf. In a statement, the companies said that: “Cargill brings its unrivaled application expertise and global commercial footprint in the sweetener market, as well as large-scale fermentation capacity with access to co-located, raw material suppliers at its Blair, Nebraska (US) site.”
In a business update this morning, Evolva reported that the first royalty income from EverSweet product sales are expected, albeit modest, in the fourth quarter of 2018. The company further says that revenues from non-core R&D partner projects continue to decline in 2018, in line with their strategy to focus on value adding, commercially attractive products.
In terms of costs and restructuring activities, Evolva reported that combined efforts in R&D and manufacturing have resulted in a focused program to significantly lower manufacturing costs over the coming years. Furthermore, a full supply chain and network of service providers is being put in place to enable to ramp up volumes. The restructuring activities to transform Evolva, started in August 2017, will be completed this month. As a result expenses in the coming years will be lower than earlier communicated levels.
In their quarterly business update, Evolva, whose flagship ingredients are stevia, nootkatone and resveratrol, reported that product sales continued a solid growth trend. Sales have shown seasonal effects, however, with summer months being significantly lower compared to the rest of the year. For the full year 2018, they expect product sales to grow at a high double-digit percentage rate. The sales development pipeline continues to gain momentum, supporting further growth in 2019. The filing for registration of nootkatone for pest control applications remains on track at the US Environmental Protection Agency.
By Robin Wyers
