MustGrow Biologics Corp MGRO TSXV The Yellow Mustard Seed is Showing It’s Green Power

Your eyes will tell you that mustard is yellow. But Big Pharma and Big Ag is seeing green when they look at the market potential for MustGrow Biologics Corp.’s (MGRO-TSXv) technology, which is based on the small mustard seed.

The eye-watering sensation of the Brassica family of crops includes mustard, wassabi, and horseradish–which you have probably ingested 1,000 times since you were a child–actually has use as a herbicide, pesticide and food preservative.

The mustard seed’s natural defense mechanism is so effective as a biopesticide that it can eventually be sold at the same price as synthetic chemical compounds (which generally are a lot stronger or why would we make them?).

MGRO has been able to secure four partnerships with BIG multi-nationals:

1. Bayer (BAYRY: OTC, $65B market cap), is researching MGRO’s molecules for bio-herbicides and food preservation, and they have exclusivity in Europe, Asia and Africa
2. Sumitomo Corporation (8053: TYO, $23B market cap) is researching MGRO’s molecules for bio-herbicides and food preservation, and they have exclusivity in the Americas
3. Janssen PMP, a subsidiary of Johnson and Johnson (JNJ: NYSE, $423B market cap) is researching MGRO’s molecules for food preservation in certain vegetables, and they have global exclusivity on that
4. NexusBioAg, a subsidiary of Univar Solutions (UNVR: NYSE, $5.4B market cap), has an Exclusive Marketing and Distribution Agreement with MGRO for Canadian canola (Clubroot disease) and pulse crops (Aphanomyces disease)

Each of these companies have been running field trials and registration process in their respective global regions on an exclusive basis, for the past couple of years at their own cost.

None of these companies get any IP out of this–all that stays with MGRO…for now. COO Colin Bletsky won’t say how much money these Ag and Pharma giants have spent on their research, but he did say the company has gone from 23 to 84 patents in the last couple years.

In their quarterly report, MGRO says lab testing can be up to $500,000 and field testing can be $1 – $5 million. Sumitomo has already paid extra ($500,000 cash to MGRO in 2022) to extend their research longer than the one year original deal.

Again, reading the latest quarterly report you can see that MGRO does spend a bit of money on R&D themselves, so it’s possible that some of these new patents came from work they did internally. It’s possible.

But the large number of new, recent patents, and the increasing length of R&D contracts says…it’s highly likely these companies are having success with MGRO molecules.

Big tailwinds here include legislation against harmful synthetic chemicals used in herbicides, pesticides and food preservatives AND a general societal wish for more organic products EVERYWHERE.

After a year or more of R&D with these majors—the next step is a commercial deal.

Now, I can’t tell you FOR SURE when/if there will be a deal between MGRO and any of these large multi-national corporations (MNC). Nor could I speculate what that could be worth to a stock with only 55 million shares out fully diluted; I truly don’t have a clue.

But I feel pretty confident saying that at some point in the near future, mustard seed biologics is about to become worth a lot more than the stuff you put on your burgers and hotdogs.

THE PRODUCT

MGRO works with the compound “AITC” – short for allyl isothiocynate – which is what gives that pungent taste to mustard, horseradish and wasabi.

It works when an enzyme and a glucosinolate that are normally separated in the cell of the mustard meet, but they can only meet when the cell is damaged like pictured below.

This can happen when… say…a bug bites into it, for example. The two compounds now are released into the same container and react to form that desired AITC compound, which acts as a natural pesticide.

ANY sort of physical disturbance can cause AITC formation. MustGrow grinds up the part of the plant high in potential AITC, isolates it from the other contents and then concentrates it into a biopesticide, which is considered completely organic.

AITC doesn’t stop there though. When it is broken down eventually, it breaks back down into its building blocks that made it up in the first place: sugars, carbs and proteins which will feed the soil, as opposed to degrading it—like if farmers over-fertilize.

While traditional pesticides can cause cancer and a wide variety of other health complications, AITC has associated anti-cancerous properties even.

Some pesticides are derived from heavy chemicals with non-sustainable practices, LIKE WHAT but if you need more of this, you plant more mustard plants.

Using AITC has been proven to work–prior to planting–through fumigation. Filling the air with food-grade organic mustard is much more preferable than poison gas!!

MGRO is also applying this same substance post-harvest to increase food preservation and control disease after picking. This use case hasn’t been studied as rigorously, but has created customer demand and early promising results.

The last product they have is using another compound in the mustard plant called thiocyanate as a natural herbicide, to prevent unwanted weed growth in your crops. This is moving through early development, but would add another $15 billion to their Total Addressable Market (TAM).

Finding the Highest Bidder

Regulatory bodies across the world are starting to crack down on the pesticide industry, making it nearly impossible to register new synthetic pesticides. Most recently Europe banned AITC’s direct competitor metam sodium which did $150M in sales in 2021. So we’re seeing a BIG shift in where the money is flowing–out of synthetics, into natural products.

So here is MGRO with 2.5 years of cash in the bank, and they still own all of their own intellectual property-over 80 patents now.

They were able to get four industry giants to fund a huge chunk of the field trials and gain the data needed to submit for more patents. Does that competition spur one to be The First with a commercial deal with MGRO?

Management/Board own 20% of the shares, and another 55% is owned by just a few different investor groups. With only 55M shares fully diluted, this is a very tight share structure. After a raise in 2021 at $2.60 that netted them $6.5 million, they still have 2.5 years cash in the bank.

So there could be a near term catalyst. Management SAID they are negotiating commercial deals–but there are no details on structure or timing or value–obviously–until the news is out. But here they are, reaching out to tell their story. I think that means they’re close.

We have already seen an uptick in acquisition activities focused around these organic alternatives.

MustGrow’s biologics have several markets in the billions to tens of billions of dollars annually–herbicides, pesticides and food preservation. Their product is good enough to attract big partners–who have been spending a lot of money doing their own work on MGRO molecules.

The next step may be close at hand…but nobody can say what that will really mean.