15 December 2023, Canada: MustGrow Biologics Corp. (TSXV:MGRO) (OTC:MGROF) (FRA:0C0) (“MustGrow”) wishes to provide additional information about the collaboration agreement (the “Agreement”) with Bayer AG (“Bayer”) which was announced December 11, 2023. The Agreement is a license and collaboration agreement enabling Bayer to further evaluate certain soil applications of MustGrow’s mustard-based biocontrol technologies and to develop, formulate and commercialize licensed products containing such technologies for soil-applied, in-field uses for food and feed production in certain countries in Europe, the Middle East and Africa. The Agreement is dated effective December 11, 2023, and unless terminated earlier as provided in the Agreement, the term of the agreement shall continue until the expiration of all intellectual property licensed to Bayer under the agreement.
Under the terms of the Agreement, MustGrow will receive an initial upfront payment as well as additional payments linked to the achievement of certain business milestones. These milestones include achievement of certain technical milestones such as testing in field trials and safety studies, submission of the first regulatory dossier to the appropriate authorities, and receipt of regulatory approval for a licensed product. Upon the commencement of commercial sales, MustGrow will also be entitled to fees from royalties and manufacturing sales.
Pursuant to the Agreement, Bayer will be responsible for the regulatory and market development work (the “Development Work”) in the respective field of use necessary to commercialize MustGrow’s mustard-based biocontrol technologies, including the development of the formulated product, conducting relevant regulatory data studies for regulatory submissions, filing regulatory submissions, registration with relevant regulatory authorities, and support, marketing, and commercial sales activities. Based on the industry experience of its management team, MustGrow anticipates that the value of the upfront, milestone payments and Development Work could approximate USD $35 to $40 million over the next 5 to 7 years. The value and the timeline associated with completing the Development Work is not knowable with precision at this time for a variety of reasons, including risks relating to product development and regulatory matters and the nature of collaboration agreements, which are described more fully in MustGrow’s Annual Information Form for the year ended December 31, 2022 starting on pages 24 and 26, which is available under the Company’s profile at www.sedarplus.ca. Because of the nature of the licensing arrangement, other than costs associated with providing product for testing, there are minimal incremental costs to MustGrow in pursuing the Development Work.
Pursuant to the Agreement, Bayer has also been granted a right-of-first-negotiation for a license to use MustGrow’s mustard-based biocontrol technologies for use in bananas in particular applications, excluding post-harvest applications. MustGrow expects to continue collaborating with Bayer to consider other potential applications of MustGrow’s mustard-based biocontrol technologies, including potentially testing in regions not currently covered by the Agreement.
MustGrow is providing this additional information to the market in response to questions it has received about the Agreement, including a clarification request from the Canadian Investment Regulatory Organization.
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