June 11, 2019

by Lynda Kiernan

Biopesticide developer Vestaron announced it has raised a $40 million Series B led by Novo Holdings, and including continuing investors Anterra Capital, Cultivian Sandbox, Open Prairie Ventures, and Pangaea Ventures.

“This is Novo Holdings’ first investment in biocontrols, specifically, and agtech more broadly,” said Anders Spohr, senior director at Novo Holdings.  “We believe that Vestaron’s platform has the potential to make a positive and meaningful impact on agriculture, the environment and society.”

Headed by CEO Anna Rath, Vestaron is dedicated to improving the safety, efficacy, and sustainability of crop protection through the development of a novel class of peptide-based biopesticides.

“Vestaron is at the forefront of a revolutionary transition in crop protection, from an industry based predominantly on small molecule synthetics to one where biologic molecules with proven modes of action as well as great safety and environmental attributes will play a major role,” said  Rath.

Peptides are small proteins that have proven modes of action, and therefore the same efficacy as traditional synthetic products, but offering the safety and environmental protection of biologicals. And as existing traditional products currently on the market face increasingly stringent regulation due to environmental concerns, along with declining efficacy due to pest resistance, Vestaron’s peptide-based crop protection products provide a critical alternative for farmers and agricultural producers.

Using an advanced proprietary fermentation-based peptide platform, Vestaron can develop a range of biological crop protection and trait products. Its first two products have recently launched: Spear®-T, which is designed for greenhouse use and controls all four of the major greenhouse pests – thrips, whiteflies, aphids, and mites; and Spear-Lep, which is designed for field use to control lepidopteran pests.

Both products are based on Vestaron’s Spear peptide, which has been assigned a novel nerve and muscular mode of action code by the Insect Resistance Action Committee (IRAC). This code validates that Vestaron’s Spear targets the nicotinic acetylcholine receptor, which is responsible for approximately 30 percent of the $18 billion global insecticide market.  

Six key muscle and nerve receptors collectively account for 80 percent of the global insecticide market, and Vestaron has peptides in its pipeline suited to address all of them. When discussing the transition of crop protection away from traditional synthetic products to biological, Rath said, “This transition is being driven by the same factors that drove a similar transition in pharma – slowing innovation, increasing late stage failures and thus development costs – as well as factors specific to crop protection including resistance of pests to existing solutions, environmental and worker safety issues, and consumer awareness of and focus on food safety and quality.”

The company plans on using the additional capital to fund the commercialization of its Spear line of products, which will include the expansion into new geographies, and to accelerate the development of new peptide-based products.

“In our time as investors, we have seen Vestaron overcome key technical hurdles. Having now demonstrated its ability to successfully commercialize its first peptide-based bioinsectide, and with the strength of its pipeline and backing of such a strong investor syndicate, we believe Vestaron is well-positioned to become a major player in the crop protection industry,” said Phil Austin, partner at Anterra Capital.

A Growing Niche

The biologicals market includes biopesticides, biofertilizers, and biostimulants, which due to increased regulation and a growing focus on sustainable practices, are commanding an increasing share of the market.  According to a just-released report by ResearchandMarkets.com, the agricultural biologicals market is estimated to have had a value of USD $6.75 billion in 2017, and is projected to reach USD $12.86 billion by 2022, which translates to a compound annual growth rate of nearly 14 percent.

“Consumer concerns over food provenance and safety – where food comes from and how its produced (i.e. organic, non-GMO, sustainable production methods, etc.) – has emerged as a major trend in developed markets,” noted Philippe de Lapérouse and Mark Zavodnyik, of HighQuest Consulting who included Crop Services and Inputs as a sector to watch in 2019.

“As a consequence, consumers are playing an increasingly influential role in how food is handled and processed across the supply chain (production, processing, packaging, and distribution, etc.).”

“To stay ahead of this trend, retailers and distributors are requiring their suppliers to meet strict protocols that are radically upending established practices throughout the supply chain, and changing the range of crop inputs and services deemed acceptable for use in the field.”

Not only is consumer pressure coming to play on the development of new crop inputs, but ecological pressure as well.

“…regulatory agencies around the world are restricting older chemical pesticides,” noted Pam Marrone, founder and CEO of Marrone Bio Innovations in a recent industry insight article, ‘Growing Innovation in Biologicals’ originally printed in the Women in Agribusiness Quarterly Journal, Volume 5, Issue 2 (2019).

“Most recently, Canada and Europe banned certain chemical insecticides in the “neonic” class due to their effects on pollinators, such as bees, that are needed to grow many crops. In contrast, there are many new biopesticide active ingredients being commercialized each year, and not just in the U.S., which has the most established registration process for biopesticides, providing a good opportunity to fill the pest management gap caused by the dearth of new chemical options coming on the market.”

However, product development is just one factor of the equation. There needs to also be a knowledgeable and accessible salesforce able to market these new products and to field questions from growers in order to assure adoption.

“To succeed in the future, ag retailers will need to be generalists and broaden the depth of their expertise and technological knowledge as newer products such as advanced crop protection and agricultural bio-inputs come into the market,” said Chris Grallert, an industry expert and HighQuest Consulting affiliate.

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.