Backed by $40M investment, Vestaron pivots to commercialize biopesticide

KALAMAZOO — When Anna Rath signed on as CEO of Vestaron Corp. 15 months ago, the company was preparing to transition from a focus on R&D to commercializing a line of new environmentally friendly insecticides. 

Since then, the Kalamazoo-based Vestaron put in place a senior management team led by Rath, built up internal capabilities, brought its first products to market, formed its first distribution relationships, moved contract production from Europe to the Midwest, and secured $40 million in financing “from a really top-shelf group of investors.”

Fourteen years after its creation, Vestaron now sits “at a really exciting pivot point in its life,” Rath told MiBiz in an exclusive interview.

“The foundation is laid,” she said. “The company has in place all of the key things that it needs to be successful and now it’s off to the races. Now we get to really start building the market for this first family of products as well as aggressively moving forward the pipeline of additional product families.”

Vestaron developed a new biopesticide based on spider venom that holds promise to create an entirely new field in the $18 billion global insecticide market. Many experts predict the effect could be similar to what the development and emergence of biologic drugs have done for the pharmaceutical industry.

Rath describes the science and technology behind Vestaron’s new Spear-branded products as “our own little revolution” in agricultural chemistry that’s going 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.”

Vestaron’s role in that transformation drew the interest of investors, who put $40 million into a Series B capital round that closed in June.

Novo A/S, a Denmark-based holding company of pharmaceutical giant Novo Nordisk A/S and biotech Novo Zymes, a producer on industrial enzymes, led the capital round. Other investors include Boston-based Anterra Capital; Chicago-based Cultivian Sandbox Ventures, which has an office in Grand Rapids; Effingham, Ill.-based Open Prairie Ventures; and Vancouver, British Columbia-based Pangaea Ventures Ltd.

The deal was the first time Novo invested in a company involved in agricultural technology. Novo entered the deal with a deep understanding of the science behind Vestaron’s peptide and the production process.

“They knew that it was a space they wanted to get into. Because of the parallels they could see in Vestaron to some of the things that happened in pharma a few decades ago, this opportunity made sense to them,” Rath said. “The most important thing is that, in general, now we have a syndicate of investors that believes that Vestaron can have a significant impact on the world of ag chem.”

In a public announcement last month on the company’s Series B round, Anders Spohr, senior director at Novo Holdings, said Vestaron’s platform “has the potential to make a positive and meaningful impact on agriculture, the environment and society.”

“We have deep conviction about Vestaron’s prospects and look forward to supporting the company and its team going forward,” Spohr said.

Funding growth

Vestaron plans to use the new capital to expand commercialization and accelerate the development of an additional line of eco-friendly insecticides, as well as a fungicide, anti-bacterial and a “much broader array of crop protection products,” Rath said.

After moving production to a contract manufacturer in the Midwest, the company recently hired Ash Patel as its chief operating officer. A veteran operations director, Patel has 23 years of experience in managing manufacturing, engineering, capital projects, supply chain and I.T./automation systems.

Vestaron sells its products through a network of distributors and this month announced a deal with BFG Supply in Burton, Ohio, a supplier to professional growers.

The company began generating revenue this year as it works to develop a broader national distribution network for 2020, Rath said. The company’s Spear-T product is used in greenhouses. Spear-Lep is used in fields to protect fruits, vegetables and high-value field crops.

Rath expects to have contracts in place with national distributors by the first quarter of next year.

“Now that we’re in a position to be able to really supply the market, we are in discussions with a couple of the major national distributors about significant national distribution agreements with them,” she said. “What we have this year is lots and lots of demonstrations out with key opinion leader growers and with these distribution partners to really lay the groundwork for next year, which we think will be our first year where we really have really significant sales into the market.”

Interest in Vestaron’s product “is extremely strong,” Rath said, helped along by a designation from what’s known as the Insect Resistance Action Committee, which is a technical group for the global industry trade association CropLife International, based in Brussels, Belgium. Both Spear products were assigned a novel code that indicates they target nerve and muscular receptors in insects that combined account for about 30 percent of the global insecticide market.

That’s a market “in dire need of a new solution” because of resistance issues, Rath said.

“Being a novel mode of action targeting that critically important receptor means that we are getting a lot more attention from distributors and from growers than a small biologics company with one product ordinarily would,” she said.

IPO ahead? 

Looking to the future, Vestaron must make a number of strategic decisions in the coming months, including “how we want to handle our international expansion,” Rath said.

That decision will come down to whether Vestaron wants to bear the full costs of registration in foreign countries, or sell international rights to fund further development in the U.S. The answers may vary from country to country, Rath said.

Vestaron has initiated trials to submit registrations for Spear peptide-based products in Canada and Mexico, and “we are starting to think more broadly beyond that as well,” she said.

The company also needs to decide how rapidly to develop a pipeline of additional peptides that have been identified and can be brought to market, she added.

Ultimately, as Vestaron grows and reaches its potential, owners will need to decide how best to unlock the value the company has created, either through an exit and sale to a strategic acquirer, or a possible initial public stock offering.

“Within a few years, or three to five, we will have really delivered on the promise of the company, including achieving substantial sales of the Spear products, including international expansion, including bringing additional pipeline peptides to market, and really showing that these biologics can have the same revolutionary impact in ag that they did in pharma,” Rath said. “At which point, we would have built something that is pretty compelling to some of the major ag chem companies.

“But given that there are those established distribution networks that are straightforward for a company like ours to tap into in ag, it is also entirely possible that we could remain independent and choose to do an IPO.”

 

 

Vestaron Adds Kira Bennet as PNW Sales Rep.

Vestaron welcomes aboard Kira Bennett as the new sales representative in the PNW!  Kira joins the team from Corteva after having worked to develop the PNW market for them over the past 12 years.  Her primary role will be working to develop Spear-Lep and Spear-T in Washington and Oregon and add new distribution partners to gain additional market share.

Kira resides in Richland, WA

Vestaron Adds Dan Albritton as South East Sales Rep.

Vestaron welcomes Daniel Albritton to the team!  Dan will be the SE Technical Sales Representative developing business in FL and GA.  He joins the team most recently from Howard’s Fertilizer and will reside with his wife Elise and two daughters Charlotte Grace and Ruby Claire in Madison, FL.

Vestaron pursuing global expansion of agchem pipeline, CEO says

Vestaron, a Kalamazoo, Michigan-based developer of biologic crop protection products, is evaluating its options to accelerate its global expansion, said CEO Anna Rath.

“At one end of the spectrum, we could choose to sell international rights to our products and use that proceeds to further development in the US,” she said. “At the other end of the spectrum, we could decide to proceed with international registrations on our own, so that we maintain full ownership of all international rights and are then in a position to gain a larger share of the downstream value from the product.”

The company, which provides peptide-based biopesticides for field and greenhouse growers with a focus on protecting high-value crops, is eyeing Canada and Mexico as key markets for near-term expansion, Rath said. Vestaron has initiated trials in both countries, she added.

The European Union, whose regulators have been pushing for environmentally friendly agricultural chemical (agchem) products, as well as major agricultural markets in Latin America and Asia also hold promise, Rath added.

Vestaron has taken in USD 86m in outside capital to-date—most recently raising USD 40m in a Series B round. Rath said the company could tap outside markets for additional funding early next year as it grows outside the US.

“It really depends on what kind of international strategy we decide to pursue, and how aggressively we decide to move the pipeline ahead,” she explained.

Founded by a molecular biologist at University of Queensland, Vestaron has launched two products that target greenhouse and field growers in all 50 US states. It sells through a network of distributors and retailers, according to Rath.

Last June, Rath was named Vestaron’s CEO, succeeding John Sorenson who died early last year, to lead the firm’s transition from the R&D phase to commercialization.

Vestaron’s investors include Novo Holdings, Anterra Capital, Cultivian Sandbox, Open Prairie Ventures and Pangaea Ventures.

Vestaron is unique in that it is focused on biologic molecules that have proven modes of action and safety and environmental attributes, Rath said. The CEO compared Vestaron’s strategy to the transition the pharmaceutical industry underwent 20 years ago, from a focus on small-molecule chemicals to a focus on safer biologicals.

Vestaron aims to expand its product portfolio to include a broad range of biological crop protection products such as fungicides and antimicrobials and to eventually become “the leader in developing peptide-based biologic protection products,” Rath said.

For the long term, Rath said Vestaron will likely make an attractive target for major agchem companies, declining to provide additional details. The company could also “easily” be an IPO candidate, she said, although there is no set timing for an exit at this time.

“Vestaron is the clear parallel to Amgen or Genentech, which were the first companies to really work with the bigger biological molecules—but with known isolated molecules where you could completely understand their modes of action,” she said. “There is no reason why Vestaron couldn’t be the Amgen or the Genentech of agchem.”

Amgen [NASDA:AMGN] and Genentech, now a Roche Group [OTCMKTS:RHHBY] company, went public in 1983 and 1980, respectively.

The CEO declined to disclose the company’s financials but said it expects to add 15 employees to its current 20 by year-end.

~ by Liying Qian in Chicago

Vestaron Hires Ash Patel as COO

June 20, 2019 – (Kalamazoo, Michigan) – Ash Patel is the most recent hire as Vestaron continues to round out its corporate leadership team and fulfill its mission of revolutionizing the agricultural insecticide landscape. As an accomplished operations director with more than 23 years of experience leading manufacturing, engineering, capital projects, supply chain, and IT/automation systems, Patel is the ideal leader for this role.

“With a background including global manufacturing and supply chain management experience in multi-national biotech companies and a strong focus on value creation, we believe the transition for Ash will be seamless,” shared Anna Rath, CEO of Vestaron. Rath continues to explain, “Ash’s previous roles, encompassing fermentation-based manufacturing oversight, plant expansions, supply chain management and international experience in LATAM, APAC, and Europe, as well as experience with regulated manufacturing processes comprise the resume Vestaron’s leadership team and board were searching for.”

With the recent commercialization of Vestaron’s first peptide-based bioinsecticides, the company was seeking someone who could help it meet increasing volume requirements while streamlining and reducing risk in the manufacturing process. Ash joined the team on June 12, shortly after the organization announced its Series B funding and completes the corporations’ senior executive team. “The recent success of the new IRAC group 32 coupled with the last round of fundraising clearly showed the potential Vestaron has, and I am pleased to have become a part of the team,” expressed Patel.
Patel will oversee all of Vestaron’s manufacturing and supply chain operations, including associated regulatory processes, throughout the globe.

June 10, 2019, 10:00 am EST – (Kalamazoo, Michigan) – Vestaron, a company dedicated to improving the safety, efficacy and sustainability of crop protection through its development of peptide-based biopesticides, announces its $40 million Series B Financing, led by Novo Holdings A/S.  Novo Holdings joins continuing investors Anterra Capital, Cultivian Sandbox, Open Prairie Ventures, and Pangaea Ventures.

Peck Joins the Vestaron Team

Vestaron Hires Field Development Biologist

April 22, 2019 – (Kalamazoo, Michigan) – Daniel Peck, Ph.D., is the most recent team member to join Vestaron Corp. As a Field Development Biologist, Peck began orientation by meeting the R&D team in Kalamazoo the week of April 15.

Daniel earned his bachelor’s degree in zoology and entomology from the University of Wisconsin at Madison, and his doctorate in entomology from Cornell University. He is a Board Certified Entomologist with the Entomological Society of America and a Certified Senior Ecologist with the Ecological Society of America.

Peck brings to Vestaron 25 years of prior experience in insect pest management. This most recently includes 3½ years working as a Product Development Manager and then Biological Program Manager at BioWorks, Inc. based in Victor, NY. His research and development efforts there were aimed at developing, coalescing and promoting the scientific validation behind biologically based products for their role in insect management, disease suppression and plant nutrition.

“Daniel’s extensive insect pest management experience will be put to immediate use serving our customers in the eastern US,” explains Ben Cicora, Senior Vice President of Sales and Marketing. “However, we are looking forward to having his expertise as a resource for the entire organization as we continue to grow and expand our footprint.”

Peck also has prior experience as an independent consultant in the area of turfgrass entomology; as an Assistant Professor at Cornell University in the area of soil insect ecology; and as a Senior Research Fellow at the International Center for Tropical Agriculture (Cali, Colombia) in the area of integrated pest management.

Vestaron Appoints Jessica Vanhoy as Chief Financial Officer

Jessica Vanhoy joined the company as Chief Financial Officer in April of 2019. Most recently Director of Financial Planning and Analysis for Dova Pharmaceuticals, Jessica has 20 years’ experience in accounting and finance, fostering teamwork through adversity. She holds a BSBA in Accounting from Appalachian State University, an MBA from Campbell University, and is a certified public accountant in the state of North Carolina.