Marrone Bio Innovations, Inc. (MBII) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Marrone Bio Innovations fourth-quarter 2013 financial results conference call. (Operator Instructions). I would like to remind everyone that this conference call is being recorded. I would now like to turn the call over to your host for today's conference, Mr. David Niederman. Sir, you may begin.

Good afternoon and thank you for joining us on today's conference call to discuss Marrone Bio Innovations' fiscal fourth-quarter 2013 results. This call is also being broadcast live over the Web and can be accessed in the Investor Relations section of Marrone Bio Innovations' website at investors.marronebioinnovations.com.

With me on today's call are Pam Marrone, Marrone Bio Innovations' Chief Executive Officer; Don Glidewell, Chief Financial Officer; and Hector Absi, Chief Operating Officer; and also our incoming Chief Financial Officer, Jim Boyd.

After the market closed today, MBI issued a press release announcing the results for its fiscal fourth quarter ended December 31, 2013. If you would like a copy of the release, you can access it online at the Company's website or you can call The Blueshirt Group at 415-217-7722 and we will fax or email you a copy.

Before beginning, I would like to remind you that this conference call may contain statements regarding management's expectations, hopes, beliefs, intentions and strategies regarding the future, as well as projections, forecasts or other characterizations of future events or circumstances. Such statements are based on management's current expectations and beliefs concerning future developments and the potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that management has anticipated. Such statements involve a number of risks and uncertainties, some of which are beyond management's control or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these statements.

Important factors that could cause differences are contained in the reports filed by the Company with the Securities and Exchange Commission, including the Form 10-Q that the Company filed on November 8, 2013 and our earnings release posted on the Company's website. Should one or more of these risks or uncertainties materialize or should any of management's assumptions prove incorrect, actual results may vary in material respect from those discussed today. Any guidance that management may offer in this conference call represents a point in time estimate. The Company expressly disclaims any obligation to revise or update any guidance or other forward-looking statements to reflect events or circumstances that may arise after the date of this call. Now I would like to introduce Pam Marrone, Chief Executive Officer of Marrone Bio Innovations.

Thank you, David and thanks to everyone joining us on the call today. 2013 was a transformative year for Marrone Bio Innovations. We launched our successful IPO, crossed the 1 million treated acres milestone in the United States, produced Grandevo and Regalia at our manufacturing facility in Michigan and also continued our robust top-line growth, more than doubling revenues for the year. Overall, we made tremendous advancements towards our goal of becoming the leader in the rapidly growing biopesticide and bio-based plant health industry.

The final quarter of 2013 capped a strong year of growth. Our fourth-quarter revenue of $6 million represents growth of 106% from the fourth quarter of 2012. This success reflects our launch and strong sales of Regalia in the Midwest where it performed well, increasing yields on corn and soybean. Additionally, our Grandevo product saw its first full year of commercial availability and enjoyed significant sales. We were also pleased to announce the EPA approval of the removal of the bee toxicity warning label from the Grandevo product label, which further enhances the appeal of the product.

We made solid progress on the buildout of our Michigan manufacturing facility and have now produced both Grandevo and Regalia at the plant. Hector will provide a more detailed update on our progress at the facility in a few moments. We also continued to advance our product pipeline. I am pleased to report that six additional pipeline products have cleared the major phases of toxicology and demonstrated efficacy in the field. This underscores our confidence in our commitment to launch one to two new products every year. In 2014, we will launch our new insecticide, Venerate, which we have successfully brought through scale-up and manufacturing and is now commercial-ready. We will also launch our first plant stress offering. I am excited about our new products for the year and will now spend a few moments providing some details on the products and our commercialization plans for them.

Let me begin with Venerate, our second broad-spectrum insecticide, which we discovered in our own screening. Venerate features contact activity against a wide range of insects and complements Grandevo's mode of action. With Venerate, we have two tools for growers to use during the season to reduce resistance risk to chemicals, protect crops right up to the day of harvest and to allow workers to get back into the field quickly.

Additionally, Venerate comes in a liquid formulation, which makes it a great product for aerial application and it is also non-toxic to most beneficials, including bees. Venerate was approved by the EPA on February 28 and state registrations are in progress. Following receipt of state registration, we expect to announce the product launch and commence sales in several states.

We will also launch a new plant stress product in 2014. The first product from this new product family has been in our pipeline as MBI-505 and in its pre-commercialization stage, we have now branded it as Haven. As an anti-transpirant, Haven has a different mode of action than the other plant stress products on the market and has showed evidence of helping plants maintain and increase yields under conditions such as solar stress and reduced irrigation. Recent tests with Haven by some of our grower partners at grape vineyards in Chile have provided positive feedback that you can see on slide 2 in the provided slide deck.

Trials in previous years showed yield increases in vegetables such as tomatoes and peppers and fruits such as apples and grapes. We believe this product is timely given current drought conditions in California, Brazil and elsewhere. Haven could potentially have uses in a broad range of crops such as high-value fruits, nuts and vegetables, turf and also row crops. Haven could be used alone or in combination with other products in our portfolio to achieve an optimal outcome of plant health and pest control.

We recently announced licensing intellectual property in this area from Kao Corporation in Japan. We have been working on technology from this type of naturally derived chemistry for the past few years learning about its action and efficacy in field trials and developing key expertise in this area. As you may have seen in the recent New York Times article, which discussed the evolution of our Zequanox product, we have unparalleled capabilities at Marrone Bio Innovations in taking inlicensed technology and developing it into a commercial product. Haven is another example of our doing so.

I would like now to provide some updates regarding field trials as shown in the accompanying slide deck. On slide 3, Regalia continues to perform well in field testing with a recent university study showing strong performance as a tank-mix partner increasing yield of barley by 8% when used in conjunction with a leading chemical fungicide over the chemical alone and also outperforming other synthetic fungicides and fungicide mixes.

In a 2013 trial in Ohio, as shown in slide 4, when Regalia was added on top of three different major chemistries on soybeans, it enhanced yields compared to the chemicals alone in all three cases. We have also seen good efficacy in our pipeline biofungicide, MBI-110, against downy mildews of vegetables such as lettuce and cucumbers in the new data as seen on slide 5. This follows previously reported control of grape downy mildew.

MBI-110 is also showing excellent plant health benefits. On slide 6, in a trial conducted by an independent researcher, the product increased yield of corn by seven bushels per acre compared to the untreated when deployed as a seed treatment. We are excited about the prospect of using 110 as a seed treatment as this represents a new segment for Marrone Bio Innovations and as a key lever available to growers as they look to enhance yields. 110 will add to our potential seed treatment offerings, which includes the nematicides and insecticides that we reported on last quarter. We are expanding seed treatment trials in 2014 to generate additional data to support future commercial launch and partnering.

We also continue to see good results from our Venerate trials across a wide range of crops and insects as you can see on slides 7 and 8. Examples include strong efficacy against Asian Citrus Psyllid where it can be a partner to Grandevo, as well as in controlling Brown Marmorated Stink Bugs in stone fruit, leafhoppers in grapes and thrips on strawberries. In a trial conducted by one of our large grower customers, Grandevo reduced Asian Citrus Psyllid down to zero when combined with two different surfactants.

Turning to our Zequanox product, our ongoing demo at Hoover Dam continues to show good results. We have developed a healthy list of more than 50 customers who have expressed interest in the preventative periodic treatment program such as that conducted at Hoover. Additionally, we have submitted Zequanox to the EPA for open water registration and expect to receive it this year, which would expand the market beyond the current pipe treatment market. We continue to grow Zequanox sales and anticipate we will see revenue growth in 2014 as a result of these efforts. While we remain excited about the long-term prospects for this product and see potential for significant upside in future years, revenue contributions from Zequanox should remain modest in 2014.

In January, Hector Absi was promoted to Chief Operating Officer. He is now responsible for our sales, marketing, business development and also our supply chain and manufacturing. Hector has been instrumental in our recent growth and success and we are thrilled that he will be applying his talents to these areas. I will now turn the call over to Hector to provide updates regarding our manufacturing plant in Michigan and also our commercial progress. Hector?

Thanks, Pam. We continue to make positive strides towards broadening our distribution network and expanding the commercial reach of our products. I am pleased to report that we have signed a letter of intent with Koppert Biological Systems for distribution rights of our insecticide in covered crops worldwide outside of the US, Canada and France. Koppert is a leading supplier of biological control and pollination solutions for covered crops for growers across the world.

We also signed a letter of intent with Nufarm Limited for distribution rights of Regalia, Grandevo and Venerate in Australia and New Zealand. Agreements with leading partners such as Nufarm and Koppert are key milestones in our global expansion. We are now negotiating commercial agreements associated with these letters of intent and will provide further updates in future calls.

Turning to our manufacturing facility in Michigan, which we refer to as M3, we have reached several milestones. We are nearing completion of phases 1A and 1B, which include getting two 20 cubic meter fermenters up and running to produce Grandevo. In the beginning of the second quarter, we will be continuously producing Grandevo at M3 and we plan to add the production of both Zequanox and Regalia before the end of the second quarter.

In addition to achieving our buildout and production goals by this timeframe, we are also operating below budget. This success will be followed by our commitment to complete phase 1C, which includes a third 20 cubic meter fermenter by the end of July. Our progress at M3 should allow us to improve our product margins, scale faster and increase production in response to market opportunities. I want to pause and again reemphasize the significance of our progress at M3 to date. With the first two fermenters in place, our confidence in our ability to achieve our operating goals has been significantly enhanced.

Our more than doubling of revenue in 2013 was driven by the successful launch of Regalia Rx into row crops and the stellar performance of Grandevo in its first full year of sales. As Pam mentioned earlier, our market research and conversations with both current and potential customers in row crops and specialty crops continue to point to a strong retention rate among current customers and significant demand for new acres. For example, in 2014, we will be expanding the marketing efforts of Regalia into wheat, rice, sugar beets and canola while continuing the penetration in our existing crop base. This, along with our successful launch into corn and soybeans, keep us optimistic that we will continue to meet expectations in 2014.

Regarding Grandevo, we believe its performance in 2013 represents one of the fastest commercial adoptions of a biopesticide. Its contributions to grow our programs in Florida citrus and other high-value crops make it a compelling product to help address the issue of invasive species and other increasing concerns of resistance and residue management. We are now focused on replicating the success we delivered in the US for Grandevo into international markets by formalizing agreements with key partners such as the ones we mentioned earlier.

I will close by noting that we have also received several registrations for Regalia in Latin America and South Africa, which over time will result in increasing revenues in the southern hemisphere. This will further diversify our business and revenue stream to help offset challenges and variability that can surface in the northern hemisphere. We have surpassed the 1 million treated acre milestone in the US and we are now focused on achieving the same milestone in other world areas. Now I'll turn it back to Pam.

Thanks, Hector. As we announced during our last earnings call, we launched a search for a new CFO upon the retirement of our CFO, Don Glidewell. We are pleased to introduce Jim Boyd who has more than 30 years of financial experience and over 12 years as a public company CFO in complex manufacturing businesses. We are grateful to Don Glidewell for his commitment to a smooth transition, his three productive years at MBI and of course his valued contributions during our IPO. Now I will turn the call over to Don to discuss our financial results. Don?

Thank you, Pam. We generated $6 million in revenue for the fourth quarter of 2013 compared to $2.9 million for the same period in 2012 or an increase of 106% for the quarter on a year-over-year basis. For the 12 months ending December 31, 2013, total revenues were $14.5 million, which represents 104% growth. This growth is in line with our 2013 plan of more than doubling revenue.

For the fourth quarter, deferred product revenue was $246,000. On an annual basis, deferred product revenue of $1 million was recorded on our balance sheet and as such is not included in the revenue just referenced. Our strong fourth-quarter results reflected the fact that our current business is characterized by a relatively small number of markets, geographies and seasonality, which causes uneven quarterly revenue.

In addition, any expected seasonality may be offset or magnified by a number of drivers such as weather, sales mix, crop growth and expansion into new segments and geographies. Revenue recognized in the fourth quarter is 41% of our annual total, which is the same as the fourth quarter in 2012. Another example of factors causing uneven quarterly revenue is purchasing for the row crop business, which typically occurs in the fourth quarter. We made significant progress this year in developing our row crop business making the seasonal swing potentially even greater in 2014. Our first and third quarters are typically our seasonally lowest quarters.

The gross margin for the fourth quarter of 2013 was 25%. This compares to 20% for the third quarter and 21.6% in the same quarter last year. This positive margin trend is largely due to sales mix, but we are seeing improvements to costs in the newer product. Our business model calls for introduction of one to two new products per year. To better understand and improve the market acceptance of these new products, we may enter the market before the cost of goods are fully optimized. We expect margins will continue to improve on Grandevo, for example, as we begin to sell product produced in our Michigan plant.

Turning to our operating expenses, total operating expenses for this quarter was $10.7 million compared to $8.9 million last quarter and $11 million in the fourth quarter of 2012. For the full year 2013, operating expense of $32.8 million compared to $26.6 million in 2012 as we made required investments to support our growth. Stock-based compensation was $2.3 million for 2013 and was $1.2 million for the fourth quarter. This compares to $500,000 for the third quarter of 2013 and $200,000 for the fourth quarter of 2012. The increase in stock-based compensation expense was driven by our ongoing investments in personnel and was also impacted when our stock price increased from our IPO price in recent times.

R&D expense was $6.1 million for the fourth quarter compared to $4.5 million for the third quarter of 2013 and $4.2 million for the fourth quarter of 2012. This increase was driven by both toxicology tests and the field trials that Pam mentioned earlier, as well as the spending on patent costs related to changes in US patent law and an increasing patent portfolio that we discussed with you last quarter. With these investments, several additional pipeline products are now through most of the toxicology tests and have demonstrated efficacy and are patented or have patents pending. We believe this derisks our pipeline and positions us well for future growth.

SG&A expense was $4.6 million compared to $4.5 million for the third quarter of 2013 and approximately $6.8 million for the fourth quarter of 2012. To reconcile the annual operating expenses for 2012, recall that there was a $3.6 million noncash financing expense identified as a separate line item in 2012 and did not occur in 2013.

While we are not providing operating expense guidance, we want to provide qualitative perspective on our anticipated expenses for 2014. In 2013, we made investments in both personnel and also toxicology testing, field trials and patents covering multiple new products, which led to the increase in operating expenses. We incurred these additional expenses in 2013 to derisk the commercial launch of new pipeline products. In 2014, operating expenses will normalize around our goal of introducing one to two new products per year. Thus, we expect a slight increase in the overall dollar amount of OpEx on a year-over-year basis.

Interest expense for the fourth quarter of 2013 was $608,000, a decrease of approximately $500,000 from the third quarter of 2013 resulting from the reduced debt associated with conversions of our convertible notes. Net loss for the fourth quarter of 2013 was $10 million and $28.5 million for the full year 2013. Our weighted average shares outstanding used in the computation of net loss per share was 19.2 million shares for both the basic and the diluted calculations for the fourth quarter of 2013. Our weighted average shares outstanding used in the computation of net loss per share was 8.7 million shares for the basic calculation and 8.9 million shares for the diluted calculation for the year ending December 31, 2013.

With regards to the balance sheet, cash and short-term investments as of December 31, 2013 totaled $38.1 million. Inventory increased $900,000 to $11.7 million during the quarter. Current deferred revenue was $1.3 million, $1 million of which is deferred product revenue and the balance associated with license revenue. Finally, we invested $1.8 million on equipment purchases in the fourth quarter for both our Davis and Michigan operations. Total capital spending for the M3 plant was $5.1 million in 2013. We are on track to adhere to our budgeted $32.5 million in costs for the plant buildout. Our plan is to finance the majority of these costs.

In closing, I would like to thank MBI for the time that I have been with the Company and I wish the Company continued success in its quest to bring effective environmentally-responsible products to ag and to water customers. Thank you, Pam. And now I will turn it back over to you.

Thanks, Don. I would like to now provide some comments regarding our outlook for 2014. This year, we expect to again at least double revenues, increase sales of Regalia Rx into row crops and commencing Regalia sales in four countries in Latin America, particularly in Brazil and also South Africa will cause revenues in 2014 to be even more back-end loaded as compared to 2013. We continue to be optimistic about our long-term growth prospects as supported by our conversations with customers, ongoing submission and approval of new products, international expansion, as well as our confidence that biopesticide growth will continue to outpace that of traditional chemicals.

In addition to another year of at least 100% plus sales growth, we expect to launch at least two new products in 2014 and submit at least two more to the EPA to lay the foundation for our growth in years to come. We are also committed to profitable growth. Under our current operating plan of increasing sales and margins and with our anticipated OpEx level, we continue to expect to achieve breakeven from the fourth quarter of 2015 on an EBITDA basis.

In closing, we had a very productive quarter, which closed a pivotal year with many milestones for Marrone Bio Innovations. We now have five biopesticide active ingredients through the EPA in eight years, which we believe is the most of any company for an eight-year time period. We are close to continuously producing our products at our own plant in Michigan. We crossed the 1 million acre treated market in the US. We continue to expand distribution. We successfully validated six more pipeline products with toxicology and efficacy tests and of course, we went public, greatly enhancing our leadership and visibility in the industry.

In our view, the market for biologically-based pest management and plant health product holds potential for robust growth for many years to come. The trends that should drive this growth, including a growing global population, decreasing agricultural acreage, continued regulatory action on older chemical pesticides and increasing pest resistance to legacy chemical solutions, are firmly in place and show no signs of abating. Our products are well-suited to capitalize on these trends with their best-in-class efficacy, new modes of action and sustainability. As I review our achievements in 2013, I believe we are positioned better than ever to capitalize on the opportunity and leverage our leadership in the biologically-based sector. Thank you for joining us on the call and we look forward to speaking with you again next quarter.

(Operator Instructions). Philip Shen, ROTH Capital.

Good afternoon, guys. This is Matt on for Phil. Thanks for taking our questions.

Hi, Matt.

I wanted to start out -- you guys mentioned that you have some seasonality and some leverage in specific geographies. Maybe could you talk about the impact of the California drought during Q4? Has it impacted customer buying patterns and would you anticipate any impact to 2014?

Inevitably -- this is Hector. Inevitably a drought of such historic proportion has an impact in agriculture. However, recently, most recently, we've had a significant amount of rain returning to the area. So that has given us hope that indeed there will be production in the west and there will be a lot of growers growing crops. These growers are going to have to make the best decisions for their farm and given the value proposition that our products bring to the farm, we believe we stand a very good chance of always being a part of those programs. We do not expect much impact from that drought here in the west for 2014.

Okay, that's helpful. And touching on the distribution agreements, I know it may be difficult to kind of discuss how current negotiations are going, but maybe you could give us a sense for how long it would take once those agreements might be in place, how long would it take to ramp commercial sales? Would it come almost immediately or would you expect kind of a slow ramp over the next several quarters once you have those distribution agreements signed?

Certainly. So given that most of these distribution agreements are taking place in the international front, registrations gate our ability to get commercial in those areas. We are well on our way in the registration process, but inevitably these agreements will probably not be yielding any significant impact into late 2015 and 2016.

Okay. That is also helpful. And one more here if I may on Zequanox. For the open water approval with the EPA, do you have any sense for when during the year you might get approval? Is that kind of towards the back half of the year and then again how long after you get that approval would it take to kind of see some commercial sales from that product?

We expect registration in the first half of the year. And as far as commercial sales, Hector, do you want to comment on that?

We've conducted a lot of successful demonstrations in 2013 yielding significant results in this area. We expect to start treating some of these open-water areas in the latter part of 2014, but we don't really expect any sales of significance into 2015 and 2016. Let me remind you that we have noted that Zequanox represents 10% of our revenues in 2017.

Okay, that's fair, guys. Thanks a lot and I will jump back in queue.

Laurence Alexander, Jefferies.

Hi, this is Jeff Schnell on for Laurence. You guys have talked about distribution agreements pretty much everywhere in the world, but Asia sort of hasn't been called out, unless I am mistaken. Can you talk about what is going on in Asia and when you expect to have any LOIs or distribution agreements? Or is this (multiple speakers) sorry -- is this Koppert one also -- it's worldwide so does that cover Asia as well?

Yes, that is correct. As a matter of fact, both of the LOIs we are announcing today have obviously coverage into that Asia/Oceania area. So Koppert is a worldwide distribution rights for covered crops and then Nufarm Limited distribution rights would be for Australia and New Zealand. We are at the table currently with significant partners and also local distributional regional partners in key areas across Asia and we expect to make announcements along this line here in coming calls.

Great. And then is it possible to quantify the margin improvement once the Michigan facility is up and running? Or fully up and running once all the phases are complete?

Yes. So we are not going to be providing guidance specifically on the impact throughout the year, but it is safe to assume that the production at Michigan will depend quite a bit on several factors, some of which will be inventory buildup that we have to deliver or achieve obviously in preparation for the plant, to variability, weather conditions, competition. It is safe to assume that there will be a gradual impact towards margin towards the latter part of 2014 for our production in Michigan, but once we get into Michigan and we are in full production for our first full year in 2015, we should start seeing a significant increase on the margin side.

Great, thank you.

Michael Cox, Piper Jaffray.

Thanks a lot. Congrats on all the progress in 2013 and good luck, Don, on your next endeavors. My first question is on the row crop opportunities you see in 2014. Could you give any sort of ballpark estimation of what row crops could constitute in terms of sales of your total expectation for 2014 sales?

Yes, Michael, this is Hector again. Again, we are probably not going to give any guidance specific to segments within our product base, but it's safe -- again, we have communicated in the past that row crops will represent at least 30% of our sales by 2017 and it will, given the trials we just conducted last fall and the success we have had given recent marketing assessment in terms of retention and growth, we are on track to deliver our objectives for 2014. And again more than doubling sales would be our overall objective for our business.

Okay, that's helpful. And another question on the Michigan facility. With that starting up in the second quarter, do you anticipate any significant startup costs associated with that that we'll see flowing through the income statement? And then second to that, when would you anticipate that the majority of your Grandevo product would be made at that Michigan facility?

On the first half of the question, no, we don't expect real significant costs. There are some that are being capitalized and there will be the effect of the amount of throughput through it relative to the overhead. But I don't think it is something that is particularly significant on the quarter or on the year. And what was the second half of the question?

Regarding the second half of the question, in terms of the production of Grandevo, we expect the majority of our Grandevo production to take place at the Michigan facility starting the third quarter. It is also important to note that we will continue to retain relationship with our existing CMO partners obviously to ensure that we can continue to have enough production capacity both at the plant and at CMO partners to derisk our model moving forward.

Okay, that's very helpful. And then my last question is on Brazil. How quickly can you target that market once an approval is in your hands from a commercial product standpoint in the market?

Yes. So southern hemisphere would be a latter part, so it would be the back part of 2014. Depending on when the approval comes in, and we are expecting this approval in 2014, my hope is that it is going to happen towards the middle of 2014. If that is indeed the case, there will be an opportunity to impact the fourth quarter of 2014 as they prepare to make applications into early 2015.

And I guess just one follow-up. Is that incorporated into doubling revenue, having some sales in the Brazil market?

Yes. We will book any sale that is actually transacted properly in terms of not being deferred that is properly recognized will be considered as part of the revenue of more than or at least doubling sales year to year.

I might clarify. I think what you are asking is is the doubling of revenue dependent on you getting the Brazilian registration.

Yes, that's right. Yes, that's right, Pam.

I am not sure that we are going to provide that level of guidance on this call, but inevitably it derisks our ability to be able to get there.

Okay, no problem. Thank you very much. I appreciate it.

With or without, we intend to at least double revenue.

Absolutely.

(Operator Instructions). Paul Massoud, Stifel.

Hi, thanks for taking these questions. Just going back to the comments you made about the budget for M3 and phase 1, I think you had said you were under budget. Can you give us a sense of what that is? Is that a material amount?

I guess the message we'd like to provide is that we budgeted $32.5 million for the completion of the overall project. We are on track in terms of our expenditures today to be able to deliver against that. We have spent, as Don announced, $5.1 million through 2013, which gives us plenty of runway to be able to continue the completion of phase 1 and then phase 2 within the $32.5 million.

And then could you give us an update on Opportune? It seems like it's a product that you had mentioned late last year, but we haven't heard much about it since.

Do you want to take that Hector?

Why don't you start it and I'll --.

Okay. So we do have a lot of interest in this product from our grower customers because of its unique efficacy and we did a small grower placement in the fall and we do intend to sell it, some of it this year. Although the amount of revenues won't materially impact the total revenues for this year, but, Hector, do you want to comment?

Yes, we did a small placement in turf in organic markets. The cost of goods of this product right now is currently limiting us to certain segments. We are currently aggressively working both in R&D and process development to continue to enhance the yieldability of this microbe to ultimately allow us to expand into other crop segments and we expect that to continue to happen through the year.

So when you talk about one to two products apart from Venerate, that doesn't include Opportune then, does it?

No, that is not counted. So there will be new ones beyond that.

Have you talked about which products those are going to be and when you expect to see them?

Yes, so Haven is one, so that is our anti-transpirant.

That is 505, is that right?

505. And we expect to launch that towards the latter half of the year. And then we have other potential ones, another potential one in the plant health sector, which we'll update you on future calls.

Meaning not right now. Got you. Okay. And then I guess just one final question on the EPA. You had talked on the last call that there was obviously a slowdown because of the government shutdown in terms of processing. Has the backlog cleared out? Are they starting to process in the same timeline that we were seeing before or are things still slow following that event?

The government shutdown just closing down and they actually [load] things longer than the actual number of days they were shut down so that did affect the Venerate timing, which we just got February 28. So as far as we can tell right now, things are back to normal and are on a more normal pace for approval.

Okay. And then just for Venerate, I mean it is going to the state approvals now. That is, what, California and Florida? Is that right?

California, Florida and all the other states, Arizona and Georgia, whatever, yes, our main market.

Where do you think it would be first approved? Is it Florida that has got the shortened approval timeline to the two-month period or is it -- it just has to start once you have gotten EPA approval? I mean is that where we would expect to start to see that be sold first?

Most states outside of California and Florida and I believe New York are shorter registrations from a state standpoint. But from an opportunity standpoint in terms of the available crops that we would be actually targeting, they primarily fall into Florida and California. I would expect to start seeing some commercial movement in the state of Florida soon.

Okay. Thanks a lot.

I am not showing any further questions in the queue. I would like to turn the call back over to the speakers for any closing remarks.

Thank you. We appreciate your attention on this call. Look forward to further updates in the future quarters.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Have a great day, everyone.