Marrone Bio Innovations, Inc. (MBII) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Marrone Bio Innovations first-quarter 2014 financial results conference call. (Operator Instructions) As a reminder, today's program is being recorded.

I would now like to introduce your host for today's program, David Niederman, Investor Relations.

Good afternoon and thank you for joining us on today's conference call to discuss Marrone Bio Innovations' fiscal first-quarter 2014 results. This call is also being broadcast live over the web and can be accessed in the Investor Relations section of the Marrone Bio Innovations website at investors.MarroneBioInnovations.com.

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

After the market closed today, MBI issued a press release announcing the results for its fiscal first quarter ended March 31, 2014. Additionally, we have a slide deck to accompany the call that can be downloaded from the Investor Relations portion of our website.

Before beginning, I would like to remind you that this conference call may contain statements regarding management's expectations, hopes, beliefs, intentions, or 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 their 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-K that the Company filed on March 25, 2014, and our earnings release posted on the Company's website. Should one or more of these risks and uncertainties materialize or should any of management's assumptions prove incorrect, actual results may vary in material respects 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. Welcome to everyone joining us on the call today. We had a productive first quarter of 2014 with many significant achievements. The Company continues to grow and make progress in executing against our goals.

Before I spend some time outlining this progress, I want to share with you feedback from two recent conferences I attended. Biologicals are now seen as essential to global food security and have transcended their status as niche products. Marrone Bio Innovations is leading this transformation and is consistently cited as a leader in the sustainable ag technology space. This experience is indicative of the conversations that we at Marrone Bio Innovations have every day with our customers and industry constituents.

Now let me spend some time summarizing our recent achievements and discuss how they position the Company for long-term growth and success. I will begin with our people.

Our team at Marrone Bio is the foundation for the Company and is a key competitive advantage as we continue to lead the bio-based industry. As many of you saw, we recently filled the key positions of CFO and General Counsel with seasoned executives, Jim Boyd and Linda Moore. Additionally, we hired Dr. Amit Vasavada as Vice President of Technology Development and also promoted Hector Absi to Chief Operating Officer and Dr. Alison Stewart to Chief Technology Officer and Senior Vice President of R&D.

Marrone Bio Innovations continues to attract top talent across the organization and we are extremely excited about the breath of our executive team. We believe that with these hires the Company is poised to hit our full potential and to continue to deliver innovative and profitable solutions for our target markets.

Turning now to products, there's a lot to cover here. Slides 2 and 3 show the status of our commercial products and pipeline. We have been conducting toxicology and field trials and moving candidates due to the EPA submission such that all the remaining products that comprise 2014 to 2017 revenues will be submitted to the EPA this year. In addition, we continue to move products into international markets.

Most recently we launched our new product, Venerate. This product, the first from our in-house screening, is a potent broad-spectrum insecticide with a novel mode of action that works upon contact against a broad range of sucking and chewing insects and mites. In addition, the active ingredient in Venerate has efficacy against nematode, which has been verified in field trials.

Venerate is non-toxic to fish, to birds, and honeybees; features a minimal four-hour reentry interval for farmworkers; and has an exemption from maximum residue level tolerances that impact traditional chemical pesticides. Venerate is complementary to Grandevo in that Grandevo works through feeding and Venerate on contact. Typically agrichemical companies offer multiple insecticides for growers to rotate different modes of action to delay resistance.

Now we are the first company ever to offer two highly-effective broad-spectrum bio insecticides with different modes of action that can be used throughout the crop season, can also be one more rotation partner for traditional chemical pesticides.

Turning to slides 10 through 20 in the deck, you will see several examples showing that Grandevo and Venerate continue to be equal to or outperform the best chemical pesticides on a broad range of tests such as lygus nymphs in cotton, San Jose scale on apple, cherry fruit fly and spotted wing Drosophila, a serious invasive pest, plum curculio in cherries, brown marmorated stink bug in peaches, whiteflies in tomatoes and cucumbers, and [thrifts] and caterpillars in peppers, and mites and leafhoppers in grapes.

This is an impressive list and we achieve these efficacies without resistance and residues to major concerns of customers and growers everywhere. These products can also be sprayed right up to harvest. They allow workers fast field reentry and are not susceptible to resistance development and delay resistance development to conventional chemical solutions.

Regarding Regalia, we continue to see outstanding increases in marketable crop yields and water savings as depicted on slide 5 and its value for soil applications to control potato diseases on slide 6 and late blight on pepper on slide 7. In canola, a new crop target for 2014, we demonstrated that Regalia significantly enhanced the standard chemical, as shown on slide 8.

Next, we submitted our pipeline product, MBI-601, to the EPA for registration. MBI-601 is a biofumigant, a novel strain of fungi that produces gaseous compounds that locally control parasitic nematodes and several destructive soil-born plant diseases that afflict crops such as tomatoes, strawberries, carrots, potatoes, trees and vines, and many others.

Historically, fumigants have been a valuable tool used worldwide to protect crops and ornamental plants against these problems. However, many fumigants have been restricted or removed from the market due to concerns about toxicity and disruption to the ozone layer. We expect our non-toxic biofumigant to help fill the real need in the market to address these issues with a safe, clean, and effective solution.

Finally, we are very pleased to receive a key patent from the US patent and trademark office surrounding our Regalia product. The patent covers methods for increasing plant growth and root initiation and extension when treated with Regalia's active ingredients. Data have shown that Regalia can increase transplant health, root mass, and weight as well as other beneficial effects on a wide variety of crops.

We also recently received a patent on an insecticidal compound produced by the bacteria in Grandevo. We expect to announce more patents on our key products and technology in the weeks and months to come.

We recently signed two new agreements which we will announce soon, both are in the biostimulant area. Biostimulants are microorganisms and plant extracts or related natural compounds that can increase plant growth and yield and may reduce plant stress, but are not biopesticides because they do not control pests. As such, they require only state registrations, do not need EPA registration, and are faster to market than biopesticides.

As you can see, we have been very busy leveraging the power of our R&D and our screening capabilities to develop exciting products. In addition to our in-house developed products, Marrone Bio Innovations is uniquely skilled at licensing microbes and other discoveries from partners and creating compelling commercial products. To that end, I would like to highlight two agreements with partners inked in the first quarter.

First, in January, we signed a collaborative research agreement with the New Zealand Institute for Plant & Food Research, one of the world leaders in biopesticide research. The agreement covers a number of novel bioactive microorganisms and natural products for the development of biopesticides and plant health products. Our Chief Technology Officer and Senior Vice President of R&D, Dr. Alison Stewart, has deep experience with the Institute and its portfolio and was instrumental in arranging this agreement.

We are excited for the prospects of this agreement. In fact, two candidates are already in field trials and the first results are very promising. Second, as we mentioned in our last call, we signed an agreement with Kao Corporation that secured a license for an active ingredient for plant health that drives our anti-transpirant product, Haven.

We are in the process of scaling this product for 2014 launch. Field trial results are shown on slide 22, where Haven reduced sunburn damage and protected yield on Merlot grapes and table grapes in Chile. I want to highlight that dollars spent on field trials are more directly reflected in revenue than any other single item and producing this kind of data will help us ramp sales in 2014 and beyond.

To summarize, I'm excited by the continued demonstration of the spectrum of insect control of Grandevo and Venerate on hard-to-control sucking insects and invasive species. Also, we are pleased with the further validation of Regalia's value in large acre crops such as canola, where millions of acres are grown in Canada, the US, and Europe. And also Regalia's efficacy in potatoes, an intensely sprayed crop globally.

There is much more I could cover on the product side, but I will now close here and pass the call to Hector to discuss our market development and commercial progress and also provide an update on our Michigan manufacturing facility. Hector?

Thank you, Pam. Weather conditions across the US growing regions in the first quarter were a significant challenge to ag companies such as ourselves. At the start of the quarter, it was about drought in the western US. Back then we were hopeful to overcome these challenges and indeed our business grew in the West.

Sprays in nuts and vines of Regalia grew double digits year-over-year and Grandevo also grew significantly in blooming crops such as stone fruit and nuts. However, the weather challenges were not limited to the West alone, but also impacted the Midwest and Eastern regions, where cold weather and excessive rain and flooding. Despite these challenges, our first-quarter sales were flat compared to Q1 of 2013.

Now as you might have noticed, weather challenges continued across the US even as we sit here today. However, we remain confident that for 2014 we will be able to deliver on our target of at least doubling revenues year-over-year. This means, as we have said before, that our sales this year will be more backend loaded when compared to 2013, where 40% of our total annual revenue was generated in the last quarter.

Our growth strategy is coming from expanded business within our existing customer base and through the addition of new acres from new customers. Regalia has expanded into California almonds, where its safety to bees and the novel mode of action provide an advantage for integrated programs. Regalia has also been applied widely in one of the largest California nurseries as a transplant dip for growth promotion and disease control.

Grandevo also demonstrated solid growth in the first quarter in the West, primarily in applications to nuts which are crossed with some of the largest acres in California. Finally, we are also working with one of the largest potato grower and processors to control potato psyllid, an invasive species that transmits a serious disease that ultimately impacts yield in the crop.

Now let me move to an update on our international front. We continue to execute on our global expansion strategy by signing MOUs that ultimately lead to formal distribution agreements.

In the first quarter, we signed MOUs with new farm for Australia and New Zealand and with Koppert for covered agriculture. These two MOUs add to our existing conversations with DeSangosse and CBC, which are quickly turning into commercial agreements that we will announce on future earnings calls. We also have discussions in progress for distribution rights of our insecticide portfolio in other parts of Asia, Europe, and Latin America, as well as for Regalia in the Asian region.

On the regulatory front, we recently announced registration of Regalia in Peru. With this registration, Regalia Maxx is now approved in six countries in Latin America to control a wide variety of bacterial and fungal diseases across an array of agricultural crops. Peru, as you might know, is an active exporter of table grapes and is the largest exporter of asparagus worldwide.

In addition, we recently submitted our Grandevo and Venerate insecticides for registration in Mexico. Upon registration in this country, our bioinsecticides will join Regalia as a powerful crop protection tool to help growers in this export-focused region. Additionally, registration of Regalia Maxx is still expected this year in Brazil. Registrations in Peru and Brazil will have a modest impact on sales on the second half of this year.

With regards to Zequanox, the treatment season has not yet commenced but we continue to build a pipeline of customers with firm commitments from several utilities for applications this year. The Hoover Dam demo continues to demonstrate a successful periodic treatment regimen mirroring the results demonstrated at Davis Dam, another Bureau of Reclamation facility. These results are illustrated in slides 24 through 26.

In 2014, we expect open-water approval and initiation of sales for lake treatments. Here again we expect most of the revenue for these treatments to impact the second half of the year.

Now let me turn to our progress at M3, our manufacturing facility in Bangor, Michigan. We are excited to share that we have produced our first batches of both Grandevo and Regalia at our facility. We were able to do this in less than one year from commencing construction.

Recall that Phases 1A and 1B are the installation and operation of two 20,000 liter fermentation tanks. This will provide us with the necessary flexibility in production to derisk our ability to achieve our margin goals in 2014.

Phase 1C, the installation and operation of a third 20,000 liter fermentation tank, which was originally scheduled to be completed by July is now expected to be completed in June. With this progress in 2014, we expect to produce Regalia, Grandevo, and Zequanox at M3.

I would like to also note that we have started to study the necessary modifications to include the production of Venerate also at M3. The completion of Phase 1 will allow us to handle our current production plan through 2015, which also includes the services of third-party suppliers to ensure a second source of supply to mitigate risks.

Thank you and now I would like to turn the call over to Jim to discuss our financial results.

Thanks, Hector, and good afternoon, everyone. Total revenues for the quarter were $2.8 million, flat with the first quarter of last year and compares with $6 million in the fourth quarter of 2013. As we have communicated in prior calls, our operating results, especially our revenue, will vary significantly on a quarter-by-quarter basis due to typical seasonality and other factors that impact our industry such as weather.

This variability is enhanced for us due to the fact that we are still largely selling into the United States. These two factors form the basis for why we only provide annual revenue guidance rather than quarterly guidance.

Gross margin for the first quarter of 2014 was 41%. This compares to 25% for the last quarter and 34% for the first quarter of 2013. Included in the related party revenue for the quarter is $292,000 in revenue from a one-time only licensing testing agreement. This had an 11% positive impact on margins in the quarter.

Backing that deal out, margins from normal operations would have been 30%. Over the next few quarters we expect continued gross margin variability. This will be driven by our switch over to in-house manufacturing and variations of plant utilization as a component of our COGS calculation.

Gross margin will also be influenced by sales of higher cost third-party manufactured inventory, changes in product mix, the introduction of new products, and also entry into new markets and crops which may require different formulations, as well as different manufacturing processes and packaging. Over the longer time frame, we expect margins to benefit from continued improvements in our manufacturing efficiencies, improved formulations, and other yield-enhancing technologies.

Turning to operating expenses. Total operating expenses for the quarter were $10.6 million compared to $10.7 million in last quarter and $6.1 million in the first quarter of 2013.

R&D expenses were down $1.8 million sequentially to $4.3 million. Mainly due to reduced regulatory field trials, tox expenses, and direct material expenses. These expenses will continue to drive variability in R&D expenses into the foreseeable future.

SG&A expenses for the quarter were $6.3 million as compared to $4.5 million in the fourth quarter of 2013, the sequential increase includes $700,000 related to ramping up operations of the Michigan manufacturing facility which will move into cost of goods sold in future quarters as we transition into production. The sequential increase also includes approximately $200,000 in management transition expenses and $500,000 in audit and tax fees, most of which will not be repeated next quarter.

Finally, we had $2.3 million in non-cash expenses in the quarter. In operating expenses there was $1.5 million of stock-based compensation and $500,000 in depreciation and amortization. In addition, below the line we also had $250,000 in non-cash interest expense.

Net loss for the first quarter was $10.2 million, which compares to a net loss of $10 million in the fourth quarter of 2013. Our weighted average shares outstanding used in the computation of net loss per share were 19.5 million shares for both the basic and diluted calculations.

Now turning to the balance sheet, cash, cash equivalents, and short-term investments as of March 31, 2004, (sic) totaled $24 million, down from $38.1 million at the end of 2013. Changes in cash were primarily cash used in operating activities of $9.9 million, which was driven mainly by our operating loss, and $5 million related to the buildout of our Michigan plant.

Now I will give you a little more information on cash. First, during the quarter we spent $5 million on capital expenditures primarily to build our Michigan manufacturing facility. To better address our previously communicated capital expenditure requirements, we have been approved on our $10 million bank financing subject to completion of documentation and have submitted an application for a USDA guarantee of that loan.

This should provide financing at very attractive terms for any spending on the Michigan plant in the second quarter and beyond and the completion of the Phase 1 buildout. We expect to receive USDA approval of that guarantee and the documents from the bank shortly.

Plant capacity after Phase 1 has been completed with three 20,000-liter fermenters should be sufficient to cover our 2015 sales projections. In our prior calls, we communicated that we reworked the plans for Phase 1 and Phase 2 last year. We moved up the installation of the third 20,000 fermenter into Phase 1C, the purpose of which was to give us production flexibility to handle multiple products and to better match capacity with the growth of our business. Therefore, Phases 2 and 3 will not occur until we are closer to full utilization of Phase 1.

We also plan to put additional fixed asset financing in place prior to any capital spending on Phases 2 and 3. Our plan is, again, to seek a USDA loan guarantee. As a reminder, Phases 2 and 3 will cost approximately $17 million out of the $32 million total estimated cost for the plant.

Second, accounts receivable, included related parties, increased $1.3 million during the quarter to $8.5 million. This includes sales in deferred revenue from the third and fourth quarters as well as the first quarter of this year. Last year we began to offer standard industry turns leading to the growth in the AR. We are already receiving payments on these sales and expect to collect a significant amount of the outstanding AR balance in Q2.

In addition, we are currently working on a receivables and inventory back line of credit that we are planning to put in place later this year to finance our future working capital requirements.

Finally, inventory increased $1.2 million during the quarter to $12.8 million. We have built inventory of raw materials and work in progress to help in the transition to in-house manufacturing and to provide for future sales growth.

We are identifying ways to better match inventory with demand. For example, at the end of Q1 we were carrying approximately $3 million of knotweed extract, which is a raw material used to make Regalia. We are currently working with existing and new suppliers to optimize our sales supply chain.

Now I would like to reiterate our outlook for 2014. Even though we saw difficult weather conditions in the first quarter, we continue to expect to at least double revenues for the year. As we mentioned last quarter, we continued to anticipate a heavily backend-weighted year for sales, driven by the penetration of Regalia X into row crops, additional sales in new geographies, and launch of new products. In addition, we continue to expect to reach EBITDA breakeven in the fourth quarter of 2015.

Now we would be happy to answer any of your questions. Operator?

(Operator Instructions) Laurence Alexander, Jefferies.

Good afternoon, I guess two questions. First, could you give a little bit more detail around the plant stimulants side of the business, like what that could mean for 2015, 2016? And, secondly, can you take a step back and just sort of bundle together your expectations for OpEx in 2014 and how it might step up into 2015, given the run rate you are looking at right now?

Okay, I will take the first one on plant stimulants and hand the second one over to Jim. So plant stimulants we've kind of been in stealth mode for a couple years. We have been screening for plant stimulants from our own collection as well as doing in-licensing agreements.

We feel that it is a very important area for us, because we can get to market more quickly and there's a very important need for bringing a science-based approach to an area which has kind of been seen as snake oil. So that's what we do, bringing some science base to this kind of area.

So we are -- have a couple more deals we are going to be announcing soon. Then in our own pipeline, as which we showed on the slide deck, have a number of them in there. What that means is that we are able to have more flexibility in the timing of when we launch and which products we launch.

Laurence, I will take the second question. I think you should think about operating expenses sort of in the range of the last few quarters, but varying up or down a fair amount due to the number of field trials, tests, and direct material costs which are the costs of running batches in R&D before they get turned over to manufacturing.

And I would expect that operating expenses would increase slightly in prior quarters through 2015. I think we've done the most of our hiring and have the most of our expenses under our belt.

Okay, thank you.

Paul Massoud, Stifel.

(inaudible) standing in for Paul today. I just have a question on the revenue. It seems a bit low coming in flat year-over-year, given the ramp up of your products. Is that solely due to the (inaudible) in the quarter or could you provide some additional color on that?

This is Hector. As we noted on the call, our revenue is flat year-over-year. Yes, we did have an impact due to weather conditions across the US. Some of those sales are gone because obviously the stage of growth of some of those crops has come and gone, but nevertheless we still feel very confident about more or at least doubling our business year-over-year.

There's still significant opportunities to come. Jim highlighted several of those. We have expansion into international geographies. We have the launch of two new products and we have still the continued penetration into areas of -- exciting areas like the Midwest and others, obviously with our existing growers and with new acres with new growers.

Thank you for that. Also, do you provide some color on if you had any progress in establishing any retail relationships to further adoption of (inaudible)?

I'm not sure -- on whose relationship?

Any detailed relationships for the further adoption of Grandevo or Regalia in row crops in US or [both Americas]?

With Grandevo we haven't actually launched big into row crops, but with Regalia, Hector.

We continue to expand our distribution relationships in the Midwest. We feel very comfortable that a test market that we did last year, primarily in 2013, in northern Iowa with a retail partner has now expanded into a couple different relationships that we have across the Midwest covering most of the Indiana, Illinois, Missouri, and the Iowa area.

And as Pam indicated, we have not started our commercial efforts in the Midwest with our insecticide portfolio, but we should be announcing some news in that area here in future calls.

All right, great. Thank you.

Philip Shen, ROTH Capital.

Thanks for taking my questions. I have a quick follow-up on the revenue for Q1. If you excluded weather, what do you think normalized revenues would have been in Q1?

We don't guide on a quarterly basis, but needless to say, we believe that obviously numbers would have been a bit stronger that what we delivered. Nevertheless, again, as you look across the entire year, doubling revenues is -- more than doubling or at least doubling revenues is what we are focused on and we believe we are still on track.

Great. Thanks, Hector. Over the past month you guys have submitted a bunch of products for registration in a number of international markets. Now I know there are a lot of factors and moving parts, but can you talk to us about the approval process for these international markets and when you expect to receive some of these approvals?

And importantly, once you receive the approvals, how long do you anticipate that it will take to ramp the commercial sales?

So for Mexico, where we submitted both Grandevo and Venerate, typically Mexico is one to two years post submission and the revenue will be very quickly after that. For the other submission of -- let's see it was Venerate to Canada, same timeframe and, again, immediate sales once regulatory approval.

It's important to note that depending on the world areas, for example, for Peru and Brazil with Regalia, all of those sales will be through our partner agreements with FMC, so we are excited about those. For our insecticide portfolio, we have not yet selected partners but we will be announcing some of these. And, again, some of these go to the MOUs that we have been signing with potential partners and hopefully we will have further announcements on that in future calls.

Can you give us an update on that at all? Any sense for timing or magnitude of some of these agreements that could be in place in the near term?

Yes, I guess the color I will give you is upon signing an MOU there's a process that takes place. Obviously, the first process is transferring material over to those partners for them to make their assessments and evaluations and conduct some demonstrations in the field. Upon that, business plans are drafted. Then we negotiate the deals and then we make the final announcement of commercial arrangements.

Since announcing the MOUs I can say that we've made significant progress and we should be announcing obviously some very good news in those areas in future calls.

Great. Thank you, Hector. Thank you, Pam, as well.

Brett Wong, Piper Jaffray.

Good afternoon. Thanks for taking my questions. Just kind of digging into the full-year guidance just a little bit more, wondering if you think you are going to recover some of these deferred or delayed first-quarter sales from weather impact in the second quarter or if the second half of the year is now more heavily weighted?

Yes, let me answer the question in two stages here. First of all, regarding the lost sales, yes, the lost sales are lost. However, we have not lost enough to still be on track to at least double revenues year-over-year.

As it relates to the weighting of sales towards the back end of the year, yes, we are signaling on this call that, again given the geographical expansion, especially on the international front, the launch of our two new products towards the latter part of the year and the growth that we foresee in some of those areas, specifically the Midwest business, leads us to believe that you will see a more pronounced backend-loaded seasonality than you did last year in 2013.

Thanks, Hector. That's very clear. I appreciate it. On the Venerate launch, can you just talk a little bit more about how that is going, state registrations, where you expect to launch first, commercial sales, all that kind of stuff? Thanks.

Certainly. We recently announced a few weeks ago obviously the launch of Venerate. We will start in general -- again, I think you will get to understand Marrone. We normally launch in a very selective crop base.

In this case, for Venerate we will target the East part of the US region, primarily in the Southeast area. Crops will be fairly narrow and specific; citrus will be one of them. And then over time we will continue to expand the label and the geographical expansion of this product. Again, most of that expansion will commence as early as the latter part of this year and it will go well into next year.

Okay. You had mentioned with the launch that California or the West was also an opportunity here in the initial launch? Has that kind of been delayed a little bit or was I understanding that incorrectly?

Actually that was Grandevo, not Venerate. So what we are saying is that we got Grandevo into some new crops. Particularly nuts had good uptake in the first quarter.

The only thing I will also add is while we have received state registrations on most of the states across the US, California normally takes a little bit longer in terms of registration.

Right, Venerate is not approved in California.

And Venerate is not yet approved in California but we should be making announcements of such in future calls.

I think we have probably close to 40 states now.

Excellent, great. Thank you very much.

Laurence Alexander, Jefferies.

Sorry, just a sort of follow-up. If you look at some -- or two follow-ups. If you look at Haven and the 500 series -- 506, 507, and 508 -- if you bundle those together into one sort of addressable market opportunity, how do they compare to Regalia and Grandevo?

Okay, so Grandevo is an insecticide, which would be put in the biopesticide pest-control category, so it doesn't relate. The 500 series is all relating to plant stress and growth promotion, and we have opportunity to address an even bigger market with some of those products because Regalia promotes growth but is not as strong as Haven on reducing water stress. Haven's mode of action is directly as an anti-transferent, which reduces water.

And then the other 500s are, I would say, additional boost of plant growth and spectrum over Regalia, so it would be market-enhancing rather than swapping out revenue from Regalia.

I guess what I'm getting at is should those be viewed as effectively doubling your pipeline or are they together equivalent to one more product in terms of addressable markets or likely sales, or peak sales, or however you want to think about it? Like, how significant are they as an opportunity set compared to the other -- the ones that you already had launched?

I would say those are additions to the pipeline. Yes, so additional additions to the pipeline I would say.

A combination of those can be as large as Regalia, the market opportunity.

So the pest-control market is about $50 billion and probably about $0.5 billion -- and, Hector, correct me if I'm wrong -- is plant health in the Midwest. So the biostimulant area is additional market above the $50 billion pest-control market. It's not captured in the registered product market analyses. So we are talking about additional TAM here on the stimulants.

Then, secondly, as you look towards 2015, what products will you have addressing the large US row crops in 2015?

Well, we are doing trials and we have signaled before that our insecticides, both Regalia and Grandevo, have nematocidal activities and we are doing a lot of field trials this year to further verify. We have already verified it, but to further get field trials. So that's one area that we are heavily focusing on would be Midwest soybeans for soybean cyst nematodes and other nematodes in corn and soybeans.

Thank you.

Thank you. This does conclude the question-and-answer session of today's program. I would like to hand the program back to Dr. Pam Marrone, Chief Executive Officer, for closing comments.

Thank you. Biologicals are increasingly recognized as essential tools for feeding the world. We continue to execute on our strategy to become the leading biological company. We have three products awaiting approval at the EPA. We expect to submit one to two more this year, including our exciting MBI-010 herbicide. This means that by year-end all the candidates that comprise revenues in 2014 to 2017 will have been submitted to the EPA.

Marrone Bio Innovations is completely unparalleled at moving candidates through development to regulatory submission and then to market. We note that many companies have started microbial discovery screening now. This lends confidence to our efforts.

However, our proprietary screening is the easiest part of the process. It is the development and commercialization that is difficult and hard to replicate. MBI is the only company in the industry that has demonstrated it can move multiple products across product categories from discovery and early stage through to commercialization.

As a reminder, our strategy includes growing revenues through market share growth, addition of new products, global expansion, and expansion into new crops and market segments. Finally, in less than one year we built and began operating a fermentation and formulation manufacturing plant, a major milestone for the Company.

Thank you for joining us on today's call. We look forward to meeting and speaking with you going forward.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.