Recent contract wins validate eSense’s unique terpenes commercialisation model

By Trevor Hoey. Published at Jul 15, 2020, in Small Caps

Life sciences research and development company eSense-Lab Limited (ASX:ESE) has had continued success in realising its 2020 commercialisation strategy.

ESE is an Israel based company focused on evidence based terpene product development for medicinal and wellness applications.

The company has been successful in achieving a number of key strategic milestones and contracts during the two recent quarters, leaving it well positioned to increase sales and revenue growth.

Establishing joint ventures for mutual development of products with different partners provides exposure to multiple revenue-generating markets, while also demonstrating the broad range of applications of eSense’s terpenes.

The company has negotiated joint venture agreements with initial orders anticipated to provide revenue of approximately $950,000.

Certainly, the significance of these achievements shown on the following timeline is reflected in the company’s share price which has more than doubled in less than two months.

This year, significant changes have been made to eSense’s leadership team and business strategy in order to best leverage its core terpenes technology for revenue growth.

Under this new guidance, eSense has signed several agreements across a range of markets, including SeaLaria therapeutic skin creams and sanitiser, ANC skincare, hair care and hand sanitiser, Wise Wine hand and surface sanitisers and Blue Science hand and surface sanitisers.

The company has favoured this approach as it reduces the upfront capital expenditure required to expand global reach, and significantly reduces costs associated with sales and distribution.

Since the inception of this strategy, eSense has been able to leverage the distribution channels of its partners to gain access to four significant global markets, being Israel/Middle East, Australia, China and the US.

Entry into US marks a major milestone

On July 7, eSense signed an exclusive Sales Agency Agreement with US-based Blue Science Solutions Inc to expand into the US, the world’s largest consumer market for terpenes-based products.

The JV is targeting A$10 million in product sales in the US market over a 5 year period.

The partners have agreed to minimum sales targets of A$3m in the first 12-months, and A$10 million over a 5 year period, to be met in order for Blue Science to maintain exclusivity in the US.

Blue Science is an established US-based company that delivers non-toxic cleaning and disinfecting solutions across a variety of industries.

The agreement provides eSense with a number of benefits including access to Blue Science’s scientists who will assist in product development.

It also incorporates an exclusive agreement covering the distribution in the US of all terpenes based products to be developed by the company in the cleaning and disinfecting solutions market segment.

eSense also benefits from local sourcing of ingredients and manufacturing with access to an established supply chain network across the US, including technical infrastructure that facilitates access to suppliers.

Although they don’t represent firm guidance, the incorporation of minimum sales targets in order to maintain exclusivity within the agreement over both a 12-month and five-year period provides incentives for the partnership to work.

Finalisation of product formulations

Management said that it is still finalising product formulations and pricing for terpenes based products in this market segment and will notify the market when this is established.

Blue Science is upbeat about working with eSense and benefiting from the addition of hand sanitiser products with chief executive Slade Smith saying, “We came across e-Sense in our search for a partner to develop skin-friendly hand sanitiser solution.

‘’By combining terpenes with our core active technology, hypochlorous acid, we hope to create a gentle, yet powerful hand sanitiser solution to add to our range.

‘’We are looking forward to the results of our combined expertise.”

Share price catalysts on the horizon

On the R&D front, eSense’s lab continues researching and testing its proprietary terpene mix, TRP-ENVTM with promising results of terpenes’ anti-viral synergistic effects.

Discussions are ongoing with several Israeli universities, hospitals and virology labs to establish further testing and research into the exact nature of terpenes’ anti-viral abilities.

TRP-ENVTM is intended to be used for the creation of hand and surface sanitisers with enhanced anti-viral properties, together with a significant reduction in the sanitiser’s ethanol levels as ethanol can be an irritant to the skin.

Further, eSense is investigating additional distribution and sales agreements with other partners to broaden its exposure within Australia and globally, and news regarding these developments could well provide further share price momentum.

Highlighting the long-term benefits of new products that stretch beyond the current COVID environment, chief executive Itzik Mizrahi said, “We have worked hard to achieve a number of strategic and operational milestones over the last 4 months, and are proud of the progress to date.

‘’In addition to their therapeutic and wellness benefits, our terpenes have exciting possible applications in a post-COVID world, and we are focused on being well positioned to service this growing market.

‘’We are hard at work continuing to pursue more joint-venture opportunities and researching further potential applications of our technology.”

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