05/07/2006
AIM minnow Micap has clinched a 'microencapsulation' deal with quoted Australian crop protection group Nufarm, potentially worth £17 million.
Microencapsulation is a process by which minute particles of liquid or solid material are coated with a uniform and continuous film for a variety of purposes. This can include the controlled or targeted release of active ingredients, masking or protecting core material for reduced colour, taste or smell (as with fish oils) as well as reducing volatility of materials.
Nufarm has now signed an exclusive option to ‘evaluate and licence’ Micap’s patented technology, in this case involving the encapsulation of active ingredients within yeast cells for use in the agrochemical field. The two companies have been working together to evaluate the potential for the technology for ‘specific crop protection functions’, entering into partnership following encouraging results with a view to achieving European Union regulatory approval.
The regulatory process, says Micap Chief executive Michael Norris, can carry a cost of around €4 million (£2.8 million). That puts it outside the reach of Micap alone. The company is currently valued at below £1 million at today’s share price of 3p, up 20 per cent on the Nufarm deal.
Norris comments that, ‘although there are no guarantees at this stage’, he sees ‘no reason why the technology should not deliver’. Micap can therefore look forward to ‘access and milestone payments’ from Nufarm, as well as between 5 and 10 per cent royalties on all sales of products containing the technology if it reaches a commercial stage.
This prospect gives the shares speculative potential.
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