A Strong Duo in a Huge and Overlooked Growth Market: MustGrow Biologics and Bayer—When Will BayWa Recover?

MustGrow Biologics: An Innovative Beneficiary of Multiple Megatrends

The foundation of the business model lies in utilizing the well-known properties of mustard plants. These plants produce natural bioactive compounds that effectively combat pests and fungi. The Canadian company has isolated and concentrated these active ingredients to develop a comprehensive platform for biological agricultural solutions. This positions MustGrow at the intersection of several global megatrends. In addition, the company possesses an extensive intellectual property portfolio of more than 100 issued and pending patents.

Two distinct product families form the core of the business. TerraSante, the company's mustard-derived organic biofertility product, is a soil amendment that delivers proteins and carbohydrates to the soil microbiome. The measurable results include improved soil health, superior water and nutrient efficiency, and significantly higher crop yields.

The second pre-registered product, TerraMG, is a natural, soil-based plant protection solution against diseases and pests originating in the soil that damage plants through their roots. In the medium term, it could replace chemical pesticides. In this area, the company can draw on a major asset. A commercialization and licensing agreement has been established with Bayer for Europe, the Middle East, and Africa, granting the German company exclusive marketing and development rights. MustGrow has received an upfront payment and is eligible for potential additional milestone payments upon development and regulatory approvals, as well as future royalties from sales.

The shares are currently trading at around CAD 0.44, valuing the company at approximately CAD 27 million. Most recently, new growth capital was raised as part of a non-brokered LIFE offering. At a price of CAD 0.50 per unit, the company raised approximately CAD 3.7 million, nearly doubling its initial target of CAD 2.0 million. Subscribers also received one warrant per share with a five-year term and an exercise price of CAD 0.70.

IIF host Lyndsay Malchuk in conversation with COO Colin Bletsky about the potential of the business model.

https://youtu.be/QdRWwgygRbY

Bayer: Is the Final Decision Coming Soon?

Bayer is one of the world's leading life sciences companies, operating in two core segments: healthcare and agriculture. Operationally, the business is divided into three divisions: Crop Science (seeds, crop protection products, and digital solutions), Pharmaceuticals (prescription medicines), and Consumer Health (over-the-counter health products).

The group is a market leader in seed innovation and crop protection and plays an important role in improving agricultural yields and developing more sustainable farming practices. This is also where its partnership with MustGrow Biologics comes into play.

The main drag on the company remains the legal dispute regarding the weed killer glyphosate, for which Bayer reached a sweeping USD 7.255 billion class-action settlement early this year.

This amount was generally considered too high; the stock corrected from just under EUR 50 to around EUR 34 at the beginning of the month and is now struggling again to reach the EUR 40 mark. Important decisions regarding the US class-action lawsuit are expected this summer. On average, analysts project nearly 30% upside potential.

BayWa: Not Yet Out of the Woods

In 2024, the large agricultural trading and diversified group fell into a financially critical situation that threatened its very existence. An aggressive international expansion strategy led to the accumulation of numerous non-core business areas, along with a substantial debt burden. Rapidly rising interest rates ultimately triggered a downward spiral. The urgently required restructuring is still ongoing. The first-quarter report showed some progress, but it cannot hide the fact that BayWa remains in a critical situation.

In particular, the situation at BayWa r.e., in which BayWa holds a 51% stake, is more challenging than initially anticipated and requires an adjustment to the restructuring plan. The restructuring report had originally planned the sale of BayWa's stake for around EUR 1.7 billion by 2028. Now, the company anticipates a "significantly" lower price and a later realization timeline.

Ultimately, questions remain as to whether operating improvements and asset disposals will be sufficient to reduce debt without additional capital increases. Around EUR 179 million was raised at the end of last year. At EUR 2.36, the share price is close to its lows. The company's market capitalization stands at around EUR 240 million. The 7.75% bond is trading just above 20%. The message is clear: BayWa has not yet turned the corner.

MustGrow is targeting future markets worth billions with organic crop protection products, biofertilizers, and regenerative agriculture. Its innovative and patent-protected business model combines in-house product sales in the US with a key licensing partnership with Bayer in international markets. The company's market capitalization of around CAD 27 million does not reflect its vast potential. Bayer faces important decisions this summer. A resolution of the legal disputes would give the stock new momentum. By contrast, BayWa is still in rough waters and must intensify its restructuring efforts.