With increased industrial activity over the past decades resulting in a significant impact on the environment, the abatement of carbon dioxide has become the need of the hour for many industries. Every major industry which is producing carbon dioxide through its operations either through the consumption of fossil fuels in its processes or any other way is mandated to have a green strategy involving the abatement of carbon dioxide and ensure a minimal carbon emissions approach. With the importance of low-carbon technologies growing with every passing day, companies offering bioreactors and natural solutions to reduce carbon dioxide and greenhouse gas emissions are getting more and more contracts and are seeing their revenues begin to scale rapidly. Our small-cap pick of the day is a company that is a storehouse of intellectual property and is providing exceptional carbon dioxide abatement technology to convert these emissions into valuable products with application in animal feeds, and nutraceuticals. It is also growing genetically modified algae that express complex proteins used in diagnostics and therapeutics. Pond– Technologies (TSX:POND, OTCQB:PNDHF)
What Does Pond Technologies Do?
Pond Technologies is a Canadian technology company that provides profitable solutions to global health and deals with wellness challenges of nutrition and climate change. It has developed a proprietary algae growth platform to reduce the level carbon dioxide from the environment. Industry emitters can generate new revenue streams from this transformation of underutilized carbon dioxide into valuable algae-based products like nutraceutical products such as Spirulina, Chlorella, and Astaxanthin for human consumption and protein for animal food. For the cultivation of microalgal biomass, the company uses available sources of carbon dioxide rich emission sources from industrial plants in Canada. Its resultant algae are used in the supply of superfoods, nutraceuticals, feedstocks, as well as aquaculture and animal feed in the production of algae-based biomaterials, bio foams, and other algae-derived products to market.
Pond Technologies enables nutraceutical companies to sustainably and reliably produce high-quality contaminant-free products for human consumption. In addition, the company’s proprietary growth platform, including patented advanced photonics, optimizes key growth inputs to provide a controlled environment that boosts the growth of algae and other organisms. The company also enables industries to monetize their waste emission while reducing their carbon footprint. Pond Technologies also helps Diagnostic and Therapeutic companies produce high-quality complex protein while reducing the cost compared to the current alternatives. It is located in Markham, Ontario.
The Pond Naturals Business
Pond Naturals, one of the largest contributors to the Pond top-line, is a wide distribution channel for its natural products as well as manufacturing operations. Through this subsidiary, the company develops and distributes various algae-based products. These products range from bulk ingredients to white-label as well as branded consumer products. The company cultivates and sells astaxanthin under its own brand – Regenurex and through white label arrangements. It extracts astaxanthin oleoresin through a proprietary wet extraction process without using harsh chemicals or dehydration techniques. Furthermore, the company is developing additional algae products like phycocyanin, the only FDA-approved blue food coloring substance. It is worth highlighting that every product comes with a ‘Made in Canada’ tag which means it can be sold as bulk wholesale, white-labeled, or into their branded product to provide customers the security of supply compared to overseas producers. The management revealed that they are in line to build other algae-based product manufacturing to support their increased sales for algae-based products, including Spirulina. This line of business is expected to generate strong revenues in the years to come.
The Pond Carbon Offering
Pond Carbon ensures to make the Pond Technology world’s leading solution for the commercial-scale deployment of algae photobioreactors capable of reducing carbon emission and producing algae in the food, feed, and biofertilizer market. It develops specific algae-based carbon capture projects that provide operational resources from initial consultation to project completion. It provides resources like lab or engineering to develop commercial processes for carbon dioxide reduction. Pond Carbon has developed algae bioreactor technology for royalty revenue and licensing in entire commercial systems and R&D demonstration systems. They are also building and implementing each carbon-reducing project as per the customer’s needs, transforming carbon into a valuable product.
It is worth mentioning that the management of Pond focuses on supporting the deployment of algae systems on customer sites, including supporting systems and proprietary bioreactors. Pond Carbon typically targets customers who have stack gas, carbon footprint, and use for algae-based products. Furthermore, the company has taken various projects from different niches, including animal feed companies, natural resource organizations, and human nutraceutical companies. The animal feed company seeks to commercialize its premium algae-based animal and aquaculture feed additives to emerge as a significant global animal feed producer and distributor. The natural resource company is trying to reduce carbon and bio-remediation to become the leading global oil and gas company. On the other hand, the precision agricultural company seeks to bring diversity into their algae-based food ingredient and nutraceuticals to emerge as a specialty agriculture company.
Pond Biotech As A Key Growth Driver
Pond Biotech represents an instant and long-term value creation opportunity by using Pond Technology’s algae-based system to manufacture and develop valuable algae strains to use in human and animal therapeutic solutions. The division is important for pharmaceutical and biotech companies looking to grow specific proteins at a large scale. In addition, Pond Biotech has grown genetically reformed algae that express COVID-19 and various antigens for diagnostic use under contract to the leading Canadian industrial corporation. Algae are a cost-effective solution for growing various recombinant proteins compared to mammalian cell lines and the company is determined to develop several recombinant proteins expressed in algae. Moreover, the management intends to make Pond Biotech the leading solution for the low-cost manufacture of vaccines, diagnostics, and therapeutics through the utilization of algal production systems. Also, the combination of simpler growing conditions and higher productivity are expected to result in a cost-benefit in production. Pond has provided an excellent controlled growth environment for pharma and biotech companies so that they can quickly produce genetically modified algae strains, expressing quality proteins for diagnostics and therapeutics. The company also provided proper protein folding at lower prices to ensure the quality protein growth at scale for biopharma companies. Overall, the company has a unique value proposition to enhance the manufacturing capabilities to pharmaceutical companies looking for cost amendments.
Pond Technologies is currently listed in Toronto and on the American OTC markets which is why it has been unable to realize its true value and is trading at a very low valuation of around 35 cents per share. The company’s revenues are around the $5 million mark and we can expect an uplisting very soon which should unlock a significant amount of value given the expected increase in trading volumes. Currently, Pond Technologies is trading at barely 3x revenues which fails to take into account, the company’s future growth potential especially that of its huge base of intellectual property. It has an extensive international patent portfolio, including 19 active patents in key markets such as Taiwan, China, Europe, Middle East, and the United States, covering its proprietary algae production platform. Overall, we believe that Pond Technologies is a highly undervalued player in the algae-based green technology space and is an excellent investment prospect for microcap investors.