AquaBounty Technologies Announces $12M IPO to Fund Expansion

January 16, 2018

AquaBounty Technologies announced it has issued an underwritten public offering with the goal of raising $12 million.

Founded in Maynard, Massachusetts, about 20 years ago, and with a second location in Fortune, Prince Edward Island, AquaBounty is a biotechnology company that aims to raise sustainability in the aquaculture industry, and more specifically, in farming systems for Atlantic salmon, through the bridging of genetics and technological advances.

AquaBounty has built its company on two pillars – the first, the discovery in 1989 by Dr. Garth Fletcher and his team at Memorial University in Newfoundland, Canada, that by integrating a growth hormone gene from the Chinook into Atlantic salmon, growth would be accelerated and time to market would be reduced from three years to 18 months.

The second pillar is the integration of the recirculating aquaculture system (RAS) of production. This production system was first employed to raise juvenile salmon which would then be raised for another year in sea cages due to cost. However, the accelerated growth rate of AquaBounty’s genetically modified AquAdvantage Salmon allows for the entire process to be completed in 16-18 months in a closed, land-based production system.

The company plans to use the funds raised through this public offering to support its goal of continuing construction and renovations on its existing facilities in Rollo Bay, Prince Edward Island, Canada, and in the state of Indiana in the United States. The capital also will be used to fund the growing of the company’s initial batches of fish at both sites, and for other general corporate purposes.

The terms of the offering include an aggregate of  3,692,307 shares of common stock, and warrants to purchase up to 3,692,307 shares of common stock in the company at an offering price of US$3.25 per share.

Salmon Run

Salmon farming began on an experimental basis only in the 1960’s, according to the Global Salmon Initiative. However, as global demand for protein is expected to climb by 70 percent by 2050, according to the Food and Agriculture Organization (FAO), the salmon farming industry is working to help meet this demand and has seen significant growth in its short existence, and heightened activity in recent months.

Additionally, advances in on-land recirculation aquaculture systems (RAS) technology developed in Israel have narrowed the cost gap between sea-based and land-based salmon production systems, making salmon farming ventures such as AquaBounty’s much more economically viable.

Given a combination of climbing widespread consumer demand and the development of technologies that enable companies to scale up fish farming operations in a sustainable manner, various players have been maneuvering to increase their presence along the farmed salmon value chain.

In January 2016, the Rodsel Group announced it was investing €60 million, sourced from its “own resources” to establish an on-land salmon farm in Zamora, Spain.

Eight months later in August 2016, Iowa-based Inland Sea – Harlan LLC announced it was seeking $12 million in equity capital through a 506C private placement offering to partially fund the construction of a state-of-the-art, two-acre salmon farm using a Danish indoor recirculating aquaculture system (RAS).

One month later, Cooke Aquaculture Scotland, the regional unit of Cooke Aquaculture, announced it has agreed to acquire Balta Island Seafare – a salmon farming company located in the Shetland Islands for an undisclosed amount.

That same month, Greig Newfoundland AS contracted AMG Norway, a subsidiary of Aqua Maof Group, to build its state-of-the-art indoor Atlantic salmon nursery facility in Marystown, Newfoundland.

The C$75 million hatchery is part of a larger C$251 million project being undertaken by Grieg and the Newfoundland Provincial government, which has agreed to commit up to C$45 million in exchange for an equity position in the company. And once completed, is expected to be the largest such hatchery in Canada, effectively more than doubling aquaculture production in the province.

In a slightly different take on farming systems, Marine Harvest, the biggest Atlantic salmon producer in the world announced in the summer of 2016 that it has applied to the government of Norway for a license to build fish farms inside an unused Panamax cargo vessel. The company explains that fish farming in the open sea in Norway has become increasingly challenging in the face of stricter regulations designed to fight outbreaks of sea lice – a parasite that can kill young fish, and to stop farmed fish from escaping into the wild.

And although the idea is an unexpected one, economically, it makes sense according to Erik Stavseth, analyst Arctic Securities, who explained to Bloomberg at the time that to buy, and modify a Panamax vessel for fish farming, and to acquire a license from the government would cost approximately $18 million – less than half the cost of building a comparable conventional fish farm.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

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