AquaBounty Technologies Stock

AquaBounty Technologies, Inc. and its wholly owned subsidiaries (AquaBounty) operate in the field of land-based aquaculture.

The company’s GE Atlantic salmon is based upon proprietary salmon genetics and grows to harvest size faster, while consuming less feed, than conventional Atlantic salmon. With the company’s salmon, the company can produce more output at a lower cost in a land-based farm than with conventional salmon. The company’s GE Atlantic salmon was approved for production, sale, and consumption in the United States on November 19, 2015 by the U.S. Food and Drug Administration (‘FDA’). This was followed by an approval from Health Canada for the production, sale, and consumption of the company’s salmon in Canada on May 19, 2016 and an approval from the National Biosafety Technical Commission for the sale and consumption of the company’s salmon in Brazil on May 12, 2021. Consequently, the company has received approvals for its product from three of the most respected and rigorous regulatory agencies in the world.

The company farms its GE Atlantic salmon in land-based, recirculating aquaculture systems (‘RAS’), which allow land-based fish farms to be established close to major demand centers in a profitable and environmentally sustainable manner. The company has experience growing salmon in RAS farms, which are bio-secure, so the company does not need to use vaccines or antibiotics to protect the company’s fish. The company controls and optimizes their living environment to promote their general health. By locating the company’s farms near to major food markets, the company reduces its transportation costs and carbon footprint.

The company is vertically integrated and maintains its own broodstock hatchery, which produces the eggs that the company grows-out to harvest size in the company’s production farms. This hatchery also produces non-GE eggs for external sales.

The company has its own research and development team with expertise in biology, chemistry and RAS operations. This allows the company to continuously focus on improving the breeding, genetics and health of its fish and improving the efficiency of the company’s farm operations.

The company operates two salmon farms: a 1,200 metric ton production grow-out farm in Indiana and a broodstock farm on Prince Edward Island, Canada. The company’s plans include completing the construction of a new 10,000 metric ton production grow-out farm in Pioneer, Ohio and building additional production farms in North America at sites close to consumer consumption. The company is also pursuing regulatory approval for its GE Atlantic salmon in Israel, with the intention of entering that market with a local partner in the form of a joint venture or licensing arrangement. Additionally, the company plans to utilize its expertise in biotechnology and RAS operations to enter complimentary areas of the aquaculture industry, with an initial focus on shrimp.

The company’s strategy is to continually strengthen the company’s core capabilities, scale the company’s business, and pursue growth opportunities.

AquaBounty Solution

Land-Based RAS Production

The closed, contained, land-based production systems using RAS technology that the company uses for the grow-out of the company’s fish are less susceptible to the disease-related pressures of conventional salmon farming, because this type of culture system is isolated from the environment. RAS facilities employ sophisticated water treatment technology, including the use of ozone, salt treatment and ultraviolet radiation to kill potential bacterial, fungal, or viral pathogens which might enter the system. In addition, incoming water is similarly filtered and treated prior to entering the system, and water quality is regularly measured as part of the standard procedures. The fish in RAS facilities are generally not vaccinated against typical fish diseases, and no antibiotics, pesticides, or pharmacological agents are typically required. RAS facilities employ effective biosecurity to prevent disease by reducing or eliminating the introduction of pathogens and continuously treating the water to assure optimal fish health. RAS production allows the company’s fish to be raised in optimized conditions with total control of the water coming in and going out of the system, while recirculating greater than 95% of the water used. Further, stocking the company’s RAS farms with disease-free eggs from the company’s own hatchery results in a much higher degree of biosecurity and protection from disease.

In addition to biosecurity measures to optimize fish health, the company’s farms feature multiple layers of containment designed to prevent escapes. The company grows fish in RAS facilities. The multiple layers of containment redundancy, coupled with the fact that the company’s salmon are sterile female fish, pose a much-needed solution to raising fresh, healthy seafood in a manner that prevents harming native fish populations. The method of land-based fish farming that the company employs has been promoted by many environmental NGOs and it does not pose a threat to wild salmon populations.

The company has significant experience in operating land-based RAS facilities. The company’s operating practices and procedures have been developed and honed over two decades and are geared towards meeting stringent regulatory requirements. The company’s experience operating land-based RAS salmon farms enables the company to protect both the fish and the environment.

GE Atlantic Salmon

The company’s GE Atlantic salmon program is based upon a single, specific molecular modification in the company’s salmon that results in more rapid growth during early development. The result is a genetically engineered Atlantic salmon that can grow to market size faster than a conventional farmed Atlantic salmon.

Further, locating the company’s farms nearer to major food markets allows the company to realize savings on transportation of the harvested stock, while maintaining a reduced carbon footprint, and an improved ability to get fresh product to market faster.

Intellectual Property

The company holds a global, perpetual, royalty-free, fully paid, sub-licensable, assignable, non-exclusive right to the technology covering genetically engineered salmonid fish that express endogenous growth hormone under the control of a protein gene promoter from an edible fish.

The company relies on a combination of patent, trademark, and trade secret laws in the United States and applicable foreign jurisdictions, as well as confidentiality procedures and contractual provisions, to protect the company’s proprietary technology, processes, and brand. In December 2015, the company was granted a U.S. patent for its molecular sterility system, which renders sterile the progeny of any female fish carrying a defined maternal sterility gene. Subsequently, the maternal sterility patent has been issued in Australia, Brazil, Canada, Chile, Japan, and the Republic of Korea. While the technology described in the sterility system patent is not required under any of the company’s regulatory approvals, the technology may be desirable in the future to obtain or maintain regulatory approvals.

Regulatory Aspects of Genetically Engineered Fish

AquaBounty is working with the FDA on the NEPA and ESA regulatory matters.

In addition to the FDA approval of the NADA for AquAdvantage salmon, the company’s operating sites in the United States and on Prince Edward Island, as well as those the company plans to operate in the future, must be registered with, and periodically inspected by, the FDA as drug manufacturing establishments.

Each of the company’s operating sites in Indiana and on Prince Edward Island, is registered with the FDA, and the FDA has performed inspections and site visits at each of those facilities.

Going forward, the company must continue to comply with FDA requirements not only for manufacturing, but also for labeling, advertising, record keeping, and reporting to the FDA of adverse events and other information. The company also needs to comply with the U.S Department of Agriculture disclosure requirements pertaining to bioengineered foods under the National Bioengineered Food Disclosure Law.

In addition, every production site for AquAdvantage salmon in the United States requires approval by the U.S. Food and Drug Administration (FDA) of both a Supplemental NADA (New Animal Drug Application) and satisfaction of corresponding obligations under the National Environmental Policy Act, as well as compliance with local permitting requirements for construction of grow-out facilities.

The company’s GE Atlantic salmon is being sold into this distribution network with an initial focus on seafood distributors and wholesalers.

Operations

The company operates two salmon farms: a refurbished 1,200 metric ton production grow-out farm in Indiana and a broodstock farm on Prince Edward Island, Canada. The company’s first harvests of conventional salmon in Indiana commenced in June 2020 and the company’s first harvests of its GE Atlantic salmon commenced in June 2021 at both of the company’s U.S. and Canadian farms. During 2022, the company transitioned the grow-out operation at the Canadian farm to egg production. As of December 31, 2022, the company had a total grow-out production biomass of 492 metric tons.

International Plans

While the company’s primary focus is on North America, the company also plans to expand internationally, targeting those markets that are net salmon importers, unable to supply their domestic needs and where the company will have success in gaining further regulatory approvals and consumer acceptance. Once approved in these locations, the company plans to commercialize through a combination of partnerships, joint ventures, and licensing arrangements. Consequently, the company has targeted Brazil, Israel and China as potential markets. In Brazil, the company has received approval for the sale and consumption of the company’s fish, and the company is seeking to identify a local partner. In Israel, the company has selected a partner and the company is preparing its regulatory application. In China, the company has paused its efforts to conduct field trials until the company has greater certainty of both the regulatory and political landscape.

Growth Strategy

The company’s strategy includes optimizing technology and innovating for the future; and vertically integrating and strategically increasing its value-added capabilities within the seafood industry.

History

AquaBounty Technologies, Inc., a Delaware corporation, was founded in 1991. The company was incorporated in 1991.