By Eric Fetters
Herald Writer
BOTHELL — Eden Bioscience Corp. announced Thursday that the Environmental Protection Agency has approved the company’s Messenger product for full commercial use on food crops, trees and other plants.
In response to the news, the Bothell company’s stock price shot up from $2.25 a share to $3.34 at Thursday’s close — a 48 percent increase for the day.
Nearly 1.3 million of the company’s shares were traded, in contrast to average daily volume of 143,000.
Despite investors’ reaction, the new approval doesn’t open any new markets for the product, said Brad Powell, Eden’s chief financial officer and interim president.
"We’ve had approval to sell Messenger since April 2000, this just allows us to keep selling it," Powell said. "It’s not going to determine whether a grower is going to buy the product or not."
Messenger is a crop treatment spray based on naturally occurring proteins called "harpins," which activate natural plant defense systems to protect against disease and pests. The proteins also stimulate plant growth systems.
Over the years, the product has been tested on more than 40 crops, including a range of fruits, cotton, rice, vegetables and wheat. Eden claims it is "virtually nontoxic" to people, most animals and other plants.
In April 2000, the EPA granted Messenger a two-year approval, conditioned upon additional data to further confirm product safety. The new approval is unconditional and carries no expiration date.
Andrew Heyward, an analyst with Ragen MacKenzie Inc. in Seattle, said the permanent EPA approval for Messenger was not unexpected.
"So it’s kind of a mystery when the market reacted as strongly as it did," he said.
Another analyst quoted by Dow Jones attributed the stock’s jump to the covering of short positions. Investors who short a stock by selling borrowed shares basically bet that its price will decline. However, if the stock rises instead, they may buy shares to pay back the loan in order to avoid losing money.
Heyward said that is a possibility but not the only explanation for the stock’s sudden rise.
Earlier this year, Eden saw its stock slide more than 50 percent after the company announced that the fourth quarter saw no new sales of Messenger, as distributors tried to sell what they already had in inventory.
Next Thursday, the company plans to release its sales and financial results from the first quarter of 2002. Analysts have estimated the company will post a loss of 27 cents per share.
You can call Herald Writer Eric Fetters at 425-339-3453 or send e-mail to fetters@heraldnet.com.
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