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SNES: Proposed California Legislation Could Be A Catalyst For Accelerating ContraPest Sales

09/09/2020

NASDAQ:SNES

ContraPest is an environmentally responsible product that could benefit from bans on other rodenticides

Sales of SenesTech, Inc. (NASDAQ:SNES) product, ContraPest, a liquid bait that acts as a contraceptive to reduce rodent populations, could benefit from proposed California legislation. California AB-1788 was passed by the California Legislature on August 28, 2020 and was sent to the governor for his signature. He has 15 days to approve it.

AB-1788 seeks to ban certain rodenticides and could be a catalyst for ContraPest growth, in our view, as the product is environmentally responsible and approved for use in most environmentally sensitive situations.

The bill requires a reevaluation of the use of second generation anticoagulants where “continued use is not reasonably expected to result in significant adverse effects to non-target wildlife.” If the governor signs the bill, it would regulate the use of second generation anticoagulant rodenticides (SGARs) until the Director of Pesticide Regulation certifies to the Secretary of State that the Department of Pesticide Regulation has completed the reevaluation.

It likely will take some time before the additional requirements are completed. Thus, we do not expect any immediate impact on SNES sales and earnings. However, we believe AB-1788 ultimately could be a catalyst for accelerating ContraPest sales.

ContraPest is a fertility control product that is a liquid bait formulation containing two active ingredients, VCD and triptolide, plus fat and a sweetener in a homogenized water based mix. Tests showed a decrease in rat population of about 40% over 12 weeks. Conventional poisons reduce the rat population by about 80% BUT since rats are prolific and the rats become bait shy, with no reduction in food supply, the rat population rebounds back to previous levels. However, using ContraPest in conjunction with other rodenticides maintains rat populations at significantly reduced levels, which is key to controlling this population that is estimated to cause significant economic damage to food supplies and human health across the globe.

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SenesTech is working with several municipalities both in the state of California and in other areas to demonstrate the efficacy of ContraPest. For instance, SNES is working with the San Francisco Recreation and Parks Department to provide proof of concept about the effectiveness of ContraPest. By including ContraPest in an integrated pest management program, they attained a 65% reduction in rodent populations. Importantly, the 65% metric is incremental to the rodent population reduction achieved by conventional programs before including the use of ContraPest.

Last year, ContraPest was deployed at animal shelters throughout the greater Los Angeles metropolitan area in situations where companion animal safety is crucial. ContraPest is viewed as a non-lethal approach to managing rodent populations in these types of situations and at these facilities. San Francisco and Los Angeles, as well as municipalities outside of California, are expected to add additional ContraPest deployment sites.

For instance, in a four month study conducted jointly with the DC Parks Department, the rat populations declined by anywhere from 50% to 88% when ContraPest was deployed. The District of Columbia has indicated it will be deploying ContraPest on a widespread basis as its budget permits. Management believes over time this could translate into annual sales of $50,000 to $100,000+ for SNES.

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