Zivo Bioscience, Inc. (ZIVO) is a pioneering biotech/agtech research and development company dedicated to developing innovative therapeutic, medicinal, and nutritional product candidates derived from its proprietary algal cultures. With a strong focus on addressing significant global challenges, ZIVO has established itself as a trailblazer in the industry, leveraging its unique expertise and scientific advancements to create groundbreaking solutions.

Business Overview and Company History

ZIVO Bioscience, Inc. has been operating in both the biotech and agtech sectors since its inception. The company has built an extensive intellectual property portfolio comprising proprietary algal and bacterial strains, biologically active molecules and complexes, production techniques, cultivation techniques, and patented or patent-pending inventions for applications in human and animal health.

In its early years, ZIVO concentrated on developing bioactive compounds from its proprietary algal culture, targeting various human and animal diseases. These included poultry coccidiosis, bovine mastitis, human cholesterol management, and canine osteoarthritis. After a comprehensive review of the isolated active materials from its proprietary algal culture and their potential treatment applications, ZIVO identified a product candidate for treating coccidiosis in broiler chickens as the most promising option for rapidly generating significant revenue. This decision was based on coccidiosis being a global poultry industry issue and the shorter clinical testing cycle for chickens compared to other species.

In addition to its therapeutic products, ZIVO has been developing its algal biomass, which is rich in beneficial nutrients such as Vitamin A, protein, iron, important fatty acids, and non-starch polysaccharides. The company has partnered with an independent distributor to sell its algal biomass product, branded as Zivolife, initially focusing on the North American green powder food market. This algal biomass is produced in Peru using ZIVO’s proprietary technology and design.

Throughout its history, ZIVO has faced challenges typical of research and development companies, including the constant need to secure funding for its operations and product development initiatives. The company has primarily financed its activities through the issuance of common stock, warrants, and debt. Additionally, ZIVO has navigated regulatory hurdles, working to obtain necessary approvals and certifications for its algal biomass product to be deemed suitable for human consumption.

Financial Overview and Liquidity

ZIVO’s financial performance has been marked by significant investments in research and development activities, as the company remains focused on advancing its product pipeline. For the fiscal year ended December 31, 2023, the company reported $27,650 in annual revenue and a net loss of $7,777,184. The company’s annual operating cash flow was -$5,799,893, with a free cash flow of -$5,799,893.

As of September 30, 2024, ZIVO had cash and cash equivalents of $159,400, which the company has been utilizing to fund its ongoing R&D initiatives and support its operational activities. The company’s current ratio, a measure of its short-term liquidity, stood at 0.17, indicating a need for additional funding to support its growth and expansion plans. The quick ratio also stood at 0.17, further emphasizing the company’s liquidity challenges. ZIVO’s debt-to-equity ratio was -0.011, reflecting the company’s negative equity position.

To address its liquidity needs, ZIVO has successfully raised capital through various private placement offerings, leveraging the support of both institutional and accredited investors. In the first nine months of 2024, the company raised approximately $3.20 million from the direct sale of 662,550 shares of common stock in private transactions.

Quarterly Performance and Key Developments

For the third quarter of 2024, ZIVO reported $31,500 in revenue, reflecting a 167% increase compared to $11,800 in the same period in the prior year. This growth can be attributed to the company’s expanded production capacity at its contract grower in Peru, which has enabled higher sales volumes of its dried algal biomass product.

During the quarter, the company continued to invest heavily in research and development, with expenses reaching $326,360. This figure included no amortization of deferred R&D obligations, compared to $189,680 in the prior-year period. Excluding the amortization, ZIVO’s gross R&D spending increased by $85,000, primarily due to higher labor and internal research costs, partially offset by a reduction in third-party research activities.

General and administrative expenses for the third quarter of 2024 were approximately $1.94 million, up from $1.36 million in the same period of 2023. This increase was largely attributable to higher labor-related costs, including a $295,000 rise in non-cash equity-based compensation, as well as a $370,000 increase in professional services expenses, primarily due to additional equity compensation awarded to the Board of Directors.

The company’s net loss for the three-month period ending September 30, 2024, was $2.27 million, compared to a net loss of $1.82 million in the prior-year quarter. This increase in net loss was driven by the higher operating expenses and the lack of amortization of deferred R&D obligations. The operating cash flow for Q3 2024 was -$1,085,016, with free cash flow also at -$1,085,016.

For the first nine months of 2024, ZIVO reported total revenues of $67,220, a significant increase from $15,850 in the same period of 2023. However, the company incurred a net loss of $11.78 million for this period, compared to a net loss of $5.87 million in the prior year. The increased losses were primarily driven by higher research and development expenses of $2.89 million and general and administrative expenses of $8.90 million.

Subsequent to the quarter, ZIVO announced the successful completion of a 42-day confirmatory study with its coccidiosis treatment product, conducted in collaboration with a major global animal health company. The study, which replicated real-world poultry production environments, further validated the efficacy of ZIVO’s non-antibiotic, immune-modulating solution for the prevention and treatment of coccidiosis in broiler chickens.

Product Segments and Market Strategy

ZIVO operates in two main product segments: Biotech and Agtech.

The Biotech segment focuses on developing bioactive compounds derived from ZIVO’s proprietary algal culture for various therapeutic applications. The company’s lead product candidate is a treatment for coccidiosis in broiler chickens, which ZIVO believes represents the best near-term opportunity to generate significant revenue. Coccidiosis is a global issue for the poultry industry, and ZIVO’s product aims to provide an alternative to current antibiotic- or ionophore-based solutions.

Other areas of focus in the Biotech segment include:

The Agtech segment focuses on ZIVO’s algal biomass as a functional food ingredient and nutritional enhancement for both human and animal use. The company has completed the self-affirmed GRAS (Generally Recognized As Safe) process for its algal biomass, validating its suitability for human consumption as a food ingredient. ZIVO has engaged a distributor, ZWorldwide, Inc., to sell the algal biomass product, branded as Zivolife, with an initial focus on the North American green powder food market.

Currently, ZIVO only sells its products in the United States. The company’s ability to expand its market presence and generate revenue from both its Biotech and Agtech segments will be crucial for its future growth and profitability.

Risks and Challenges

ZIVO’s journey as a pioneering biotech/agtech company is not without its risks and challenges. As the company continues to navigate the complex regulatory landscape and the highly competitive markets it operates in, it faces several key risks that investors should be aware of:

1. Regulatory Hurdles

Obtaining regulatory approvals for ZIVO’s product candidates, particularly in the human health and animal health sectors, can be a lengthy and costly process. Delays or failures in the regulatory approval process could significantly impact the company’s ability to commercialize its products.

2. Competitive Landscape

ZIVO faces competition from both established players and emerging competitors in the biotech, agtech, and nutraceutical industries. The company’s ability to maintain its competitive edge and market share will be crucial to its long-term success.

3. Intellectual Property Protection

ZIVO’s success is heavily dependent on its ability to protect its proprietary algal strains, production techniques, and other intellectual property. Any breaches or challenges to the company’s IP could hamper its growth and profitability.

4. Funding and Liquidity Constraints

As a research-intensive company, ZIVO requires significant capital to support its ongoing R&D activities and commercialization efforts. Failure to secure adequate funding or maintain sufficient liquidity could hinder the company’s ability to execute its strategic plans. The company’s current ratio and quick ratio of 0.17 indicate potential liquidity challenges that need to be addressed.

5. Reliance on Strategic Partnerships

ZIVO’s partnerships with global industry leaders, such as the major animal health company, are critical to its success. Any disruptions or changes in these partnerships could have a material impact on the company’s operations and financial performance.

6. Operational Risks

ZIVO’s reliance on contract growers, particularly in Peru for its algal biomass production, exposes the company to potential supply chain disruptions and quality control issues.

7. Market Acceptance

The success of ZIVO’s products, especially in the Agtech segment, depends on market acceptance of algae-based ingredients and supplements. Consumer preferences and perceptions will play a crucial role in the company’s ability to generate revenue and grow its market share.

Despite these challenges, ZIVO’s strong track record of innovation, its diversified product pipeline, and the growing demand for natural, sustainable solutions in the biotech and agtech sectors position the company for potential long-term success, should it navigate these risks effectively.

Conclusion

Zivo Bioscience, Inc. (ZIVO) has established itself as a pioneering force in the biotech/agtech industry, leveraging its proprietary algal cultures to develop innovative therapeutic, medicinal, and nutritional product candidates. With a focus on addressing significant global challenges, the company has made significant strides in areas such as immune system modulation, cholesterol management, and the treatment of poultry coccidiosis.

ZIVO’s strategic partnerships, particularly with the major global animal health company, have been instrumental in advancing its product pipeline and validating the efficacy of its solutions. As the company continues to navigate the complex regulatory landscape and competitive markets, its ability to secure funding, protect its intellectual property, and execute its growth strategy will be critical to its long-term success.

The company’s financial performance, marked by increasing revenues but also significant net losses, underscores the challenges and opportunities that lie ahead. ZIVO’s ability to successfully commercialize its lead product candidates, particularly in the poultry coccidiosis market, while also expanding its Agtech segment, will be crucial in its journey towards profitability.

Despite the challenges, ZIVO’s commitment to innovation and its diversified product portfolio position the company as a promising player in the rapidly evolving biotech and agtech industries. Investors interested in the company’s potential should closely monitor its progress, regulatory developments, and the success of its strategic partnerships as it works to bring its groundbreaking solutions to market and address its financial and liquidity challenges.

Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.