Executive Summary / Key Takeaways

• Pioneering Botanical Synthesis: BioHarvest Sciences is revolutionizing plant-based compound production with its patented Botanical Synthesis technology, enabling consistent, potent, and sustainable manufacturing of active ingredients for nutraceuticals, pharmaceuticals, and other high-value industries.
• Dual Growth Engines Accelerating: The company is driving robust revenue growth through its direct-to-consumer VINIA product line, which is expanding into new categories like functional beverages and chews, and its rapidly maturing CDMO services division, securing marquee partnerships and a healthy pipeline.
• Clear Path to Profitability: BioHarvest is on track to achieve adjusted EBITDA breakeven by Q4 2025, supported by significant gross margin expansion, operational efficiencies, and strategic investments in product innovation and AI-powered CDMO tools.
• Technological Moat and Market Disruption: Proprietary AI tools, advanced bioreactor scaling, and a focus on clinically backed, superior-tasting products provide a strong competitive advantage, allowing BioHarvest to disrupt multi-billion dollar markets and offer sustainable alternatives to traditional sourcing.
• Strengthened Financial Position: Recent balance sheet fortification, including a $14.7 million boost from new investments and debt reduction, enhances the company's financial flexibility to execute its ambitious growth and expansion plans.

The Botanical Synthesis Revolution: A New Paradigm for Plant Compounds

BioHarvest Sciences Inc. (NASDAQ:BHST) stands at the forefront of a biotechnological revolution, leveraging its proprietary Botanical Synthesis platform to redefine how plant-based compounds are discovered, developed, and manufactured. With over 15 years invested in perfecting this patented, non-GMO technology, BioHarvest can produce highly potent and consistent active ingredients without the need to grow the entire plant. This innovative approach addresses critical industry challenges, offering a sustainable, reliable, and economically viable alternative to traditional agricultural sourcing and chemical synthesis. The company, operating in Israel and the United States from its Vancouver, Canada base, is strategically positioned to capitalize on the increasing global demand for natural, science-backed health and wellness solutions.

The company's journey began with the successful commercialization of VINIA, its flagship red grape cell-derived nutraceutical. Launched in the USA in May 2021, VINIA's rapid market acceptance, evidenced by over $55 million in lifetime revenue and a 4.7-star average rating from nearly 10,000 verified customer reviews by Q2 2025, validated the immense potential of Botanical Synthesis. This success laid the foundation for BioHarvest's "North Star" mission: to discover, develop, manufacture, and democratize 5 to 10 life-changing plant compounds that positively impact hundreds of millions of consumers globally while preserving the planet.

Technological Edge: Precision Cultivation for Superior Outcomes

BioHarvest's core differentiator is its Botanical Synthesis technology, a sophisticated platform rooted in plant cell biology. This process allows for the perpetual creation of consistent botanical molecules by taking a physical plant only once to develop a valuable, perpetual cell bank. These cells are then multiplied in industrial-scale bioreactors to produce a final soluble, bioavailable, and highly efficacious end product. The technology's tangible benefits are significant and quantifiable. For instance, VINIA delivers Piceid Resveratrol at concentrations at least 100 times higher than what is found in regular red grapes. This magnified potency, combined with industrial scalability and inherent consistency, provides a distinct advantage over traditional plant cultivation, which is often subject to environmental variability, seasonal changes, and geopolitical supply chain risks.

The company's commitment to innovation is evident in its continuous R&D initiatives. BioHarvest has progressively scaled its bioreactor capacity, moving from 350-liter units to 1,200-liter bioreactors, with plans for 2,000-liter and above in its next manufacturing facility. This expansion, coupled with the full digitization of its production line and biological metrics, has led to a "step change in efficiency and optimization of production." These efforts, including the deployment of 22% larger bioreactors, have directly contributed to enhanced manufacturing yields and improved gross margins. Furthermore, BioHarvest is actively developing automation in processes like harvesting and drying, and has integrated AI capabilities across its R&D, computational biology, and customer success teams. A significant breakthrough announced in September 2025 was the successful large-scale production of plant-based exosomes in its bioreactors. Exosomes, nano-sized extracellular vesicles, offer enhanced absorption and bioavailability, opening new potential revenue streams for both products and CDMO opportunities. For investors, these technological advancements translate into a robust competitive moat, enabling higher potency products, lower production costs, better margins, and a faster, more predictable path from discovery to market.

Dual Growth Engines: Products and CDMO Drive Expansion

BioHarvest operates two synergistic business divisions: Direct-to-Consumer Health and Wellness Products and CDMO Services.

Direct-to-Consumer Health and Wellness: Expanding the VINIA Ecosystem

The direct-to-consumer division, primarily driven by VINIA, continues to demonstrate strong growth and market acceptance. As of July 2025, total active VINIA customers in the U.S. reached approximately 65,000, with subscriptions accounting for the majority of vinia.com revenue. VINIA has maintained its premium pricing since its May 2021 launch, a testament to its efficacy and brand trust, and is currently the #1 resveratrol-only product sold on amazon.com in the U.S..

The "VINIA Inside" strategy is successfully expanding the brand's footprint into new, high-margin categories. New products, defined as non-capsule offerings, contributed 20% of the company's incremental revenue growth in Q2 2025 and now constitute a healthy 10% of the total revenue mix. Key launches include:

• VINIA SuperFood Coffee: Generated over $2.5 million in revenue since its December 2023 launch, with VINIA Espresso in Nespresso-compatible pods expected soon.
• VINIA SuperFood Teas: Following a successful Q1 2025 debut in sachets, English Breakfast and Matcha Green Tea in K-Cup compatible pods were added in Q2 2025.
• VINIA Daily 2X Formula Chews: Launched in June 2025, these double-dose 800-milligram chews target athletes and active individuals, are Informed Sports certified, and are quickly garnering positive Amazon reviews.
• VINIA Blood Flow Hydration Solution: Slated for an October 2025 launch, this powdered electrolyte mix aims to disrupt the $13 billion electrolyte market by uniquely focusing on blood flow-powered hydration. It features natural electrolytes and is Informed Sports certified.

To further accelerate growth and reduce customer acquisition costs, BioHarvest launched the VINIA Health Pros' Professional Affiliate program in Q2 2025, aiming for 300 top health thought leaders by year-end. This program leverages influential practitioners and athletes to expand VINIA's reach to a discerning health-conscious audience.

CDMO Services: Unlocking Long-Term Value

The CDMO Services division, launched in early 2024, provides industrial partners with access to BioHarvest's Botanical Synthesis technology for developing patentable plant-based compounds. This model generates non-recurring engineering (NRE) fees during development and transitions to royalty-based manufacturing for commercialized products, offering significant long-term recurring revenue. Management has noted that NRE fees have increased significantly from historical ranges of $1.8 million to $2.5 million.

Major milestones include the successful completion of Stage 1 and progression to Stage 2 in Q2 2025 for a contract with a NASDAQ-listed pharmaceutical partner, marking the first CDMO project to advance to this stage. The company also signed its first contract targeting a fragrance molecule in Q2 2025, a high-value compound derived from an endangered plant species, showcasing the technology's versatility and sustainability benefits. The CDMO deal funnel is "very healthy," with expectations to announce multiple new contracts in the second half of 2025.

A new AI-enabled discovery phase service, launched in Q2 2025, further enhances the CDMO's capabilities. This service, costing $35,000 to $50,000 for a 7-10 day assessment, leverages proprietary AI and computational biologists to identify promising botanical compounds for clients, accelerating new Stage 1 contracts. Meaningful revenue contributions from the CDMO business are anticipated to begin in early 2026 as projects advance to later stages.

Financial Performance: A Trajectory Towards Profitability

BioHarvest has demonstrated consistent financial momentum, driven by its dual growth strategy and relentless focus on efficiency.

• Revenue Growth: Q2 2025 revenue rose 41% year-over-year to $8.5 million, in line with guidance. Q1 2025 revenue increased 47% year-over-year to $7.9 million, exceeding guidance. Full-year 2024 revenue reached $25.2 million, representing 99% year-over-year growth.
• Gross Margin Expansion: Gross margins have shown remarkable improvement, expanding by 800 basis points to 60% in Q2 2025 (up from 52% in Q2 2024). This follows a 227 basis point improvement to 58.5% in Q1 2025 and a 600 basis point increase to 57% in Q4 2024. Full-year 2024 gross margins improved by 1,000 basis points from 45% in 2023 to 55%. These gains are attributed to increased manufacturing scale, improved yields from larger bioreactors and digitization, and cost efficiencies like optimized shipping for multi-month subscriptions, which added 50 basis points to Q2 2025 gross profit margin.

• Operating Leverage: While operating expenses increased in Q2 2025 due to marketing for new products and CDMO expansion, general and administration (G&A) expenses have shown significant operating leverage. Full-year 2024 G&A decreased 1.8% in absolute terms despite revenue doubling, falling to 17% of revenue from 35% in 2023.
• Adjusted EBITDA: The adjusted EBITDA loss for Q2 2025 was $1.3 million, an improvement to 14.7% of revenue from 20.7% in Q2 2024. This reflects the company's disciplined approach to balancing growth with profitability.

Competitive Landscape and Strategic Positioning

BioHarvest operates in a competitive landscape encompassing synthetic biology firms, traditional plant extract producers, and diversified nutrition/health companies. Direct competitors like Ginkgo Bioworks (DNA), Evolva (EXAI), and DSM (DSM) present varied challenges and opportunities.

Ginkgo Bioworks, a leader in synthetic biology, offers a broad platform-as-a-service model for bioengineering. While Ginkgo's platform is more generalized, BioHarvest's botanical synthesis provides a specialized, targeted approach for plant-derived compounds, particularly in nutraceuticals. BioHarvest's focus on clinically proven therapeutic solutions and integrated direct-to-consumer product development gives it a niche market positioning in health supplements, potentially leading to better product performance in specific applications.

Evolva, specializing in fermentation-based production of natural ingredients, competes directly with BioHarvest in producing plant-based compounds. BioHarvest's cell-based growth method may offer a qualitative edge in preserving the natural matrix of compounds, as seen in VINIA. BioHarvest's integrated contract manufacturing services could enhance customer loyalty, differentiating it from Evolva's potentially more cost-focused, large-scale production.

DSM, a global diversified company in nutrition and health, offers a wide range of nutritional products. BioHarvest's specialized offerings like VINIA allow for greater agility in product innovation and differentiation through unique performance benefits. While DSM benefits from global scale and established distribution, BioHarvest's niche technological capabilities and direct-to-consumer model enable it to target specific therapeutic needs with higher margins.

BioHarvest's proprietary Botanical Synthesis technology serves as a significant competitive moat. It offers superior product purity and efficacy, fostering customer loyalty and recurring revenue. This technology provides higher efficiency in producing plant-derived compounds compared to broader synthetic biology platforms and addresses the limitations of traditional plant sourcing. The company's integrated CDMO services further strengthen its position by fostering deep customer relationships and potentially accelerating innovation cycles.

Tariffs are emerging as a tailwind for BioHarvest. The 15% tariff on transfer material from Israel to the U.S. has been factored into the company's projections and is considered manageable. More significantly, competitors relying on ingredients from countries like China face substantial tariff impacts, forcing them to increase prices. This dynamic makes VINIA's premium less pronounced, acting as a "significant tailwind" for BioHarvest. Furthermore, geopolitical and supply chain challenges, exacerbated by tariffs, are pushing pharmaceutical and nutraceutical companies to seek biotech solutions like BioHarvest's, which offer consistency, economic viability, and patentability, accelerating the industry's shift towards controlled, sustainable production.

Outlook and Guidance: Scaling Towards a Profitable Future

BioHarvest's outlook is firmly set on achieving adjusted EBITDA breakeven by the fourth quarter of 2025, targeting $11 million to $12 million in quarterly revenue. This goal is underpinned by continued gross margin expansion, sustained growth in VINIA subscription revenue, and accelerating CDMO traction. Management anticipates continued high double-digit growth for the core capsule business in 2025, augmented by new product launches and the Health Pros' Professional Affiliate program, which is expected to drive subscriber growth at lower acquisition costs.

The CDMO division is poised for significant expansion, with management expecting to announce multiple new contracts in the second half of 2025, potentially one or two by year-end. Meaningful revenue contributions from CDMO are projected to materialize more substantially in early 2026 as existing projects advance through development stages. The new AI-enabled discovery phase is expected to accelerate the pipeline of high-value CDMO projects.

Looking further ahead, BioHarvest plans to launch its olive verbascoside cell product in 2026, targeting the substantial market for liver, cholesterol, and joint health. This product is expected to leverage the existing VINIA subscriber base for a much faster ramp-up. The company is also investing in significant manufacturing capacity expansion, with plans for a new Israeli facility four times the size of the current one, targeting 100 tons capacity, and eventual U.S. manufacturing capabilities by 2028-2029 to support large-scale CDMO projects. Long-term, BioHarvest targets a 20% adjusted EBITDA margin for its direct-to-consumer products business, with even higher margins expected from the CDMO segment.

Risks and Challenges

While the outlook is promising, investors should consider several risks. The 15% tariff on materials transferred from Israel to the U.S. represents an ongoing cost, though management has factored this into projections and is mitigating it through other efficiencies. CDMO projects inherently carry development risk, particularly in Stage 1, although BioHarvest boasts a 100% technical success rate in moving compounds past this initial stage. Regulatory pathways for novel pharmaceutical compounds, while believed to be simpler due to the nature of BioHarvest's purified biological materials, still require careful navigation and can impact timelines. Furthermore, the successful scaling of new product launches and the Health Pros' program will be critical to achieving projected subscriber growth and cost efficiencies.

Conclusion

BioHarvest Sciences is cultivating a compelling investment narrative, driven by its groundbreaking Botanical Synthesis technology and a dual-pronged strategy of direct-to-consumer product innovation and high-value CDMO partnerships. The company's ability to consistently expand gross margins, manage operating expenses, and strategically diversify its product portfolio positions it for sustained growth. With a clear path to adjusted EBITDA breakeven by Q4 2025 and a fortified balance sheet, BioHarvest is demonstrating its capacity to translate technological leadership into tangible financial results. The increasing demand for sustainable, science-backed health solutions, coupled with geopolitical shifts favoring biotech alternatives, provides a powerful tailwind for BioHarvest to democratize life-changing plant compounds and create significant shareholder value in the years to come.