SenesTech's Big Play On Small Pests

By Brett Hershman

Thursday, April 17, 2025 1:56 PM EDT

In a divisive world, it's hard to get anyone to agree on anything. Reducing invasive rats? That is undoubtedly something that most people can get behind, and removing them in an environmentally friendly way? Even better.

SenesTech Inc. (Nasdaq: SNES) is an innovative pest control company that takes a different approach to reducing the prevalence of pesky rats and mice, known for their explosive growth potential. According to the company, just two rats can produce up to 15,000 offspring in a year, making population control a difficult challenge.

The Birth Of An Unconventional Idea

SenesTech is a pioneer of rat fertility or birth control. Instead of trying to continue to chase the population through lethal methods, they aim to eliminate the problem at the source by reducing their ability to reproduce.

Two biologists at Northern Arizona University founded the company to develop a safe, humane, and environmentally friendly rodent contraceptive.

The company's initial product, Contrapest, is a liquid contraceptive bait for rodents, which has seen success, but its latest product, Evolve, is the key catalyst for future growth.

What Makes Evolve Different

Launched in 2024, Evolve is a soft bait product that now drives more than half of the company's revenues, and is a product that SenesTech feels confident will finally push the company towards cash flow breakeven. In my exclusive interview with CEO Joel Fruendt, he said that he expects his company to reach that mark next year.

"Over the last 60 days, we have announced that we have a strategy to grow our revenues but also a cash burn reduction so we can get to cash flow breakeven in 2026," Fruendt said this week.

The active ingredient in Evolve is cottonseed oil, which contains a compound that reduces sperm motility in males and limits egg fertility in females. Fruendt says a key factor in Evolve is that it is not a poison and does not impact other animals.

The EPA offers an exemption for products made from approved natural ingredients, and according to Fruendt, Evolve qualifies for this designation. This exemption allowed SenesTech to avoid the typically lengthy regulatory approval process that chemical-based pesticides must undergo.

Rodents: A Global Threat with Massive Costs

So, why is rodent pest control important? In addition to being unsightly, rats contribute significantly to food insecurity. According to ECOBLOC, rodents destroy 22% of the world's food supply annually. In total, they account for $20 billion in damages to homes, agriculture, and businesses every year.

While SenesTech has encouraging catalysts with its flagship Evolve product, it's still in the early innings of widespread adoption.

"When you do a field trial, it's done over a significant number of months or even years. We have regular repeat customers and can see the benefits, and we are expecting to see that grow exponentially over 2025," Fruendt added.

While the company executives are optimistic about growth prospects in the near and long term, the stock has fallen 43% year to date, despite beating earnings estimates in its past three consecutive quarters.

In the most recent quarter, revenues were up 70% year over year, while net income increased 27%. Still, its revenues missed estimates by 29% in the 4th quarter, which has been weighing on the stock. The company is expected to announce its first-quarter earnings on May 8. As a Nasdaq-listed company with a market cap of just over $3 million, this stock has room to run.

Multi-Channel Growth Strategy

SenesTech is taking a multi-channel approach to growing its business with Evolve. It is currently available through E-commerce and limited retailers, including Ace Hardware, Amazon (AMZN), Walmart (WMT), and Tractor Supply (TSCO).

What used to be $400-$500 orders, the company is now seeing orders over $10,000, according to the CEO.

Urban Adoption & International Growth

In addition to selling directly to consumers through these channels, SenesTech is currently working with municipalities and launching a test pilot in New York City, with test pilots already underway in Baltimore, Chicago and Boston.

By 2050, 90% of the global rodent population is expected to live in urban areas, ultimately forcing municipalities to find an alternative to this growing problem.

"We've been working with New York for a while to get them to understand the value of contraception and birth control. After trying the same things for 50 years, they are finally looking to control the birth rate. After working with the City of New York over the past year, they have now submitted an order to us that we will ship this month," said Fruendt.

"We are starting to see some momentum in the municipal side of the business because they are starting to integrate birth control as a part of their integrated pest control management."

While it's not the first time New York City has tried rat birth control, New York Council member Shaun Abreu said previous attempts were unsuccessful because officials weren’t persistent and used liquid bait and did not pair it with trash containerization, according to The New York Post.

Challenges and Market Opportunity

What seems like a catalyst that could be a game changer for this company is noticeably downplayed by the CEO, presenting a unique challenge for the company.

"Nobody wants to admit they have a rat issue. We face that on a daily basis. "

The rodenticide market is around $1 billion in the United States and $5 billion worldwide. SenesTech is currently pursuing international growth, with 11 exclusive distributors worldwide, including Hong Kong, Singapore, the Netherlands, Australia, and New Zealand.

A recent report claims the rodenticide global market will grow to $7.7 billion by 2029 and is currently dominated by tech giants BASF SE (Germany), Bayer AG (Germany), and Syngenta Ag (Switzerland). If SenesTech can prove its efficacy, it could become a potential acquisition target.

"We are now in the process of getting the full approval in a few different countries that will have a significant positive impact on our revenues moving forward," Fruendt says.

Looking Ahead: A Potential Breakout

Company executives feel confident that the fundamentals are in place and the company is well-positioned for a breakout.

"We have the ability to bend the curve very quickly. E-commerce is growing extremely well, but it is linear, and the move into retail has taken a while, but there are some things that the moment they happen, the game changes," said CFO Tom Chesterman.