Monsanto Says BASF Partnership Promising

Companies billing the $1.5 billion partnership as a unique venture that would help them speed development of the next generation of genetically engineered crops.

ST. LOUIS (AP) - A new research partnership is letting two of the world's biggest biotechnology companies peer into each other's private vault of genetic code. And the companies say the initial results are promising.

Monsanto Co. and Germany-based BASF AG announced the partnership earlier this spring, billing it as a unique venture that would help the companies speed development of the next generation of genetically engineered crops.

The $1.5 billion partnership gives both companies access to decades-worth of research that each had been carrying on in private. The goal was to pool resources to develop new lines to plants that contained multiple engineered genes to let them withstand a variety of challenges like pests and droughts.

The St. Louis Post-Dispatch reported Sunday that the research partnership has begun in earnest. Much of the work is occurring at Monsanto's research campus in the St. Louis suburb of Creve Coeur.

''We're really pleased with the start of the collaboration,'' said Steve Padgette, Monsanto's vice president of biotechnology. ''It's really important for our customers in the future (and) it's a real competitive advantage for the team.''

Since the deal was struck in March, the companies have been scouring each other's published research and patents.

In May, the first batch of genes from BASF's sites in Germany began arriving in Creve Coeur for study. Monsanto scientists say the findings have been positive.

Most important is the discovery that the two firms have discovered different sets of genes to give beneficial characteristics to crops such as corn, soybeans, cotton and canola. For each of the four row crops, Monsanto found that less than 10 percent of BASF's varieties had genetic overlap with those already discovered by Monsanto, Padgette said.

That boosts the menu of genes from which researchers can choose as they develop new varieties.

''I don't need to worry at all about not having enough genes'' to feed into the product development pipeline, he said.

Even in its early stages, the deal is winning some praise from some Wall Street analysts.

Frank Mitsch, with BB&T Capital Markets, last month toured Monsanto's research operation and said in a report that some of the companies' jointly developed crops should reach farmers in good time.

''Monsanto management has (resolve) in not only winning the competitive battles in the near and midterm, but also in the long-term. The venture with BASF was about combining resources to win in future generation technologies,'' he wrote.

While it has worked with universities before, this is Monsanto's first foray into research and development with a big industrial partner.

BASF has a vast portfolio of chemical products that produces about $70 billion in annual sales. Monsanto, on the other hand, focuses on genetically engineered plants, producing 18 commercial biotech crop products over 11 years. Its hybrid and biotech seeds and trait licensing business produced $4.2 billion of the company's $7 billion in sales for the first nine months of this year.

Monsanto will handle the lengthy and complicated process of getting regulatory approval for whatever plants the companies develop, and will keep 60 percent of revenue from the new products.

The company estimates the first new plants should be on the market some time between 2010 and 2015.

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