Depressingly optimistic and upbeat stuff from Monsanto and Celera - though interesting analysis on less enthusiastic market response to genomics -- "It's still not clear how to make money from this."
Lucy Michaels Food and Agriculture Researcher Corporate Watch (UK)
Monsanto upbeat on genetically modified seeds
By Christopher Bowe in Chicago
Published: February 12 2001 20:49GMT
Monsanto, the US agricultural chemicals and biotechnology group, said on Monday that prospects had improved for approval of its genetically modified seeds in key potential markets.
The Brazilian government created a national regulatory authority for biotechnology issues in December, company officials said. They see this move as a key step to gaining approval for the company's genetically modified soyabean seeds. Brazil's soyabean market is the second biggest behind the US and it is a key competitor in export markets. Monsanto already sells to Argentina, another big grain producer. "Seed is planted around the end of the year (in Brazil) and we're working really hard toward that target," said Hugh Grant, chief operating officer.
Monsanto executives also expressed confidence in the eventual use of modified cotton seeds in India. Upon approval, it estimates that seeds made by a local supplier using its licensed technology could account for about half of the country's 22m-25m planted acres of cotton. The company said it expects approval within two years.
In Japan, Monsanto is awaiting approval of its corn seed and the European Commission is close to finishing rule changes that would allow it to start seeking approvals again. The comments came as Monsanto, 85 per cent owned by US drug-maker Pharmacia, beat Wall Street's expectations for it fourth quarter results. Monsanto said a new capital structure, cutting $90m in expenses in the year and higher sales, particularly of its Roundup herbicides, helped boost its performance.
Pharmacia bought Monsanto, which included pharmaceuticals, and spun it off last October with only agricultural chemicals and biotechnology using the name. Excluding charges for restructuring and write downs, underlying profit in the fourth quarter was $31m. Modified seed acreage with Monsanto seeds grew 15 per cent last year.
Celera gains on genome release
By Victoria Griffiths in Boston
Published: February 12 2001 20:30GMT
Shares in Celera Genomics shot up on Monday after the biotechnology company published its map of the genome. But the tameness of reaction compared to the enthusiasm surrounding potential profitability last year suggested investors may be tiring of the hype surrounding the "book of life". Celera's stock rose 17 per cent to $48.89 in late afternoon trading.
Shares in other genomics companies, including Incyte, Gene Logic and Human Genome Sciences, also benefited.
The reaction was muted, however, compared to a year ago. In January 2000 when Celera said it was entering the final phase of its genome sequencing project, the company's stock soared 30 per cent to close at more than $120. Celera shares have ranged from $27.75 to $275 over the past 12 months.
The Nasdaq biotechnology index is down 37 per cent since its peak last March as investors worried about the sector's astronomic price to earnings valuations. "No one doubts the importance of the human genome for science, but investors are questioning how this translates into revenues for companies over the next few years," says Sushant Kumar, a biotechnology analyst with Mehta Partners in New York. "It's still not clear how to make money from this."
The publication in Science of Celera's data on the human genetic code had been widely anticipated, but the market had a few surprises. The company said on Monday that it was nearing completion of the mouse genome - data that may allow drug research companies to conduct more effective experiments on mice before moving to human trials. The mouse genome could prove vital to Celera's ability to market its database, which competes with the free human genome data available from the publicly sponsered Human Genome Project. "It's a unique tool people can get right now only from Celera's database," Craig Venter, president of Celera, said. Mr Venter hopes to create a "humanised mouse genome" that would supply laboratory animals with all of the extra human genes, probably about 300 in total.
Celera plans to make money through sales of its database to the health industry and through drug discoveries of its own. The company's database sales are expected to double to $95m for the year to June. About 50 organisations pay for access to the information. Mr Venter admitted that Celera will need to improve its database to retain customers. The biggest surprise of the human genome data is that it pointed to fewer genes than scientists imagined - just 30,000 to 40,000, instead of the estimated 100,000. It was unclear how that will affect drug research.