Evogene reports progress in corn agreement with Monsanto

Ofer Haviv  photo: Tamar Matzafi

Evogene is developing a strain of corn more resistant to fusarium disease.

Evogene Ltd. (Nasdaq: EVGN; TASE:EVGN) today announced success in its plant model trial for strains it has discovered that improve the resistance of corn to fusarium disease. Like medical trials, plant trials have three phases: a plant model trial (plants that are relatively easy to grow in a laboratory, and which have a short lifespan), trials of the target plant (corn, soy), and large-scale field trials of the target plant. It can now be said that Evogene has passed the Phase I trial.

Evogene's market cap is NIS 446 million. The company has $79 million in cash, mostly from past milestone payments and proceeds from its offerings on Nasdaq. Evogene president and CEO Ofer Haviv said, "Where the fusarium disease is involved, the plant model is very similar to the corn plant, so success in them has a high predictive value for later success, and that is the reason that we are reporting."

The trial was part of Evogene's relatively new framework agreement with Monsanto signed in 2013, not the extensive agreement signed by the companies in 2008, in which Monsanto paid tens of millions of dollars for the development of improved strains of corn and soy crops that would be resistant to drought. Under the newer agreement, which concerns only fusarium wilt disease, Monsanto is making milestone payments to Evogene for progress in the process, in addition to royalties from sales of the product, if and when it reaches the market. The terms of the agreement, however, have not been disclosed.

Evogene did not report today that it would receive a specific payment for the current milestone, but the company is going ahead with further trials. Haviv believes that the plant trials can be finished in two-three years. The cost of losing crops to fusarium in the US is estimated at $700 million a year. Evogene also announced the completion of the strains discovery phase in an older agreement between the two companies dealing with crop improvement and resistance to drought. The next phase is entering plant model trials. Monsanto itself is in the process of being acquired by international company Bayer, a measure that will create a giant agricultural conglomerate, to which the agreements between Monsanto and Evogene will be transferred.

Bayer, traded at a $91 billion market cap, is expected to acquire Monsanto for $66 billion. The merger has not yet been finally closed; it depends on approval by the antitrust authorities in several countries and an audit by a number of agricultural organizations. The merger follows a more general process of large-scale mergers in the agricultural sector, including between Syngenta and Chemchina and between Dow and Dupont.

Published by Globes [online], Israel Business News - www.globes-online.com - on July 11, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Ofer Haviv  photo: Tamar Matzafi
Ofer Haviv photo: Tamar Matzafi
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