Monsanto sees new genes, new products in pipeline

By Carey Gillam
Thursday, January 4, 2007; 2:14 PM

KANSAS CITY, Missouri (Reuters) - Crop biotechnology company Monsanto Co. (MON.N), said on Thursday its research and development of new products is accelerating at a record pace, with a range of genetically altered crop enhancements on the horizon.

"Our R&D engine is really humming," said Monsanto Chief Technology Officer Robb Fraley in a conference call. "We will screen and test more genes in 2007 than in any other year in our history."

St. Louis-based Monsanto is considered a global leader in genetically altering crops to resist pests and tolerate weed-killing treatments. The new offerings would include soybeans with healthier oils and higher oil yields; higher-yielding corn; beans, cotton and corn that grow well in drought conditions, and crops that make more efficient use of costly nitrogen applications.

Fraley said largely because of the use of molecular breeding techniques, which significantly speeds up gene selection, "the new data we generate in 2007 across all our breeding and testing programs will equal that achieved throughout the company's history."

Monsanto officials said while the company has relied in large part on two core genes for the insect-protected and herbicide-tolerant traits that have driven the company's recent growth, it now had made good progress on seven specific projects that use new genes across new platforms.

"We have a pipeline that is delivering in the near term and will launch game-changing products shortly after the turn of the decade," said Fraley.

Including the launch this year of the Roundup Ready Flex cotton, Fraley said Monsanto expects to launch five new products before the turn of the decade, with a package of drought-tolerant traits following shortly after.

Monsanto chairman Hugh Grant called the research portfolio "remarkably rich" in a call with Wall Street analysts on Thursday.

"All of the growth we've talked about ... is still based on two genes," said Grant. "Those two genes will pale in comparison to the breadth and depth of our pipeline and the pace of innovation here."

"If you look at their pipeline of new products ... that should continue to put them ahead of the competition," said Argent Capital Management portfolio manager Tom Leritz.

Monsanto posted a higher-than-expected quarterly profit on Thursday, citing strong sales of U.S. corn seed and herbicide as well as a reduced tax burden, but shares fell as the company elected not to raise its fiscal-year earnings forecast.

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