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Monsanto Moves Four RNAi Products through Pipeline, Posts Improved Fiscal First Quarter Financials

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Monsanto last week provided an update to its research and development pipeline, highlighting the advancement of four product candidates incorporating RNAi through the company's pipeline.

During a conference call held to discuss the pipeline, as well as Monsanto's fiscal first-quarter 2013 financial results, CTO Robert Fraley stressed the importance of having “more than one or two component technologies” to success in the ag-bio space.

In line with this, Monsanto late last year paid nearly $30 million to pick up the exclusive rights to Alnylam Pharmaceuticals' RNAi technology and intellectual property for use in agriculture (GSN 9/6/2012). But even before then, the firm had steadily been incorporating RNAi into its suite of biotechnologies, and in early 2012 advanced into phase III a strain of corn, dubbed corn rootworm III, that uses RNAi to create resistance to the corn rootworm pest, which attacks the roots of the plant.

According to the company, phase I testing involves establishing proof of concept, phase II focuses on the early development of a new product such as trait development and the generation of pre-regulatory data, and phase III work includes advanced development activities including trait integration, field testing, and regulatory data collection. All three phases typically take between one and two years.

Prior to commercialization, Monsanto also runs product candidates through phase IV testing, which takes between one and three years and involves submitting data to regulators and preparing marketing initiatives.

“This year, we have added another novel RNAi-based product — corn rootworm IV — in phase I,” Fraley said during last week's call.

Corn rootworm IV joins protein-based modes of action with an RNAi component. Monsanto did not provide specific details about the product's mechanism of action, and company officials declined to comment on any of the new product candidates. However, Monsanto researchers last year published data describing the use of orally delivered dsRNAs targeting the Snf7 ortholog, which encodes a protein essential for intracellular trafficking, to kill rootworms.

In mid-2012, Monsanto also unveiled its RNAi-based BioDirect initiative, which it said brings its “expertise in plant genomics to chemistry” to create topically applied agents to improve crop health. Last week, the company formally moved three BioDirect programs into its pipeline.

“By understanding the genes in plants and pests, we are able to take advantage of the advances in RNAi technology and naturally occurring processes to create topical applications from molecules found in nature,” Fraley said. “These can precisely target pests and result in many of the same benefits we've seen with biotechnology traits.”

The first newly advanced BioDirect project, which is now in phase I, focuses on weeds resistant to glyphosate, a commonly used herbicide originally brought to the market by Monsanto in the 1970s under the brand name Roundup.

In field testing, the technology was able to control glyphosate-resistant Palmer amaranth at more than nine locations, according to Monsanto.

Meantime, moving into discovery-stage testing are two BioDirect programs related to insect and virus control. The first has proven effective against a number of viruses in pepper and tomato plants in early testing, and is expected to have broad applicability in a variety of plants. The second has already been tested in lab trials against pests such as the Colorado potato beetle and the Mexican bean beetle.

“While still in early stages … this is a really exciting advance and reminds me of when I first saw the RoundUp Ready technology,” Fraley said of the three programs. “When you look at the products coming out of our BioDirect technology, I believe that these can facilitate expedited regulatory approvals, lower-cost product development, and the ability to benefit markets where biotech traits aren't allowed today.”

The Fiscal First Quarter

For the three-month period ended Nov. 30, 2012, Monsanto's revenues climbed to $2.9 billion from $2.4 billion the year before, primarily driven by a strong increase in sales from its corn seed and traits operations, which pulled in $1.1 billion in the fiscal first quarter.

Operating expenses were $888 million in the quarter, up from $851 million in the same period a year earlier, as a rise in selling, general, and administrative costs to $542 million from $500 million offset a decrease in research and development spending to $346 million from $351 million.

Monsanto reported a sharply increased profit of $339 million, or $0.63 a share, in the fiscal first quarter, versus earnings of $126 million, or $0.23 per share, in the year-ago quarter.

Based on the strong results, the company raised its full-year earnings per share guidance to $4.40 from a previous estimate of $4.30. It also said that its full-year free cash flow guidance has been increased to $2 billion from $1.8 billion, with net cash from operating activities to be between $2.9 billion and $3.3 billion.

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