Please ensure Javascript is enabled for purposes of website accessibility

Monsanto Seeds Its Pipeline

By Brian Orelli, PhD – Updated Apr 5, 2017 at 7:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A continued partnership with Evogene should result in higher yields.

The agricultural biotech business is starting to look a lot like its pharmaceutical counterparts. Monsanto (NYSE:MON) is hooking up with small companies in research and development deals to try and keep potential technology from falling into the hands of rivals Syngenta (NYSE:SYT) and DuPont (NYSE:DD).

Its newest partnership, a five-year deal with Israel-based Evogene, is actually an expansion of a year-old partnership with the company. The duo are expanding the scope of their partnership to include discovering "genes related to yield, environmental stress and fertilizer utilization" -- basically anything that will help the plants grow faster and produce more. The scope of the research was previously limited to increasing nitrogen usage.

Evogene will do the initial discovery research to identify genes that could increase yields and then Monsanto will test the candidates in plants. For its efforts, Monsanto will pay Evogene $35 million over the course of the partnership and pay additional milestone and royalty payments for products that actually get developed. Monsanto is also taking an $18 million equity stake in Evogene, which trades on the Tel Aviv Stock Exchange, and later will purchase another $12 million worth of shares.

While bigger yields are definitely good news for farmers and Monsanto -- since seeds that provide better yields can fetch higher prices -- it is a bit tougher to predict the long-run ramifications for fertilizer players like Mosaic (NYSE:MOS) or PotashCorp (NYSE:POT).

Then again, these potential products are still years away from the fields, so there's no immediate concern for fertilizer producers. Investors just need to watch for upcoming surprises in biotech seed producers' pipelines.

More Foolishness:

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Monsanto Company Stock Quote
Monsanto Company
MON
Nutrien Stock Quote
Nutrien
POT
E. I. du Pont de Nemours and Company Stock Quote
E. I. du Pont de Nemours and Company
DD
The Mosaic Company Stock Quote
The Mosaic Company
MOS
$48.53 (-7.60%) $-3.99

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.