Sources inform ''Globes'' that crop bioengineering company Rosetta Green Ltd. (TASE: RSTG) is in talks on a strategic cooperation agreement with a global seed company. There may even be talks on a strategic investment in the Israeli company, or its acquisition.
Global seed giants include Monsanto Company (NYSE: MON), which has invested in crop bioengineering company Evogene Ltd. (TASE:EVGN), Syngenta AB (NYSE: SYT; SWX: SYNN), DuPont (NYSE: DD) and its subsidiary DuPont Pioneer, and Bayer Cropscience.
Rosetta Green is current traded at a market cap of NIS 66 million, and trading in the share in the past few days suggest that the market smalls a deal at the company. The share price rose 4.1% today to NIS 6.54, to gain over 10% this week. The share price has risen 74% over the past 12 months.
Rosetta Green uses proprietary microRNA (miRNA) technology to improve crop traits. Its business model is based on the sale of proprietary know-how about a particular gene, its sequence, and expression to seed companies. The seed companies test the gene on various crops, and if they ultimately use the gene in seeds they develop - to improve crop yields or drought resistance, for example - they pay a fee to Rosetta Green derived from their profits, which are based on farmers' willingness to pay more for the improved seeds.
Rosetta Green has not yet developed such a seed, so it has no material revenue. However, it has signed agreements for enhanced corn and soy beans, which are drought or salinity resistant, or fix nitrogen better, and for a higher yield beet sugar.
Until 18 months ago, Rosetta Green only had pilot agreements with seed companies to test improved crops. In October 2011, it signed an agreement with DuPont which included, in addition to testing crop traits, a promise of future payments if the drought and salinity resistant corn and soy bean seeds were successful.
In April 2012, Rosetta Green signed a similar agreement with Bayer Cropscience. The agreement is potentially worth hundreds of millions of dollars, but it includes no substantial advance payments or investment in Rosetta Green's R&D.
In September 2012, Rosetta Green told "Globes" that it aims to switch to revenue-generating agreements.
The current pending agreement could be more substantial than its predecessors, and resemble Evogene's agreement with Monsanto. Monsanto has invested $35 million in Evogene, owns 8.72% of the company, has financed tens of millions of dollars in R&D, and has exclusive rights to a large number of crop and traits.
Published by Globes [online], Israel business news - www.globes-online.com - on January 31, 2013
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