monsanto 01-18-05
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monsanto 01-18-05 monsanto 01-18-05 Presentation Transcript

  • ROBERT T. FRALEY, PH.D. Chief Technology Officer and Executive Vice President MYSTIC RESEARCH FACILITY INVESTOR PRESENTATION January 2005 1
  • Forward-Looking Statements Certain statements contained in this presentation, such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, currency impact, business and financial plans and other non-historical facts are quot;forward-looking statements.quot; These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company’s actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: the company's exposure to various contingencies, including those related to Solutia Inc., litigation, intellectual property, regulatory compliance (including seed quality), environmental contamination and antitrust; fluctuations in exchange rates and other developments related to foreign currencies and economies; increased generic and branded competition for the company's Roundup herbicide; the accuracy of the company’s estimates and projections, for example, those with respect to product returns and grower use of our products and related distribution inventory levels; the effect of weather conditions and commodity markets on the agriculture business; the success of the company’s research and development activities and the speed with which regulatory authorizations and product launches may be achieved; domestic and foreign social, legal and political developments, especially those relating to agricultural products developed through biotechnology; the company’s ability to successfully market new and existing products in new and existing domestic and international markets; the company’s ability to obtain payment for the products that it sells; the company's ability to achieve and maintain protection for its intellectual property; the effects of the company's accounting policies and changes in generally accepted accounting principles; the company's ability to fund its short-term financing needs; general economic and business conditions; political and economic conditions due to threat of future terrorist activity and related military action; and other risks and factors detailed in the company's filings with the U.S. Securities and Exchange Commission. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention to revise or update any forward-looking statements or any of the factors that may affect actual results, whether as a result of new information, future events or otherwise. The trademarks identified in italics in this presentation are owned by Monsanto Company and its wholly-owned subsidiaries. 2
  • We Track the Next Generation of Products Through the Pipeline The heart of Monsanto’s research and development is our product pipeline. Our pipeline is an engine for discovering and developing the next generation of commercial products. We take our ideas through five phases — from early discovery work through four pre-commercial preparation stages. The pipeline product examples in this section are shown in reverse chronological order, beginning with the products that are closest to potential commercial launch and tracking deeper into the research phases. We sort projects in the pipeline in categories by those that offer benefits to farmers, processors or consumers. Farmer benefits are those that increase productivity or reduce cost by increasing yield, improving protection from weeds, insects and disease, or increasing tolerance to heat, drought, and other stress. Processor benefits create better value in food and feed nutrition for food and feed processors. Consumer benefits are advantages such as increased protein, improved oils, improved fatty-acid balance, or carbohydrate enhancements that help make food healthier for consumers. 3 View slide
  • Pipeline Phases PHASE IV PHASE II PHASE I PHASE III DISCOVERY Pre-Launch Early Development Proof of Concept Adv. Development For conventional Demonstrate the Produce bulk seed for For conventional This is where R&D breeding products, performance of the potential sale. breeding, we conduct begins. We conduct we breed plants from hybrid or variety field trials of plants high-throughput parents with desired developed through bred from parents screening of genetic Develop plans for traits. conventional breeding; with the desired traits. databases to identify commercialization. or valuable plant traits to be used in conventional For biotechnology Demonstrate the For biotechnology Respond breeding and valuable products, we test efficacy of a products, we conduct to regulatory processes genes that can be used gene configurations in biotechnology trait in lab and field-testing of as appropriate. to improve plants plants to screen for elite germplasm. genes in plants to through biotechnology. desired performance. select the product candidates that can Develop and submit be commercialized We apply screens to We determine which regulatory data as and can meet broad categories of leads show the most appropriate regulatory interest, identifying promise for requirements. multiple leads that are application to target then investigated. plants. AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE DURATION DURATION DURATION DURATION DURATION 24 to 48 months 12 to 24 months 12 to 24 months 12 to 36 months 12 to 24 months AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE PROBABILITY PROBABILITY PROBABILITY PROBABILITY PROBABILITY OF SUCCESS OF SUCCESS OF SUCCESS OF SUCCESS OF SUCCESS 5 percent 25 percent 75 percent 90 percent 50 percent 4 Time estimates are based on our experience; total development time for any particular product can be shorter or longer than the time estimates here View slide
  • Our Technology Platforms Monsanto uses its scientific capabilities in a number of arenas to develop new products. These capabilities form a toolkit used throughout our product pipeline, as each tool can be used on its own or in combination to help study, test and refine new traits, germplasm and other characteristics in plants. Genomics involves the mapping of the genes of plants to understand their structure GENOMICS and the role they play in how the plant functions. Conventional breeding is the process of cross-pollinating plants with desirable CONVENTIONAL BREEDING qualities to develop improved plants in successive generations Molecular breeding involves the use of DNA markers for genes in combination with MOLECULAR physical measurement of traits to manage plant breeding programs. Molecular BREEDING breeding significantly accelerates the efficiency in bringing new varieties to market. Crop analytics involves the application of advanced analytical methods and technologies to identify the composition of food and feed traits. CROP ANALYTICS Biotechnology is the application of scientific knowledge to transfer beneficial genetic BIOTECHNOLOGY traits to enhance plants’ growth or to provide nutritional or other benefits to farmers, food and feed processors, or consumers. 5
  • Products Launched Y D R E E 2 3 4 1 H V C E E E Farmer Benefits E O N S S S S C A A A A U IS H H H H LA D P P P P SOYBEANS Roundup Ready Soybeans 1996 CANOLA 1999 Roundup Ready Canola COTTON 1997 Roundup Ready Cotton 1996 Bollgard Insect-Protected Cotton 2003 Bollgard II Insect-Protected Cotton 1997 Bollgard and Roundup Ready Cotton CORN 1998 Roundup Ready Corn 2001 Roundup Ready Corn 2 1997 YieldGard Corn Borer Insect-Protected Corn 2003 YieldGard Rootworm Insect-Protected Corn 2004 YieldGard Plus 2005 YieldGard Plus with Roundup Ready 1998 YieldGard Corn Borer with Roundup Ready 2003 YieldGard Rootworm with Roundup Ready GENOMICS CONVENTIONAL MOLECULAR CROP ANALYTICS BIOTECHNOLOGY BREEDING BREEDING 6
  • Product Pipeline Y R E 2 3 4 1 H V C E E E Farmer Benefits E O N S S S S C A A A A U IS H H H H LA D P P P P Roundup Ready Flex Cotton 2006 Pending Second-generation Roundup Ready/ Regulatory YieldGard Rootworm Corn Approval Breeding: Elite germplasm Second-generation YieldGard Corn Borer Second-generation Roundup Ready Soybeans Drought-tolerant corn Drought-tolerant soybeans Drought-tolerant cotton Higher-yielding corn Higher-yielding soybeans DISCOVERY PLATFORMS Grain yield Environmental stress tolerance Insect control Roundup Ready herbicide tolerance Disease resistance GENOMICS CONVENTIONAL MOLECULAR CROP ANALYTICS BIOTECHNOLOGY BREEDING BREEDING 7
  • Product Pipeline Y R E 2 3 4 1 H V C E E E Processor Benefits E O N S S S S C A A A A U IS H H H H LA D P P P P Processor Preferred elite germplasm in key crops, including: – High-fermentable starch corn for ethanol – High-extractable starch corn High-lysine corn Improved-oil soybeans for processing Improved-protein soybeans for feed Feed corn with balanced proteins Feed corn with increased amino acids DISCOVERY PLATFORMS Protein enhancements Lipid enhancements GENOMICS CONVENTIONAL MOLECULAR CROP ANALYTICS BIOTECHNOLOGY BREEDING BREEDING 8
  • Product Pipeline Y R E 2 3 4 1 H V C E E E Consumer Benefits E O N S S S S C A A A A U IS H H H H LA D P P P P 2005 Vistive Low-Linolenic Soybeans Improved-protein soybeans for food Mid-Oleic + Low-Linolenic soybeans Omega-3 soybeans for food uses Zero Saturated Fat + Mid-Oleic + Low-Linolenic soybeans DISCOVERY PLATFORMS Protein enhancements Lipid enhancements Carbohydrate enhancements Bioactive compounds GENOMICS CONVENTIONAL MOLECULAR CROP ANALYTICS BIOTECHNOLOGY BREEDING BREEDING 9
  • FOCUS: CORN Corn Presents the Most Attractive Global Opportunity Across Key Agricultural Producers EUROPE ASIA UNITED STATES 15M AC HARVESTED ACRES 50M AC HARVESTED ACRES 71.5M AC 2B BU HARVESTED ACRES PRODUCTION 6B BU PRODUCTION 11.7B BU PRODUCTION BRAZIL ARGENTINA 30M AC HARVESTED ACRES 6M AC HARVESTED ACRES 1.6B BU PRODUCTION 660M BU PRODUCTION Source: U.S.D.A. Foreign Agricultural Service 10
  • FOCUS: CORN Corn Continues to be Most Profitable Large-Acre Crop for U.S. Farmers 2003 U.S. CROP VALUE 25 $23.3 20 $17.5 (IN BILLIONS) 15 10 $7.8 5 $1.0 $0.8 $0.2 0 CORN WHEAT BARLEY SORGHUM OATS SOYBEANS Source: USDA, NASS, Crop Production, 2003 Summary, Jan 2004; USDA, ERS, Outlook Reports, Jan 2004 11
  • FOCUS: CORN Corn Seeds and Traits is Growing Contributor to Monsanto Gross Profit GROSS PROFIT $700 CORN SEEDS AND TRAITS SOYBEANS SEEDS AND TRAITS $600 DOLLARS (IN MILLIONS) $500 $400 $300 $200 $100 $0 2002 2003 2004 12
  • FARMER BENEFITS Industry’s Most Diverse Genetic Pool Creates New Opportunities U.S. KEY MARKET ACRES BRAZIL ARGENTINA BRAND LICENSED ASI Corn 80M 30M 6M AVAILABLE MARKET CONTRIBUTING Breeding 1 PLATFORMS 14% 33% 2% 35% 49% PERCENT PENETRATED 6-to-8 year process undertaken to accelerate breeding: GENOMICS Late 1990s: Acquired 36 major corn breeding programs (12 countries X average of 3 companies per country) CONVENTIONAL BREEDING Early 2000s: Crossed genetic lines across acquired companies MOLECULAR BREEDING Today: Launching new hybrids from inter-company crosses CROP ANALYTICS BIOTECHNOLOGY WHAT IS IT? THE MOST ADVANCED GERMPLASM CREATES THE BEST-YIELDING NEW CORN DISCOVERY HYBRIDS FOR PHASE I PHASE III PHASE II PHASE IV LAUNCH FARMERS Proof of Concept Adv. Development Early Development Pre-Launch 13
  • FARMER BENEFITS Industry’s Most Diverse Genetic Pool Created New Opportunities U.S. KEY MARKET ACRES BRAZIL ARGENTINA BRAND LICENSED ASI Field Trial 80M 30M 6M AVAILABLE MARKET Results 2 CREATING VALUE 14% 33% 2% 35% 49% PERCENT PENETRATED All categories of Monsanto’s elite corn germplasm out-yielded • Value is measured competitors’ germplasm across 2004 field trials in market share gains; Monsanto’s Up Next: Launch 37 new products in our brands U.S. branded seed gained 4 points in 3 2004 BRANDED CORN GERMPLASM YIELD VS COMPETITORS years 220 • Elite, high-yielding MONSANTO germplasm 210 COMPETITORS refreshes product BUSHELS/ACRE portfolio at the 200 high end of pricing 190 • Our highest priced 180 conventional hybrid is about 170 $100/unit or 160 $36/acre 150 95 100 105 110 115 RELATIVE MATURITIES (DAYS) DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 14
  • PROCESSOR BENEFITS High Lysine Enhances Animal Feed, Shifts Value to Seed KEY MARKET ACRES U.S. BRAZIL ARGENTINA High Lysine Corn 4M 1M 4M AVAILABLE MARKET CONTRIBUTING 1 PLATFORMS 0% 0% 0% PERCENT PENETRATED Lower cost of animal feed ration – lysine – which cannot be GENOMICS produced by animals, so must be obtained through feed CONVENTIONAL Improved amino acid balance BREEDING Increased total energy MOLECULAR BREEDING CROP ANALYTICS BIOTECHNOLOGY WHAT IS IT? CORN WITH ENHANCED LEVELS OF A LIMITING AMINO ACID FOR ANIMAL FEED DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 15
  • PROCESSOR BENEFITS High Lysine Enhances Animal Feed, Shifts Value to Seed KEY MARKET ACRES U.S. BRAZIL ARGENTINA Field and Feeding 4M 1M 4M AVAILABLE MARKET Trial Update 2 CREATING VALUE 0% 0% 0% PERCENT PENETRATED U.S. regulatory packages submitted • Market value for feed-grade lysine Field trials conducted in U.S. and Argentina this year; Evaluating in roughly $1 over 12 hybrid genotypes in this year’s program billion annually* • Value shared with Excellent performance demonstrated in feeding trials to date Cargill through 50/50 Renessen Up Next: Regulatory review joint venture LYSINE TOTALS IN TESTING CONTROL WITH GENE 1800 FREE LYSINE (PPM) 1600 1400 1200 TARGET 1000 800 600 400 200 0 U.S. SOUTH AMERICA DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH * Source: CEH Market Proof of Concept Adv. Development Early Development Pre-Launch Research 16
  • PROCESSOR BENEFITS Second-Generation High-Lysine Corn Could Further Replace Feed Supplements KEY MARKET ACRES U.S. BRAZIL ARGENTINA Feed Corn with TBD TBD TBD AVAILABLE MARKET CONTRIBUTING Improved Amino Acids 1 PLATFORMS 0% 0% 0% PERCENT PENETRATED Increased levels of lysine over first-generation High-Lysine Corn GENOMICS could displace more supplements used in animal feed CONVENTIONAL Second generation improves the overall amino acid balance in BREEDING corn, creating more available “energy” in feed MOLECULAR BREEDING CROP ANALYTICS BIOTECHNOLOGY WHAT IS IT? SECOND- GENERATION CORN WITH ENHANCED LEVELS OF LYSINE FOR ANIMAL FEED DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 17
  • PROCESSOR BENEFITS Second-Generation High-Lysine Corn Could Further Replace Feed Supplements KEY MARKET ACRES U.S. BRAZIL ARGENTINA Field and Feeding TBD TBD TBD AVAILABLE MARKET Trial Update 2 CREATING VALUE 0% 0% 0% PERCENT PENETRATED • Market value for Early field trials conducted in 2004; Lead event candidates feed-grade lysine identified in roughly $1 billion annually* Up Next: Test lead events in commercially relevant • Value shared with germplasm Cargill through 50/50 Renessen joint venture LYSINE TOTALS IN TESTING 5000 FREE LYSINE (PPM) TARGET 4000 3000 2000 1000 0 EVENT 1 EVENT 2 DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH * Source: CEH Market Proof of Concept Adv. Development Early Development Pre-Launch Research 18
  • FARMER BENEFITS Second-Generation YieldGard Corn Borer Controls More Insects KEY MARKET ACRES U.S. BRAZIL ARGENTINA Second-Generation 15M 4M AVAILABLE MARKET 30-40M CONTRIBUTING YieldGard Corn Borer 1 PLATFORMS 0% 0% 0% PERCENT PENETRATED Broad control solution for fall armyworm and corn earworm for GENOMICS global expansion CONVENTIONAL Durability solution for insect resistance management BREEDING MOLECULAR BREEDING FALL ARMY WORM CONTROL CROP ANALYTICS BIOTECHNOLOGY 2ND-GEN YIELDGARD 2ND-GEN YIELDGARD CONTROL CONTROL WHAT IS IT? CORN BORER CORN BORER CORN EARWORM CONTROL SECOND- GENERATION CORN BORER CONTROL, WITH EXPANDED INSECT AND DISCOVERY ENHANCED IRM PHASE I PHASE III PHASE II PHASE IV LAUNCH DURABILITY Proof of Concept Adv. Development Early Development Pre-Launch 19
  • FARMER BENEFITS Second-Generation YieldGard Corn Borer Controls More Insects KEY MARKET ACRES U.S. BRAZIL ARGENTINA Field Trial 30-40M 15M 4M AVAILABLE MARKET 2 Update CREATING VALUE 0% 0% 0% PERCENT PENETRATED 2004 field trials conducted in Puerto Rico, Argentina and U.S. • Value reflects enhanced insect Excellent control in high infestations levels control and insect resistance Up Next: Tests in 2006 field season to validate management. Lifts performance in multiple inbred backgrounds the value of the YieldGard Corn CORN EARWORM FEEDING DAMAGE IN TRIALS Borer trait. 12 EAR DAMAGE (CM) 10 8 6 4 2 0 YIELDGARD CONTROL 2ND-GENERATION YIELDGARD CORN CORN BORER EVENTS BORER COMPETING PRODUCT DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 20
  • FARMER BENEFITS Drought Stress Tolerance Will Be a Family of Traits in Pipeline KEY MARKET ACRES U.S. BRAZIL ARGENTINA Drought-Tolerant TBD TBD TBD AVAILABLE MARKET CONTRIBUTING Corn 1 PLATFORMS 0% 0% 0% PERCENT PENETRATED GENOMICS Yield protection on all acres to protect against water deficits Yield enhancement on all acres through improved water CONVENTIONAL BREEDING use Cost savings on irrigated acres MOLECULAR BREEDING CROP ANALYTICS BIOTECHNOLOGY WHAT IS IT? HYBRIDS PROTECTED FROM ENVIRONMENTAL STRESS CREATED FROM WATER DISCOVERY SHORTAGE PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 21
  • FARMER BENEFITS Drought Stress Tolerance Will Be a Family of Traits in Pipeline KEY MARKET ACRES U.S. BRAZIL ARGENTINA Field Trial TBD TBD TBD AVAILABLE MARKET Update CREATING VALUE 0% 0% 0% PERCENT PENETRATED Two gene leads obtained positive results with more than • Pricing depends on choice of market one transformed event • Stacking with weed Up Next: Test stacking; continue with lead events and insect control enhances the YIELD INCREASE IN TWO GENE TRIALS margin opportunity 30 18 • Irrigation currently 3 EVENTS: GENE 1 3 EVENTS: GENE 2 YIELD INCREASE (BU/AC) costs $50 to $100 16 25 per acre 14 20 12 10 15 8 10 6 4 5 2 0 0 EVENT 3 EVENT 3 EVENT 1 EVENT 2 EVENT 1 EVENT 2 GERMPLASM 1 GERMPLASM 2 DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 22
  • FARMER BENEFITS Improving Nitrogen Use Can Boost Yields KEY MARKET ACRES U.S. BRAZIL ARGENTINA Higher-Yielding TBD TBD TBD AVAILABLE MARKET CONTRIBUTING Corn 1 PLATFORMS 0% 0% 0% PERCENT PENETRATED GENOMICS Increased yield achieved through enhanced nitrogen uptake and utilization CONVENTIONAL BREEDING Potential to reduce fertilizer inputs MOLECULAR ROOT TOLERANCE TO LOW NITROGEN BREEDING CROP ANALYTICS BIOTECHNOLOGY WHAT IS IT? CONTROL WITH GENE HYBRIDS THAT CAN BETTER USE AVAILABLE NITROGEN IN THE SOIL DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 23
  • FOCUS: CORN Value Shift Continues… INDUSTRY VALUE SHIFT FROM CROP CHEMICALS TO SEEDS AND TRAITS IS WELL UNDER WAY 1996 2003 2008F $9.2 BILLION $7.5 BILLION $8.4 BILLION $0.1 $1.3 $2.7 $2.6 $3.0 $4.5 $3.5 $3.6 $3.8 CROP CHEMICALS GERMPLASM BIOTECH TRAITS Source: U.S. 1996-2003 Doane Agrotrak & Seed Studies; 2008 Monsanto Estimate 24
  • FOCUS: CORN … To Food, Feed and Yield YIELDGARD CORN BORER VALUE CROP ROUNDUP READY CORN CHEMICALS SHIFT YIELDGARD ROOTWORM HIGH-LYSINE CORN ANIMAL VALUE FEED CORN WITH INCREASED NUTRITION SHIFT AMINO ACIDS HUMAN OMEGA-3 VALUE CORN FOR HEALTH SHIFT FEED DROUGHT- WATER & TOLERANT VALUE CORN SOIL SHIFT HIGHER- NUTRIENTS YIELDING CORN VALUE SHIFT TO SEED 1996 25