Mycogen Gets Contract That Opens Asian Markets

Mycogen has signed a three-year, $6-million research and development agreement with Kubota, a multibillion-dollar Japanese conglomerate, to develop agricultural biopesticides, the companies said Tuesday.

The resulting joint venture will develop and market products in the Far East, but Mycogen will retain product and marketing rights elsewhere in the world, according to Jim Glynn, vice president and chief financial officer of the San Diego-based biotechnology company.

Mycogen will use the funding to develop biopesticides that will combat insects and weeds that reduce yields from “rice, vegetables and fruits, the primary crops” in East Asia, Glynn said. The East Asia market accounts for about 25% of the $15 billion spent by farmers each year on insect and weed control, according to industry analysts.

Mycogen has “managed to take a step to enter the East Asian market for biopesticides without giving away the key to their own store,” said one industry analyst. “It’s hard for American companies to sell products in Japan . . . so why not deal with a company that’s as large and successful as Kubota?”

Kubota, a diversified manufacturer of farm equipment, pipe, industrial equipment and housing materials, is a leading farm equipment supplier in Asia.

Mycogen, which hopes to introduce its first product in the United States early next year, raised $18 million during its initial public offering this past summer. The stock began trading at 11 in June and closed down three-eighths on Tuesday at 6 5/8.

Mycogen is exploring the use of naturally occurring microorganisms and genetically engineered products that can eradicate or control insects and weeds.

Its first product, M-1,will utilize genetically engineered material to combat Colorado potato beetles that attack crops, particularly on Long Island. The company expects to develop several other biopesticides during coming years.

The company reported a $3.9-million net loss and $1.6 million in revenue for the third quarter ended June 30. It had a $1.6-million loss and some interest income during the previous nine-month period.

Other than interest income, Mycogen’s only source of revenue has been a two-year, $5.4-million R&D; contract from Lubrizol Corp.’s venture capital subsidiary.

The company gained some prominence in May when it became the first company to receive U.S. Environmental Protection Agency approval to test genetically engineered pesticides in open fields. Those tests were concluded earlier this year with satisfactory results, Glynn said.