Mycogen has signed a three-year, $7.7-million research...

Mycogen has signed a three-year, $7.7-million research and development contract with JT Biotech USA, a U.S. subsidiary of Japan Tobacco, to develop biopesticides for control of insects and weeds, the companies said Tuesday. In a related development, a second U.S. subsidiary of Japan Tobacco has agreed to pay $1.8-million, or $98 per share, for 200,000 shares of Mycogen stock. Mycogen’s stock has traded at about $6 in recent weeks.

The research and development contract was the second that Mycogen has signed with a Japanese company. In 1987, Mycogen signed a three-year, $6-million research and development agreement with Kubota, a Japanese conglomerate, to develop agricultural biopesticides.

Mycogen, a San Diego-based biotechnology company, and JT Biotech, will research new bioherbicides at Mycogen’s laboratories in San Diego and Ruston, La., as well as a Japan Tobacco laboratory in Yokohama.

According to terms of the agreement, Mycogen will retain U.S. market rights to newly developed products, but will pay a portion of profits to Japan Tobacco. The Japanese company will market new products in Japan under a license agreement and turn a portion of the profits over to Mycogen.


Japan Tobacco entered the contract because “there is a need worldwide for new environmentally acceptable herbicide products,” according to a prepared statement by Japan Tobacco Vice President Morio Tansho.

Mycogen uses genetic engineering technology to form naturally occurring microorganisms that can eradicate weeds and insects. Japan Tobacco is that country’s largest tobacco products manufacturer. It is also Japan’s sole supplier of salt.