Crop Genetics International of Hanover took a big step toward making itself a commercial biotechnology company yesterday when it announced a partnership with chemical giant Du Pont to develop and sell Crop Genetics' insecticides made from viruses retrieved from dead bugs.
The deal calls for Wilmington, Del.-based Du Pont to pump $3.75 million into Crop Genetics over the next two years. Crop Genetics will work on researching and manufacturing new insecticides, while Du Pont will also do research and will handle the field testing and marketing of the products.
"This is really the first collaboration the company [Crop Genetics] has developed," said George Dahlman, a securities analyst who follows Crop Genetics for Piper, Jaffray & Hopwood in Minneapolis. "It's a milestone in that regard."
Crop Genetics Chief Executive Joseph W. Kelly said the agreement covers a line of insecticidal virus products, or IVPs, that Crop Genetics has already been developing.
The viruses will be aimed at lepidoptera insects, a class of bugs that start out as caterpillars and end up as moths or butterflies. The companies plan to use the viruses initially to protect fruits and vegetables.
"One of the ways Mother Nature controls insects is with these viruses," said Mr. Kelly. The trick to commercializing them is to extract small amounts from bugs the viruses have already killed and finding ways to mass produce them cheaply enough to compete with chemical pesticides, he said.
"We've done no genetic engineering. It's found in nature," he said.
The shares Crop Genetics and Du Pont will get from sales of any products they develop jointly are still to be negotiated, Mr. Kelly said.
Small biotech companies like Crop Genetics often turn to big companies like Du Pont for money to help them develop their products and the marketing muscle to sell them. In exchange, the big companies get concessions -- in this case, the marketing rights to the pesticides that come out of the research.
Frank W. Owen, global product manager for insecticides at Du Pont's agricultural products division, said Crop Genetics has made progress in isolating the viruses and developing a process to manufacture them but doesn't yet have a product that's either cheap enough or effective enough to market.
"It's a good active ingredient, but we have a lot of work to do to make it a product," Mr. Owen said.
"There's probably no one blockbuster in the whole group" of IVPs Crop Genetics is developing, Mr. Dahlman said. "I think it will carve out a niche as a $4 million to $40 million product [in annual sales], and the key is it will probably be highly profitable."
Mr. Owen said no company now markets IVPs in the United States.
Interest is high in the viruses and other biological pesticides because researchers hope the final products will be more environmentally friendly than chemicals. But high cost and low effectiveness have limited biologicals to less than 1 percent of the $7 billion to $8 billion annual market for pesticides, Mr. Owen said.
Mr. Kelly said the IVPs will not be harmful to the land or water, or even to bugs other than the insects they are designed to kill. He said he doesn't expect to have products on the market until at least 1993.