Crop Genetics to sever 3-year link with Du Pont

September 30, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

After a nearly three-year relationship with Du Pont that brought it $3.75 million in development money, Crop Genetics International Corp. has called it quits with the giant chemical company, saying it wants a network of distributors that will aggressively sell its biological insecticides.

"We need aggressive distributors all over the world," said Joseph W. Kelly, chairman and chief executive officer of the Columbia-based biotechnology firm. "And our global arrangement from Du Pont, in our opinion, was slowing that down. We think it is better to have several relationships exclusively limited to any single country."

But while Crop Genetics pulled the plug on the deal, Du Pont said it also has been unsatisfied with the relationship, calling it an "impediment."

J. Gary Hollinghaus, manager of the microbial program at Du Pont Agricultural Products, said the joint effort had not reached the goal of introducing the new products into the marketplace during this year.

"For us to succeed in what we were trying to do, we both needed to be in the marketplace to generate a return on our investments," he said. "So the alliance became an impediment to that."

When the agreement was originally announced in December 1991, Crop Genetics' stock shot up from $4.50 a share to $11. But the stock has steadily declined since then with the rest of the biotechnology industry and has been trading between $1 and $2 since April.

The stock dropped by 18.75 cents yesterday, to close at $1.0625 a share.

Crop Genetics' decision ends a lucrative relationship with the chemical manufacturer, which provided $3.75 million to the fledgling company to develop liquid virus insecticides and build a plant to produce them. In return, Du Pont would get exclusive rights to worldwide marketing of the new products.

Despite the demise of the agreement, Du Pont continues to have some rights to jointly owned technology and is working with Crop Genetics on pursuing marketing efforts in individual countries, Mr. Hollinghaus said.

Crop Genetics' first insecticidal virus product, Spod-X, was registered with the Environmental Protection Agency in May 1993, but the product has been sold only in the Netherlands for use in growing flowers in greenhouses, Mr. Kelly said.

The company, which has 65 employees, hopes increasing the number of distributors will boost the sale of the product, which goes into other markets next year.

"Obviously, we think it's going to improve the outlook; otherwise we wouldn't have made the decision to do it," Mr. Kelly said.

But he does not expect the company to become profitable next year. "I hope it will soon thereafter," Mr. Kelly said.

Last year the company lost $8.5 million, or $1.35 a share, on revenue of $3.9 million.

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