Biotech tiddler bites globally

By LIBBY MIDDLEBROOK

Auckland biotech company Genesis Research and Development has taken a small shareholding in global research company ArborGen in exchange for rights to its intellectual forestry property.

Genesis has acquired a 5 per cent stake in ArborGen, a US-based joint-venture company specialising in the research and development of elite tree seedlings to improve forestry health and productivity.

Genesis chief executive James Watson said the company had initially agreed to sell ArborGen its forestry intellectual property rights, but signed a non-exclusive licensing agreement instead in exchange for the 5 per cent shareholding.

"We thought the shareholding would give us far greater value than a one-off cash sale. It's a non-exclusive licence, which means we retain ownership," said Dr Watson.

Established last April, ArborGen was a initially a joint-venture company between Fletcher Challenge Forests, Agricultural chemical giant Monsanto and two of the largest paper companies in the United States, International Paper and Westvaco Corporation.

Dr Watson said that although Monsanto withdrew from the joint venture last year after major restructuring, ArborGen's five-year $113 million funding programme was still intact.

"In July Monsanto decided it was right outside its core business and elected not to go ahead."

Genesis will continue to carry out its forestry research from Auckland on a contract base to ArborGen, while collecting a royalty from the sale of seedings that incorporate Genesis' technology.

Dr Watson said Genesis also had the option to increase its shareholding, but declined to comment further.

"This really is the type of model that New Zealand industries should be looking to - it's the only way small companies can grow."