Seed Firm Devgen Signs Syngenta Pesticide Deal

Hybrid seed company Devgen has signed a crop protection research pact with Switzerland's Syngenta, the world's largest agrochemicals company, swelling its resources to carry out future seed development.

Devgen said on Monday it would receive a €22-million ($28.5 million) upfront payment and research funding of €4.8 million per year during the partnership, as well as royalties on the sales of any commercialised products.

The deal will help pay for five years of development by loss-making Devgen of its specialised strains of rice that are more resistant to heat and drought for use in countries like India.

"We're not intending to splash out and vastly increase our burn rate," Chief Executive Thierry Bogaert told Reuters.

"But with over €60 million in the bank, we can strategically and systematically maintain our investment level over a number of years towards profitability."

Under the agreement, Syngenta will develop and commercialise Devgen's sprayable insecticides. These affect a specific gene mechanism known as RNAi, which means it can target certain insect species without harming those that are beneficial to a particular plant.

"The deal ... not only brings a substantial amount of non-dilutive funding, but validates once more the RNAi technology, and provides another technology pillar for future cash flows to the company," KBC Securities said in a note to clients.

KBC raised its rating on Devgen shares from "accumulate" to "buy" and increased its target price to €8.30 from €7.00.