oakley biotech final - basf · 5 green biotechnology 1st, 2nd and 3rd generation of plant biotech...

Green BiotechnologyPeter OakleyMember of the Board of Executive Directors

August 2005

1 | Biotechnology & Markets

2 | Focus of BASF Strategy

3 | Research Platform

4 | Business Model

5 | Pipeline

6 | Beyond Green Biotechnology

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Green Biotech

White Biotech

Red Biotech

Biotechnology for Agricultural Applications

Biotechnology for Industrial Applications

Biotechnology for Pharma Applications

BiotechnologyDifferent Fields of Application

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Biotechnology for Agricultural Applications:

Input Traits:

• The plant is modified to resist a certain insect, disease or the application of a crop protection agent

Output Traits:

• Agronomic Traits: The plant is modified to withstand environmental stress (e.g. drought, cold) or to produce higher yields

• Plants as Green Factories: The plant is modified to produce a valuable ingredient (e.g. a specialty or bulk chemical)

Green Biotech

Green BiotechnologyDefinitions

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Green Biotechnology1st, 2nd and 3rd Generation of Plant Biotech Traits

2005 2025

Input Traits

Output Traits(Specialty Chemicals)

Output Traits(Bulk Chemicals)

Output Traits(Agronomic Traits)

• High oil content• Biopolymers

• Cold tolerance• Drought tolerance• Salinity tolerance• Yield increase

• Amino acids• Vitamins• Fatty acids

• Insect resistance• Herbicide tolerance• Nematode resistance• Fungi resistance

Examples:

1st Generation 2nd Generation 3rd Generation

Output Traits(Agronomic Traits)

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Green BiotechnologyEstimated Market Size of the Segments

5 – 10

>10

>10

3 – 8

Market Potential*

≥ 2025

~10 years

~8 years

~5 years

1st ImportantLaunches

< 1Output Traits(Agronomic Traits)

< 1Output Traits(Bulk Chemicals)

< 1Output Traits(Specialty Chemicals)

1.6Input Traits

Market*2004

ü

In billion USD

* only trait value excluding seed commodities (BASF estimates)

1 | Biotechnology & Markets

2 | Focus of BASF Strategy

3 | Research Platform

4 | Business Model

5 | Pipeline

6 | Beyond Green Biotechnology

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Green Biotechnology1st, 2nd and 3rd Generation of Plant Biotech Traits

2005 2025

Input Traits

Output Traits(Specialty Chemicals)

Output Traits(Bulk Chemicals)

Output Traits(Agronomic Traits)

1st Generation 2nd Generation 3rd Generation

Output Traits(Agronomic Traits)

• Insect resistance (BT)• Herbicide tolerance

BASF Focus

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Key learnings

• Monsanto introduced the first herbicide-tolerant soybean variety in 1996 and launched a corn borer-resistant corn variety in 1997

• Many companies paid an expensive price to enter the seed business as ‘me-too’ players loosing focus from their traditional core competences

• Monsanto continues to lead the market for input traits

1st Generation of Input TraitsHerbicide Tolerance and Insect Resistance

è BASF decided to leapfrog the 1st generation of input traits and focus on the 2nd and 3rd generations of input and output traits

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Focus on 2nd and 3rd Generation

Input Traits• Just a few market segments offer critical mass and

manageable risk to develop input traits that compete with agrochemicals

• BASF pursues only selective investments on input traits

Output Traits• Output traits offer great room for innovation and considerable

market potential• Today competition takes place not in the seed market but in

the laboratories and patent offices• This technology is fully complementary to innovative

agrochemicals

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In million USD

R&D Spending on Output Traits

* Source: Context Network

Comparison of BASF and Top Seed Players in 2004*

0

20

40

60

80

A BASF B C

1 | Biotechnology & Markets

2 | Focus of BASF Strategy

3 | Research Platform

4 | Business Model

5 | Pipeline

6 | Beyond Green Biotechnology

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BASF Biotech R&D UnitsExternal Cooperations

Global Platform for Green BiotechnologyR&D Sites and Cooperations

DNA LandMarks

North Carolina Plant Science Sweden

MetanomicsSunGene

Limburgerhof

• Part of global BASF R&D Verbund since 1998

• BASF spends approx. 70 million EUR p.a. on green biotechnology

• BASF employs >450 people in green biotechnology

• Unique network of individual companies with low asset base

ExSeed Genetics

What is BASF’s Approach to Create a Competitive

Advantage in Green Biotech?

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The Metabolic Network Chemistry of Nature

• A cell is a complex network of thousands of chemical reactions

• In these reactions thousands of enzymes act as catalysts in the production of chemical substances (metabolites)

• The genes are respon-sible for producing and steering these enzymes

M5

M4

E3

E4

E2

M3

Cell

M1

M2

E1

G3

M

E

Metabolite

Enzyme

G Gene

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The Metabolic Network Chemistry of Nature

• A change in one gene leads to multiple changes in the metabolic network

M5

M4

E3

E4

E2

M3

M

E

Metabolite

Enzyme

G Gene

Cell

M1

M2

E1

G3

M Increased production of chemical substance

M Decreased production of chemical substance

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Metabolic Profiling Analytical Tool for Understanding the Metabolic Network

• Measuring changes:Metabolic profiling is an analytical process that measures changes of more than 1,000 important metabolites in an organism quickly and precisely

• Building a database:BASF has modified a model plant by knocking out each of the more than 30,000 genes and built a database with all resulting metabolic profiles

• Setting the benchmark:The platform is unparalleled in industry

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+

Conventional Gene Selection

Look at Plant Look at Yield

Tra

nsf

orm

atio

n

Conventional approach: 1) modify gene, 2) look at external plant attributes and yield in the field, 3) decide on selection for further gene testing

New Gene Selection

Info

rmat

ion

19

+

BASF MethodOur Approach is Unique in the Industry

+

Scan proprietary library with advanced bioinformaticsand identify new genes

Look at Plant Look at Yield

Tra

nsf

orm

atio

n

Info

rmat

ion

Look Inside

With metabolic profiling tool we greatly increase the efficiency and efficacy of gene discovery activities

6.008.0010.0012.0014.0016.0018.0020.0022.0024.000

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• We see not only the plant, but also what is happening inside

• Switching off or addition of one gene leads to multiple changes in the metabolic profile of a plant which we measure

• We have modified our model plant by knocking out each of the more than 30,000 genes and built a database with all the resulting metabolic profiles

• We have developed a powerful search engine to scan this ‘library’ for genes that trigger certain metabolic profiles

• With this tool we greatly increase the efficiency and efficacy of gene discovery activities

• The platform is unparalleled in industry

Summary Metabolic Profiling

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BASF’s Competitive Advantage

1 major patent application every 5 days

Better Data

Higher Speed

Lower Cost

Better Genes

1 | Biotechnology & Markets

2 | Focus of BASF Strategy

3 | Research Platform

4 | Business Model

5 | Pipeline

6 | Beyond Green Biotechnology

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Business ModelBASF’s Approach to Green Biotechnology

1. BASF profits from the most advanced gene-discovery platform in the industry and is building a solid IP position

2. BASF develops the trait up to the successful genetic transformation of the target crop

3. BASF markets its traits through seed partners

4. BASF generates and captures additional value through unique position in key value chains (understanding customer needs)

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Output Traitsfor Specialty Chemicals

• Low acreage• High value per acre

Strategy:through toll-manufacturingwith local seed partners

For commercial scale seed development, seed production and seed marketing:

Seed Access Strategy

• Low acreage• Higher value per acre

Strategy:Through toll manufacturingwith local seed partners

Output Traitsfor Bulk Chemicals & Agronomic Traits

• large acreage• low value per acre

Strategy:through value-sharing and license agreements with leading seed companies, profiting from non-competitive position of BASF in the seed business

• Large acreage• Lower value per acre

Strategy:Through value-sharing partnerships and license agreements with leading seed companies, profiting from non-competitive position of BASF in the seed business

1 | Biotechnology & Markets

2 | Focus of BASF Strategy

3 | Research Platform

4 | Business Model

5 | Pipeline

6 | Beyond Green Biotechnology

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High Yield (Corn, Canola, Wheat, Soy)

Drought Tolerance(Corn, Canola, Wheat, Soy)

High Oil (Canola, Soy)Improved Amino Acid Profile (Corn)PUFAsCarotenoids

Amylose (Potato)

Strong Early Stage Pipeline in Green Biotechnology

Amylopectin (Potato)

Fungal Res. (Potato)InputTraits

Animal Health & Nutrition

Human Health & Nutrition

Personal Care

Crop Health & Yield

Stress Tolerance (drought, cold, salinity)

Fungal Resistance

Nematode Resistance

Industrial Uses (specialty & bulk chem.)

* POC = ‘Proof of Concept’ in model crop / POC II: ‘Proof of Concept in Target Crop’

Output Traits(Agronomic

Traits)

DiscoveryIdentifying Genes

& POC*

2 – 6 years

Stage ILook for POC II*

2 – 4 years

Stage IIEarly Prod. Dev.

2 – 3 years

Stage IIIAdv. Prod. Dev.

3 – 4 years

Focus Areas

Output Traits(Specialty &Bulk Chem.)

Nematode Res. (Soy)

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• PUFAs: poly-unsaturated fatty acids

• This food ingredient helps to prevent cardiovascular diseases

• Recommendation: 1 to 2g per day

• Main source today: fish and algae

• Project target is to grow PUFAs in oilseed rape

• Proof of concept in model crop was achieved

Output Trait Example: PUFAsPlants as Factories

Today Tomorrow

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Carotenoid Tomato:

Standard Tomato:

Output Trait Example: CarotenoidsPlants as Factories

• Carotenoids are used:- To give salmon its

typical pink color - As pigments for food

and beverages• We produce carotenoids

through classical chemical synthesis

• The production in plants is cost-efficient

• We have full IP protection to gene sequence

• We hold a strong position in the carotenoids market (Fine Chemicals Division)

• Carotenoid market in 2004: >650 million USD

Proof of Concept in Tomato (Model Plant)*

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• Drought-tolerant crops will benefit growers all around the world

• Proof of concept in model crop was achieved

• Target crops for development are: corn, soybean, wheat and canola

Output Trait Example: Drought Tolerance Agronomic Traits

WithNewGene

WithoutNewGene

Gene for Drought Tolerance

Identified

Moss

GeneTrans-

fer

Proof of Concept in Model Plant

Achieved

Next Step:Transform Target Crop

GeneTrans-

fer

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Input Trait Example: Nematodes

• Nematode (hair worms) infection leads to major yield losses in soybeans

• No efficient treatment with conventional plant protection possible

• Biotech solution: modify soybean roots

• First lead genes identified. Nematode Population reduced by up to 80% in test systems

Larvae

Feeding Nematode“Hairy Roots” from Soybean

1 | Biotechnology & Markets

2 | Focus of BASF Strategy

3 | Research Platform

4 | Business Model

5 | Pipeline

6 | Beyond Green Biotechnology

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Exciting Additional Potentialfrom Metabolic Profiling

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Exciting Additional Potentialfrom Metabolic Profiling

Toxicology

Product Development

Diagnostics

• Reduce need for animal testing • Recognize tox issues very early

• Predict wide array of diseases at early stage with simple blood or urine test

• Gain time / reduce treatment costs / save lives

• Identify best active ingredient at early stage (target activity & tox)

• Accelerate development and reduce cost

Analysing the impact of chemicals on metabolic profiles

Analysing the impact of diseases on metabolic profiles

Develop products that trigger the most desirable profile

Major Benefits

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Potential Fields of Application

• Pharma• Agrochemicals• Food Ingredients• Cosmetic Ingredients

Toxicology

Product Development

Diagnostics

è In 2003, we founded Metanomics Health GmbH in Berlin to access these market opportunities

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Key Messages Green Biotechnology

• We set the right strategic priorities early

• With metabolic profiling we have built an unparalleled gene-discovery platform

• With this platform we believe we find better genes faster and more efficiently than our competitors

• We have a strong early stage pipeline that will continue to grow

• Our platform has opened up completely new opportunities with great potential in other industries

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Disclaimer

This presentation contains forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections of BASF management and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict and are based upon assumptions as to future events that may not prove tobe accurate.

Many factors could cause the actual results, performance or achievements of BASF to be materially different from those that may be expressed or implied by such statements. Such factors includethose discussed in BASF’s Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking statements contained in this presentation.

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