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Regulated information

During Q1 Devgen made significant progress. Key milestones were reached indicating that the business is performing in accordance with guidance given. Having strengthened its cash position with EUR 20 million, Devgen is well positioned to continue to implement its business plan.

Business highlights

Seeds & traits

• Market demand creation in India in Q4 08 and Q1 09 resulted in substantial advanced bookings (more than EUR 5.5 million). This is a good indicator of market interest in our products and gives us confidence as we enter the principal sales season in India.

• Due to adverse weather conditions throughout the production areas, 2009 is a poor production year for the Indian seed industry. Devgen's seed production is hence expected to be below target. Therefore, seed revenues will probably come in slightly lower than management's expectations. However, one may assume that overall low availability of hybrid seed in the market may lead to higher sales prices. 

• A new tolling plant for seed processing in India was completed and started operations at the start of the processing season. This completes our anticipated processing infrastructure needs for the next 3 years.

• In the Philippines Devgen and Leads Agri join forces. Leads Agri, the country's third largest agrochemical product distributor, will distribute Devgen's hybrid seed. Devgen Philippines will provide product and marketing support.  Committed to develop and produce hybrid rice in the Philippines adapted to Philippine's farmer needs, Devgen is strengthening its local organization in research, product testing, in-country production and marketing.

• In Indonesia Devgen has, together with its partner Sang Hyang Seri, completed the second year of registration trials. The registration dossier can now be completed and submitted.  Subject to regulatory approval the company is on track for market launch in Q4 09.

Crop Protection

• Devgen announced the launch of its nematicide "Enclosure" in the US in 2010. Regulatory approval was obtained and first year sales in 2010 will focus on application for peanut growing. Devgen is now planning large demonstration trials for growers, besides extra university reference trials. The regulatory process targeted to enter the high value tomato and cucurbit market segment in the US in 2010 has been initiated. 

• In Europe its nematicide registration dossier was submitted. 2009 trials are focused on demos to opinion leaders in high value crops including tomatoes, cucumbers, pepper and melon. Application program approaches for farmers with our own Devgen product in combination with the few nematicides expected to remain in the market, are being developed to optimally meet farmer's long term needs. 

Technology

• Devgen renewed its research collaboration with Sumitomo. Under the terms of this new 3-year agreement, Devgen will receive funding for its research activities and is eligible for royalties.

• Devgen and Monsanto Company announced that they modified the scope of their research and technology agreement signed in 2007. Monsanto now has broader rights to Devgen technology. In exchange, Devgen received EUR 20 million in cash.

• Devgen's trait pipeline in rice is on track and appropriate greenhouse infrastructure is being expanded in Ghent and India to accommodate the progression to products.

Key financials (non audited) as of 31.03.2009

Total revenue for Q1 2009 amounts to EUR 1,359 ('000) as compared to EUR 1,107 ('000) for Q1 2008. Income from sales of goods amounts to EUR 651 ('000) as compared to EUR 70 ('000) in the previous period, an increase with EUR 581 ('000). Income from R&D services fell from EUR 1,037 ('000) to EUR 708 ('000) due to the completion of the previous Sumitomo collaboration in February 2008. As mentioned above, a new collaboration agreement has been signed in March.

EBITDA for Q1 2009 amounts to EUR -3,237 ('000) as compared to EUR -4,229 ('000) for Q1 2008. EBITDA is favourably impacted by lower R&D expenses.

Cash and cash equivalents1 at the end Q1 2009 amount to EUR 24,199 ('000) as compared to EUR 24,218 ('000) at the end of 2008. Net decrease in cash and cash equivalents amounts to EUR 19 ('000). Working capital improvements did offset other cash used in operations.

Financial outlook 2009

Product sales revenues will be impacted by lower availability of product. This may be partially offset by expected higher prices in the market. Therefore total product sales revenues are expected to be slightly lower then management's expectations. Revenue out of collaborative research programs is going to be higher taking into account the income related to the agreements recently entered into. Income recognition for 2009 for the update of the research and technology collaboration with Monsanto (signed in April 2009) will be announced once audited numbers are available. Overall revenue expectations for 2009 exceed the EUR 15 million, announced earlier this year.

Devgen maintains its guidance with respect to R&D expenditure (excl. depreciation) at EUR 10 million.

Cash burn for the year, including planned investments and loan repayments, is set at approximately EUR 19 million. Taking in account cash received with respect to agreements recently entered into, the net cash at year end will be around EUR 25 million.

Devgen's mission is to enable farmers to sustainably grow more food on less land, with less water, agrochemicals and labour.
Devgen uses advanced biotechnology and molecular breeding technology to make high yielding seeds and crop
protection solutions with a superior environmental profile.
Devgen brings this technology to the market in the world's major food and feed crops through two complementary strategies:
- Licensing Devgen technology for use in corn, cotton and soy and selected other crops in exchange for R&D funding, and milestone and royalty payments.
- Producing and selling its premium hybrid seeds in major field crops such as rice, sunflower, sorghum, and pearl millet, in the Indian subcontinent and S.E. Asia.
In its Crop Protection unit, Devgen develops a novel nematicide, an agro-chemical product that protects crops from damage by parasitic nematodes.
Incorporated in 1997, Devgen has offices in Ghent (Belgium), Singapore, Hyderabad (India) and Delaware (US) and employs more than 200 people. 

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