August Green Biotechnology Peter Oakley Member of the Board of Executive Directors

Transcription

1 August 2005 Green Biotechnology Peter Oakley Member of the Board of Executive Directors

2 1 Biotechnology & Markets 2 Focus of BASF Strategy 3 Research Platform 4 Business Model 5 Pipeline 6 Beyond Green Biotechnology

3 Biotechnology Different Fields of Application Green Biotech Biotechnology for Agricultural Applications White Biotech Biotechnology for Industrial Applications Red Biotech Biotechnology for Pharma Applications 3

4 Green Biotechnology Definitions Biotechnology for Agricultural Applications: Input Traits: The plant is modified to resist a certain insect, disease or the application of a crop protection agent Green Biotech 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) 4

5 Green Biotechnology 1 st, 2 nd and 3 rd Generation of Plant Biotech Traits Examples: Output Traits (Bulk Chemicals) High oil content Biopolymers Input Traits Output Traits (Agronomic Traits) Output Traits (Specialty Chemicals) Cold tolerance Drought tolerance Salinity tolerance Yield increase Amino acids Vitamins Fatty acids Insect resistance Herbicide tolerance Nematode resistance Fungi resistance st Generation 2 nd Generation 3 rd Generation 5

6 Green Biotechnology Estimated Market Size of the Segments In billion USD Input Traits Market* Market Potential* st Important Launches Output Traits (Specialty Chemicals) < 1 >10 ~5 years Output Traits (Agronomic Traits) < 1 >10 ~8 years Output Traits (Bulk Chemicals) < ~10 years * only trait value excluding seed commodities (BASF estimates) 6

7 1 Biotechnology & Markets 2 Focus of BASF Strategy 3 Research Platform 4 Business Model 5 Pipeline 6 Beyond Green Biotechnology

8 Green Biotechnology 1 st, 2 nd and 3 rd Generation of Plant Biotech Traits BASF Focus Output Traits (Bulk Chemicals) Output Traits (Agronomic Traits) Insect resistance (BT) Herbicide tolerance Output Traits (Specialty Chemicals) Input Traits st Generation 2 nd Generation 3 rd Generation 8

9 1 st Generation of Input Traits Herbicide Tolerance and Insect Resistance 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 BASF decided to leapfrog the 1 st generation of input traits and focus on the 2 nd and 3 rd generations of input and output traits 9

10 Focus on 2 nd and 3 rd 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 10

11 R&D Spending on Output Traits Comparison of BASF and Top Seed Players in 2004* In million USD A BASF B C * Source: Context Network 11

12 1 Biotechnology & Markets 2 Focus of BASF Strategy 3 Research Platform 4 Business Model 5 Pipeline 6 Beyond Green Biotechnology

13 Global Platform for Green Biotechnology R&D Sites and Cooperations Part of global BASF R&D Verbund since 1998 DNA LandMarks ExSeed Genetics North Carolina Plant Science Sweden Metanomics SunGene Limburgerhof 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 BASF Biotech R&D Units External Cooperations 13

14 What is BASF s Approach to Create a Competitive Advantage in Green Biotech?

15 The Metabolic Network Chemistry of Nature M 1 A cell is a complex network of thousands of chemical reactions G 3 E 1 E 3 M 2 M 3 E 2 M 5 In these reactions thousands of enzymes act as catalysts in the production of chemical substances (metabolites) The genes are responsible for producing and steering these enzymes E 4 M 4 Cell M E Metabolite Enzyme G Gene 15

16 The Metabolic Network Chemistry of Nature E 1 M 1 A change in one gene leads to multiple changes in the metabolic network G 3 M 2 M 5 E 3 E 2 M Metabolite M 3 E Enzyme E 4 G Gene M 4 Cell M M Increased production of chemical substance Decreased production of chemical substance 16

17 Metabolic Profiling Analytical Tool for Understanding the Metabolic Network 17 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

18 Conventional Gene Selection Look at Plant Look at Yield + Transformation New Gene Selection Information Conventional approach: 1) modify gene, 2) look at external plant attributes and yield in the field, 3) decide on selection for further gene testing 18

19 BASF Method Our Approach is Unique in the Industry Look at Plant Look at Yield Look Inside Transformation Scan proprietary library with advanced bioinformatics and identify new genes Information With metabolic profiling tool we greatly increase the efficiency and efficacy of gene discovery activities 19

20 Summary Metabolic Profiling 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 20

21 BASF s Competitive Advantage Better Data Higher Speed Lower Cost 1 major patent application every 5 days Better Genes 21

22 1 Biotechnology & Markets 2 Focus of BASF Strategy 3 Research Platform 4 Business Model 5 Pipeline 6 Beyond Green Biotechnology

23 Business Model BASF s Approach to Green Biotechnology 1. BASF profits from the most advanced genediscovery 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) 23

24 Seed Access Strategy For commercial scale seed development, seed production and seed marketing: Output Traits for Specialty Chemicals Low acreage Higher value value per per acre acre Strategy: Strategy: Through toll manufacturing through with local toll-manufacturing seed partners with local seed partners Output Traits for Bulk Chemicals & Agronomic Traits large Large acreage low Lower value value per per acre acre Strategy: through Through value-sharing and license partnerships agreements and license with leading seed agreements companies, with leading profiting seed from non-competitive companies, profiting position from of noncompetitive in the position seed business of BASF in BASF the seed business 24

25 1 Biotechnology & Markets 2 Focus of BASF Strategy 3 Research Platform 4 Business Model 5 Pipeline 6 Beyond Green Biotechnology

26 Strong Early Stage Pipeline in Green Biotechnology Focus Areas Animal Health & Nutrition Human Health & Nutrition Personal Care Crop Health & Yield Stress Tolerance (drought, cold, salinity) Fungal Resistance Nematode Resistance Output Traits (Agronomic Traits) Output Traits (Specialty & Bulk Chem.) High Yield (Corn, Canola, Wheat, Soy) Drought Tolerance (Corn, Canola, Wheat, Soy) High Oil (Canola, Soy) Improved Amino Acid Profile (Corn) PUFAs Carotenoids Amylose (Potato) Amylopectin (Potato) Industrial Uses (specialty & bulk chem.) Input Traits Nematode Res. (Soy) Fungal Res. (Potato) Discovery Identifying Genes & POC* 2 6 years Stage I Look for POC II* 2 4 years Stage II Early Prod. Dev. 2 3 years Stage III Adv. Prod. Dev. 3 4 years 26 * POC = Proof of Concept in model crop / POC II: Proof of Concept in Target Crop

27 Output Trait Example: PUFAs Plants as Factories Today Tomorrow PUFAs: polyunsaturated 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 27

28 Output Trait Example: Carotenoids Plants as Factories 28 Proof of Concept in Tomato (Model Plant)* Carotenoid Tomato: Standard Tomato: 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

29 Output Trait Example: Drought Tolerance Agronomic Traits Gene for Drought Tolerance Identified Gene Transfer Proof of Concept in Model Plant Achieved Gene Transfer Next Step: Transform Target Crop 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 Moss With New Gene Without New Gene 29

30 Input Trait Example: Nematodes Larvae 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 30 Hairy Roots from Soybean Feeding Nematode

31 1 Biotechnology & Markets 2 Focus of BASF Strategy 3 Research Platform 4 Business Model 5 Pipeline 6 Beyond Green Biotechnology

32 32 Exciting Additional Potential from Metabolic Profiling

33 Exciting Additional Potential from Metabolic Profiling Major Benefits Toxicology Analysing the impact of chemicals on metabolic profiles Reduce need for animal testing Recognize tox issues very early Diagnostics Analysing the impact of diseases on metabolic profiles Predict wide array of diseases at early stage with simple blood or urine test Gain time / reduce treatment costs / save lives Product Development Develop products that trigger the most desirable profile Identify best active ingredient at early stage (target activity & tox) Accelerate development and reduce cost 33

34 Potential Fields of Application Toxicology Diagnostics Pharma Agrochemicals Food Ingredients Cosmetic Ingredients Product Development In 2003, we founded Metanomics Health GmbH in Berlin to access these market opportunities 34

35 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 35

36 Disclaimer This presentation contains forward-looking statements under the U.S. Private Securities Litigation Reform Act of 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 to be 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 include those 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. 36

37 37