Updated Bloomberg article on Monsanto:
Monsanto 3rd-Qtr Profit Down as Seed Business Expands (Update1)
(Adds shareholder comment in 4th paragraph, drug's name
change in 5th paragraph, background on Pfizer pact and DuPont in
7th through 11th paragraphs.)
St. Louis, Oct. 15 (Bloomberg) -- Monsanto Co., one of the
world's largest agricultural biotechnology companies, said third-
quarter profit fell 16 percent as it spent to develop new
products and integrate acquired seed businesses.
Profit before charges fell to $87 million, or 13 cents, from
$103 million, or 17 cents, a year earlier. Results matched the
average estimate of analysts polled by First Call Corp.
Sales rose 15 percent to $1.99 billion from $1.72 billion,
including a $140 million payment from Pfizer Inc. for a marketing
agreement for a Monsanto arthritis drug. This drug, expected to
be introduced in 1999, could eventually top $1 billion in annual
sales, analysts said.
''They have next year's potential blockbuster drug,'' said
Erik Anderson, a portfolio manager with Sit Investment, which
holds 676,000 Monsanto shares. ''They have all of these new
products.''
The name of the drug, expected to start sales in 1999, has
been changed to Celebrex from Celebra to avoid possible confusion
with Celexa, an antidepressant, Monsanto said. Celexa is sold by
Forest Laboratories Inc.
Monsanto rose 3 to 37. It closed Monday at 50 3/8 before
announcing the end of a planned $35 billion merger with American
Home Products Corp. Monsanto had agreed to work with Pfizer, the
maker of the impotence pill Viagra, before announcing its plan to
merge with American Home. Pfizer is considered one of the drug
industry's best marketers.
Pfizer's Interest
And, Pfizer has shown strong interest in the new Monsanto
drug, which can treat pain and swelling without irritating the
stomach as existing painkillers do. Pfizer has made about $240
million in payments over the past six months for marketing rights
to the drug, said Hemant Shah, an independent drug analyst.
''I've never seen a payment like that ever for any drug,''
Shah said. ''Pfizer must think Celebra has a potential of
incredible proportions.''
The new drug might help draw the attention of another
possible merger partner or buyer, Sit's Anderson said. DuPont
Co., the largest U.S. chemical company, intends to shed its
Conoco oil unit and focus more on the so-called ''life
sciences,'' such as making better seeds and developing new drugs.
''They want to be what Monsanto already is,'' Anderson said.
''That begs the question of what happens when DuPont sells
Conoco.''
DuPont, which intends to have shed Conoco through sales and
spin-off by 1999, has said it intends to grow in the ''life
sciences'' through smaller acquisitions than a Monsanto takeover
would be.
In the latest quarter, a charge of $187 million, or 30
cents, for research and development associated with the
acquisitions, brought Monsanto's final loss of $100 million, or
17 cents.
In the year-earlier period, Monsanto took a charge of $270
million, or 45 cents, stemming from another acquisition and had
income from its discontinued chemical businesses of $34 million,
or 6 cents. That made a final loss of $133 million, or 23 cents.
quote.bloomberg.com
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