By Karen Young

Mendel Biotechnology Inc. entered a five-year, $20 million research and commercialization partnership with Monsanto Co.

With the agreement, Mendel, of Hayward, Calif., a functional genomics company, will focus on lead advancement of genes that regulate plants.

¿We think this is the largest deal in the plant space this year, which is always nice,¿ said Dave Summa, Mendel¿s president and CEO. ¿Secondly, by having our partners pay for us to develop our product development infrastructure, we will be able to use it for our own purposes without having to buy it and build it on our own.¿

Summa also said that the $20 million is actually a minimum of what this deal could be worth, since the money will be used to fund Mendel¿s research.

Perhaps more importantly, Summa said, is that Mendel earns ¿a very nice royalty¿ on Monsanto¿s products that use Mendel technology, or the plants that use these genes, although he declined to provide specifics. This, in turn, will allow Mendel to create a product development capability.

Monsanto has interests in corn, seed oil products and other agriculturally relevant crops.

The partnership is an extension of a relationship begun in 1997. Since then, Mendel has been functionally characterizing transcription factors for Monsanto ¿ screening the function of genes in plants ¿ and Mendel will spend the next few months completing this work.

The new agreement will focus on lead advancement, while along the way new discoveries may be made.

¿We have found enough leads to fill our own and our partner¿s pipeline for many years to come,¿ Summa said.

Now, it¿s time for product development, and Mendel will be starting its own product development program.

¿In agriculture alone, there are probably six multibillion-dollar products, which are very much the equivalent of blockbuster drugs, including yield, drought tolerance, disease resistance ¿ particularly fungal ¿ and fertilizer utilization efficiencies,¿ Summa said. ¿Each one of these is a very large financial target.¿

Mendel also has an agreement with the vegetable seed company Savia SA, of Monterey, Mexico, as well as with two other undisclosed companies.