By Mary Welch

The $17 million technology collaboration in plant and animal genomics research between Monsanto Co. and GeneTrace Inc. means a lot to both companies' strategic growth, but it has a far more tangible impact on Menlo Park, Calif.-based GeneTrace.

"It's allowed us to move out from the basement of SRI (a local research institution) into our own 48,000-square-foot building in Alameda," said George LaMotte, CEO of the privately held biotech firm. "That's real nice for the company. We've kept a low profile while we were developing our technology platform."

The $17.2 million investment by St. Louis-based Monsanto includes fees for a series of options to exclusively license all aspects of GeneTrace's technology for plant and animal genomics, such as gene-expression analysis and genotyping. The deal also includes research and development funding, equipment purchases, supply agreements and an equity investment in GeneTrace.

In addition, Richard Stonard, president of Monsanto's sustainable development sector and a vice president of the company's genomics network, will serve on GeneTrace's board of directors.

"This deal is a major and very visible public validation of our technology, and it's very important to us," said LaMotte. "There are a series of options — all exclusive to Monsanto — and if they option everything that we do in the plant and animal genomics field, well, that's fine with us. They're a leading player and there is a definite mutual attraction between the two companies. It works out well for both."

The alliance fits into each company's corporate strategy.

For its part, GeneTrace wanted "fewer partners, but deep relationships. We didn't want to be in the agri-bio business," LaMotte said.

Over the last three years, Monsanto has acquired a $2 billion portfolio of genomic companies and relationships. Among its collaborations are deals with Incyte Pharmaceuticals Inc., of Palo Alto, Calif., and Millennium Pharmaceuticals Inc., of Cambridge, Mass. And Monsanto's acquisitions include Calgene Inc. of Davis, Calif., and Agracetus Inc., of Middletown, Wis.

"The rapid technology advancing in genetics allows scientists to understand the biological role in the formation of genes in people, plants and animals so quickly," said Dan Verakis, Monsanto spokesman. "This allows us to identify traits that can be beneficial to crop production and healthier foods traits that drive the commercial products for Monsanto."

Monsanto didn't let the grass grow before exercising its first option to license GeneTrace's genotyping methods that can determine the genetic make-up of an individual species. The first two crops under study will be soybeans and corn.

"Their technology gives us the ability to understand the genetic make-up of an individual crop very rapidly," Verakis added.

That work with the first option should begin within a few months makes it even more exciting for GeneTrace. "It's here, it's today. It's up and running in the next few months," La Motte stated, adding, "It will also be a continuing source of revenue." *