Escagenetics Corp. said it has expanded its True Potato Seed(TPS) program into Spain and Portugal -- markets thatcombined represent almost $500 million of the estimated $8.5billion world seed tuber market, according to the company.

If field trials in Spain and Portugal with the company's hybridTPS and hybrid seed tubers are successful, Escagenetics(ASE:ESN) of San Carlos, Calif., will be able to register TPShybrids in the Commercial Catalog and the Plant VarietyProtection List of Spain and Portugal, enabling the product tobe traded on the European common market.

The TPS propagation method uses true botanic seed as thestarting point rather than tissue cultured plantlet in traditionalclonal methods. Through sexual propagation, geneticcharacteristics can be transferred from parents to offspring.TPS utilizes the sexual reproductive system, which doesn'ttransmit most major diseases through the true seed. "Clean"TPS can be planted, and in a single generation produce largequantities of high-quality, disease-free hybrid seed tuber.

Raymond Moshy, Escagenetics' president and chief executiveofficer, said the TPS technology has demonstrated excellentresults in field trials. He said TPS is a disease-free, lower-costalternative to traditional clonal propagation methods that incurexpensive storage and transportation costs, and are susceptibleto viral and fungal diseases, particularly in tropical climates.

Moshy said there is great demand for the product indeveloping nations where potato consumption is far less percapita than in developed countries due to high costs.

"Where the need is greatest, the willingness to try (newapproaches) is the greatest," said Moshy. "Acceptance of thereality of TPS technology is growing."

But some have questioned the ability of developing nations topay for state-of-the-art technology.

Greg Dahlman, an analyst with Piper, Jaffrey and Hopwood inMinneapolis, questioned the size of the market Escagenetics ispursuing. "It's a worthwhile project, but those that really needit can't afford it," said Dahlman.

Moshy, however, said, "Our strategic thrust is in seed-deficitareas that are physically unable to produce potato seeds, andthe main driving force is economics of course."

Utilizing a less-expensive means of producing superior potatoeswould eliminate the need for imports, permitting countries toretain their hard currency, Moshy told BioWorld.

By forming producer distributor (PD) relationships with localseed tuber growers rather than selling directly to farmers,Moshy said Escagenetics will have three sources of revenue:sales of TPS to PDs, royalties on seed sales by PDs, and a shareof the production cost savings achieved by the PDs as a resultof using Escagenetics' technology.

With the first wave of TPS activity currently in 10 countriesthat account for 15 percent of total world seed tuber sales,Moshy projects that even with a small market share, TPS hasenormous potential.

"It's a worldwide crop and all produced one way," Moshy said."We're coming in with a one hundred percent different way."

Escagenetics has producer/distributor agreements in India,Mexico, Indonesia and Egypt, and trials under way in SouthAmerica, China, Japan and the U.S. Its future target marketsinclude Turkey, Brazil, Italy, Argentina and Greece.

But Jim McCamant, editor of the Medical Technology StockLetter in Berkeley, Calif., said Escagenetics' success rests on itstaxol program. "There's nothing going on there right now that'sgoing to make them any money; the key is what happens tothem on taxol."

Moshy, however, predicted that TPS could be profitable forEscagenetics within 12 months, either on a non-operating or anoperating basis, depending on whether the company has actualTPS sales by that time. "TPS is a major focus, taking about 85percent of our agbio resources," he said.

Meanwhile, the company is forging ahead with taxol. "Themajor thrust is to scale up production," Moshy said. "We'reshooting for several kilos during 1993 and commercialproduction of 100 kilos per year by 1994."

Escagenetics is considering several production alternatives:going it alone, paying someone else to do it, or forming acollaboration with a partner, Moshy said.

He added that during taxol production Escagenetics hasdiscovered taxanes, brand new molecules related to taxol thatthe company has screened for cancer activity. The company isfiling patents on those recent discoveries, Moshy said.

-- Michelle Slade Associate Editor

(c) 1997 American Health Consultants. All rights reserved.