Menlo Park, California, USA
September 14, 2011
Landec Corporation (Nasdaq:LNDC), a materials science company that develops and markets patented polymer products for food, agricultural, medical device and licensed partner applications, today announced that Monsanto Company has informed Landec that Monsanto is shifting its focus to other areas of research and development and is reallocating resources to those areas. Accordingly, Monsanto has indicated that it intends to allow the co-exclusive technology license agreement between Landec and Monsanto to expire in accordance with its terms on December 1, 2011. The agreement was originally entered into in December 2006, in connection with the sale of Fielder's Choice Direct to Monsanto, as a five-year co-exclusive technology license and polymer supply agreement covering Landec's Intellicoat(R) polymer seed coating technology. The agreement was amended in November 2009 to grant certain limited rights to Monsanto for seed applied controlled release applications. The termination of the Monsanto agreement has no impact on Landec's fiscal year 2012 financial results or guidance. All rights to the Intellicoatseed coating and controlled release technology will revert to Landec, allowing Landec to broaden its on-going discussions with other leading seed and crop protection companies.
Gary Steele, Landec Chairman and CEO, explained, "Upon the termination of the agreement, Monsanto will pay Landec Ag, Landec's wholly-owned seed coating subsidiary, a $4 million termination fee. Since December 2006, the Company has been recognizing $200,000 in revenue per quarter as a result of this guaranteed termination fee. Also, we reiterate our guidance as previously stated in our Fiscal Year and Fourth Quarter 2011 earnings release dated July 26, 2011, that for fiscal year 2012, we plan to grow revenues approximately 5% and, after adding back the $4.8 million impairment charge to net income for fiscal year 2011, we plan to grow net income in fiscal year 2012 by 30% to 40%. This guidance assumed no ongoing relationship with Monsanto after December 1, 2011."
"We benefited from our collaborative partnership with Monsanto and appreciate their technological and financial support," continued Steele. "Landec is interested in continuing to develop and advance its controlled release technology and we have begun initial discussions with seed and crop protection companies who have expressed an interest in the technology. We think our controlled release technology is viable but will require further development and field validation. This technology is unique and proprietary and supported by multiple Landec patent applications."
Concluded Mr. Steele, "Landec's strategy, as evidenced by the growth in revenue and gross margin during fiscal year 2011, is to continue to shift its revenue mix to higher margin businesses by identifying and taking advantage of high margin business opportunities and by investing in new product development. Pursuing opportunities with leading seed and crop protection companies is consistent with implementing that strategy."
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