Inside Wall Street
THE BIG BUZZ OVER A BUG-KILLER
Ecogen is a tiny agricultrural biotech company that has been a giant winner. Its stock has tripled in two months, from 2 7/8 in late January to 8 3/4 on Apr. 9, and it may keep on going, say some investors.
One reason, apart from the market's recent infatuation with small over-the-counter stocks, is that New York investor David Blech has been accumulating shares. By late March, his stake came to nearly 61%. Talk is that he may end up bidding for the entire company, which has yet to make money. Revenues in 1990 were a paltry $2.1 million.
Ecogen has been lining up big partners in its development of natural pesticides, which include the Cutlass (R) bioinsecticide that California approved in March to protect lettuce, cabbage, tomatoes, and other vegetable crops from caterpillars. It's already being sold in Texas, Florida, and Georgia.
But the next Ecogen surprise, says one money manager, will be a licensing agreement to be signed soon with Pioneer Hi-Bred International, a major seller of seed corn, for Pioneer's use of Ecogen's insecticidal toxin genes. The genes, derived from certain bacteria, produce a natural protein that has no known toxic effect on nontarget insects, humans, animals, or plants. They are designed to protect cornstalks against pests such as the European corn borer. Pioneer is expected to use the genes in its new corn varieties.
Ecogen will receive an up-front fee from Pioneer, says one source, as well as royalties on Pioneer's sale of any seed corn containing Ecogen's insecticidal genes. One analyst says the market for the corn seed is about $700 million a year, of which 35% is controlled by Pioneer. Ecogen said the pact with Pioneer will boost its bottom line. Pioneer declined comment.Gene G. Marcial