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Devgen NV (Euronext Brussels: DEVG), a public agricultural biotech and seed company, today reports on the successful conclusion of its first full sales season and on the establishment of a solid base for growth in India in 2009. In addition Devgen reports on its entry with rice into Indonesia and the Philippines.

Devgen Seed and Crop Technologies

India

Sales on target

Product sales are in line with expectations and amount to 5.8 mio EUR at the end of Q3 2008.

Devgen successfully established itself in the market as a producer and supplier of premium seed products for hybrid rice, sorghum, pearl millet and sunflower. 18 hybrid products were introduced into the market and successfully positioned under the Frontline and Mahalaxmi brand names.

Devgen experienced strong demand for its hybrid rice products thereby realizing high net sales prices in the premium market segment. The sorghum sales season was concluded early for reason that stocks for these products were already sold out during the Kharif (April to July) season. Pearl Millet sales were impacted by low rainfall witnessed in Maharashtra. Sunflower sales were accomplished during Q1. Follow-up sales for sunflower are mainly planned for Q1 2009.

Solid base for growth

In the first year of business in India, Devgen integrated the various components, acquired during the previous year, into a solid organisation, ready to meet the challenges of the future.

• A full management team is now in place in India with industry professionals in charge of sales, marketing, legal, finance, technical development and production;
• All key functions were strengthened. Starting off with 59 employees on November, 1st  2007, today 141 people are employed by Devgen India. About 70 additional people will be hired between now and year-end, mainly for production and sales;
• Production acreage under contract for the 2009 season triples the acreage under cultivation during the previous production cycle. Furthermore a second seed processing plant is under construction assuring capacity for the next 3 years. Devgen is currently building its own parental seed production facility, including QC lab facilities and cold storage for parental seed;
• Close to 4500 demonstration plots were used in new and existing markets to demonstrate to the farmers Devgen's existing and  pipeline products;
• Marketing activities in function of the coming season are intensified in order to meet 5 times more end customers/farmers compared to previous season. In total more than 1,000,000 farmers were reached through the organisation of field days, field visits and farmer meetings;
• Products were distributed by 300 distributors during this season reaching the farmers through over 10,000 dealers. For the next season the number of distributors will be increased to 726 reaching over 21,000 dealers.

Excellent performance of our current and pipeline products in the field combined with positive customer and distributor feedback form the basis for substantial growth in 2009.

Research and development

Devgen's pipeline was evaluated through extensive product testing. 2500 candidate new products were tested in 700 trials across India. The breeding team and infrastructure was strengthened and breeding activities are now globally integrated across sites in India, Kenya, Indonesia and the Philippines. All sites are supported by our marker technology team, the IT and IP department, all based in Ghent (Zwijnaarde), Belgium. The stewardship team assists in managing the processes.

Devgen in Indonesia and the Philippines

Devgen has completed its first year of field trials in Indonesia. Product testing for registration purposes was organised at 9 different locations. The Devgen Indonesia subsidiary is under incorporation.

A field station for seed production has been built in the Philippines to support the scale up of parental seed that was acquired from Monsanto Company in the Philippines. The scaling up of the parental seed is required for local testing and commercialisation purposes in the local market in the Philippines and in the Indonesian and Indian markets.

An implementation plan to address the Indonesian and the Philippines markets is being developed.

RNAi and traits

Significant progress was made on improvements of the RNAi technology and the development of a pipeline for our biotech traits in Devgen's crops of interest.

Nematicides

In line with the previously announced strategic development plan, Devgen is currently finalizing the compilation of the first registration dossiers of its candidate nematicide product in key territories being the USA, southern Europe and South Africa. Target date for the completion of the dossiers is still set by year end. Further news will be provided in due course.  

Focus on the agro business

Devgen has decided to restructure its pharma division to fully focus on its agro activities. We expect to complete this process in a timely manner in close cooperation with the employees, the unions and the management team. We expect no further burn rate for these activities as of 2009.

Key financials 30.09.2008

[1] Including restricted cash for an amount of EUR 4,840 ('000)

Revenues amount up to EUR 8,299 ('000) compared to EUR 6,020 ('000) by the end of Q3 2007. Total revenues are mainly related to sales of goods, totalling EUR 5,836 ('000) which offset the lower revenues out of R&D collaborations and grants.

EBITDA amounts to EUR -15,513 ('000) compared to EUR -9,183 ('000) for the first 3 quarters of 2007. EBITDA is impacted by higher costs which could not be fully offset by higher revenues. Higher cost are related on the one hand to the cost of goods sold related to the product sales and the operational expenses involved in these activities, in total amounting to EUR 5.667 ('000). On the other hand, R&D expenditure amounted to EUR 17,047 ('000) compared to EUR 12,266 ('000) during the same period last year, representing an increase of EUR 4,781 ('000) in line with guidance given with regard to accelerated investments in the nematicide program in 2008 and acceleration of the breeding activities to bring new hybrid seeds to market.

Loss from operations amounts to EUR -17,436 ('000) compared to EUR - 9,955 ('000) for the same period last year. Net loss amounts to EUR -16,881 ('000) compared to EUR -9,133 ('000) for the same period last year. The increase in R&D expenses (to prepare for revenue growth through product sales) in combination with the decrease in funding of these activities through research collaborations and research grants explains the higher losses compared to previous year. 

Cash and cash equivalents1 at the end of the third quarter amounted to EUR 30,410 ('000) compared to EUR 43,863 ('000) at the end of 2007. Net decrease in cash and cash equivalents during the first 3 quarters amounts to EUR 13,453 ('000) of which EUR 13,029 ('000) is relating to cash used in operating activities.

Shareholder notification

Devgen NV received this week a shareholder notification from BIOVEST ComVa, a Belgian Investment company. In total BIOVEST ComVa acquired 1.082.574 shares with accompanying voting rights representing 6.05% of the total voting rights.

Devgen is a public agricultural biotech and seed company focused on developing and commercializing:
- biotech traits and hybrid seeds to meet the growing needs for high yielding, high quality hybrid rice, sorghum, millet and sunflower of the Indian and other south-east Asian markets;
- a novel generation of biotech products to protect a wide spectrum of  crops incurred from pests; to render crops more tolerant against stress factors such as drought and salty soils and to decrease the need for fertilizer use by optimizing nitrogen uptake;
- a new generation of agrochemical products to protect crops from damage inflicted by plant parasitic nematodes.
Incorporated in 1997, Devgen has offices in Ghent (Belgium), Singapore, Hyderabad (India) and Delaware (US) and employs more than 200 people worldwide. Devgen is listed on Euronext Brussels (ticker: DEVG) since June 2005.

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