Doug Rushing

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Monsanto Biotechnology Pipeline December 9, 2004

• Doug Rushing
• Director, Technology Development

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7 Words to Think About

• Technology
• Demographics
• Water
• Energy
• Conservation
• Obesity
• Information
• Non-Pecuniary

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Science is continuously improving the quantity
and quality of food production
10000 BC Fermentation Leavening
1980 2000 Gene Sequencing, Biotech Crops, Human
Insulin
1800s Mendels Pea, Darwins Species,
Pasteurs Microbes
1950-1980 DNA, Human Nutrition, Fortification,
Green Revolution
1900-1950 Antibiotics, Pasteurization,
Preservation, Crop Breeding
2001 Human Genome, Plant Genome, Animal Genome
Building on centuries of science, biotechnology
is a collection of tools used to improve and
enhance plants, animals, and microorganisms for
the benefit of society.
Photo credit AAAS, ARS, Nature
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Monsantos Global RD Presence
Platform
Product Focus
(Molecular Breeding Trait Integration)

• Genomics Biotechnology
• Breeding Molecular Breeding
• Regulatory Science
• Chemistry

• Germplasm Corn, Oilseeds, Cotton
• Agronomic Traits
• Feed Traits
• Food Traits
• Goodwill Technology

• 15 Basic Science Research Centers
• 100 Breeding Stations (corn, oilseeds)
• Renessen Joint Venture with Cargill
• Numerous Technology Partners
• 150 Academic Collaborations
• Industry Leading Bio-informatics

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Monsantos RD Strategy Drives Innovation
Platforms
Markets
Products

• Focus on corn, oilseeds, cotton, swine, dairy
• Feed process traits via JV
• Downstream partnerships for food quality traits
• Selectively apply technologies to specialty crops

• Balance near- and long-term growth pipeline
• Commercialize high- margin traits and seeds
• Strengthen Animal Ag and Roundup

• Invest 10 of sales in RD
• Differentiate genomics, breeding and
  biotechnology
• Drive proprietary position and speed to market

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Delivering the Pipeline, Advancing New Products
On May 10, 2004, Monsanto announced it is
deferring all further efforts to introduce
Roundup Ready wheat until such time that other
wheat biotechnology traits are introduced.
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Global Regulatory Approval of Ag Biotechnology
Continues to Advance
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Global Expansion of Ag Biotech Traits Continues

• gt10 annual growth since 1996 introduction
• Planted by 7 million growers in 18 countries in
  2003

• Impact on US Agriculture
• Current and potential products
• 46 Million pounds AI / yr of pesticide reduced
• 4 Billion pounds / yr in additional yield
• 1.5 Billion / yr in income to producers

canola
cotton
corn
soy
M. Ac.
Source Gianessi et al., 2002. NCFAP (National
Center of Food and Agricultural Policy)
Source ISAAA (International Service for the
Acquisition of Agri-Biotech Applications)
Monsanto estimates
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Growth Through Innovation

• Strategy Current Status
• Development Next Five Years
• Research Next Generation

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Success in Traits Business Is Supported by
Integrated Platforms for Breeding
Seed is the delivering vehicle
Network of Breeders
Molecular Breeding
Crop Analytics
Global Germplasm
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Renewable Bio-Energy Creates New Markets

• Benefits
• Renewable bio-energy
• Cleaner air
• Enhanced energy security
• New market for growers
• Monsanto Corn Ethanol Plan
• Working with partners to increase demand for
  ethanol fuel fuel infrastructure.
• Continued research to improve High Fermentable
  Corn

Corn for Ethanol Production will more than double
by 2010 in U.S.
(M. Acres )
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Roundup Ready Trait Is Significantly Expanding in
Corn Market
U.S. Roundup Ready Corn Acreage Growth
Market Potential
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Millions of acres (including stacks)

• Current forecast of 21M acres in 2005 U.S. season
• Stacking with other traits to further expand the
  acreage
• Could reach 50M acres via
• Channeling
• Improved European regulatory situation approved
  last month

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20
16
15
12
10
7.8
4.6
5
2.7
2.1
0.9
0
1998
1999
2000
2001
2002
2003
2004
2005F
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YieldGard Plus Controls Both Corn
Borer and Rootworm

• Full regulatory approval for broad commercial
  launch in 2005
• 2004 YieldGard Plus Demonstration Program
• Provide early adopters a chance to experience
  YGPL technology in 2004
• Equally divided between Asgrow/DEKALB and Seed
  Partners
• Compare side-by-side YGPL vs. growers choice of
  hybrid insecticide (e.g., Aztec or Poncho 1250)

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Ensuring Successful Launch of Roundup Ready
FLEX Cotton

• Product Concept
• 2nd generation Roundup Ready
• Benefits
• Wider window of application with higher use rates
  and enhanced crop safety
• Simplified production systems
• Better weed control

• Situation Update
• USDA FDA submission completed
• Cotton States planted 400 acres of foundation
  seed
• Target launch 2006

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Next Generation Cotton Traits Raise Performance
Bar
Monsanto Cotton Trait Pipeline
Yield Stress Tolerance Traits Agronomic Traits
Lygus / Stinkbug
Drought Tolerance
Drought Tolerance
Value Creation Portfolio
BG II / RRF Stack
QTL Yield
QTL Yield
QTL Yield
BG II / RR Stack
Roundup Ready Flex Cotton
Roundup Ready Flex Cotton
Roundup Ready Flex Cotton
Roundup Ready Flex Cotton
BG / RR Stack
Bollgard II Cotton
Bollgard II Cotton
Bollgard II Cotton
Bollgard II Cotton
Bollgard II Cotton
Roundup Ready Cotton
Roundup Ready Cotton
Roundup Ready Cotton
Roundup Ready Cotton
Roundup Ready Cotton
Roundup Ready Cotton
Bollgard Cotton
Bollgard Cotton
Bollgard Cotton
Bollgard Cotton
Bollgard Cotton
Bollgard Cotton
Bollgard Cotton
2014
2013
2008
2006
2002
1997
1996
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YieldGard II for IRM and Broader Insect Control

• Product Concept
• Global solution for corn borers, fall armyworm
  and corn earworm
• Benefits
• Dual mode of action enhances IRM and durability
• Increased insect spectrum
• Global expansion (fall armyworm)
• 2004 Milestones
• Confirm efficacy and agronomics
• Select commercial events
• Initiate regulatory trials

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Drought Tolerance Traits Repeating in 2004 Field
Trials
Gene
Control
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Roundup Ready Alfalfa

• Opportunity
• 25M U.S. acres
• Up to 6.0 lb ae/A Roundup during growing season
• Collaboration with Land O Lakes/Forage
• Genetics International 40 of current
  alfalfa
• germplasm market
• Benefits to Industry
• Over the top, broad spectrum weed control
• from seeding through harvest
• Higher success of stand establishment
• Superior crop safety
• Weed-free high quality forage
• Suitable for reduced / no-till systems
• Development Update
• USDA submission under review
• Commercial seed production in 2004
• Projected launch in Fall 2005

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Growth Through Innovation

• Strategy Current Status
• Development Next Five Years
• Research Next Generation

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The Technology is Progressing, Building Upon the
Learning Acquired in Each Previous Wave
The evolution of biotechnology benefits
Bio-Materials Bio-fuels and bio-pharma
Quality Traits Human nutrition and animal
productivity
2nd Generation Agronomic Traits Crop yield and
drought tolerance
1st Generation Agronomic Traits Crop production
and pest management
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Yield is a Complex Trait
Bt
Yield
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Drought Stress Tolerance Research
Last year, we disclosed discovery and testing of
drought tolerance

• Agriculture is responsible for 70 of freshwater
  withdrawal
• Product Concept
• Yield improvement from tolerance to water
  deficits
• Benefits
• Higher yields on all acres with improved water
  utilization
• Reduced water consumption
• Improved economics and environmental
  sustainability

Arabidopsis
Rice
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Drought Tolerance in Greenhouse Corn Soybeans
Corn
Soybean
Control
Control
With Gene
With Gene
New biotech traits in the development pipeline
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Drought Tolerance Leads Advance into 2004 Field
Trials
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Drought Tolerance Traits Repeating in 2004 Field
Trials
Gene
Control
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Cold Stress Tolerance Research
Discovery of cold tolerance gene and its testing
in model plants

• Low stand establishment and delayed emergence
  limit crop yield and use of conservation farming
  practices
• Product Concept
• Early seedling germination and growth tolerant to
  cold wet conditions
• Grower Benefits
• Higher yields and better stand establishment on
  conventional and no-till acres
• Flexibility in planting and earlier crop
  emergence (7 days)

Arabidopsis Cold Stress Germination Screen
Control
w/ Gene
Control
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Cold Stress Tolerance Genes Advancing Into Crops
2004 Results Confirmed lead under cold
germination screen. Gene increases both the
extent and uniformity of germination under cold,
wet conditions. Phase Discovery
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Nitrogen Utilization Research

• Nitrogen is one of the most important nutrients
  for crop growth, second only to water
• Product Concept
• Crops with more efficient nitrogen utilization
• Grower Benefits
• Improved crop performance
• Enhanced nitrogen uptake
• Less yield variability
• Greater output per unit input

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Improving Soybean Oil for Broad Consumer Benefits

• Soybean Oil is the predominant vegetable oil for
  US consumers
• 40M acres opportunities
• Current soybean oil is not Optimized for most
  food applications
• Oxidative stability
• Off flavor and rancidity
• Relatively high content of trans-fat and
  saturated fat

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Creating Value with Phased Improvement for
Soybean Oil

• Product Portfolio
• 1st Generation Low Linolenic
• Breeding approach
• Lowers trans fats
• 2nd Generation Mid Oleic
• breeding approach
• 3rd Generation Zero saturates
• Transgenic approach
• Valuation
• Low Lin Trait premium gt 5/Acre
• Working with major food/grain companies to ensure
  value capture
• Launch
• 2005 - Low Linolenic (2 varieties)
• 2008 - Mid Oleic
• 2011 - Low Saturates

Acreage from Improved Soybean Oils (M)
Market Demand is Accelerating Timeline
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Omega-3 Biofortification Research

• Omega-3 fatty acids are essential constituents in
  human diet
• Product Concept
• Vegetable oils enriched with bio-available
  omega-3
• Benefit
• New consumer product options for omega-rich foods
• Qualified health claims
• Environmental sustainability
• Economical supply

general population stating they consider their
diet deficient in
39.1
32.0
30.9
29.4
24.9
23.1
18.7
Omega-3
Whole Grains
Soy Protein
Vitamin C
Vitamin E
Folic Acid
Fiber
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Omega-3 Crops

• Scientific Progress 2003
• Multi-gene expression
• Soybean transformation
• Omega-3 oil production

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High Lysine Corn for Enhanced Animal Feed and
High Oil Soybean for Efficient Processing
High Lysine Corn Total Lysine

• High Lysine Corn
• Enhance level of limiting essential amino acids
  in feed
• Benefits
• Lower cost of animal feed ration
• Improved amino acid balance
• Increased total protein energy
• High Oil Soybean
• Enhanced oil yield with commodity meal protein
  content
• Benefits
• Higher total product value
• More efficient processing
• Improved COGS

Transgenic High Oil Soybean
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Expanding the Corn Trait Portfolio for Enhanced
Agronomic Performance and Crop Value
Monsanto Corn Trait Pipeline
Yield Stress Tolerance Traits Food / Feed
Quality Traits Agronomic Traits
Hi Protein Corn
Yield II
High Trp. Corn
YGRW II
YGRW II
High Oil Corn
Yield I
Yield I
Yield I
Value Creation Portfolio
YGCB II Stacks
YGCB II Stacks
YGCB II Stacks
YGCB II Stacks
High Lys. Corn
High Lys. Corn
High Lys. Corn
High Lys. Corn
High Lys. Corn
RR YGCB YGRW
RR YGCB YGRW
RR YGCB YGRW
RR YGCB YGRW
RR YGCB YGRW
RR YGCB YGRW
YGCB YGRW
RR YGRW
YGCB YGRW
YGCB YGRW
YGCB YGRW
YGCB YGRW
YGCB YGRW
YGCB YGRW
YIeldGard Rootworm
YieldGard Rootworm
YieldGard Rootworm
YieldGard Rootworm
YieldGard Rootworm
YieldGard Rootworm
YieldGard Rootworm
YieldGard Rootworm
RR YGCB
Roundup Ready
Roundup Ready
Roundup Ready
Roundup Ready
Roundup Ready
Roundup Ready
Roundup Ready
Roundup Ready
Roundup Ready
YieldGard Cornborer
YieldGard Cornborer
YieldGard Cornborer
YieldGard Cornborer
YieldGard Cornborer
YieldGard Cornborer
YieldGard Cornborer
YieldGard Cornborer
YieldGard Cornborer
YieldGard Cornborer
2014
2013
2012
2009
2005
2004
2003
1996
1998
2007
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Committing to Technology Leadership

• Align Resources with Biggest Market Opportunities
• Crop focus large acreage, high value
• Trait focus broad customer and consumer appeal
• Balance Resources between Near and Longer Term
  Needs
• Accelerate development to ensure first to
  market
• Participate in long term, new discoveries
• Provide Broad Access to Proprietary Technologies
• Commercial access to elite germplasm and traits
• Goodwill collaboration to expand the consumer base

Monsanto Relies on YOU to Bring the Technologies
to the Marketplace, and to Realize Value
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