EU GE Rules Expand Seed TAM, Favor Fungicides, & Insecticide R&D

Research evidence excerpt

EU GE Rules Expand Seed TAM, Favor Fungicides, & Insecticide R&D

nce, fertilizer efficiency, greater nutritional value, longer shelf Chart 1 - Key Equity Value Drivers If GE Rules

lives, and optimized oil content). We estimate potential GE value capture could total $80bn-$225bn, Pass

depending on innovation cycles, industry structure, and climate stress, and how well GE value 10% share in 2050, discounted 10%-15%: $2-$3/sh.

1x scarcity premium for Seeds: ~$5/sh.

propositions develop in fruit and vegetable markets. $1bn in R&D pipeline value: $1.00-$1.50/sh.

.$100m of seed licensing: $0.11 to EPS, $1.50-$2.00/sh.

Mixed impact for crop chemical demand: GM technology increased crop yields by 22%, on average, Source: Jefferies Estimates

but reduced pesticide use by 37%, while also driving a structural shift in favor of non-selective

Chart 2 - KISS Framework For GE

herbicides, such as glyphosate. GE, in our view, could trigger a similar demand shock, particularly GE 2050E TAM $45-50bn, 2x-5x blue sky

for generic insecticides and fungicides used on wheat, rice, fruits, and vegetables. Differentiated LiftsValueout-licensingpropositions:marketweatherto >$10bnstress, diseasefrom ~$4bnresistance, herbicide tolerance, pest

R&D in fungicides and insecticides likely receives a higher premium over time. management,Disease & pestsnutrientclip cropefficiencyyields 15%-30%and outputeachtraitsyear

2ºC global warming cuts yields 10%-25%

GM traits mostly target insect resistance & herbicide tolerance

GM crops ~50% of seed sales, ~20% of row crops and ~10% of cropland

GM ~35% in US, ~32% in Brazil, ~11% in Argentina

GM soybeans ~49%, corn ~33% and cotton ~12%

. GE 5x faster than GM, <33% R&D

Source: Jefferies Estimates

Chart 3 - Seed Position (% Sales)