Ceres, Inc., an agricultural biotechnology company, develops and markets seeds and traits to produce crops for feed, forages, sugar and other markets. The company uses a combination of advanced plant breeding, biotechnology and bioinformatics to develop seed products. Following commercial field evaluations in 2014, the company launched its U.S. forage sorghum business in 2015 and initiated multiple distribution arrangements with providers of crop inputs and services, including Helena Chemical Company, Wilbur-Ellis, and 3rd Millennium Genetics. Distributors provide the company with local market information, agronomy support and access to their customer base. In 2015, the company expanded its sorghum offerings to include hybrids for use as livestock feed and forage. The company owns access to sorghum parental lines (germplasm) through its strategic collaboration with The Texas A&M University System. The company has developed proprietary bioinformatics software, known as Persephone, to deal with the massive amounts of data generated in plant genomics. In September 2015, the company licensed Persephone to global seed developer, KWS SAAT SE. Bayer CropScience, Syngenta Biotechnology and HZPC Holland BV, all multi-national life sciences companies, have also licensed Persephone as their primary genome browser. Product Lines and Product Pipeline Forage Sorghum Forage sorghum seeds are primarily used for growing feed for livestock, including dairy and beef cattle. The company’s hybrids, which are conventionally bred and do not yet contain biotech traits, have performed well in various commercial and multi-hybrid field trials in the United States. The company has also advanced its biotech traits in sorghum for additional field evaluations in the United States. In 2014, the company received confirmation from the United States Department of Agriculture (USDA) that its high biomass trait was not considered a regulated article under 7 CFR §340 of the USDA’s mandate to regulate genetically engineered traits. Seed Production and Operations The company produces commercial seed either on leased land managed by the company or with contract seed producers. In the United States, the company receives, conditions, treats, packages, and warehouses its seed grown in the northern hemisphere at its seed warehouse and order fulfillment center in Amarillo, Texas. In addition, the company works with various third parties who have complete production and packaging capabilities to complement its own production capabilities. Sales and Marketing The company markets its seed products under the trade name Blade. Its customers have included, among others, dairies and livestock producers, agri-industrial facilities, individual growers and grower cooperatives. The company sells, markets, and distributes its seed products through both direct sales and distributors. Customers For the year ended August 31, 2015, USAID, Syngenta, Exelus, Florida Crystals, and Bayer represented 33.5%, 13.1%, 12.2%, 11.9%, and 10.4% of the company’s revenues, respectively. Strategy Key elements of the company’s business strategy include expanding forage sorghum’s use into a major feed crop with greater yield and nutritional quality, increased value capture and expanded market potential; making use of the positive regulatory landscape to introduce biotech traits in its branded sorghum seed products, beginning in the U.S.; pursuing additional license and royalty-based collaborations with market leaders in multiple geographies to introduce its biotechnology traits to other forage crops and sugarcane; continuing to realign its business operations in Brazil toward sugarcane trait development and commercialization, and work with well-established local partners; and increasing the number of plant sciences customers utilizing its Persephone platform and expand into the biomedical fields, where genetic information is analyzed and viewed in a similar manner to plant genomics. The company’s strategy is to focus on genes that have shown large, step increases in performance, and whose benefits are largely maintained across multiple species. Research and Development For the year ended August 31, 2015, the company invested $9.7 million in research and development, with the main emphasis on breeding and traits. Intellectual Property As of August 31, 2015, the company owned or had exclusive licensed rights to approximately 90 issued patents and approximately 70 pending patent applications in the United States and in various foreign jurisdictions. The patents for company-developed inventions are set to expire beginning in 2020. The company’s filings in foreign jurisdictions, such as Europe and Brazil, are generally targeted to the products that the company plans to offer in those respective markets. The company continues to file new patent applications, for which terms generally extend 20 years from the filing date in the United States. The duration of plant variety protection and plant breeder’s rights protection varies among jurisdictions, e.g., the duration is 20 years from issue in the United States, 25 years from filing in Europe, and 15 years from grant of a Provisional Certificate of Protection in Brazil. The company’s registered and pending trademarks in the United States and in selected foreign countries include Ceres, Blade, iCODE, Persephone and Skyscraper. Regulatory Matters Under the Plant Protection Act of 2000, regulatory approval is required before the introduction, including the environmental release, interstate movement, and importation, of certain genetically engineered organisms, which include majority of the company’s biotechnology products. The primary U.S. regulatory agency overseeing field testing and deregulation for commercialization of the company’s biotechnology products is the USDA. Competition The company faces direct competition from other seed companies, such as Chromatin, Inc.; S&W Seed Company; and Winfield Solutions LLC, a subsidiary of Land O’ Lakes. History Ceres, Inc. was founded in 1996. The company was incorporated in Delaware in 1996.
(CERE:Consolidated Issue listed on NASDAQ Capital Market)
1535 Rancho Conejo Boulevard
Thousand Oaks, CA 91320
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