Enzymes, Animal feed and Waste reduction

1. Enzymes, Animal feed and Waste reduction Peter Natkanski

2. Agribusiness: a large, global industry Global market 2002: $ 41+ bn ConventionalSeeds ($bn 13) CropProtection ($bn 25) GM Seeds($bn 3) Source: Phillips McDougall, The Context Network, Syngenta

3. Industry consolidation 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Ciba Novartis Sandoz Syngenta Merck Zeneca ISK Biosciences Bayer Bayer Aventis Rhone-Poulenc Hoechst Schering Monsanto Monsanto DuPont DuPont Shell Cyanamid AHP BASF BASF Dow Dow Rohm & Haas

4. 2002 Sales of Major Agribusiness Companies $m Crop Protection Seeds and Traits Syngenta Bayer CropScience* Monsanto DuPont BASF Dow * Estimated after EU divestments of ~ Euro 700 m Source: Phillips McDougall & Annual Reports

5. Sales 2003 $m 6578 Product Lines Selective Herbicides 26% Crop Protection 9% Non-selective Herbicides (84%) Fungicides 22% Seeds 15% Insecticides (16%) 10% Professional Products 9% Field Crops 8% Vegetables & Flowers

6. Capture opportunity Drive for growth Enhance leadership Fresh produce Professionalproducts Animal feed Crop Protection Seeds:flowers Biopharma Seeds:field crops, traits Seeds:vegetables Crop processing Agri markets Consumer driven markets New markets Strategy … the next three years

7. Capture opportunity Fresh produce Animal feed Biopharma Crop processing New markets Strategy … the next three years Drive for growth Enhance leadership Professionalproducts Crop Protection Seeds:flowers Seeds:field crops, traits Seeds:vegetables Agri markets Consumer driven markets

8. Whole Foods • Golden Rice • Product concept: GM rice with elevated levels of B-Carotene which converts to vitamin A in the body; antioxidant properties of carotenoids • Value capture: transfer Syngneta Golden Rice to Humanitarian Board for licensing to third world institutes • Beneficial consumer output trait for third world countries

9. Attractive as research partner Collaboration recognized as core value Outsourcing culture Proximity to centers of scientific excellence Wealth of collaborations & partnerships Collaborations with 400 institutions and companies worldwide • UC Berkeley • Clemson University • University of NC at Chapel Hill • Pohang University • NC State University • Boyce Thompson/ Cornell • University of Nevada • Oxford University • Washington State University • Vienna University Universities • Centrum voor Planten-veredlings - en Reproductieonderzoek • The Scripps Research Institute Research institutes • Myriad • Diversa • Maxygen • Advanta • Incyte • Danisco • Discovery Technologies Private companies

10. Phosphorus and the animal diet • Phosphorus vitally important for bone and tissue growth • Phosphorus (organic) stored in phytate and found in corn and soybean oil – animal feeds • Phytic acid not readily digestible by monogastric animals • Must add supplementary mineral phosphorus • Expensive, replaces other valuable nutrients,increases phosphorus in waste, causes pollution.

11. Phytate (myo-inositol hexaphosphate) is the principal storage form of phosphorus in plant seeds Considered an anti-nutrient -Chelates essential dietary minerals such as calcium, iron, copper, and zinc Phosphorus in phytate is nutritionally unavailable to monogastric animals To provide adequate dietary phosphorus to animals, inorganic phosphates are added to formulated animal feeds Phytate

12. 80+ million tons inorganic Phos @ $1-2/ton 600 000 metric tons of Phos waste = Environmental Cost Adding Phosphate to Feed Costs $ and Causes Pollution Many countries are beginning to regulate animal production based upon amounts of Phos in animal waste

13. Phytase H OH H OH H OH H OH H OH H OH Inositol Phytate 6 PO4 • An enzyme that removes Phos from phytate • Used widely in the feed of monogastric animals to allow animals to utilize the Phos contained naturally in feed components (corn, wheat, soy) • Use allows reduction of inorganic forms of Phos in feed • Reduces Phos in animal waste – positive environmental impact

14. Current Phytase Market • Most widely accepted feed enzyme; recognized efficacy • Increases animal performance on low Phos diets; reduces need for inorganic Phos • Fastest growing segment of feed enzyme market • Limitations in price/performance of current products will cap ultimate market penetration and growth • >$120M globally with the potential to grow to >$350M

15. Limitations of conventional phytases Animal feed is commonly formed into pellets, a manufacturing process that requires moisture and heat. Most phytases are unstable under normal temperature pelleting conditions and must be applied either with a protective coating before pelleting or post-pelleting by liquid application. Can result in sub-optimal feed and inconsistent animal performance.

16. Steam (90° C) Phytase Why Thermotolerance? Feed Ingredients Pellet Formation Cool Mixing High Capital Cost

17. Syngenta and Diversa - a unique collaboration • Started in 1999 through Zymetrics for feed and agricultural processing applications • Expanded in December 2002 to include more nutrition, processing and biopharmaceutical applications • Combines world-class gene discovery, optimization, plant biotechnology • 35+ scientists devoted to Zymetrics R&D Organized to deliver a pipeline of high-value animal nutrition products

18. Commercial status • Sales in Mexico since January 2004 • Sales in Brazil beginning August 2004 • Approval pending in the USA • Registration application made in EU for broilers • Registration in other countries in progress In the warehouse with first shipment of Quantum Phytase:Miloud Araba (Zymetrics),  Ruben Bustos (Zymetrics), Plant Manager for Nutriba (first customer)