BIOTECH: Tree developer postpones IPO
Paul Voosen, E&E Reporter
The biotech tree developer ArborGen LLC has, at the last minute, postponed its plans to sell shares on the NASDAQ exchange, one of the company's primary investors announced today.
Apparently, the market was not ready to support ArborGen, which has not received regulatory approval to sell its bioengineered trees. However, the three timber giants backing the firm -- International Paper Co., MeadWestvaco Corp. and New Zealand's Rubicon Ltd. -- will continue to support the company, they said, though it has not yet turned a profit.
"All three partners remain committed to the future success of the company," Rubicon said in a release to the New Zealand press. "And an ArborGen IPO will be reconsidered in the future, when market conditions are more favorable."
For years, these massive timber companies have supported ArborGen, based in South Carolina, hoping to mimic for trees the success Monsanto Co. has had with biotech crops. ArborGen has developed several bioengineered eucalyptus trees, including a freeze-tolerant variety for the United States and a fast-growing eucalyptus for Brazil. The firm envisions foresters growing modified eucalyptus on plantations throughout the South, providing biomass for power plants and biofuels (Greenwire, Jan. 29, 2010).
Those dreams, however, have been deferred. Like many clean-tech companies, ArborGen would have been aided by a price on carbon to spur increased U.S. timber demand, which has faltered in the face of foreign competition. Also, tree-derived biofuels have proved tricky to develop, with one past ArborGen collaborator, Range Fuels, shuttering its cellulosic fuel refinery in Georgia this year.
ArborGen has sought approval from the U.S. Agriculture Department to sell its freeze-tolerant eucalyptus since 2008, and earlier this year updated that petition with additional research, the firm disclosed in filings to the Securities and Exchange Commission. The company is also seeking approval to sell its trees in Brazil, which has become more open to biotech crops in recent years.
Currently, ArborGen grows its modified eucalyptus at 28 trial sites totaling 330 acres stretched across seven states from Florida to Texas. Last year, USDA gave ArborGen permission to let the trees reach sexual maturity, causing a storm of protest from environmental groups (Greenwire, May 11, 2010).
Many scientists supported the expanded trial, which will test the viability of a gene inserted into the tree to disrupt its pollen spread (Greenwire, Oct. 7, 2010). The Nature Conservancy, though, was critical of USDA's decision to allow flowering at 10 sites in Florida, where species of eucalyptus like the rose gum are already grown, presenting a crossbreeding risk.
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Questions also remain as to whether modified eucalyptus could pose an invasive threat to the South's existing pinelands. One parent species of ArborGen's eucalyptus has been classified an invasive threat in Florida. The field trials should resolve this question, ArborGen has said.