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Origin Agritech Limited (NASDAQ: SEED) is China’s leading agricultural biotechnology company, specializing in crop seed breeding and genetic improvement. Leading the development of crop seed biotechnologies, Origin Agritech’s phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China’s Ministry of Agriculture.
On March 1st, 2018, a new CEO was installed at SEED and the company has refocused itself by incorporating the blockchain into its existing seed business. The new CEO is Dr. James Chen. Dr. Chen said, “I believe Origin can not only provide biotechnology to the farmers in China or globally, the joint development program between Origin and Elastos also has the potential to provide e-commerce solutions, allow seed providers and farmers to track original source of the seed product, and more comprehensive needs of Chinese farmers.”
Dr. Chen has identified three areas of development for SEED:
E-commerce development for the vast farmland in China. With the new blockchain technologies, there is a potential that the detail original source of seed products can be tracked and documented. This could resolve the intellectual property pirating problems the Chinese farmers and seed providers face over the years.
Foundation corn seed technology business development. Origin has been working on the development of germplasm and hybrid corn seed varieties. The company has built a large collection of diverse corn seed germplasm, which they believe is the largest among the Chinese corn seed companies.
Further development of their biotech and genome editing seed technologies. While they are waiting for the final commercialization approval from the Chinese government, they cooperate with government agencies in implementing the previously announced commercialization plan for GM corn seed technologies outlined in the 13th Five-Year Plan, which ends in 2020. Their technology platform established for biotech development, including DNA and protein engineering, efficient commercial scale plant transformation and versatile trait-efficacy testing capabilities, can be seamlessly utilized for genome editing,
Recent Events
March 16, 2018. Dr. James Chen, the Chief Executive Officer of Origin Agritech, presented the Company’s strategy for SEED+ Rural E-Commerce with Blockchain Technologies at the “Elastos x BITMAIN Meetup: Blockchain for Scaling Large, Enterprise DApps” on March 15, 2018. https://finance.yahoo.com/news/origin-presented-strategies-seed-rural-120000963.html
March 8, 2018. Origin Agritech announced the newly appointed Chief Executive Officer Dr. Z. James Chen has set and discussed new strategic directions for the Company. With the new blockchain technologies, there is a potential that the detail original source of seed products can be tracked and documented. This could resolve the intellectual property pirating problems the Chinese farmers and seed providers face over the years. https://finance.yahoo.com/news/origin-sets-strategic-directions-153700325.html
February 16, 2018. SEED announced the Board of Directors has appointed Dr. Z. James Chen to be the Chief Executive Officer effective on March 1, 2018. Dr. James Chen served as Origin’s CFO from 2012 to 2016 and was appointed a director of Origin on August 30, 2017. https://finance.yahoo.com/news/origin-agritech-appoints-james-chen-130000063.html
Products
Since SEED is a domestic Chinese company, they can proceed through all five phases of the GM approval in China. They have already had several products submitted to testing in phases two through four, and one product has completed the five-step process. They are the first company to obtain a safety certificate for GM corn seeds in China.
About
Origin Agritech Limited, founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, is China’s leading agricultural biotechnology company, specializing in crop seed breeding and genetic improvement. Leading the development of crop seed biotechnologies, Origin Agritech’s phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China’s Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits. Origin operates breeding stations nationwide located in key crop-planting regions. Product lines are vertically integrated for corn.
Financial review
Origin Agritech has a FYE of September 30th.
For the fiscal year ended September 30, 2017, no revenue was recorded from continuing operations.
Operating expenses from continuing operation for the fiscal year ended September 30, 2017 were RMB68.6million (US$10.3 million), representing an increase of 5.8% from RMB64.8 million in the fiscal year 2016. General and administrative expenses for the fiscal year ended September 30, 2017 were RMB34.9million (US$5.3 million), an increase of 9.8% from RMB31.8 million year-over-year.
Net loss from continuing operation for the fiscal year ended September 30, 2017 was RMB76.1 million (US$11.5 million), remained stable to compared with operating loss of RMB71.9 million in fiscal year 2016.
Net loss from discontinued operations for the fiscal year ended September 30, 2017 was RMB30.1 million (US$4.5 million), compared to net loss of RMB5.0 million in fiscal year 2016.
Net loss attributable to Origin for the fiscal year ended September 30, 2017 was RMB75.7million (US$11.4 million) compared to the net loss of RMB65.6 million for the fiscal year ended September 30, 2016.
Net loss per share was RMB (3.24) or US$(0.49) for the fiscal year 2017, compared with net loss per share of RMB (2.87) in fiscal year 2016.
As of September 30, 2017, and 2016, they had approximately RMB3.2 million (US$0.5 million) and RMB3.6 million, respectively, in cash and cash equivalents of continuing operations.
Stock influences and risk factors
The development and commercialization of their biotech pipeline of products will be important for their growth;
The potential uncertainty in the government regulation in China of genetic technology and genetically modified, or GM, agricultural products and the acceptance of these products by the public could have an adverse effect on the business;
They face significant international competition in the GM seed market and the competition may affect our overall sales;
Their licensors may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses.
Stock chart
On Friday, March 16, 2018, SEED shares were at $1.20 (+20%) on traded volume of 13.6 million shares.
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