Mycogen Gets OK to Market Bio-Insecticide : Genetics: EPA action clears way for first in an expected wave of products that will challenge chemical pesticides.

San Diego-based Mycogen Inc. on Thursday became the first company to win U.S. Environmental Protection Agency approval to sell genetically engineered products for use in the eradication of crop pests.

The products are the first of an expected wave of bioengineered products that will begin to challenge chemical-based pesticides, which have long been the pesticide of choice for the world’s farmers.

Mycogen will market its proprietary M-One Plus and MVP products to farmers whose crops are susceptible to certain kinds of beetles and caterpillars. The products do not involve the release of live bacteria into the environment, but rather toxins created by genetically altered bacteria.

The EPA, which recently completed a lengthy review of Mycogen’s products, on Thursday determined that “use . . . according to label directions will pose no danger to public health or to the environment,� said Linda Fisher, the agency’s assistant administrator for pesticides and toxic substances.

Mycogen will “begin selling immediately� to farmers, Mycogen Chairman Jerry Caulder said Thursday. The EPA approval “removes a shackle, it validates our belief that there are now alternatives to chemical pesticides . . . and that we are able to genetically engineer them and clear them� with regulators, he said.

The worldwide market for insecticides, mainly chemically based products, is estimated to be worth $20 billion. U.S. farmers spend an estimated $6 billion each year on insecticides. Mycogen’s two new products will compete with established chemical insecticides in a relatively narrow market niche that Caulder estimated at about $130 million.

With regulatory approvals in hand, Mycogen now must “roll up its sleeves and begin visiting distributors and farmers to show how effective their products are,� said Sano Shimoda, an industry analyst with San Francisco-based Montgomery Securities.

Farmers won’t be easily swayed, however, because “they are very conservative people who won’t make the switch to a new product overnight,� Shimoda said. Mycogen must prove beyond doubt that its products are “more effective than the other (chemical-based) products . . . cost-competitive . . . and that they have environmental pluses, which they do,� Shimoda said.

Mycogen should benefit from growing concern worldwide about the environmental consequences caused by the widespread use of pesticides and insecticides on crops, Shimoda said.

Although other companies, including Abbott Laboratories and Sandoz, have introduced naturally occurring bio-insecticides, Mycogen has gone a step further by genetically engineering faster-growing bacteria.

Mycogen’s pesticides “are important because they are second-generation products that . . . are more effective than the previous generation,� Shimoda said.

The active ingredients in both of Mycogen’s new products are proteins that are produced by Bacillus thuringiensis (B.t.), a naturally occurring bacterium. Mycogen inserts the gene that produces the B.t. toxin into another naturally occurring bacterium.

A mass fermentation process creates a recombinant bacteria that is subsequently killed with a process that stabilizes the microbial cell wall. The process also forms a protective capsule around the insecticidal protein. When applied to crops, the material kills certain leaf-eating insects as they ingest the toxin.

M-One Plus is effective against the Colorado potato beetle, the elm leaf beetle and other beetles that attack eggplant, potatoes, tomatoes and some ornamental trees. MVP Bio-insecticide is approved for use against a variety of caterpillars that attack vegetable, fruit and ornamental crops.

The product introductions won’t create new jobs in San Diego because Mycogen, which concentrates on “inventing new products and getting them to market,� has assigned manufacturing to another company in South Carolina, Caulder said.

Product sales won’t quickly move Mycogen, which has only reported one profitable quarter, into the black financially. The company reported a $4.5-million net loss and $15 million in revenue during 1990.

Mycogen, which had been trading at about $11 a share earlier in the year, was unchanged in over-the-counter trading at $15 on Thursday. The stock had risen in price during the past two months after word that the EPA intended to clear the company’s products for sale soon.

Although Mycogen expects growth in the number of companies offering bioengineered products, its main “competition is with the chemical manufacturers,� Caulder said.