SIAL (MM)

Biotechnology giant Sigma-Aldrich Corporation’s (SIAL) biological products and services research unit, Sigma Life Science, has entered into a licensing agreement with Kraig Biocraft Laboratories Inc. to develop genetically modified silkworms for the production of spider silk. Per the agreement, the companies will use Sigma's proprietary CompoZr Zinc Finger Nuclease (ZFN) technology.

This co-operation will ensure speedy and bulk production; in addition, Kraig has also been granted a license by Sigma to use the technology in the textile and biomedical markets.

According to the agreement, Kraig will get the exclusive right to use Sigma’s ZFN technology to target the insertion of spider silk genes into the silkworm genome while removing endogenous silkworm silk genes.  This process will eventually lead to producing silkworms that will be capable of spinning pure spider silk at commercially viable production levels.

Kraig remains confident that Sigma’s technology will enable it to produce customized zinc fingers and the company will be able to target specific gene sequences for the creation of stronger fibers, advanced textiles and new bio-materials.

Further, this technology will also enable Kraig to strengthen its foothold in the bio materials and silk polymers field. The company also has faith in this partnership, which will be reaping the benefits and create synergies.

On the other hand, Sigma also expressed its confidence in the ZFN technology. The technology used for a number of other applications and spider silk production is just the one example of a potential commercial animal application.

In February 2011, the company also came up with its pre-designed ZFN technology to knockout any gene in the human genome. The technology can generate permanent and heritable gene knockouts in human cell lines within weeks.

 In February 2011, Sigma-Aldrich announced its 2010 fourth-quarter earnings of 83 cents, which surpassed both the Zacks Consensus Estimate of 80 cents and prior-year earnings per share (EPS) of 80 cents. The company is slated to release its first quarter earnings on April 26, 2011.

Reported sales in the fourth quarter of 2010 were $582 million, an increase of 2% year over year. Excluding a 1% impact from unfavorable currency rates, fourth-quarter organic sales growth came in at 3%. 

Sigma Life Science is a Sigma-Aldrich business that represents the company's leadership in innovative biological products and services for the global life science market. It offers an array of biologically-rich products and reagents that researchers use in scientific investigation.

Sigma-Aldrich faces stiff competition from Bayer AG (BAYRY) and privately held companies Brenntag AG and VWR International, LLC.

We currently maintain a Zacks #3 Rank (short-term Hold recommendation) on Sigma and a long-term Neutral recommendation.

 
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