Bayer Aktiengesellschaft (BAYN) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to Bayer's Crop Science R&D Pipeline Update. [Operator Instructions] I would now like to turn the conference over to Mr. Oliver Maier, Head of Investor Relations of Bayer AG. Please go ahead, sir.

Thank you very much, Emma. Good morning, and welcome to those joining us on the call today. We very much appreciate you joining us. We know it's a busy day today. We are very excited to be with you and share our annual research and development pipeline update for the Bayer Crop Science. As leaders in the space, we look forward to providing this update every year, not only for the benefit of our owners, but to provide transparency on the innovation we are bringing to our growers, customers and other stakeholders. With me on the call today are Liam Condon, the President of Crop Science -- of the Crop Science Divisions; Bob Reiter, who leads R&D for Crop Science and several members of his leadership team, including Mike Graham, Head of Breeding; Jeremy Williams, Head of Plant Biotechnology; Axel Trautwein, Head of Small Molecules; and Sam Eathington, Climate, Chief Science Officer, who many of you also met during our 2019 Crop Science Technology showcase in St. Louis. As always, I would like to start the call today by drawing your attention to the cautionary language that is included in our safe harbor statement as well as in all of the materials that we have distributed today. With that, no further ado, I'll hand it over to you, Liam. The floor is yours.

Thanks, Oliver, and thank you all very much for joining us today. I'd like to start with why we put such an emphasis on research at Bayer. With the challenges we've seen in the last 2 years, it's kind of logical to ask if higher yields and better agronomic performance are really necessary? The short answer is yes. Despite weather, trade and the near-term effects of African swine fever in China, long-term demand for grain continues to grow. At the same time, climate change and finite resources are making it more difficult to meet that demand. Innovation is the answer to bridge these 2 challenges so that agriculture can be part of a sustainable solution. We are acutely focused on anticipating needs and developing the products necessary to provide our planet with healthy food and feed. Now on Slide 5, you can see that our mission is to shape agriculture to benefit farmers, consumers and our planet. And we are uniquely positioned to do this. We've assembled the industry's best ingredients, seeds and traits, crop protection and digital tools to tailor sustainable solutions for our customers' challenges. Many of our competitors have pieces of this, but our leading position in these areas enables a unique combination that no others can claim. On Slide 6, you can see that perspective here is important. We'll spend our time today looking out over what is on the horizon. But it helps to look back to see how far we've actually come. In this image from our Jerseyville research farm, which some of you on the line actually experienced in August last year, you can see the amount of land in each of those strips that it took to grow 10 bushels of corn in that year in the United States. Increasing scientific and technological know-how was continually infused to reduce the amount of land needed to produce the same amount of output. Advances in insect and weed control, genetics, nutrient management, tillage practices and planting density all contributed to driving these productivity gains. And we still see plenty of room for improvement. Technology creates opportunity. These advancements don't just improve productivity, they enable farmers to manage land and resources more effectively. And reducing the amount of land we put into production preserves biodiversity and improves carbon sequestration. This brings us to our sustainability commitments. As the leader in this space, we are unequivocal in our pursuit of setting new standards in sustainability. It is the innovation we will share with you today, that will allow us to meet those goals. Whether it's through digital tools provided by the FarmRise platform, our new higher-yielding Arize rice hybrids to smallholders, our Intacta 2 Xtend soybeans for large-scale growers in Brazil. For each of the products we will highlight today, we've included a sustainability advantage that reflects how closely these commitments and our technology priorities are intertwined. With that, I'll hand it over to Bob.

Thank you, Liam, and a very warm welcome to all of you. I've really been looking forward to today and the opportunity that it affords us to showcase the tremendous contributions and advancements from my team, and I'm so glad you could join us. Realizing the vision Liam highlighted takes responsible investment, and we're a clear front-runner. We're converting EUR 2.3 billion every year into meaningful products that growers around the world are demanding. To put that into some context, it's nearly double the R&D spend of our next closest competitor. And we don't expect that to wane. In fact, we've committed to EUR 25 billion of R&D investment over the next decade. These resources, though, are more than financial. With approximately 7,800 R&D employees in more than 50 countries, we are the partner of choice for new technologies and serve as the technology provider to the industry. And it isn't just about scale, it's about the productivity of that investment and the opportunities it can unlock. This investment manifests itself in 2 ways. On one hand, we pursue incremental improvements that strengthen our position as a leading technology provider in seeds and traits and crop protection. And don't read incremental as any less important than disruptive because farmers count on annual germplasm upgrades for higher-yielding seeds every year. And they seek to protect that yield potential with our latest innovation in biotech traits as well as chemical or biological crop protection, be it a new mode of action or a new formulation. However, the landscape in agriculture is evolving quickly and disruptive opportunities exist. Whether that comes from gene editing, predictive algorithms or new modalities and applications for crop protection. To realize these opportunities, we know that we need to take advantage of the great science that happens inside and outside of Bayer. Our open innovation model is designed to ensure that we have access to the best that science can offer, and we have a broad network that supplements the great work of our discovery teams and the work they're leading. This network, combined with our in-house capabilities, helps us unlock new potential in breeding, biotechnology, small molecule development, biologicals and data science. We have assembled the world's premier innovation platforms in agriculture. Our strength and scale in each of these scientific disciplines gives us a significant competitive advantage in creating the solutions for growers that will meet the challenges they face today and tomorrow. And it all comes down to this, the most productive pipeline in the industry. In 2019, we delivered 55 key products and formulation advancements and commercialized more than 450 new hybrids and varieties across corn, soybeans, cotton and vegetables. This isn't science for the sake of science. These products generate real value. We're expecting nearly EUR 30 billion in non-risk adjusted peak sales for the products we're developing. Corn products and germplasm upgrades account for close to half of that value, with strong representation in the other relevant crops. Roughly half of this peak sales is expected incremental sales and the rest are replacement sales that sustain our base. Let's move beyond the summary, and let's take a look at some of the new products and technologies we'd like to highlight for you today. This slide summarizes the key product launches we expect in the new -- next decade. Including the annual refresh of products from our breeding program and the new formulations of existing actives from our crop protection program. The products featured here are expected to generate more than EUR 22 billion of the total pipeline peak sales of $30 billion and span every reporting segment. The biotech traits shown here create global licensing opportunities and many are the first in the space for the desired characteristic. Whether it's ThryvOn technology for piercing/sucking insects in cotton, next generations of weed or insect control in soybeans, or Short Stature Corn. And each of these new formulations extends the life and value of existing molecules for the benefit of our customers. While each new hybrid provides a yield advantage over the prior generation, we pride ourselves on leading, not on being the, me, too. With that, I'll hand it over to Mike Graham, our global breeding lead, to begin the breeding highlights.

Thanks, Bob, and a very good morning to everyone on the call. One of the largest drivers of value in our pipeline is the annual class of corn hybrids that my global team develops. We've compiled the largest and most diverse collection of germplasm, and with our unique tools, we're able to generate leading hybrids for our customers. This translates into the leading position in 5 of the 6 key core markets, and with the advantage our hybrids deliver as compared to previous generation, we expect to grow that lead. In particular, I'd highlight that in 2019, our leading U.S. corn hybrids continue to deliver the 7 to 10-bushel per acre performance advantage compared to our leading competitors and we saw even wider advantages in Brazil and Argentina. Developing a new commercial hybrid requires years of breeding to advance the best products from 1 generation to the next. Since most of our breeding work is done in open field research farms, any adverse weather event can delay product development. As we know from the difficult growing season in the U.S. last year, weather can be one of the biggest challenges of any work that is done in the field. One way to accelerate development time lines and eliminate weather events is by bringing part of the breeding process indoors. In a greenhouse, we can double the number of breeding generations in a year, accelerating product development. Additionally, doing production in a controlled environment allows us to ensure that our researchers have the required seed on time. Our product design center in Marana, Arizona in the United States will be the first of its kind when it comes online next month. This center fully capitalizes on advancement in proprietary seed chipping, advanced marker technology, automation and data science. Innovations like this are helping our breeding organization move from selecting the best seeds to truly designing the best seeds for our farmers. Another way breeding has the potential to fundamentally change agriculture is with Short Stature Corn, where we have made tremendous progress in the last year. Both the breeding and biotechnology approaches to create Short Stature Corn are advancing from Phase 2 to 3. And I am pleased to announce today that we've developed a third pathway to Short Stature Corn through gene editing, which Jeremy will cover in more detail shortly. We've also just launched a commercial beta for the breeding approach in Mexico under the brand name VITALA, and the broader scale breeding approach in Phase 3 will build on this commercial beta. This aerial shot from the Sinaloa region in Mexico is particularly compelling. The plot in the middle is the VITALA hybrid and there is a clear differentiation between it and the commercial checks on either side. While this is very visually striking, the benefits go beyond just height. We believe this product will transform corn production and the benefits can be summarized in 3 categories: reduced crop loss, more precise use of crop protection and the potential to optimize use of key resources like nitrogen, land and water. First, Short Stature Corn improves plant standability, which reduces greensnap and stalk lodging. These are challenging environmental conditions that contribute to significant crop loss in fact, some experts believe that in the United States alone, annual yield loss due to stalk lodging can range from 5% to 25%. Second, we extend in-season crop access due to the shorter stature of the plant. Rather than having to apply insecticide or fungicide late in the season with an airplane, a ground-based rig can be used more cost effectively. Third, the product has the potential to reduce both land and nutrient requirement for crop production, by enabling increased plant density and allowing late season access for nitrogen application. And with advancements in the 3 approaches we now have, we have increased confidence that the potential fit has grown to more than 220 million acres, opening access to markets in Europe and Asia. With that, I'll hand it over to Jeremy to discuss the progress we are making in gene editing and plant biotechnology.

Thanks, Mike. Gene editing is an area of tremendous promise, and we are best positioned to create value in the space, given that these tools build on our leading genomic libraries and trade platforms. The greatest gene editing capability in the world doesn't mean a lot if you don't already have a leading crop lineup to edit and improve. Two of our most exciting agreements are with the Broad Institute and Pairwise Plants. Broad offers us RNA-guided nucleases, which are basically the cutting technologies of CRISPR-Cas9 and CRISPR-Cpf1. Pairwise Plants offers us access to base editing technology from Harvard, which is the next-generation of editing capability that has the potential to have an enormous impact on the speed and precision with which plant scientists can improve crops. Under the agreement, Pairwise works exclusively with us in corn, soybeans, cotton, wheat and canola. Using these tools, we are starting to see tangible progress. For the first time, we've been able to elicit a short-stature response in corn using only gene editing, as you can see in the photo on this slide. This gives us 3 different approaches to deliver Short Stature Corn, which has the potential to expand the market opportunity. We're also working on other growth and development traits, disease resistance and quality traits. While still early days, gene editing is yet another exciting tool to solve the challenges that growers face. Let's switch to soybeans next and to a product whose commercialization is right around the corner. XtendFlex, the next-generation weed control for soybeans, is advancing to the launch phase and commercial availability will be dependent on regulatory approval timing. This triple stack of glyphosate, dicamba, and glufosinate tolerance is built on the foundation of Roundup Ready 2 Xtend soybeans and has comparable yields. It promises to provide excellent flexibility in weed control, with expectations that the system will control 375 weeds as opposed to 350 for Roundup Ready 2 Xtend and only 260 for Enlist E3 soybeans. Further, with the inclusion of low volatility dicamba in the Roundup Ready Xtend crop system, it is the only weed control system in soybeans to offer 14 days of residual soil activity for the control of weeds not yet emerged at the time of spring. We are expecting the U.S. acres to be limited this spring as is often the case in the first year, but anticipate high demand longer term. Not only did XtendFlex advance this year, but so did our entire herbicide tolerance pipeline in soybeans. Beyond Xtendflex, we have the fourth and fifth generation versions coming in the next decade, and they bring additional herbicide tolerances to provide weed control flexibility. Let's start first with the fourth generation of herbicide tolerance. This project advances to Phase 3, and we are pleased to share for the first time that this will carry the XtendFlex tolerances plus HPPD and 2,4-D tolerance, which we developed in-house. Beyond that, the fifth generation is advancing from Phase 1 to Phase 2. It will offer tolerances to 6 herbicide classes with the addition of PPO herbicides. We are also developing a new herbicide to be used with this trait on a parallel path with Sumitomo. You can see the excellent efficacy of this new herbicide in the photograph on the slide. Technologies like these continue to contribute to our integrated weed management program and this is vitally important for sustained responsible farming. While weed control is critical to growers globally, insect control is also vitally important, particularly in South America. Intacta RR2 PRO soybeans have been widely adopted and we're growing on more than 65 million acres in the 2018-2019 season. This product was a game changer, not only for the direct benefits that the technology provides in terms of yield performance, but also in terms of sustainability. Planting Intacta RR2 PRO soybeans instead of conventional soybeans enables no-till farming and reduces insecticide sprays. This decreases carbon dioxide emissions and water use significantly. This is truly remarkable technology. Intacta 2 Xtend soybeans build on these benefits by providing an additional mode of action for insect control plus dicamba tolerance for weed control. This additional mode of action not only expands the spectrum of insect control, but it enhances resistance management for the primary pest, and we are targeting commercialization next year. Another late-stage project we are excited about will fill an important need in the cotton market. Our ThryvOn technology, a trait for Lygus and Thrip control will be the first ever biotechnology offering for the control of piercing/sucking insects and is expected to launch in 2021. We expect this trait to offer better control and reduce insecticide use with an acre opportunity of more than 10 million acres in the United States. As with nearly all our technologies, we expect to broadly license this trait. These are just a few of the biotechnology projects we're working on, but they illustrate our sustained and unrivaled leadership in this space and will pair nicely with the crop protection solutions we'll share with you next. With that, I'll hand it over to Axel.

Thanks, Jeremy. We continue to make great progress in our small molecule discovery, which allows us to increase the number of development candidates with new modes of action and a higher probability of regulatory success. And this stems from our extensive early safety testing and from the use of differentiating starting points in discovery, which we identified through complementary technologies in biological screening, target-based screening and phenotyping, all of which are fueled by data science driven approaches. Since we established this strategy in 2015, we've seen a doubling of the new small molecule candidates, and I'm excited to share 1 of these with you shortly. Now Bob spoke earlier about the concepts of incremental and disruptive innovation, which is very relevant for small molecules. We have truly disruptive potential in collaborations like Oerth Bio, while having an equal focus on incremental formulation innovation to maintain efficacy and extend the life of our vast portfolio. To illustrate how this works, let's have a look at an example. In this chart, you can see how we rapidly grew fluopyram sales as we expanded its formulations and registrations across crops, spectrum and application methods. This drove an eightfold increase in sales of the molecule since in its initial launch, and we see the potential to double the sales over the next decade. Our technical expertise are high standards for safety and our keen awareness of grower convenience and use preferences has driven our leadership in life cycle management and has defined our approach. Fluopyram is just 1 example of how we sustain our molecules. Another is Fox Xpro, a new soybean fungicide formulation in Brazil that is comprised of 3 active ingredients from 3 different chemical classes. It features excellent control of diseases like Asian Soybean Rust, which can be devastating in soybeans in South America. In fact, Fox Xpro was recently recognized as the Best Formulation Innovation in industry-wide AGROW Awards because of its performance and its ability to minimize environmental impact by reducing off-target losses. We enjoy our leading position in soybean fungicides today and expect that to continue with Fox Xpro, which has the potential to achieve EUR 600 million in annual sales. And coming right behind it in Phase 4 is the next-generation Fox Supra, which includes Indiflin in the formulation. Now let's move beyond formulations to new molecules, which is a particularly exciting area. I'd like to begin with iblon, a novel new fungicide for the use in cereals. It demonstrates the most reliable control of all relevant diseases in wheat, and it exceeded the commercial standards more than 80% of the time. We plan to launch in New Zealand in 2020 and then expand to Europe and several other regions. Overall, we expect the product to deliver peak sales of greater than EUR 400 million. The next product I'd like to share with you is also based on a new molecule and provides us with the opportunity to meet our customers' needs in Asia. With peak sales potential of more than EUR 300 million, tetraniliprole, brand name of which is Vayego, is a new broad-spectrum insecticide that is aimed primarily at our Asia Pacific market, with an initial launch in Korea this past year. As with many of our other actives, we expect the list of geographies it's serving to expand significantly, with up to 17 launches planned in 2020 and 2021. Vayego, or its seed treatment form which is known as Reatis, is quite versatile. It provides broad-spectrum control of caterpillars, certain beetles and sucking pests and can be used in many crops and has several application methods. Now I'll close the crop protection highlights with a molecule that just advanced to Phase 2 of our R&D pipeline, and it is the first new post-emergent mode of action for broad acre weed control in 30 years, which is particularly exciting. It's a very tangible example of our commitment to invest more than EUR 5 billion in new methods of weed control over the next decade. The reason why it's so beneficial is that it offers very effective post-emergence control of tough grasses that have shown resistance to glyphosate. Additionally, our discovery program in biotechnology is focused on developing a herbicide tolerance trait to pair with the molecule, and we already have some approaches under evaluation. With that, I'll turn it over to Sam, our Chief Science Officer at Climate to share some highlights from our digital pipeline.

Well, thanks, Axel. As we start to draw today's update to a close, it's fitting that we end with an update on our Climate FieldView platform because the digital space is where all this technology converges. FieldView offers our customers opportunities for new insights and new ways to optimize our leading portfolio more effectively on farm. Today, FieldView is the clear digital platform leader, with more than 95 million paid acres. We exceeded our paid acre target for 2019, even in the face of significant agronomic challenges in the U.S., and with more than 1 billion acres of potential in crops like wheat, soybeans and corn, we're just scratching the surface. As further endorsement, the number of platform partners is now close to 70, allowing us to bring even more services to our grower customers. This leadership in paid acres represents more than just a statistic. It enables a core competitive advantage. We make it easy for growers to connect their acres and capture data from planters, sprayers and combines. More data translates into better informed models, which leads to improved recommendations for growers. These recommendations improve as we get new data each season. To quantify our pace, the first 10 million connected hours of data took about 32 months to collect. While the second 10 million hours of data took only 9 months, a remarkable acceleration of our new platform. Now let's look at a product that has been enhanced by the data we have been collecting, our Seed Advisor. This tool is designed to help farmers place the right corn seed, in the right field and at the right planting density. We've been testing Seed Advisor for a few years, and our proprietary algorithms utilize data from FieldView, combined with our extensive plant breeding data. In fact, more than 6 million data points from more than 7,700 hybrids have fueled the advisor. What we found through our on-farm testing is that use of the tool is improving corn yields by 6 to 9 bushels per acre across multiple years and locations. For the 2020 season, we intend to increase the use -- increase the acres using Seed Advisor in the U.S. and are planning a beta launch of a similar tool in soybeans, closer to the middle of the decade. Next, I'd like to highlight our advanced Seed Scripting tool, which is already commercial in the U.S. and just advanced to Phase 3 for both Argentina and Europe. This tool provides planting density recommendations and variable rate planning scripts in corn. We've seen a yield benefit of more than 3 bushels per acre from use of the tool in Brazil and have planned a beta launch in Brazil, Argentina and Europe in 2021. These are just a few examples of the more than 35 projects and models under development at Climate today, but they highlight how digital tools can be used in conjunction with the other products in our portfolio to improve their performance. With that, I'll pass it back to Bob to close.

Sam, thank you. And thanks to the entire team. Before we summarize, I wanted to pause and reflect on why our investment in innovation is so important. At the end of the day, it's all about growers and meeting their needs on the farm, all-season long. From the time they plant their seed until they harvest their crop, we are with them every step of the way. We have a long history of converting R&D into viable, value-added solutions for growers that enhance productivity and reduce the use of inputs necessary to produce a crop. You can see that from the leading positions we have established to date and the growth of our pipeline builds on that strong foundation. If we do that, we leave more land to support biodiversity, conserve more carbon and reduce the overall environmental impact of agriculture. Our customers win, the planet wins and we win. We've covered a lot here today, and it's only a fraction of what's to come. Truth is, there are more than 100 projects, thousands of hybrids and varieties and more than 100 formulations in development here at Bayer Crop Science. We don't simply have the largest pipeline in the industry, it's the most productive and comprehensive. Each project has a place and purpose, serving unmet needs and imagining better ways to farm. Our team is hard at work discovering disruptive innovation, improving the products, making a difference today and delivering on our promise to shape the future of agriculture. Thanks for joining us on today's call, and we look forward to sharing more with you in the year ahead. And with that, I'll pass it back to Oliver for Q&A.

Great, thank you very much, Bob. Very much appreciated. Thanks, everybody, actually, for all your comments and remarks. As always, to allow for as many people to ask questions as possible, we ask to limit your questions to 2 per person. And with that, Emma, I think you may open up the lines for questions, please.

[Operator Instructions] The first question comes from the line of Vincent Andrews with Morgan Stanley.

First, a question on the addition of the gene-editing path for Short Stature Corn. One of the talks about gene editing is that it's supposed to be able to move through pipelines faster, both in terms of the science aspect, but also the regulatory aspect. Could you give us a sense of -- at a rough high level, sort of how fast you think that product could move through the pipeline versus the other -- versus the biotech route?

Sure, Vincent. Yes. I -- we do believe that we can move products in gene editing more quickly. Obviously, it will depend on which geography because, of course, if we have to have complete incorporation of other trait packages for the grower, then we're obviously going to have to match against that time line for our trait packages. But in other types of geographies, I do think there's an opportunity to accelerate, depending on what kind of a gene edit we're making. Maybe I can have Jeremy comment a little further on where we're at with our gene-edited version and kind of how we see that.

Yes. Thanks, Bob. So this is -- that's a great question. Although early days, we're really excited by the potential of gene editing to allow us to take this technology into more market segments. To the question you asked, I think one of the advantages we see is a more streamlined and efficient discovery in early development process that we think can take some of the time off the early phases of getting the actual event off to regulatory handoff and then if -- depending on how the regulatory system evolves, one could contemplate a system where perhaps the hurdles are lower in most geographies for gene-edited crops. But as Bob says, this does depend on all of the major regulatory agencies. So it's still early days there. But I'd say overall, we're really excited about the ability to have this technology accelerate, at the very least, the discovery and development phases of advancing something as transformational as Short Stature Corn.

If I could just add a follow-up on XtendFlex soybeans. Just looking at Slide 19 here, where you talk about the increased spectrum of control from 350 to 375 weeds. Just trying to understand the value proposition of XtendFlex versus the basic Xtend, I guess, as well as Enlist. And maybe you could talk about the prevalence of those incremental 25 weeds that you provide in control against in the key geographies as well as what the farmer is spending today, presumably on a crop chemical solution to control those weeds?

Yes, Vince, and maybe I'll start, and then I'll hand it over to Axel, just to kind of talk a little bit from a weed resistance management perspective. But obviously, we see this as a product fit across all of the North American market. And given that, depending on the individual conditions for different growers and also their weed control preferences in terms of how they're using weed control packages, we expect growers to kind of use these various options differently. So the more options by having these 3 modes of action, gives them more flexibility and allows them to do chemistry rotations, other weed management practices to kind of manage resistance. Maybe, Axel, you can comment just real briefly on kind of the advantages of having that extra control over additional weeds.

Yes, exactly, just like Bob said, we're doing this to offer additional solutions and complementary modes of action, which helps growers to have different offers and basically combat weed resistance development. And dicamba offers different opportunities compared to glyphosate because it controls weeds that glyphosate actually does not control. And we actually also -- use this as input for our early discovery process where we regularly monitor field samples and look for mutations in weed species in order to find new modes of action and to complement that offering even further in the future.

The next question comes from the line of Steve Byrne with Bank of America.

I wanted to ask a question about your vegetable seed business, which doesn't seem to get much exposure. You have this expertise in gene editing, one of the other advantages is it avoids the GMO label stigma. Do you have any update on the use of this technology to advance your vegetable seed business?

Well, Steve, we've been obviously looking at gene editing, given the qualitative nature of many of the products and the attributes that you want to bring to vegetable growers. Gene editing is a natural to think about. I think what we're also though looking at is, is the overall regulatory environment right now, particularly in Europe, where we have a very large presence, and the complexity of making gene edits, and then also, at the same time, wanting to see your germplasm flow on a global basis. So we're kind of looking at that balance and trying to make a decision on how that should all kind of pull together. Maybe I'll let Jeremy comment a little bit on kind of where we see sort of gene editing and vegetable stand from a technical perspective and kind of how we can anticipate it.

Yes. So I mean, great question there. There are lots of opportunities. And I think if you think about the complex regulatory situation currently, one area we've been looking at, in particular, is in sort of protective culture, sort of vertical farming types of segments where you might have the ability to keep gene edits out of general commodity flow, and where you can imagine using the technology to do things like improve the ability to work with artificial light, modify architecture. Those are some of the things that you can imagine using to accelerate and complement breeding, particularly for these sorts of high-value segments as the regulatory climate evolves. I mean, the good news is I think we're seeing lots of positive development around the world with respect to how gene editing is likely to be regulated, but there's still some key major geographies that need to have further advances before I think you could fully leverage the technology broadly in open settings. But I think you do have in the nearer term, some of these vertical segments that would be very attractive.

And then I just wanted to ask about your corn Seed Advisor. When you look at that platform going forward, do you see that yield bump that you can provide growers as primarily a mechanism to drive market share gains in your corn seed platform? Or do you see it as a potential revenue generator to share in that revenue gain?

Yes, I'll pass it to Sam, and he could talk in a little bit more detail on your question, Steve.

Yes. Thanks, Steve. Actually, I would say we see it at both ways. One is, if -- obviously, if we can continue to see increased yields of 6 to 9 bushels per acre on our products, that's a great way for us to think about how to optimal place them, which really should help us think about our market share. And of course, we'd still look at mechanisms of how we share in that revenue with our customers. And this year, we had a few pilots out there testing some new business models to look at that. So I think both of them are in play. And today, the digital space is so early, and we're really still figuring out the best way to bring this technology and value to the marketplace.

The next question comes from the line of Tony Jones with Redburn.

Tony Jones, Redburn in London. I've got two. So firstly, the number of pipeline advances looks to be much higher than we've seen from Monsanto and Bayer on a stand-alone basis. And I know that you called out earlier scale in terms of molecule discovery. But is there something else going on? Is it just an innovation cycle effect? Or are we seeing merger benefits starting to come through there? And then secondly, on XtendFlex, any indication of what the price premium will be, maybe '20, '21, '22, above the current market price range for regular Xtend?

So I'll go ahead and I'll take the first piece on the pipeline. If you look at our pipeline numbers, they obviously fluctuate year-to-year because we report out on phase advancements. So as we mentioned, we have a huge number of projects in our portfolio. And so advancements sort of can ebb and flow a little bit. Plus, I think, given the comprehensive nature of our portfolio, given that we're covering such an array compared to our competitors, we have a large number. So what's exciting to me though is, is I think, this year, we've got some really quality advancements on some very key products for the market. And I think that for me is really the highlight for this year. Maybe I'll pass it to Liam on the second question.

Yes. Thanks, Tony. So on pricing, we haven't finalized the pricing yet for Xtendflex coming to market. But you can be assured that we'll be looking for a premium price, of course, for this type of innovation. And I guess, you can take a hint from what we've already seen from the cotton market, where we've had, I think, an outstanding success with Xtendflex in cotton.

Ms. Hancock, your line's open.

My question was regarding Nemastrike. We understand that you announced to customers this year that you would not be offering this technology in 2020. We just wondered if you had any update for us on that, on what you would do going forward?