June 3, 1999

Nippon Paper Industries Co., Ltd., Licenses
its Innovative Gene Technology to Zeneca

Nippon Paper Industries Co., Ltd.

Nippon Paper Industries (NPI) has concluded a Licensing Agreement for its innovative proprietary gene technology, the Multi-Auto-Transformation Vector (MAT-V) System for molecular plant breeding, with Zeneca, a major British plant biotechnology company.
NPI is aiming to obtain useful genes and advanced fundamental technologies developed by overseas industries for the breeding of tree species by exchanging the System with those overseas companies. On the other hand, Zeneca decided to enter the Agreement after they recognized through their own study that the System would be beneficial and holds promise for practical application.
Recognizing the different aims of the companies, the Agreement specifies the species of plants and territories that are covered by the license. NPI granted Zeneca exclusive rights and sublicensing rights worldwide except in Japan, with the exception of tree species and rice, for which NPI holds the exclusive rights and sublicensing rights worldwide.
NPI will receive an initial licensing fee and additional royalties in proportion to Zeneca's sublicensing performance. Furthermore, NPI has obtained the right to use Zeneca's proprietary gene technologies for the breeding of tree species, without compensation.
Other expected benefits to NPI from the Agreement are:
1) Extension of the MAT-V System: The system is applicable to molecular breeding of various plant species. NPI has been sponsoring the "MAT-Vector Association" in order to expand the System among universities, public institutes and industries worldwide. NPI, however, has decided that licensing out the system to Zeneca as a major global company is the optimal strategy for its quick expansion.
2) Efficient development of the MAT-V System: The MAT-V System is a widely applicable technology, while at the same time, developmental studies are required in certain plant species. In such studies, cooperation with Zeneca provides great benefit in terms of time and cost saving.
3) License fee: With research in biotechnology, especially in the field of plant breeding, the recovery of research investment takes a long period of time. It is NPI's judgment that the Licensing Agreement enables earlier recovery and reinvestment.
NPI recognizes that the present Licensing Agreement shows a path to survival for Japanese industries in the field of plant breeding via biotechnology.
MAT (Multi-Auto-Transformation)-Vector System
Various fundamental technologies regarding gene transformation in plants have been patented by industries in developed countries overseas. MAT-V system was developed by NPI in 1995 as a result of its intensive scientific program to develop proprietary fundamental technology. The system has the following advantages and is expected to be a key technology in molecular plant breeding.
1) Gene transformation in the same plant can be repeated in order to introduce many desired genes.
2) Transformants produced by the system are safer due to exclusion of a marker gene.
3) An increased transformation rate is expected. Transformants can be selected visibly.
Patents for the MAT-V System have been applied for worldwide. Patents have been granted in the U.S. and several other countries.