Talk about nasty reversals of fortune. Only nine months ago, President Clinton pinned the National Medal of Technology on four Monsanto researchers for pioneering bioengineered crops. But recently their two decades of work have been seen as worse than worthless. Spooked by the ruckus about genetically modified, or GM, crops, investors have valued Monsanto's profitable, $5 billion-a-year agricultural-business unit at less than zero dollars during the past few weeks, according to calculations by Salomon Smith Barney analyst James Wilbur.

Now, Monsanto has its troubles--the growing uproar about GM crops threatens to cut demand for bioengineered seeds. But there's much more to the company than besieged seeds. Its popular Roundup herbicide is growing 20% a year in sales volume. Monsanto also owns one of the drug industry's hottest products, the painkiller Celebrex. Wilbur estimates that Monsanto's $4 billion-a-year drug unit is worth as much as $23 billion, based on market caps of pharmaceutical companies with similar sales and earnings. Subtracting that from the company's total market cap of about $22 billion in late January yielded a below-zero value for its ag-biotech group. At presstime, Monsanto's stock had perked up on rising expectations for its drug business--the company's two units increasingly resemble a Porsche pulling a heavy load of compost.

Clouds started gathering over Monsanto 18 months ago when a British researcher claimed on TV that eating genetically modified potatoes could stunt rats' growth. Few scientists found his data compelling; calling his claims "misleading," his own institute suspended him. But the episode riveted public attention on GM crops' potential risks.

The risks loomed larger last spring when a Cornell study showed that lab-fed monarch butterfly caterpillars died after eating pollen from corn bioengineered to make a natural insecticide. Other studies suggested that GM corn poses little risk to caterpillars in the field. But the new data didn't negate the fallout from the Cornell study, which critics played up to support their charges that Monsanto and other seed-sellers had rushed GM crops to market before their ecological risks were well understood.

A number of European supermarket chains soon swore off GM ingredients, as did some major food companies, including Gerber, the baby-food maker, and Kirin, the Japanese brewer. Militant natural foodists destroyed field tests of GM plants, and Brazilian police were given emergency powers to seek out and burn GM crops. By last fall, U.S. food processors were paying premiums for non-GM crops, and, in a momentous shift, food-processing giant Archer Daniels Midland advised its suppliers to segregate GM from non-GM crops.

Last fall Monsanto belatedly tried to disarm critics by pledging to hold a "dialogue" with them and to forgo the use of "terminator" technology--GM crops in which the plants grow up sterile, thwarting black-market sales of harvested seeds. The overtures went nowhere. In mid-December, anti-biotech crusaders struck again by filing a class-action suit against Monsanto on behalf of farmers, alleging it had broken antitrust laws and marketed GM seeds without adequate testing. A few days later, Wall Street fired its own zinger: After Monsanto announced a "merger of equals" pact with Pharmacia & Upjohn, investors pounded down its share price from about $42 to around $36. One theory was that they had hoped a bigger drug concern would buy Monsanto at a premium.

The stock drop also reflected fears that the market for GM seeds may wither after four years of explosive growth. Last year more than a third of the corn grown in the U.S., and almost half the soybeans, were bioengineered to make an insecticide or to withstand weed-killing sprays. Monsanto says surveys show that few of its GM-seed customers plan to revert to non-GM crops this spring. Farmers contacted at random by Fortune generally support that.

But there are signs the GM-seed market could wilt fast. Bob Hendrickson, a grower in Shickley, Neb., says a local seed dealer, scrambling to meet unexpected orders for non-GM soybean seeds, offered him $4.45 a bushel for non-GM soybeans he harvested last fall--a 25-cents-a-bushel premium. Hoping for more, Hendrickson held on to them.

Talk about nasty reversals of fortune. Only nine months ago, President Clinton pinned the National Medal of Technology on four Monsanto researchers for pioneering bioengineered crops. But recently their two decades of work have been seen as worse than worthless. Spooked by the ruckus about genetically modified, or GM, crops, investors have valued Monsanto's profitable, $5 billion-a-year agricultural-business unit at less than zero dollars during the past few weeks, according to calculations by Salomon Smith Barney analyst James Wilbur.

Now, Monsanto has its troubles--the growing uproar about GM crops threatens to cut demand for bioengineered seeds. But there's much more to the company than besieged seeds. Its popular Roundup herbicide is growing 20% a year in sales volume. Monsanto also owns one of the drug industry's hottest products, the painkiller Celebrex. Wilbur estimates that Monsanto's $4 billion-a-year drug unit is worth as much as $23 billion, based on market caps of pharmaceutical companies with similar sales and earnings. Subtracting that from the company's total market cap of about $22 billion in late January yielded a below-zero value for its ag-biotech group. At presstime, Monsanto's stock had perked up on rising expectations for its drug business--the company's two units increasingly resemble a Porsche pulling a heavy load of compost.

Clouds started gathering over Monsanto 18 months ago when a British researcher claimed on TV that eating genetically modified potatoes could stunt rats' growth. Few scientists found his data compelling; calling his claims "misleading," his own institute suspended him. But the episode riveted public attention on GM crops' potential risks.

The risks loomed larger last spring when a Cornell study showed that lab-fed monarch butterfly caterpillars died after eating pollen from corn bioengineered to make a natural insecticide. Other studies suggested that GM corn poses little risk to caterpillars in the field. But the new data didn't negate the fallout from the Cornell study, which critics played up to support their charges that Monsanto and other seed-sellers had rushed GM crops to market before their ecological risks were well understood.

A number of European supermarket chains soon swore off GM ingredients, as did some major food companies, including Gerber, the baby-food maker, and Kirin, the Japanese brewer. Militant natural foodists destroyed field tests of GM plants, and Brazilian police were given emergency powers to seek out and burn GM crops. By last fall, U.S. food processors were paying premiums for non-GM crops, and, in a momentous shift, food-processing giant Archer Daniels Midland advised its suppliers to segregate GM from non-GM crops.

Last fall Monsanto belatedly tried to disarm critics by pledging to hold a "dialogue" with them and to forgo the use of "terminator" technology--GM crops in which the plants grow up sterile, thwarting black-market sales of harvested seeds. The overtures went nowhere. In mid-December, anti-biotech crusaders struck again by filing a class-action suit against Monsanto on behalf of farmers, alleging it had broken antitrust laws and marketed GM seeds without adequate testing. A few days later, Wall Street fired its own zinger: After Monsanto announced a "merger of equals" pact with Pharmacia & Upjohn, investors pounded down its share price from about $42 to around $36. One theory was that they had hoped a bigger drug concern would buy Monsanto at a premium.

The stock drop also reflected fears that the market for GM seeds may wither after four years of explosive growth. Last year more than a third of the corn grown in the U.S., and almost half the soybeans, were bioengineered to make an insecticide or to withstand weed-killing sprays. Monsanto says surveys show that few of its GM-seed customers plan to revert to non-GM crops this spring. Farmers contacted at random by Fortune generally support that.

But there are signs the GM-seed market could wilt fast. Bob Hendrickson, a grower in Shickley, Neb., says a local seed dealer, scrambling to meet unexpected orders for non-GM soybean seeds, offered him $4.45 a bushel for non-GM soybeans he harvested last fall--a 25-cents-a-bushel premium. Hoping for more, Hendrickson held on to them.

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