NEW YORK (Dow Jones)--Wall Street jumped on Flamel Technologies S.A. (FLMLY) stock Tuesday after the company confirmed it had signed a potentially lucrative agreement with Monsanto Co. (MTC) to upgrade Monsanto's world-renowned Roundup herbicide.

Flamel Technologies' American depositary receipts shot up 46%, following a 29% rise Monday. The ADRs recently changed hands at 4, up 1 1/4, on Nasdaq volume of 93,200, compared with average daily volume of 14,300. Earlier, they traded as high as 4 1/2.

Analyst Laurie Haber of New Vernon Associates, who follows the agrochemical sector, said the Monsanto agreement is a significant conquest for Flamel Technologies.

"Roundup is the largest agrochemical product in the world," said Haber, "This is a huge opportunity for (Flamel)."

Under the pact, Flamel Technologies, based in Lyon, France, will use its Agsome Agrochemical Delivery System technology to upgrade Monsanto's Roundup herbicide. On top of research and development payments as well as milestone fees, Flamel will rake in royalties once the product is developed.

Monsanto reaped about $2.3 billion in revenue from the Roundup herbicide in 1997, according to Haber.

Making the upgrade even more timely and urgent is the countdown to the 2001 expiration date on the Roundup patent in the U.S. Once the patent expires, other companies will be able to make generic versions of the herbicide, cutting into Monsanto's sales and margins.

The aim of the Flamel-Monsanto agreement is to develop an improved, less-costly version of the Roundup herbicide that will allow Monsanto to secure a patent for another 17 to 20 years, said Flamel spokesman George Anania. He described the collaborative agreement, which has been in the works for about 18 months, as Flamel's potentially largest to date.

Anania would not speculate on when the company expects to harvest dollars from the agreement. He attributed Tuesday's stock activity solely to the Monsanto news and said Monday's activity was likely the result of investor buy-backs following year-end tax-loss selling.

1/11/98