BIOPLAN POSTING 2001-5-13

David.Duthie@unep.org
Sent by: owner-bioplan@undp.org
05/07/01 03:10 PM
 

bioplan
David.Duthie@unep.org
Dear BIOPLANNERS,

Here is an interesting view of the commercial side of bioprospecting.

Best wishes
 

David Duthie

**********************************************************************************
Molecular Sex for Fun and Profit
May, 2001
Latin Trade

Diversa corp. had one of biotech's most spectacular IPOs last year. The San
Diego company's share price tripled on the very first day of trading, then
doubled again over the next two weeks. The stock has since slipped but
Diversa, which prospects for genetic raw material in Latin America, remains
one of the leading DE?or directed evolution?companies.

A new and exciting?if financially risky?area of biotech, directed evolution
goes a step beyond celebrated genomics companies like Celera, Incyte and
Millennium by altering natural DNA and creating novel gene products it is
hoped will improve on what nature created slowly and randomly over 3
billion years.

Diversa specializes in a technique known as gene shuffling. During sexual
reproduction genes naturally recombine, producing obvious physical traits
such as eye and hair color and more subtle differences, the genetic origin
of which we are only beginning to understand. Diversa's scientists broaden,
systematize and accelerate the process, breaking apart genes then mixing
the fragments with parts of equivalent genes taken from different
organisms, a process known as molecular sex. Diversa then tests the hybrid
genes to see if they work better than the original ones. "Their
technologies are very promising in digging out the hidden gene treasures,"
says University of Illinois chemical engineering professor Huimin Zhao.
"The commercial potential for Diversa's technology is huge."

Diversa thus creates powerful new enzymes, biological catalysts that can
accelerate otherwise random chemical reactions a billionfold. Such enzymes
are used in everything from chemical manufacturing to food processing to
new pesticides and herbicides. Diversa already licenses heat-tolerant
enzymes that improve oil and gas recovery from deep wells by keeping
drilling fluids flowing and more products are on the way.

The company is also inventing drugs. "We really believe in the combination
of discovery and evolution as the best path to reaching the best products,"
says Monica Sullivan, Diversa's manager of licensing and technology
transfer.

Other biotech companies, notably Maxygen, in Redwood City, California,
perform gene shuffling and related techniques. But only Diversa
goes out into the world seeking entirely new microorganisms for its DNA.
The ability to access nature's tremendous biodiversity gives Diversa a "big
advantage" over Maxygen, says Jeff Moore, a senior research biochemical
engineer at Merck Research Laboratories in Rahway, New Jersey. Maxygen's
strength is in the technology of directed evolution science, not in genetic
diversity, Moore says. "Gene shuffling relies quite heavily on the
diversity of the genetic information that's input into that process ?
That's the heart and soul of [Diversa's] strength."

Diversa has bio-prospecting agreements in place in six countries. It has
found new "thermophile" microbes in the hot springs of Yellowstone and
collected bacteria from a whale carcass in the Pacific Ocean. According to
Diversa CEO Jay Short, only about 10,000 microbial species have been
catalogued, but the company's growing DNA libraries now contain genes from
nearly 2 million different strains of microorganisms. Many are from extreme
environments, and Diversa expects their genes to yield super-tough new
biological products that only nature could invent.

Gutsy research. In Latin America, Diversa has ongoing bio-prospecting
programs in Costa Rica with the Institute of Biodiversity (INBio) and in
Mexico with the Universidad Nacional Autónoma de México; it is negotiating
agreements in Panama and Brazil. In Costa Rica, Diversa's INBio
collaborators collect organisms from thermal spots like hot springs, mud
pots and steam vents. And, says Leif Christoffersen, diversity coordinator
for Diversa, "they're looking at insects that eat strange things like toxic
plants," says. The insect guts are extracted in order to find organisms
that help the insects neutralize toxic chemicals. Soil samples are another
rich source of biodiversity. In every case, Diversa extracts DNA from the
raw biological sample, clones it, then runs the DNA products through a
battery of tests. The best ones are improved through gene shuffling or
other techniques.

But Moore cautions that gene shuffling and other such methods are not yet
fully accepted by drug companies, which are Diversa's most important
customers, because they're accustomed to using traditional chemistry for
making drugs. "The industry as a whole is adopting a 'wait and see'
attitude," he says. Although Moore believes that deliberately evolved
enzymes will eventually play a major role in the synthesis of new drugs,
that hasn't happened yet. "DE is a powerful [but] largely potential tool,"
he says.

Diversa is not yet profitable. Although company revenues increased from
US$2 million in 1999 to about $24 million in 2000, overall losses are
growing, too, as R&D expenses mount. Although Diversa has deals with
Aventis, Introgen, Syngenta, Celera and Dow Chemical, it must find other
partners. Despite talks between Diversa and Merck, "we have not been able
to come to an arrangement that's comfortable between both parties," says
Moore.

So far, so good. While genetically engineered drugs and industrial products
haven't generated the same controversy as genetically modified foods, gene
shuffling might raise a red flag for consumer groups. "Some of our products
are genetically engineered," notes Diversa's stock prospectus. "If we are
not able to overcome the ethical, legal and social concerns relating to
genetic engineering, our products may not be accepted."

Consumer distrust of biotechnology, for now, seems limited to genetically
altered crops. Despite the recent ruckus over modified corn in taco shells
in the United States, genetically altered biological drugs, as well as
genetically modified enzymes used in the industrial synthesis of drugs,
have been on the market since the early '80s with almost no controversy.
People seem happy to take genetically engineered hormones, for example, but
get nervous about eating a genetically altered potato chip.

Whatever obstacles might be ahead, Diversa stands out among the new wave of
directed evolution companies as "the major player in cataloguing,
understanding and actually having the diversity," in Moore's words. The
next few years will reveal whether gene shuffling's potential can be
translated into concrete commercial reality.

Author: Ken Garber ? San Diego, California

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