Gene Boutiques Stake Claim to Human Genome

Updates on Pyrethrum, Species Patents, and Neem; Crucible Report: People, Plants, and Patents

ISSUE: Despite international controversy over the patenting of human genes and other life forms, US-based genomic companies (in partnership with major pharmaceutical corporations), are filing patents for exclusive monopoly control on human genes and gene fragments.

IMPACT: The commercial potential of genomic technologies is still untested and unproved. But the commodification of human genetic material raises many profound questions: Who will control the genes and genetic information that may someday unlock secrets to genetic diagnosis and treatment of human diseases? Will the patent grab on human genes ultimately thwart innovation as well as information exchange between public and private sector researchers, and between North and South? Who will benefit, and at what cost to society?

PARTICIPANTS: See RAFI's survey of genomic companies (page 4-6). Transnational pharmaceutical investors include, SmithKline Beecham, Hoffmann-LaRoche, Eli Lilly, Ciba-Geigy and more.


The January/February issue of RAFI CommuniquÈ examined the patenting of human genetic material, and the international controversy over the US government's patent applications on the human cell lines of indigenous peoples. In this issue, RAFI takes a look at the astonishing growth of new companies, popularly known as the gene boutiques," that are devoted to identification, characterization and commercialization of human genes and their products. U.S.-based genomic companies are applying for patents covering thousands of human gene sequences. (1) Despite unresolved controversies over life patenting, commercial exploitation of human genes and other human genetic material is proceeding at a frantic pace.

What is a "genomic" company?

The field of genomics refers to the discovery, analysis and commercial development of genetic information. Many companies believe that information flowing from the discovery of human genes and their protein products will revolutionize pharmaceutical drug development, provide a new set of drug discovery tools, and novel therapies for treating human diseases.

How do the efforts of Genomic Companies differ from the government-funded Human Genome Project?

The Human Genome Organization was launched in 1988 as a 15-year, $3 billion international collaborative effort to map the entire human genome--the 100,000 genes and 3 billion chemical compounds that form the complete genetic instructions for a human being.

For the most part, new genomic companies are not concerned with the location and analysis of all human DNA. Genomic companies limit their search to relatively small chromosomal regions that contain genes of suspected medical or biological importance--functional DNA. Many companies use proprietary, highly-automated computer methods for collecting, analyzing and storing DNA sequence information.

What is Gene Sequencing?

Information in DNA is encoded in the form of four nucleotides designated A,C, G, T. The order of the nucleotides, is called the DNA sequence of the gene, and it determines the order of the amino acids that make up the protein product of the gene. The DNA sequence of a gene accurately predicts the amino acid sequence of the protein.(2) Genomic companies hope to use gene sequencing to ultimately discover and understand the so-called "disease-causing" genes, and to develop diagnostic and treatment products.

New genomic companies vary greatly in their precise strategies for gene discovery, but most specialize in gene mapping, DNA sequencing, and bioinformatics (computational molecular biology). Although most of the genomic companies have yet to market a single product, they are filing patent claims on genes and gene fragments, as well as related genomic technologies at a feverish pace. In recent months, transnational pharmaceutical companies and venture capitalists have made major investments in new genomic companies.

According to industry analysts, "...genomics has caught the attention of the traditional pharmaceutical industry to a greater extent than any other early-stage technology in the biotechnology industry's history. Companies are vying to stake out patent-protected territory in what they believe will be the therapeutic battlefield of the 21st Century: the human genome."(3)

"Companies are vying to stake out patent-protected territory in what they believe will be the therapeutic battlefield of the 21st Century: the human genome."

U.S. National Institutes of Health Reverses Policy on Patenting of Human DNA

In February, Harold Varmus, Director of the US government's National Institutes of Health (NIH, Bethesda, MD) announced that the NIH was dropping all efforts to patent human gene seqments. "I do not believe that patenting at this stage promotes technology development, and it may impede important research collaborations here and internationally," explained Varmus.(4)

International controversy over the patenting of human gene sequences erupted after NIH researchers, Dr. Craig Venter and colleagues, filed for patents on nearly 7,000 partial DNA sequences for human genes during 1991 and 1992. The patent claims were ultimately rejected by the US Patent and Trademark Office (PTO) for failing to meet standard patent criteria--they were not useful, not new, and were too obvious. While the US patent office has granted previous patents for human genes whose full sequences and functions are known, the NIH applications were especially controversial because they covered only partially characterized genes where no biological function was known.

A New Era in Private-Sector Human DNA Research and Patenting

Despite the NIH policy to abandon patenting of human gene sequences, a new era of human DNA research and patenting is expanding at a frantic pace--this time in the private sector. The conspicuous departure of leading public researchers to private genomic companies gives new meaning to the term "brain drain." Dr. Craig Venter, for example, left the NIH genome initiative to head-up a genomic company that is hoping to exploit technologies related to the human genome project. Last year, David Galas, head of the US Dept. of Energy's human genome initiative, left his government post to join another recently-founded genomic company, Darwin Molecular Genetics.

In 1993, Venter became a multi-millionaire as part-owner of Human Genome Sciences, Inc.(5) Together, Human Genome Sciences Inc. and its non-profit partner, The Institute for Genomic Research (headed by Venter), operate 80 automated DNA sequencers that have obtained partial sequences of more than 200,000 human cDNAs. The company claims that more than 45,000 of these represent novel human sequences.(6) As of April 1, 1994 Human Genome Sciences had filed 25 patent applications with the US PTO covering both partial and full gene sequences. According to the company's annual report, "HGS will continue to pursue applications based on partial gene sequences where HGS believes that such applications meet the requisite standards for patentability.(7) In addition, HGS has exclusive, worldwide, royalty-free rights to all intellectual property produced by its non-profit partner, The Institute for Genomic Research.

Human Genetic Sciences Inc. and other gene sequencing companies claim that the US Patent and Trademark Office's earlier ruling (rejection) on human DNA patents is "far from definitive" and several companies are filing patent claims on human DNA that far exceed the NIH applications.(8) Randy Scott, vice president of research and development at Incyte Pharmaceuticals, a California-based genomic company, told Bio/Technology magazine that "the NIH decision has no impact on us...We've already filed claims for 40,000 cDNA templates, which is far beyond what the NIH did, and we want to protect all our sequences as far as possible."(9)

In recent months, millions of dollars have flowed into new genomic companies that are in the business of discovering and privatizing bits and pieces of the human genome. Recent investments in fledgling genomic companies by pharmaceutical corporations and venture capitalists far exceed the $165 million a year in US govt. funding for the human genome project. For example:

* SmithKline Beecham (USA) signed a deal with Human Genome Sciences, Inc. in May, 1993 worth (US) $125 million. SmithKline will get first right to develop and market drugs, vaccines and diagnostic products and services based on human gene sequence data discovered by Human Genome Sciences.

* Hoffmann-LaRoche (Switzerland) entered into a 5-yr. collaboration with Millenium Pharmaceuticals, Inc. in March, 1994 worth (US) $70 million. Under terms of the agreement, Hoffman-LaRoche will get exclusive worldwide rights to therapeutic applications of data gathered by using Millenium's proprietary genomics technologies for obesity and Type II diabetes.

* In May, 1994, William H. Gates and Paul G. Allen, billionaire co-founders of Microsoft Corporation, invested (US) $10 million in Darwin Molecular Technologies, Inc.

The gene boutiques are tantalizing investments for major pharmaceutical corporations because they want exclusive access to newly discovered genes and genetic information. As one industry analyst puts it: "The fear among the big pharmaceutical companies is that they could be shut out of the market of the future if they don't get proprietary ownership of the right set of genes," explains Alan Walton of Oxford Biosciences, one of the venture capital firms backing Human Genome Sciences Inc.(10)

"The fear among the big pharmaceutical companies is that they could be shut out of the market of the future if they don't get proprietary ownership of the right set of genes."

It is important to point out that the commercial potential of genomic technologies is still untested and unproved. Skeptics note that the link between the discovery of a single gene and disease treatment is relevant in very few cases. The majority of diseases are believed to be vastly more complex--influenced by the interaction of multiple genes.

The Bottom Line

Monopoly control over human genes is a dangerous and disturbing trend. Patent offices, governments and corporations are making vital decisions about who owns life with little public awareness or debate on the enormous social, ethical and economic implications of the privatization of genetic information and life itself. New developments in life patenting underscore the need for international protocols to protect the rights of human subjects from patent claims and unjust commercial exploitation. While the potential for discovering and using new genomic technologies for curing and treating human disease is enormously compelling and exciting, exclusive monopoly control of genes and gene products may ultimately thwart innovation and exchange of information, and increase costs of drugs and health care.

The Gene Boutiques:

RAFI's Survey of Some of the Leading Companies Staking Claim to the Human Genome(10)

HUMAN GENOME SCIENCES, INC.(founded July, 1992) Rockville, MD (USA)97 employees

Strategy: HGS, Inc. operates the largest gene discovery facility in the world. The company seeks to discover and obtain proprietary rights to a substantial portfolio of novel genes and to commercialize products based on those genes either alone or with corporate partners. HGS, Inc. has exclusive rights to patent applications filed by its non-profit partner, The Institute for Genomic Research. As of April 1, 1994, HGS had filed 25 patent applications with the US Patent and Trademark Office.

Agreements: Exclusive worldwide licensing agreement with SmithKline Beecham worth $125 million over three years. Genentech has option to license the heart-lung specific DNase gene discovered by HGS and its non-profit affiliate, the Institute for Genomic Research (see below). John Hopkins Univ. School of Medicine has joint venture to investigate colon cancer genes discovered by HGS, but HGS retains exclusive rights to any new discoveries."

THE INSTITUTE FOR GENOMIC RESEARCH (TIGR) (founded July, 1992) Gaithersburg, MD (USA) 55 employees

Strategy: A non-profit research organization founded by Dr. J. Craig Venter (formerly of US National Institutes of Health) with an $85 million, ten-year grant from Human Genome Sciences, Inc. TIGR is devoted to accelerating the understanding of human evolution by the sequencing, mapping and functional characterization of human, animal and plant genomes. The Institute operates 30 automated DNA sequencers.

Agreements: Human Genome Sciences, Inc. has exclusive rights to commercialize the discoveries of the Institute for Genomic Research.

COLLABORATIVE RESEARCH INC. founded in 1961-- (proposed name change to Genome Therapeutics Corporation as of 25 May 1994) Waltham, MA (USA) 72 employees

Strategy: Genome Therapeutics Corp. is active in both gene sequencing and mapping, with a focus in two areas: infectious diseases and therapeutic targets in the central nervous system, primarily manic depression and schizophrenia. The company will aggressively seek pharmaceutical alliances to translate the discoveries of the Human Genome Project into significant commercial breakthroughs in commercial medicine.

Agreements: The company has been supported by the US government-sponsored Human Genome Project, with over $16 million in genome-based contracts and grants awarded to CRI since 1991. The company secured an exclusive license from Harvard Medical School for commercial applications of Harvard's sequencing technology. Also initiated collaborations with Abbott Laboratories and Immuno-Cor.


Strategy: Applies large-scale computer aided gene sequencing to the discovery of new biopharmaceuticals, with emphasis on the development of biotherapeutics for inflammatory and degenerative disorders. The company is attempting to build an enormous patent portfolio, and has already filed patent claims for 40,000 cDNA templates.

Agreements: Ciba-Geigy; Genentech (60% owned by Hoffmann-La Roche); The Mayo Foundation.

MYRIAD GENETICS, INC. (founded in 1991) Salt Lake City, UT (USA) 45 employees

Strategy: Discovery and commercialization of genes linked to major disorders such as cancer and heart disease. The company provides testing and genetic information services based on genes that predispose individuals to common diseases. In April, 1994 Myriad scientists reported the discovery of a tumor suppressor gene that appears to be involved in the formation of many, if not all, cancer types. Myriad has filed for patents on the gene, which it has dubbed multiple tumor suppressor 1, or MTS1. According to the Wall St. Journal (4/14/94) the company "hopes to own or license the rights to develop the discovery into new ways to diagnose and treat cancers of the brain, breast, lung, skin and other major forms of the disease."

Agreements: Privately-held, Myriad has raised $11.3 million from investors and through a strategic alliance with Eli Lilly & Co.

MILLENIUM PHARMACEUTICALS, INC. (founded January, 1993) Cambridge, MA (USA)

Agreements: Under terms of 5-yr. agreement worth $70 million, Hoffmann La-Roche will get exclusive worldwide rights to small molecule therapeutic applications of data gathered by using Millenium's proprietary genomics technologies for obesity and Type II diabetes.


Strategy: Biopharmaceutical company formed to rapidly convert DNA sequence information embedded in the human genome into novel therapeutics for cancer, AIDS and autoimmune disease. The company's vice-president for R&D, David Galas, is former head of the U.S. Department of Energy's human genome project.

Agreements: The company received start-up funding of (US) $3 million from two of its founders and biotech company veterans, George Rathmann (founder of Amgen and current CEO of ICOS) and Ronald Cape (former CEO of Cetus Corp.) In March, 1994 William H. Gates and Paul G. Allen, co-founders of Microsoft Corp. invested $10 million in Darwin.


Dutch Government Releases Study on In Vitro Production of Pyrethrins

In June, 1992 RAFI released a CommuniquÈ entitled, "Genetic Engineering of Pyrethrins: Early Warning for East African Pyrethrum Farmers," that reported on the efforts of US-based AgriDyne Technologies Inc. to produce pyrethrins in the laboratory. RAFI warned that, if commercially successful, biosynthetic production of pyrethrins could seriously erode or eliminate the export earnings of major pyrethrum producers such as Kenya and Tanzania, affecting the livelihoods of hundreds of thousands of small farmers who cultivate pyrethrum flowers.

Does biosynthetic production of pyrethrins pose a serious threat to East African farmers and developing country export earnings? A new report prepared by a researcher at Wageningen Agricultural University for the Dutch government attempts to answer that question. "Pyrethrins and production by in vitro systems" reports on state-of-the-art of cell/tissue culture technology. It discusses both biological and technological obstacles to the industrial exploitation of pyrethrum cultures, concluding that, "With the present-day state-of-the-art it is unrealistic to expect industrial production of pyrethrins by plant organ cultures in the near future."(11)

But the report also examines the prospects for alternative bio-production systems, including bioconversion of pyrethrins by genetically engineered micro-organisms. It finds that technological feasibility is still uncertain, but notes that AgriDyne Technologies, Inc. has made first steps in this field (see below). "At present, it is impossible to predict if this technology will be commercial, but bioconversions with plant enzymes seem to offer a good potential for biotechnological production of pyrethrins."(12)

"At present, it is impossible to predict if this technology will be commercial, but bioconversions with plant enzymes seem to offer a good potential for biotechnological production of pyrethrins."

US-based Biotechnology Company Announces Breakthrough in Pyrethrum Research

In February 1994, just one month after the release of the Dutch government's report, AgriDyne Technologies Inc. (Salt Lake City, Utah, USA) announced that it has taken the first step toward establishing a stable, domestic (i.e. US) source of the natural insecticide, pyrethrum. Agridyne researchers have cloned the gene for chrysanthemol diphosphate synthase (CDS), the key insecticidal enzyme from the pyrethrum chrysanthemum plant, and inserted it into bacteria. Agridyne has filed for US and foreign patents on the gene, and expects to seek additional protection as the research proceeds.(13)

Calgene's High-Laurate Canola Yields New Source of Lauric Oil

Calgene's genetically engineered high-laurate canola (edible rapeseed) may soon capture a share of the lauric oils market, displacing exports of tropical lauric oil from Southeast Asia valued at more than (US) $350 million per annum. Laurate is a medium chain fatty acid that is a primary ingredient in the manufacture of many soap, detergent, oleochemical and personal care products. Currently, commercial sources of laurate are limited to coconut and palm kernel oils, which are imported into the US primarily from Southeast Asia. Calgene is a US-based plant biotechnology firm (Davis, California) that specializes in fresh tomato, cotton seed and specialty industrial and edible oils.

In late March, Calgene received a US patent for the expression of the laurate synthesis gene in genetically engineered plant oils. Patent No. 5,298,421 covers the thioesterase gene from bay trees. The expression of this gene in rapeseed and other temperate oilseed crops yields high levels of laurate.

Imports of tropical oils containing laurate exceeded 1.2 billion lbs. in 1992, valued at over $350 million. Experts at the World Conference on Lauric Oils held in Manila in February 1994 predicted that the demand for lauric oil will increase in emerging markets such as China and Eastern Europe. Calgene is confident that its high-laurate rapeseed will capture a share of the existing market because the performance of detergents and other products containing laurate cannot be duplicated with other plant fatty acids from commonly available oils such as corn or soybean, nor can such crops be modified to produce laurate by conventional plant breeding.(14)

Calgene is now entering its fourth year of field tests for its genetically engineered rapeseed that yields over 40% laurate. Field tests are underway in the US, Canada and Europe. Calgene recently submitted a petition to the US Department of Agriculture seeking approval for commercial sale of its genetically engineered laurate canola. If approval is granted, Calgene expects to commercialize its first LAURICAL product in 1995/96.

According to Andrew Baum, President of Calgene's Oil Division, "Our Laurical line of high lauric rapeseed oil products will be the first in a series of value added proprietary plant oils that we will produce and supply to the edible and industrial markets."(15)

In addition to Calgene's new patent covering oil plants genetically engineered to produce laurate, the company holds a broad patent (US Patent No. 5,188,958) covering the genetic engineering of Brassica cells using the Agrobacterium transformation method.16 Brassica is the plant genus that includes rapeseed, broccoli, cauliflower, cabbage and brussels sprout.

Calgene has a rapidly expanding portfolio of patents for oil biosynthesis genes. In addition to laurate synthesis, the company has European and US patents pending on plant desaturase, synthase, and reductase oil biosynthesis genes.


Work Begins on Tissue Culture Production of Tropical Neem in the Laboratory

Species of neem trees grow in more than 50 countries throughout Asia and Africa, where local people have used parts of the tree for centuries for its medicinal and pesticidal properties. In India, leaves, bark and oil of the neem tree have dozens of traditional uses, but neither traditional methods of extraction nor modern processes developed by Indian scientists are protected by national or international patent laws.17 In the US, meanwhile, neem seeds and their potent insecticidal extract, azadirachtin, are the subject of continuing biotech research and biopiracy claims:

Agridyne Technologies Inc. (Salt Lake City, Utah, USA) has received a (US) $63,000 grant from the US National Science Foundation to investigate the production of azadirachtin from tissue cultured cells of the tropical neem tree as an alternative to extracting the insecticidal compound from neem seeds.

The grant will be used for a 6-month validation study. If successful, a larger two-year study will be conducted. Successful cellular production of biologically active neem compounds would lessen dependency on seasonal availability of neem seeds from developing countries, according to AgriDyne.(18)

According to AgriDyne, "This effort will compliment the company's continued expansion of its production of neem extract in India and its efforts to develop other sources of neem extract from countries outside of India where neem trees flourish."(19)

Other Neem Developments

In related news, AgriDyne has received two US patents for bioprocessing of neem for bioinsecticidal products. The first patent is for a refining process that removes fungal contaminants found in extracts from the neem seed. The process is used in the manufacture of technical-grade azadirachtin, which is used in the production of AgriDyne's neem-based bioinsecticides. The second patent is for a method of producing stable insecticide formulations containing high concentrations of azadirachtin.

W.R. Grace expands its line of neem-based biopesticides with the introduction of Neemix for use on food crops. Neemix suppresses insect feeding bahaviour and growth in more than 200 species of insects.(20)


W.R. Grace Claims on Cotton and Soybean

RAFI has learned that W.R. Grace's (Agracetus, Inc.) US patent covering all genetically engineered cotton varieties is being challenged by an unknown party. No further details have been disclosed by the US Patent and Trademark Office.

FROM INDIA: Despite numerous published sources reporting that the Indian government revoked the W.R. Grace species-wide patent on transgenic cotton in February 1994, Dr. A.T. Dudani of Society for Citizen Concerns in New Delhi reports that the cotton patent has not been officially revoked as of May 2, 1994. According to Dr. Dudani, the Indian Minister of Commerce indicates that the matter is still under examination."

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