Rural Pharmaceutical Grower, Inc. A prescription for better farm profitability?

A 40-year-old mother of two is on a waiting list for a kidney transplant. Her kidneys have succumbed to the ravages of diabetes - a disease she's fought since she was 12 years old. It's uncertain whether she will receive a transplant in time. Each day, 10 people in the United States die while waiting for an organ for transplantation.

In the next decade, the odds will improve for people like this woman. Advancements in plant and animal biotechnology may make it possible to immunize children from juvenile diabetes via genetically engineered potatoes and may someday result in an alternative supply of organs harvested from genetically engineered pigs for transplantation in humans.

The potential appears unlimited. Farm crops of the future will do more than feed a world population that's expected to double in the next 50 years. Through genetic engineering and the use of crops and animals as molecular bio-factories, it will also improve the health of millions of men, women and children around the globe. These bio-based solutions will not only provide miracle cures but will help prevent diseases and infections from occurring.

It's truly a revolutionary time in agriculture. Some farmers will have opportunities to produce exciting value-added products. The ag, pharmaceutical and food industries must develop new infrastructures to handle these products, which require identity preservation, quality control measures and new processing methods.

Creating organs for transplant. Xenotransplan-tation is the transplantation of animal cells, tissues or organs into humans. Currently more than 60,000 Americans are awaiting a transplant, and 10 of them die each day waiting. Xenotransplan-tation has the potential to provide an alternative source of organs for transplantation. In January, Infigen and Imutran, a wholly owned subsidiary of Novartis Pharma AG, formed a strategic partnership to develop a new line of pigs, through genetic engineering and cloning, with organs that will be more suitable for transplantation. For example, removing or adding genes for specific proteins may enhance the transgenic organ's protection from immune attack or increase its physiological compatibility with humans. According to Dale Schwartz, CEO of Infigen, an immunosuppressant pig whose organs will not be rejected by humans may be developed within the next decade.

Plants as pharmaceutical factories. Pharma-ceuticals are expected to be commercially grown in plants within five years. Several human clinical trials are now underway with pharmaceuticals that were manufactured in genetically engineered plants.

The basic technique involves taking the genes that encode specific proteins and antibodies for human diseases and inserting them into the plant's cells where they are reproduced. Another technique is to insert the desired genes into a plant virus that replicates itself in plants. The plants are harvested, and the desired protein, antibody or chemical is extracted from the plants or, in the case of edible vaccines, is simply harvested and perhaps processed.

Increased safety, reduced production costs and lower capital costs are key reasons for the pharmaceutical industry's interest in using plants as bio-factories. "The ag system is very efficient and scaleable; without significant additional capital expenditures we can significantly increase pharmaceutical production," says Vikram M. Paradkar, scientist with Integrated Protein Technologies (IPT), a division of Monsanto. "Currently antibodies are made in expensive mammalian cell culture systems. Using these antibodies in a wider range of treatment is not cost-effective. That's why we are looking at making them in soybeans and corn. Another important reason for using plants is that plants do not harbor human pathogenic viruses. It's a safer raw material for producing therapeutic proteins than blood plasma or mammalian cell culture." According to Andrew Hiatt, vice president of research for Epicyte, a start-up biotechnology company focused on producing antibodies in plants, the cost to build a fermentation facility is between $200 million and $400 million. Typical production of proteins from animal cells in vitro may only yield 220 lbs./yr. "A few hundred acres of corn could produce 10 times that amount of a specific protein for a fraction of the cost," says Hiatt.

Epicyte is inserting an antibody for herpes simplex virus protection into corn. It hopes to have a commercial product by 2004. The corn acreage required to serve this market of potentially millions of people will be fewer than 1,000 acres.

"There is some discordance between our needs and farmers' desire for large acreage of these crops. There are more than 100 antibodies now in clinical trials, so there are at least 100 opportunities. But it will take years and years before all of these would be manufactured in plants," says Hiatt.

In 1998 IPT conducted human clinical trials on a cancer treatment that it produced in corn. Although high in value, the amount of active ingredient needed to treat the entire patient population is small. "For the whole market we only need probably several hundred pounds. This could be produced on several hundred acres," says Paradkar. "Many of these pharmaceuticals will only require a small-sized farm to serve the whole market."

IPT has also produced an antiviral agent in soybeans that could prevent herpes infections in humans. "The potential for this market is much larger and it will require several thousand acres," Paradkar predicts. IPT is also working on producing blood proteins and drugs for cardiovascular disease in corn and soybeans.

The active ingredient in a pharmaceutical may cost anywhere from $20 per gram to several thousand dollars per gram, depending on the method used to produce it. "A $4,000 per gram cost may be acceptable for a life-saving anticancer drug, but the high cost limits the molecule's use in broader applications such as industrial uses," says Jim Thornton, vice president of agriculture for Demegen. "It's feasible that production costs for these molecules could be lowered eventually to just pennies per gram in plant-based production systems. By reducing the cost of production, you can broaden the potential uses of the material, including reducing medical costs."

Cows as pharmaceutical factories. Advance-ments in animal cloning have created the possibility of simultaneous generation of an entire herd of transgenic cows capable of producing a medicine in their milk on reaching maturity. In January, Pharming Group of the Netherlands announced that it generated the first transgenic female calves via nuclear transfer using technology developed by its partner Infigen. The animals are the first of a herd to be born in the course of this year, which can be used to produce one of Pharming's lead bio-pharmaceuticals. Pharming develops products in the area of tissue and bone repair, rheumatoid arthritis and blood plasma components. The company is working with the American Red Cross to develop therapeutic blood-clotting proteins in plants to treat patients with hemophilia and to control bleeding in surgery and trauma.

To accommodate all of the transgenic calves being born this year, Pharming has begun construction of a state-of-the-art, $2 million farm complex in DeForest, WI. The new facilities, which will house up to 80 animals, are designed to ensure the safe production of bio-pharmaceuticals in the milk of transgenic animals.

The first commercial product produced from these animals could potentially reach the market next year. One cow can produce the same amount of human therapeutic protein as 1,000 rabbits or 300 sheep, according to Dale Schwartz of Infigen. After extraction of the desired proteins, the milk would be discarded. Because of the quality-control measures required and the value of the animals, it's unlikely dairy producers would have one or two of these cows in their normal herd.

"We envision production herds totally devoted to the production of pharmaceutical compounds in the milk. These would be new molecular farms that would operate at high bio-security levels," says Mike Bishop, vice president of research for Infigen. "These will be million-dollar cows, so high levels of management will be required."

What's the market potential? "One of our pharmaceutical products represents a $300 million market annually. It would require 1,000 to 1,500 cows to produce the protein," says Bishop. "Other pharmaceutical products that could be produced in transgenic cows' milk represent markets ranging in size from $500 million to $2.5 billion annually. It's hard to predict how many herds might be needed."

Edible vaccines. Vaccines produced in plants would be cheaper and easier to distribute and administer worldwide. Dwayne Kirk, project manager for edible vaccines with the Boyce Thompson Institute for Plant Research in Ithaca, NY, explains: "Traditional vaccines were derived from live bacteria or viruses which were then inactivated. There is risk of infection, purifying the vaccine is expensive and these vaccines must be refrigerated. Modern vaccine technology has allowed production of component proteins, without the pathogen's complete DNA, removing the risk of infection. To make an edible vaccine we take the gene from the bacterium or virus that encodes for specific proteins and insert those into the plant cells. The plants will produce the protein just as the authentic virus or bacteria will."

Kirk notes several advantages in producing the vaccine in plants:

*Production costs less because there is no need for expensive purification or extraction.

*Contamination risks associated with mammalian cell lines, yeast or bacterial production systems are eliminated.

*The vaccine has a longer shelf life and doesn't need to be refrigerated.

*The vaccine doesn't need to be injected with a needle; it can simply be administered orally.

Boyce Thompson Institute (BTI) published its first human clinical trial for edible vaccines last year. It inserted the gene that codes for the bacterial toxin produced by E. coli into potatoes. E. coli found in contaminated food or water causes diarrhea in humans and is the third biggest killer of people in developing countries. In this human safety trial, volunteers who were fed the raw potatoes expressed specific antibodies against the E. coli toxin.

This year BTI and its licensed partner, Axis Genetics, will conduct human safety trials on two other edible vaccines in potatoes: one for a viral pathogen that causes gastrointestinal infections and another for hepatitis B. There are no oral vaccines currently available for either condition. The first edible vaccines could be commercially available in three to five years, according to Kirk.

Axis Genetics has licensed the edible plant vaccine technology from Mycogen and BTI. It recently signed its first manufacturing agreement with American Ag-Tec International of Delavan, WI, to grow the first transgenic potatoes for development of the oral hepatitis B vaccine. Axis Genetics will also be conducting clinical trials on a cholera vaccine in conjunction with Dr. William Langridge at Loma Linda University Medical Center in California.

Langridge is hopeful that one day an oral vaccine may help eliminate or reduce the effects of juvenile diabetes. As an outgrowth of his work on the cholera vaccine in potatoes, he has created a fusion protein of the cholera vaccine and the human insulin protein in potatoes. In juvenile diabetes, the pancreas doesn't produce enough insulin and the body treats the production of insulin as a foreign substance that must be attacked. Mice genetically predisposed to juvenile diabetes were fed the special fusion potatoes, which helped them to tolerate insulin so their bodies would not send "attack" cells to the pancreatic beta cells that produce insulin. In the 30-week experiment, the mice had a 50% reduction in diabetes symptoms.

Reinventing the wheel. Many in the ag industry are hopeful that farm products tailor-made through biotechnology for specific end uses will shift agriculture from a low-cost, commodity-based business to a high-value, identity-preserved industry. "The formation of a new 'wellness complex' by food, agriculture and pharmaceutical companies adds value and new dimensions to agriculture," says Sano Shimoda, president of BioScience Securities, an ag biotechnology investment banking firm. "It is dramatically expanding the linkage of the farm to a much broader spectrum of value-added growth industries."

The transition will not be an easy one. "The science is running fast and it's credible," says Ed Shonsey, president of Novartis Seeds. "How quickly it's adopted depends on the greater issues of creating a whole new economic infrastructure and dealing with emotional and regulatory issues." He notes that pharmaceutical companies have not been pursuing these solutions, but agribusiness is showing them the viability. "Some pharmaceutical companies may fear that their products will become commoditized in a new plant-based production system, but I contend that the lower cost of production for these drugs will free up dollars for researching new solutions in disease prevention and create more opportunity."

Novartis Pharma AG is investigating using plants as bio-factories for pharmaceuticals in its seven core product areas: dermatology, cardiology, metabolism, endo-crinology, respiration, transplantation and oncology. Most of the products are still in the lab with commercialization of the first products expected in seven to ten years. "Our commitment and intent is to reduce costs and offer more profitability for everyone in the value chain, including farmers," says Shonsey.

To capture that value, farmers need to look at new ways of valuing their contribution, says Scott Mc-Farland of the National Corn Growers Association. "Attribute production should not be priced off the Chicago Board of Trade commodity system. We need to move beyond this lowest common denominator for farmers to win," he says. McFarland notes that in a few short years, "high-oil corn has become a commodity."

He suggests that growers be compensated at a set margin based on the value of the attribute. To do that there needs to be full disclosure by all participants in the value chain so that they can take a reasonable share of the profit based on the value they supply and the risk they assume. McFarland calls this "value transparency."

Shimoda agrees: "The existing structure is obsolete. We will have to create an all-new business model, pricing and value mechanism to allocate portions of value to people in the chain. We also need to reengineer the agribusiness infrastructure from the farm to the consumer. The progress for identity-preserved ag-biotech traits will be bumpy because we are fundamentally reinventing the wheel. New small and medium-size companies will innovate to create the new structures and the existing monsters on the block will change kicking and screaming.

"We are shifting agriculture from a production, cost-driven business to a demand, value-driven business. Farmers will have to share in the wealth based on quality and value, not pure cost of production. Quality out of the farm is going to count."

A handful of Nebraska farmers have tried their hand at new age pharming, producing a high-value medical protein in their corn fields. Although the amount of acreage is small - tens of acres rather than hundreds of acres - they are providing "proof of concept" for companies interested in growing pharmaceuticals in plants.

The farmers are growing corn seed developed by ProdiGene and Stauffer Seeds to produce Avidin, a protein used in human health diagnostic test kits and Gus (B-glucuronidase), a protein used as markers in plant transformation. The scientific community uses markers to indicate the presence of the foreign genes being introduced into the plant. Both products are marketed by Sigma Chemical Company. Currently, Stauffer offers growers a $1/bu. premium for corn containing these products.

"These products represent very small markets by corn farmers' standards but are relevant because they prove corn can efficiently and economically be used as a bio-factory for pharmaceutical and industrial molecules," says Dan Hammes, vice president of sales and marketing for ProdiGene.

According to Tony Laos, president of Stauffer Seeds, within 10 years, 10% of the corn acreage in the United States will be devoted to production of pharmaceutical and industrial proteins contracted through Stauffer Seeds and ProdiGene. "In the next few years there will be tens of thousands of acres devoted to this type of value-added production," says Laos. "We have an agreement with Aurora Co-op which has 16 locations throughout Nebraska to identity preserve grain for us. We're also building a data-base of preferred growers from Minnesota to the high plains of Texas to grow these value-added products for us. Basically, we want them as customers now so we can get to know one another before these products come on line." They look for growers with good records, top management skills and systems for quality control.

ProdiGene is working on producing an oral hepatitis B vaccine in corn, which would require tens of thousands of acres of corn. It's also working on producing Brazzein, a low-calorie natural sweetener, in corn.

The company has put the TGEV antigen into corn and expects to have a commercial corn product available in two years that would immunize swine from transmissible gastroenteritis virus when they eat the corn. ProdiGene is also working on enzymes that can be used in industrial processes. These applications would require a large number of corn acres.