DISCOVERY TO COMMERICIALIZATION
Robert A. Curtis
Cape Aquaculture Technologies, Inc
New Seabury, MA 02649
rcurtis@capecod.net
INTRODUCTION
Biotechnology has proven to be a powerful tool in advancing our understanding of the cellular mechanisms of life. Its value to society is evidenced by the vast ongoing investments being made in research and infrastructure by government agencies such as the National Institutes of Health, National Science Foundation, Department of Defense, Department of Commerce and the United States Department of Agriculture (USDA), as well as by public equity/venture capital investment in the 1,300+ U.S.-based biotechnology companies. The major share of those companies are pursuing human treatments and diagnostics, with a much smaller percentage directed toward agribiotech, as these extremely powerful tools have been exploited in the human pharmaceutical market for the past 20 years but have only recently begun to be applied to agricultural industries, including aquaculture.
Currently, biotechnology-based aquaculture products fall within four major categories:
- Vaccines: Biotechnology already has contributed to the development of vaccines against enteric redmouth disease, vibriosis and furunculosis in finfish, and gaffkemia in lobsters. In addition to reducing the use of antibiotics, these new vaccines have had a major impact on the survival of salmonids during net pen culture. As aquaculture expands, the need for biotechnology-vaccines to address infectious diseases in finfish and shellfish will increase.
- Diagnostics: The application of biotechnology to disease diagnostics has led to the development of highly sensitive diagnostic procedures based upon fluorescent antibodies, enzyme-linked immunoassays, and the polymerase chain reaction (PCR). Combining these sophisticated tests with traditional diagnostic techniques provides powerful tools for controlling disease outbreaks in aquacultured species. Improved technologies must be developed for detecting and diagnosing pathogens and diseases and for enhancing the genetic basis of disease resistance, thereby reducing the need for antibiotics and other drugs.
- Hormones: Recombinant DNA technologies have provided an array of potentially useful preparations for aquaculture. Carp pituitary extracts, semi-purified and purified hormonal preparations, and synthetic peptides and their analogs play an important role in the aquaculture industry. The use of hormones to control and induce spawning and ensure an uninterrupted supply of eggs and fry has become routine. More recent innovations in the application of hormones to aquaculture include teleost sex control (reversal) measures, thereby supplying so-called "monosex" lines; and development of agents for smolt-enhancement, growth acceleration, and enhanced feed conversion efficiency.
- Transgenic Fish: Fish farming is the world's fastest-growing sector of agricultural business, and consumer demand for fish products is increasing. Aquaculture contributes more than 30 million tons of fish and shellfish annually to the world food supply. Advancing the application of molecular biology and genetic engineering techniques in aquaculture promises significant benefits to both producers and consumers of aquacultural products through improvements in growth rates, food conversion, disease resistance, and product quality and composition; as well as conservation of wild species and genetic resources, and development of important new models for biomedical research.
The focus of this discussion is how biotechnology will influence the development of new products in the field of aquaculture and to present a business model designed to economically and efficiently identify, develop, and commercialize new aquaculture products based on promising research discoveries and the application of enabling technologies.
COMMERCIAL IMPLICATIONS
The global aquaculture industry in 1998 represented a $52.5 billion market (FAO 2001). The potential commercial impact of applying biotechnology to this field is difficult to overstate. Biotechnology offers significant promise for developing technologies that address the major research and commercialization challenges confronting the industry, including:
- development of genetically improved stocks
- enhanced seed quality and availability
- improved survival rates
- enhanced growth rates
- development of better feeds
- health and disease management
- water-quality and waste management
- guarantee consistent and high quality supply of seafood
Advances resulting from biotechnology-based aquaculture initiatives have the potential to significantly improve the industrys economics and profitability as well as make important global contributions by:
- securing a preeminent U.S. position in the global aquaculture market
- reversing the overwhelming trade deficit and dependence on imported seafood in the U.S. ($7+ billion trade deficit in fisheries products, with almost 75% imported from overseas markets)
- catalyzing economic growth
- creating new opportunities and technologies for U.S. agriculture
- curbing further depletion of ocean resources
- providing environmentally sustainable food production methods
- ensuring an adequate supply of seafood and protein for a growing global population
- have a positive impact on the environment by making alternative land-based systems economically feasible
RESEARCH DRIVES BIOTECHNOLOGY ADVANCES
To be commercially viable in the U.S., the aquaculture industry is becoming increasingly technology-intensive. Advancing the industry requires access to practical, commercially oriented research that continues to broaden the technology and knowledge base of the sector. Most of the knowledge and technological innovation necessary to advance the aquaculture industry emerge from universities, supported by federal research grants.
Because of their position at the frontier of creativity-driven discovery, researchers from universities and federal laboratories have long been an enticing potential source of new biological targets that may influence a physiological function that is key to improving the production efficiency of the animal. The goal of most research universities, however, is to understand the molecular basis of the biology in the aquatic species of interest. Even in a relatively applied discipline such as aquaculture, commercialization of an end product has not been the focus of academic research.
Regardless of how exciting, well funded, or promising their research programs may be, universities generally do not generate commercial products because they lack the discovery resources and expertise required to move fundamental discoveries along the product development pathway in a rigorous commercial manner. As a consequence university discoveries tend to be early-stage, biology-driven targets that prove a scientific principle, but remain below a critical hurdle to attract the nascent and very limited industry-based aquaculture research to invest in the further development and commercially test and market a product.
The potential for research universities and human-focused biotechnology companies to serve as a generator of new targets and/or chemical tools for commercial development is astounding. A growing number of universities with aquaculture research programs are increasingly focusing on applying the tools of biotechnology to discover novel biochemical targets as a source of new products for the industry. Nevertheless, universities encounter several barriers to commercializing their technologies: 1. Knowledge- (as Opposed to Market-) Driven Research
The historical focus of universities has been to conduct research for its own sakei.e., research that has no requirements for commercial application but is designed and supported to advance basic knowledge. A deeper understanding of commercial values and procedures is required before application of most university research will become practical.
2. Noncommercial Focus (Mechanism vs. Target)
As a corollary to the foregoing, most university research focuses on mechanisms of biological activity rather than on targets for agrichemical or pharmaceutical intervention. Thus, there is a need for additional guidance to funnel basic research discoveries of universities toward the pragmatic endpoints needed by the industry.
3. Lack of Fundamental Discovery Tools
Many university-based aquaculture researchers lack leading-edge discovery technologies and enabling tools available in other disciplines such as combinatorial chemistry, high-throughput screening, and complex bioinformatics to identify novel new compounds to interact with newly discovered biological targets. These tools are necessary to generate compounds, which are pursued when a significant level of commercial value has been obtained. Thus, many university researchers are not technically equipped to enhance the value of the biological targets they discover.
4. Limited Funding
Government grants such as those made by the USDA, NOAA and its Sea Grant College Program traditionally have supported research in pursuit of fundamental discovery and knowledge advancement or to improve existing production systems through engineering developments or the selection/creation of new strains by conventional breeding programs. In many cases funding frequently halts before a true commercial opportunity develops, at which point academic researchers may be forced either to abandon their investigation or to identify additional research funding from other sources, which may include commercial entities. The Small Business Innovation Research program (SBIR) does support commercialization, but the number of grants available are limited. CAPE AQUACULTURE TECHNOLOGIES, INC.
A Pioneering Approach to Nurturing and Commercializing
New Aquaculture Technologies
Cape Aquaculture Technologies (CAT) has developed a novel business model to identify and develop early technology and to commercialize the resulting products. Our model is applicable to the five major product types for biotechnology-based aquaculture products previously mentioned. In addition, CAT is focused on applying its model to a relatively unexplored frontier of biotechnology application in aquaculturethe identification of novel targets for chemical or pharmaceutical intervention.
The recent series of dramatic scientific breakthroughs in cloning, genetic modification, and gene transfer, initiated by the cloning of Dolly the sheep, has generated a general public perception that the application of biotechnology to livestock and animal species is focused exclusively on genetic modification of the animal. In contrast, in the human health realm, while these same technologies are currently being applied to eliminate disease, the application of biotechnology is more heavily oriented toward elucidating the cellular and molecular mechanisms of the organism of interest. This knowledge of cell physiology, molecular biology, and proteomics is used to identify suitable biochemical targets that in themselves may be products, e.g.erythropoetin or EPO, or that may be modulated through novel substances that may be biological in origin or produced with traditional chemical (pharmaceutical) technologies. A major focus area of CAT is the application of biotechnology to develop small molecule commercial products for aquaculture.
The CAT Approach
Venture capitalists, stock market investors, and major pharmaceutical and agricultural companies have invested billions of dollars in biotechnology companies over the past 20 years. Much of this investment has been applied to "reinvent the wheel". In the conventional biotechnology company model, before investors and their companies can determine the potential value of a new discovery program, a substantial (>$10 million) investment in infrastructuremanagement, facilities, enabling discovery technologies such as combinatorial chemistry, high-throughput screening, and scientific staffmust be made. This extensive, expensive infrastructure has been established for each of hundreds of start-up companies that are focused on discovering and developing a commercial pharmaceutical product whose likelihood of success is less than 10%.
For biotechnology companies based on the conventional model, the inefficiency of redundant infrastructure and the high risk of failure have made commercial success elusive. In fact, very few that were formed around a single target or a limited number of targets have been successful. The high cost of discovery and development and attendant high risk of failure require that todays start-up biotechnology companies have a reasonable number of product opportunities in their pipelines to compensate for failures.
The CAT model takes a different approach and involves identifying and supporting a number of scientifically diverse projects focused on key commercial aspects of aquaculture that eventually will be aggressively pursued for commercial development. Using small-molecule product development as an example, the CAT model encompasses four stages: Stage 1. CAT identifies and licenses a new technology or discovery for potential development from universities, biotechnology companies, research institutes and federal laboratories.
Stage 2. CAT applies its internal research resources or provides access to core discovery technologies through existing companies that work on a project basis. These technologies include protein and peptide synthesis, molecular modeling, combinatorial chemistry, or high-throughput screening to advance the project to the point at which a lead proprietary compound, with backups, is identified.
Stage 3. CAT undertakes pilot-scale testing in the aquatic species of interest.
Stage 4. CAT sublicenses the project to a major agriculture/aquaculture company for later-stage development and commercialization or enters into a joint venture with the company or spins off a new startup. CATs model is designed to maximize the upside of an investment in resources by leveraging its core technologies over multiple opportunities, cutting its losses on projects that do not achieve predetermined milestones, and concentrating efforts and resources on those that prove most commercially promising.
Discovery Technologies
Combinatorial and Medicinal Chemistry
Key enabling technologies for identifying novel compounds parallels those used in pharmaceutical development, including combinatorial chemistry and lead compound optimization. These services are available through several contract sources, thereby eliminating the need for CAT to invest in the substantial resources (>$10 million) required to establish proprietary combinatorial chemistry. Reasonable financial options are available with these vendors, including direct compound purchase, fee-for-service chemistry, and revenue sharing.
High-Throughput Screening/Field Testing
CAT will establish core capabilities in high-throughput screening and pharmacological testing at its own facilities or in partnership with a university with a species-specific interest. Alternatively, several excellent external vendors offer these services on a contractual basis.
Maximizing Research Investment by Minimizing Infrastructure
The CAT model significantly reduces investment in R&D infrastructure and technologies which can rapidly change and quickly become outdated. This allows for the companys working capital to be focused on R&D and value creation.
Terminated Projects
As part of the development process, CAT assigns project teams to establish precise discovery and developmental milestones for each project. Projects failing to achieve reasonable milestones are terminated, with attendant resources redeployed to more promising programs. This approach significantly improves upon the traditional biotechnology model, in which the company forms around a single technology or product target and offers no option for redeployment in the face of a declining probability of success.
COMMERCIALIZATION PATHWAYS
CAT has three major revenue-generating models for finalizing development and commercializing products:
REQUIREMENTS FOR INDUSTRY EXPANSION
As has been the case in the human biopharmaceutical industry, the growth and international competitiveness of the U.S. aquaculture industry will be determined by the size of the resource investment in research and technology development. In addition to developing improved business models for developing and commercializing new products, attracting and expanding private equity investment into the emerging technology-based aquaculture industry will depend on:
- Federal support of basic research at universities and federal laboratories. The Federal role is to provide leadership in supporting research to advance knowledge in important research areas and to facilitate the transfer of promising results and technologies to the private sector. Research in aquaculture biotechnology is limited and detailed scientific knowledge about aquatic organisms is meager compared with other agricultural sectors. Development of this knowledge is a particular challenge due to the diversity of cultured aquatic species and the systems for their production. Federal support for long-term fundamental research, therefore, will continue to be critical to the industrys development.
- Federal support of industry innovation through SBIR grants and government-private sector alliances designed to advance large projects.
- Clear-cut safety and regulatory guidelines that protect the environment and human health and provide a sound science and technology base for innovation. Further research is required to determine potential environmental impacts, research on risk assessment, analysis and management methodologies, and research on physical and biological containment techniques. Such applied research would lead to more effective regulations and increase public confidence, which is necessary prior to commercialization. In addition, the government has a responsibility to ensure the public has access to credible information on the benefits and risks of biotechnology products as well as the related policy decisions.
- Enhanced regulatory infrastructure As the aquaculture biotechnology sector grows, the number of products for which regulatory approval is sought will increase. So, too, will the demands on the regulating agencies. To remain effective and maintain public confidence, federal regulatory departments must ensure that they have enough skilled professionals and regulatory resources.
- Public acceptance Public confidence in the safety of biotechnology products will determine the future of aquatic biotechnology. This issue is increasingly important in aquaculture and will become even more so with the application of biotechnology to aquaculture. For fish, the environmentally safe commercialization of transgenic broodstock is the most significant biotechnology public issue.
- Improved statistical data on the sector, required to support effective economic analyses and development of policies conducive to growth of the industry.
SUMMARY OF RECOMMENDATIONS
Short-Term
Organize discussions between federal agencies and the entrepreneurial private equity investment sector to increase awareness, identify commercial opportunities and provide guidance on regulatory issues.
Increase number and size of grants focusing on commercialization of biotechnology in aquaculture.
Mid-Term
Encourage exploration of existing genomic databases for appropriate biochemical targets in aquaculture
Support international use of products derived from U.S. biotechnology.
Long-Term
Increase support for long-term basic and applied research at universities, federal laboratories and research institutes.