Plant-Made Pharmaceuticals (PMPs) Financial Risk Profile
Bill Freese, Research Analyst, Friends of the Earth
Richard Caplan, Food Safety Advocate, U.S. Public Interest Research Group
While the biopharmaceutical industry as a whole has had some limited success, attempts to employ genetically engineered plants as a production platform for "plant-made pharmaceuticals" (PMPs) have completely foundered despite 15 years' of field trials and huge infusions of capital.
Companies have failed to bring even one PMP through the FDA's approval process due to technical difficulties unique to the plant-based system -immunological issues, problematic extraction of the drug from plant tissue, and inconsistency in drug quality and yield in differing environments.
The $500 billion food industry has lobbied against the use of food crops for PMP production, fearing contamination of the food supply. Food companies and federal regulators insist on a "zero tolerance" standard with respect to contamination that scientists agree is impossible to achieve on a commercial scale. Without tolerances, outdoor PMP producers face extraordinary liability for contamination at all levels of the food chain.
Food industry pressure has also resulted in stricter, more costly government regulation. USDA imposed a costly settlement on industry leader ProdiGene, Inc. for violations that led to two high-profile contamination incidents involving the company's pharmaceutical-producing corn.
Insurers are increasingly leery of insuring agricultural biotech as a whole; they will be even less likely to provide coverage for PMP producers.
Four major biotech companies are leery of PMPs. Industry leader Monsanto (MON) closed its PMP subsidiary Integrated Protein Technologies in October 2003. Novartis Pharma, the world's largest maker of biopharmaceuticals, is skeptical of the GE plant platform and recently committed $6 billion to further development of traditional fermentation systems.
Smaller players that concentrate on PMP production are going bankrupt (CropTech) or performing poorly (Large Scale Biology (LSBC)). Epicyte Pharmaceutical, a leader in pharm corn development, was taken over by Biolex in April 2004; Biolex utilizes the small aquatic plant duckweed to make biopharmaceuticals in contained and controlled bioprocessing facilities.
Two National Academy of Sciences' committees have criticized use of food crops for PMP production due to concerns that PMP contamination of foods could pose health risks.
Farming and public interest groups increasingly oppose open-air biopharming. Farmer-led opposition killed field trials of pharma corn in Colorado in 2003 (Meristem Therapeutics) and pharma rice in California (2004) and Missouri (2005) (Ventria Bioscience).
Contained and controlled alternatives to the open-air cultivation of drug-producing plants are gaining favor as opposition to biopharming grows.
||No. of Permits
||Corn, soybeans; 44 permits
||shut down PMP operations in 2003
||Corn; 27 permits
||none since 2002
||Rice, barley; 14 permits
|Large Scale Biology
||GE tobacco virus to produce drug in tobacco
||Tobacco; 7 permits
Number of permits for field trials of pharma & industrial Companies that have conducted the most outdoor crops (1991 - 2005) pharma & industrial crop field tests (1991-2005)
Biopharmaceuticals are proteins generated in living organisms that have medicinal properties. They were once obtained exclusively from animal or human tissues, such as insulin from pig pancreas or albumin from human blood. Although over 99% of biopharmaceuticals by weight are still obtained in this way from tissues, there is a growing trend to produce biopharmaceuticals in fermentation facilities employing genetically engineered (GE) animal cells, bacteria, yeast or fungi. With over 132 GE products, the global market in biopharmaceuticals was valued at $32 billion in 2003, with a high, though declining, growth rate.
Genetically engineered (GE) plants represent an experimental platform for production of these compounds (i.e. "plant-made pharmaceuticals," or PMPs). Factors driving the use of GE plants include anticipated reduction in production costs, ease of scalability, and storage cost savings vis-à-vis proven fermentation techniques. However, despite 15 years of open-air field experimentation and huge investments of time, money and scientific expertise, not a single PMP has passed FDA's drug review process. PMPs are failing for numerous reasons, including technical difficulties, food industry opposition, increasingly stringent and costly regulation, untenable liability, opposition from farming and consumer groups, and growing interest in alternate production platforms.
Interest in PMPs on decline
Experimental PMPs are grown primarily in GE corn, soybeans, tobacco and rice; outdoor plantings require permits from the USDA. According to USDA records, the number of authorizations issued for field trials of crops producing pharmaceutical and related compounds has fallen from a peak of 19 in 2001 to 7 in 2004 and 2005 (see graph). While corn represents 48% of all pharma crop permits historically, pharma corn permits have fallen from a peak of 13 in 2001 to just one in 2004 and 2005. Half of the field trials in 2004 and 2005 involved pharma tobacco. This move away from corn to non-food tobacco reflects concern over contamination of food with PMPs.
It has proven much more difficult than once imagined to produce human and animal biopharmaceuticals in GE plants. The human immune system can react to a plant-made "human" drug as foreign due to subtle differences in structure between the natural and plant-made versions of the "same" compound. Immune system attack can render the drug ineffective, trigger allergic reactions or even cause auto-immune disorders. Another difficulty is extraction of the PMP from thousands of plant constituents without damaging it. Finally, the technique is plagued with inconsistency in drug yields and quality in plants with different genetic backgrounds, and in identical plants grown in different environments. For instance, inconsistency in plant-to-plant vaccine levels has undermined hopes of delivering "edible vaccines" in raw fruit or vegetable form.
Food industry has "zero tolerance" FOR PMPs in food
Another important reason for declining interest in PMPs is the strong opposition of the $500 billion food industry due to concerns about liability arising from contamination of the food supply with drugs. Geneticists and agronomists believe such contamination is inevitable at commercial scale - especially with corn, a prolific pollinator that is also the favorite PMP host plant. Thus, some have called for establishment of tolerances (i.e. maximum permissible levels) to legalize PMP contaminants in food. Yet the USDA and FDA maintain a zero tolerance standard for PMPs. And the food industry, normally supportive of liability-easing tolerances, has unequivocally opposed tolerances for PMPs, no doubt fearful of consumer and export market backlash upon discovery of even low "legal" levels of drugs in the food supply. Food company attitudes towards PMPs are shaped profoundly by the StarLink GE corn debacle, which cost them millions of dollars through food recalls, in part because the EPA held firm to a zero tolerance standard for transgenic residues of StarLink in food. With both the food industry and the government dead set against tolerances, open-air PMP production in food crops involves huge, and ultimately untenable, exposure to liability for PMP companies as well as farmers, millers, food companies, etc. Former Kraft Foods CEO Betsy Holden singled out the issue of PMP contamination of foods as a threat to her company and the food industry as a whole. In 2005, Anheuser-Busch threatened to end all purchases of Missouri rice if Ventria Bioscience went forward with plans to grow its pharma rice in rice-growing southeastern Missouri. The proposed planting, which was also opposed by Missouri rice growers, never took place.
Food industry drives stricter, more costly, regulation
In the fall of 2002, two high-profile contamination episodes catapulted "biopharming" onto CBS Evening News (11/13/02). The culprit was ProdiGene, Inc., a privately-held Texas firm that was once the leader in development of corn-based PMPs. One incident involved the USDA-mandated destruction of 500,000 bushels of contaminated soybeans in Nebraska and $3.5 million in liability for ProdiGene. In a similar incident in Iowa, USDA ordered the destruction of 155 acres of field corn potentially contaminated with ProdiGene's pharm variety via cross-pollination. Food companies and consumer groups outraged by these episodes lobbied the USDA for stricter regulation of PMP field trials, which came in early 2003 in the form of greater isolation distances, dedicated harvesting equipment and more inspections. Later in 2003, the USDA acknowledged 113 other violations by GE plant field trial operators, raising serious questions about the biotech industry's ability and/or willingness to prevent contamination.
PMP production may be uninsurable
As part of the settlement imposed on ProdiGene for these violations, USDA is requiring the company to post a $1 million bond before any more field trials to cover damages from any future contamination episode. The North American Millers' Association demands that all PMP producers be required to obtain insurance coverage to indemnify everyone downstream in the food chain. But would insurers provide such coverage? According to Robert Hartwig, chief economist for the Insurance Information Institute: "Genetically engineered foods are among the riskiest of all possible insurance exposures that we have today." The amount of coverage available to biotech firms in general has declined in recent years, perhaps in part due to a $110 million settlement reimbursing non-StarLink growers for economic losses due to the StarLink corn contamination debacle. If insurance companies are increasingly leery of insuring even garden-variety GE crops, then their disinclination to cover companies whose operations threaten to put drugs and industrial chemicals in the food supply will be still greater.
Big players leery of PMPs
Swiss-based Novartis Pharma, the global leader in biopharmaceuticals, is skeptical of the GE plant platform and recently committed $6 billion to further development of conventional fermentation systems. Ag biotech industry leader Monsanto (MON) announced closure of its biopharm subsidiary, Integrated Protein Technologies (IPT), in October 2003 due to "uncertainty of the longer-term reward from a highly capital-intensive business." DuPont (DD) and its subsidiary Pioneer currently have an internal policy to forego PMP development. According to USDA data, neither Bayer CropScience (BAY) nor Syngenta (SYT) has conducted a single outdoor field trial of a drug-producing plant, though both companies have entered into joint ventures with biopharm dot.coms. Their strategy seems to be to avoid the financial risk associated with contamination episodes while at the same time keeping some irons in the fire. Of the five largest ag biotech companies, only Dow Chemical (DOW) is pursuing PMPs, but by its own admission is having considerable technical difficulties with its plant-made monoclonal antibodies.
Biopharm dot.coms not delivering
Efforts to develop PMPs are led by small firms such as ProdiGene, Epicyte, CropTech, Large Scale Biology and Ventria Bioscience. Despite $6 million in subsidies from an Iowa state economic development fund, ProdiGene has delivered nothing to Iowa's economy, and in fact was nearly sued by the Iowa Attorney General's office for defrauding farmers with its "get rich quick with pharm crops" ploy. ProdiGene, unable to pay USDA-imposed penalties (see above), was saved from bankruptcy through a no-interest loan from USDA and a buyout by Stine Seed Company.
In 2004, San Diego-based Epicyte Pharmaceutical, another pharma corn leader, shut down and sold its assets to Biolex of North Carolina. Epicyte's closure is the latest in a series of San Diego biotech company failures, dashing the city's dream of becoming the 'Silicon Valley of ag biotech.' Epicyte's collapse was due to technical difficulties in development of monoclonal antibodies and concern in the investment community about liability should the company's pharmaceuticals contaminate the food supply. Significantly, Epicyte's purchaser Biolex produces monoclonal antibodies "in regulatory-compliant, contained and controlled bioprocessing facilities" utilizing the aquatic plant duckweed.
CropTech was a privately-held Virginia company once considered the leader in development of PMPs in tobacco. In the ten years of CropTech's existence, it received over $12 million in state and federal subsidies. After failing to raise $6 million from struggling VA tobacco growers to stay afloat, the company sought financing from North and South Carolina, but filed for bankruptcy before it could take advantage of South Carolina's incentive package.
California-based Large Scale Biology (LSBC) conducted the first outdoor field trial of a pharmaceutical-producing plant (viral-vectored tobacco) in 1991. Fourteen years later, it has still not commercialized a single PMP. After going public at over $20/share in mid-2000, the company's share price has fallen steadily, ranging from $0.70-$2.50 in 2004 and from $0.25-$1.50 in 2005. LSBC had an operating loss of over $17 million in 2004, and has been rated a strong sell throughout 4Q 2005.
As of December 2005, Ventria Bioscience's planned move from California to Missouri is stalled. MO state legislators are balking at a ballooning subsidy package demanded by Ventria as a condition for it to set up shop at Northwest Missouri State University. Originally asked to provide $10 million, MO officials are now being asked to pony up $23 million in subsidies for the project, which includes a PMP education facility.
AG groups divided on PMPs
While some agribusiness groups like the National Corn Growers Association support PMPs, farmer organizations like the American Corn Growers Association and National Family Farm Coalition are firmly opposed due to concern over liability to farmers from contamination. The Rocky Mountain Farmers Union (RMFU), Western Colorado Congress and 40 other rural & environmental groups have called for a moratorium on outdoor PMP experimentation, and were instrumental in stopping a proposed 2003 trial of pharma corn by Meristem Therapeutics. Farmer-led opposition in California and Missouri stopped proposed field trials of pharmaceutical rice by Ventria Bioscience in both states in 2004 and 2005, respectively. The opposition in Missouri included two major rice producer trade groups, USA Rice Federation and US Rice Producers Association. The flax industry is fighting attempts by a startup called Agragen to develop pharmaceutical flax due to contamination concerns.
Scientific and public interest groups opposed to PMPs
Two committees of the National Academy of Sciences have warned of the potential for contamination of food crops with PMP traits, and associated human health risks. The editors of Nature Biotechnology, the industry's leading journal, recently issued a scathing critique of PMP production in food crops, comparing it to a drug company "packaging its pills in candy wrappers or flour bags or storing its compounds or production batches untended outside the perimeter fence." A growing list of environmental, consumer protection and public interest science organizations are also opposed to open-air PMP production, especially in food crops. These include Friends of the Earth, Consumers Union, U.S. Public Interest Research Group and Physicians for Social Responsibility of Oregon, among others.
Alternate production platforms
In 2003, the Scripps Institute announced promising results from engineering algae to produce a range of biopharmaceuticals. Applied Phytologics (now Ventria Bioscience) has produced an experimental biopharmaceutical to treat cystic fibrosis in a contained fermentation system based on rice cell culture. Another promising experimental technique is rhizosecretion (engineering plants to secrete biopharmaceuticals from their roots) conducted hydroponically.
The $32 billion biopharmaceutical industry is based on proven fermentation systems employing various types of cell cultures. While this technique involves large capital start-up costs, it offers three crucial advantages over the experimental GE plant platform. It works, while GE plants have not. GE drug traits are contained, with virtually no possibility of contaminating the food supply, while 100% containment is impossible with GE plants. And precise control over production conditions facilitates a high level of consistency in drug quality and yield, which is not possible with plants grown out-of-doors exposed to a broad range of environmental conditions. Thus, further refinements to traditional fermentation techniques (e.g. Novartis' path) or development of alternate techniques like plant cell culture and rhizosecretion that offer the advantages of containment and control appear to be more promising than the GE plant platform in the future development of the biopharmaceutical industry.