Researchers Genetically Engineer Microorganisms into Tiny Factories

In work that could transform radically the ways in which many of these compounds are produced commercially, the UB researchers are genetically engineering microorganisms, such as E. coli, into tiny, cellular factories.

Several patents related to this work have been filed by UB. The team also is in discussions with companies in the U.S. and abroad.

First Wave Technologies, Inc., a technology development company based in UB's New York State Center of Excellence in Bioinformatics and Life Sciences, which is collaborating with the UB group, recently received a highly competitive Phase I Small Business Innovation Research (SBIR) grant from the National Science Foundation to focus on the biosynthesis of a popular group of flavonoids called isoflavonoids.

"Ultimately, we want to be able to take a designed E. coli off of the shelf and drop into it the enzymes that constitute a particular biosynthetic pathway in order to make exactly the product we want," said Mattheos A. G. Koffas, Ph.D., assistant professor of chemical and biological engineering in the School of Engineering and Applied Sciences and leader of the UB team.

The UB approach to synthetic chemistry addresses some of the major challenges in conventional industrial production of specialty chemicals.

Through the use of specially adapted bacteria, specialized enzymes and natural feedstocks, microbial biosynthesis reduces or eliminates the need for petrochemical sources, elevated temperatures, toxic heavy metal catalysts, extremes of acidity and dangerous solvents, Koffas said.

In addition, the natural enzymes the UB researchers are using can facilitate chemical reactions that are difficult to accomplish through conventional chemistry, such as chiral synthesis, glycosylations and targeted hydroxylations, common but challenging steps in many syntheses.

"We are finding out how we can actually 'train' microbial systems to produce high yields of chemicals to be used as pharmaceuticals and to make production processes more efficient, less expensive and more environmentally friendly," Koffas said.

As with any commercial endeavor, process efficiency is a critical concern, he noted.

In work published in Applied and Environmental Microbiology in June, Koffas and his colleagues produced about 400 milligrams of flavonoids per liter of cell culture, far above the next highest yield of about 20 milligrams per liter produced by other microbial synthesis efforts.

"We have done this by increasing the amount of precursor available and re-engineering the native microbial metabolism," he explained, adding that they have taken different approaches to identifying the pathways that lead to the biosynthesis of precursors for desired compounds.

"Further improvement of production yields are possible and various approaches are being pursued by our team at this time," he said.

Another major challenge for microbial biosynthesis is that the enzymes required for certain chemical steps have special requirements that the host cell cannot meet efficiently, Koffas said. In some cases, the enzyme needs to be re-engineered, while in others the host cell needs modification.

Koffas' lab recently achieved the functional expression in E. coli of P450 monooxygenases, enzymes that are used widely in nature, but are not readily expressed in most industrially important microorganisms.

"P450 is very important in the synthesis of natural products," said Koffas. "For example, both Taxol, the breast cancer drug that is currently produced from plant cultures, and artemisinin, the anti-malaria drug, have P450 enzymes in their biosynthetic pathways."

The Koffas lab has introduced ways to modify both the P450 monooxygenase enzymes and the host cell, thereby improving their yield of flavonoids.

Microbial biosynthesis methods also are making it easier to create analogs of existing drugs, as well as new molecules for a broad range of therapeutics.

The UB researchers are particularly interested in developing novel molecules that can be used to treat chronic diseases, such as type II diabetes and obesity.

They also are using the methods to produce specialty compounds, such as natural pigments, that could replace chemical dyes in food.

Koffas' goal is to employ these microbial synthesis methods for a wide variety of applications.

Flavonoids, which are of interest to pharmaceutical companies because of their antioxidant and anti-carcinogenic properties, are difficult to produce using currently available methods.

Microbial synthesis strategies also are being adapted by the UB researchers for the biosynthesis of other commercially significant classes of compounds, including vitamins, anti-cancer drugs, anti-parasitic drugs, dyes and food supplements.

The UB group is working on boosting yields further and hopes to achieve pilot scale production of flavonoids by the end of this year.

For further information on commercialization of this technology, please contact Mike Fowler, commercialization manager for bioinformatics and health sciences, in UB's Office of Science, Technology Transfer and Economic Outreach (STOR) at mlfowler@buffalo.edu.

For information on commercialization of SBIR-funded research on the biosynthesis of isoflavonoids, please contact Jack Daiss, technical director, First Wave Technologies at jack@firstwavetechnologies.com.

Koffas's research has received funding from the National Science Foundation, UB's New York State Center of Excellence in Bioinformatics and Life Sciences and the Independent Research and Development Fund of the UB Office of the Vice President of Research.

The University at Buffalo is a premier research-intensive public university, the largest and most comprehensive campus in the State University of New York. UB's more than 27,000 students pursue their academic interests through more than 300 undergraduate, graduate and professional degree programs. Founded in 1846, the University at Buffalo is a member of the Association of American Universities.

Interest data from VCExperts upon surveying 127 VC or PE firms.

What valuation method(s) does your firm use when evaluating initial investment (frequency distribution):

Industry	Comparable Transac-tions	Compa-rable Multiples	Dis-counted Cash Flows	Net Assets of Invest-ment Company	Industry Valuation Bench-marks	Adju-sted Present Value	Option Valuation Approach	Other
Software	45	36	32	9	1	10	3	0
Other	33	32	27	14	5	13	9	1
Business Products and Services	23	29	13	21	6	4	5	3
Industrial / Energy	10	11	3	9	2	1	3	0
Semiconductors	9	3	8	2	9	4	0	4
Telecommunications	11	7	3	8	3	2	1	1
Biotechnology	15	3	8	4	1	2	0	2
Healthcare Services	8	8	6	4	1	0	3	0
Consumer Products and Services	5	7	5	4	2	0	3	2
Medical Devices and Equipment	9	2	1	4	6	0	3	1
Financial Services	6	5	3	4	3	0	1	2
IT Services	9	9	1	3	1	0	1	0
Electronics / Instrumentation	5	5	0	5	3	1	2	0
Networking and Equipment	6	4	2	2	2	0	2	2
(blank)	4	2	2	2	0	2	2	0
Media and Entertainment	6	2	3	0	0	2	0	0
Retailing / Distribution	2	0	2	2	0	0	2	0

If we analyze the result in terms of industry, it is found that "Comparable Transactions" is also the most popular choice among different industries. "Comparable Multiples" comes as the second most popular method.

In June 2004, the Milken Institute published a report ranking the biotech clusters of the U.S., which can be found here

A lot of interesting notes including..........

If one could magically drop San Diego's biotech cluster into Buffalo at a 'gross metro product per job' of $104,316 overall and $133,333 direct only, what impact would it have on Buffalo Niagara's 545,900 non-farm employment?

Altogether, the life science industry in San Diego MSA is responsible for 55,600 jobs, or nearly 5
percent of all nonagricultural employment in the region. Of those, 21,000 are accounted for directly, while 12,600 and 21,000 are generated through the indirect and induced effects, respectively. For every job within the life sciences in San Diego, an additional 1.7 jobs are created in all other sectors. Similarly, the life science industry in San Diego MSA is responsible for $5.8 billion, or 5.3 percent of gross metro product in the region. $2.8 billion is registered directly, while $843 million and $2.2 billion are generated through the indirect and induced impacts, respectively. For each dollar of output produced in the life sciences sector in San Diego, an additional $1.10 of output is generated beyond it.

To get there, you need to start with the science as happened in San Diego and UB's goal of recruiting 8-10 NAS scientists should only further the excellence in science being produced today.

The Scripps Research Institute solidified a position as one of the world's leading centers of
biomedical research in 1961 with the recruitment of the immunologist Frank Dixon and a team of four colleagues from the University of Pittsburgh. Specializing in the causes of autoimmune disease, the pioneering work of Dixon and his team effectively put TSRI, in particular its Department of Experimental Pathology, at the forefront of bio-science research. And Jonas Salk brought to his center some of the world's foremost biological research scientists, including Francis Crick, one of the discoverers of the "double helix" structure of deoxyribonucleic acid (DNA). Thus, almost two decades before the launch of San Diego's first biotech company, the area was already well populated with advanced research sites and truly world-class human capital.

UCSD: Indicators of Bio-Science Strengths
Since its founding in 1961, U.C. San Diego has risen to become
one of the world's leading universities for life science research.
The following illustrates various dimensions of its leadership
position.

Nobel Laureates. Ten UCSD faculty have been awarded the
Nobel Prize. Current faculty members who won awards relevant
to the life sciences are Francis Crick (prize awarded in 1962 for
discovery of the double helix structure of DNA), George Palade
(1974, structural and functional organization of the cell), and
Renato Dulbecco (1975, tumor viruses).

National Medal of Science. Considered the nation's highest
scientific honor, eight UCSD faculty have been recipients,
including Nobel Laureate George Palade (1986) and Yuan-Chen
Fung (2000), professor emeritus of bioengineering.

MacArthur Foundation Awards. Popularly known as
the "Genius Awards," 11 UCSD faculty have been recipients,
including Russell Lande in biology.

National Academy of Sciences. UCSD ranks 7th in the nation
in the number of faculty elected to the NAS, America's premier
society for the scientific community. (The top 10, in descending
order, are: Harvard, U.C. Berkeley, Stanford, MIT, Yale, CalTech,
UCSD, Princeton, Chicago, and Cornell.)

Nature Magazine. The leading scholarly journal of the life
sciences, Nature, in its "Yearbook of Science and Technology"
has ranked UCSD as "one of the 10 most powerful research
universities in the United States."

Cited Research. The Institute for Scientific Information
has ranked UCSD 5th in the world in terms of the most
cited molecular biology and genetic research papers. UCSD
pharmacology professor Michael Karin ranks 1st worldwide

Pretty straight forward, recruit great scientists to do great work, in particular those with entrepreneurial ambitions.

In the case of the formation of San Diego's first full-fledged biotech company, Hybritech, its two
co-founders had been lured away in 1977 from research positions at Stanford to do work at U.C.
San Diego on what was then one of the most promising fields in biomedical research: monoclonal
antibodies. Within less than a year of their arrival at UCSD's cancer center, the
former Stanford research team of Royston and Birndorf had decided to find a means to set up a
company based on their own advances in monoclonal antibody production techniques.

Started with $300,000 from Kleiner Perkins.........

But specific plans for Hybritech, which co-founder Birndorf thought of as "a very nice little business," were themselves of minor scale. The vision was based on how we bought antibodies all the time for our research and antibodies back then were made in animals. Each batch was different. Each time you did it produced different immunogenicity and whatnot and you had to test each batch, etc...........Within five years of Hybritech's founding, spinoff companies were being formed (the first, Gen-Probe, was co-founded by Hybritech employee number one, Birndorf, himself). Over time, the fortunes of the firm would vary. In 1986, Hybritech lost its independence with a $480 million acquisition by the pharmaceutical giant, Eli Lilly. One indication of Hybritech's lasting impact on the cluster is the number of companies that can be traced back to former Hybritech employees. As of the 25th anniversary of Hybritech's founding, the San Diego Union Tribune counted more than 50 firms that could be considered the progeny of San Diego's original biotech firm. Admittedly, Hybritech's business model changed over time.

Could Roswell be Buffalo's Salk?

Salk Institute generates $100 million a year for the local economy. Its scientists have been involved in the founding of nearly 20 companies and developed 250 active patents that are being licensed to biotech or pharmaceutical companies.

Everyone in Upstate likes to complain about the lack of venture capital........but SD didn't have any either in the beginning. And fyi, NYC is closer to Buffalo than SF is to San Diego.

Since arriving in San Diego in 1977 as an assistant professor of medicine at UCSD, Ivor Royston has made tremendous contributions to the San Diego cluster as a researcher and business innovator. He began his latest enterprise, Forward Ventures--what is today the major life science-dedicated venture capital firm in the San Diego region--in 1990. "Whereas back in the 1970s, there was no venture capital firm here, we had to access venture capital from the Bay Area. But that's now changed."

But in the end, it is all about people........

While acknowledging the importance of the cluster's capacity to generate cutting-edge science,
Royston stresses how having capable people, more than brilliant technology, has built up the
cluster.

The above provides a roadmap to the traditional cluster building approach (recruit great scientists, invent great things, bring capital from outside the area.....and you only need one big winner). But 40 years after the fact and with greater global competition, I believe the model has morphed some and holding your breathe until the one hits isn't very rational.