SemBioSys Bankrupcy

Recently SemBioSys has announced that it is winding down the company and ceasing operations after delisting from the Toronto Stock Exchange where its stock had traded. 1

Safflower used by SemBioSys in the production of plant-manufactured proteins

Life Sciences and Seed Business

In 1978 the Nobel Prize for medicine was awarded to Werner Arber, Dan Nathans and Hamilton Smith for the discovery of “restriction enzymes and their application to problems of molecular genetics”. The word was out about the importance of biotechnology, and people began to make business plans for the application of the technologies.

Once upon a time, there was an idea that the technology of biotechnological innovation would drive the agricultural technology and the pharmaceutical industry together.  That idea drove Ciba-Geigy to invest in Funk Seeds in the 1970’s. It drove Sandoz to purchase Northrup King a little later.  The two merged into Novartis to increase their synergies and optimize their Basel heritage. The idea drove Pfizer to invest in Trojan Seeds in the 1980’s and to create a joint venture with DEKALB. It was part of the motivation for the Pfizer merger with Monsanto in the 1990s.  In the end, the technology of biotechnology did not unify the life sciences businesses.  The difference in customers provided more important than the technology of biology in the same way that the technology of machining failed to unify the automotive and aviation industries for Henry Ford in the 1930’s.

For the opposition to biotechnology , the unification of the life sciences was also a potent theme, a threatening one: the image of mad life scientists run amuck creating Frankenfood.

It turned out that the technology was not the primary driver of industry structure.  It was interpretation of customer demand which was more important in determining company structure. The life science combinations were split up.  With the death of the idea of the unification of agriculture and the pharma industries, some of the ideological commitment to combinations like plant produced pharmaceuticals ceased to exist.  Neither side had much incentive to take on the public relations burden of producing drugs in food crops.  The projects like producing insulin in safflower were left to startups, even though the startups were arguably less able to address the challenges of containment or isolation.

SymBioSys

The USDA APHIS list of applications for Release Permits for Pharmaceuticals, Industrials, Value Added Proteins for Human Consumption, or for Phytoremediation has always been pretty short. 2 SemBioSys has been present on that list since I began watching it in 2003. SemBioSys was one of the few companies which were willing to take the public relations heat associated with the production of pharmaceutical products in food plants, pharming as it has been called. 3

Plant-produced pharmaceuticals have been consistently controversial.  The idea of producing pharmaceutical proteins in plants spans pharmaceutical production where biotechnology is less controversial for the public, and agricultural biotechnology where biotechnology where it has been more controversial.  But the controversy seems to have abated since 2003-2006 when it hit a peak.  In the early 2000’s there were a larger number of new products in stage I clinical trials.  This was perhaps spillover from investments made during the life sciences phase. As the first group of produces got weeded out in clinical trials, the numbers became less threatening.  Publication of new USDA regulations on the handling of non-food genetically modified plants may have lessened fears about mishandling.  The draft guidance for Field Testing of Plants Engineered To Produce Pharmaceutical and Industrial Compounds was published in 2003.

Biological proteins are for the pharmaceutical industries are normally produced by fermentation of bacteria in sealed vats. Genetic modification can allow bacterial to be created with proteins which cannot be found in the bacterial world.  But there are limitations to bacterial fermentation when the objective is to produce proteins for human and animal use.  The biology of higher organisms is different.  One of the main differences is glycosylation.  Higher organisms 4 usually finish proteins by glycosylation  of some the amino acids. Bacteria do not.  Glycosylation is a means by which the proteins acquire their appropriate activity.  There are also other systems present in the cells of plants and other higher organisms which allow proteins to be made into active forms.  The presence of these systems gives plants some advantages in the production of biologically active proteins.

For the industry producing biological proteins by bacterial fermentation in vats, the idea of producing proteins in plants is controversial, at least in the sense of being competition.  The technology of purification of proteins from bacterial cultures is highly evolved and consistent purity can be obtained.  Purification of proteins from plants is not so highly evolved, and given the variation among plants, the development of protocols for protein purification is never likely to be as routine as purification in bacterial fermentation.

SemBioSys’s business model concerned purity and purification.  One of their principle inventions involved attaching the biological products of transgenic plants to the lipid bodies.  Since the lipid bodies contained oils, using the right processing would allow them to float free of the other plant ingredients and part of the protein separation would be done easily.

Their plant of choice was safflower, Carthamus tinctorius.  The plant has a well-known agriculture and it was not widely cultivated in Canada. SemBioSys is located in Calgary and associated with the University of Calgary. Safflower was easy to transform and has no weedy relatives in North America, being native to Southern Europe and Southern Asia.  Being an oilseed it has lots of lipid bodies.

One of the major products which SemBioSys targeted was human insulin. With insulin there was no way to avoid the purification issue. SemBioSys started clinical trials with their insulin in 2008. At the end of last year they signed an agreement with a Chinese pharmaceutical company for commercialization of the product. 5

One of the promises of biological production in plants was to be that purification might not always be necessary.  Plants seeds could be used to protect the protein product and people could get the protein just be eating the seeds.  Many biologically active proteins would remain stable in seeds for extended periods of time. This was especially promising for vaccines for poorer nations.  But the idea of biologically active seeds moving around in commerce did not sit well with those who liked their nature pure.

Plant-produced pharmaceutics had their supporters. Dr. Henry I. Miller was one.  Dr. Miller had a complete argument that differentiated those proteins which might fit well with being produced in plants. 6 His argument was that there was a class of proteins, whether industrial or pharmaceutical which would do little harm if they happened to be consumed for purposes which were not linked which their intended use in protein production. The proteins simply had to be non-toxic or easily digestible. For these products escape was not a major problem. Insulin is on the list of products which is easily digestible. That is why it is normally injected not swallowed. The acceptance of drug production in a food crop was still a hard sell for those who found the idea of drugs accidentally getting into food to be inherently objectionable, whether the presence of a particular drug created any damage or not.

There was considerable interesting in plant-produced proteins in the earlier years of biotechnology.  Several of the major seed companies were involved. Dow had invested in SemBioSys. Monsanto and Syngenta had projects in plant-produced pharmaceuticals. Syngenta had licensed technology from SemBioSys.  But the bad public relations of pharming coupled with increasing understanding of the real challenges of purification caused the major companies to spin off their projects.  By 2005 Syngenta had given up plans to use corn as a base for pharmaceutical production. 7 Later in that year Syngenta made a deal with SemBioSys to license Syngenta safflower transformation technology to SemBioSys.  As far as I know the history of plant-produced pharmaceuticals, this deal took Syngenta out of the business.

One interesting investor in the activities of SemBioSys was that well known” reactionary” organization the Government of Canada. Given the hopes of the time, this investment was not so unusual.  For example, the state of Iowa’s economic development fund, invested $6,000,000 in vaccine production by ProdiGene.  That turned out badly when volunteer corn from a ProdiGene experiment was harvested with soybeans in 2002. CropTech received over $12 million in Virginia state funding and was looking for funding from North Carolina when it went bankrupt in 2003. Their product was produced in tobacco plants and North Carolina had reason to be interested.

There is still a need for cheap pharmaceuticals and vaccines in developing countries, but it does not appear that any plant-produced pharmaceuticals have reached the market. 8 For rhetorical purposes there could be one exception, golden rice, rice producing beta carotene.  It is hardly appropriate to classify golden rice as a pharmaceutical production system, because beta carotene is more correctly classified as a food component and is naturally occurring in some crops.

These days it appears that the more serious discussion in plant-produced pharmaceuticals seems to be on plants like duckweed which can be grown in complete isolation from the environment.

There has recently been a major success for plant-made pharmaceuticals. On May 1st the Food and Drug Administration approved an orphan drug for the treatment of a rare genetic disorder called Gaucher disease.  9 The disease is caused by an ineffective form of an enzyme. The correct enzyme can be grown in plant cells. In this case the plant production is in carrot cells grown in a bioreactor.  There are no seeds involved.  The originator of the Technology was Protalix BioTherapeutics, and Israeli company.  The technology was licensed to Pfizer in 2009 and Pfizer has guided the product through phase III testing.

SemBioSys’ insulin appears to be the most advanced pharmaceutical product which is produced in plants which could be grown in the field.  For a reasonably current review of the current state of plant-produced pharmaceutical products with a history of the technical challenges of some of the early products I suggest a review article called Evolution of Plant-Made Pharmaceuticals. 10

There is an example of a plant-produced industrial protein and it is in corn.  In February of 2011 USDA APHIS deregulated transgenic corn expressing a thermostable alpha-amylase for use in breaking down corn starch in ethanol processing, trade named Enogen ™. The use of Enogen will be a closed system.  Syngenta will provide the seed and know how. Distiller plants contract land and production, and purchase the entire crop. All the grain produced will be used by the distiller plants; mixed with other grain during fermentation. No purification is necessary.  If the system remains closed there should not be any opportunity for the high amylase to get into other sorts of corn processing.  There was some concern among corn chip makers that the transgenic corn might alter the characteristics of their chips. I suppose that there still is some possible presence, because pollen drift and unintended mixing will put some of this product into the food chain. The nature of ethanol production avoids the problem of purification which has troubled plant-produced pharmaceuticals.

The approval of might have been an example of a harmless protein for which escape would not be a serious problem but the existence of amylase in ordinary barley makes the example less striking than something like insulin.

It appears that SemBioSys had a workable idea, but competing with the conventional technology is not necessarily easy or cheap.  It seems like growing insulin for thousands of people with a single acre of safflower seems like it should be a winning idea, but it may be that the cost of purification and regulation means that things are not as they appear.  Of course, the bankruptcy of SemBioSys does not necessarily mean that the technology will not be used.  The intellectual property of SemBioSys may already be owned by creditors.   One assumes that, at the very least, the Chinese pharmaceutical company which licensed the technology will be interested in purchasing the patents or licensing the technology from current owners.

Conclusions for the Seed Industry

There are times when technology drives industry and company structure, but it does not always.

The participation of the seed industry, as we normally think of it, in the closed pharmaceutical systems of plant-manufacture may be minimal, even if we only exclude the culture of plant cells in bioreactors. The isolations of whole plant systems require skills in isolation and purity maintenance which are mostly available from the seed industry.  If one takes a broader definition of what the seed industry is about, say improving plants for the betterment of mankind, these specialized systems might fall in the scope of our seed industry activities. One the other hand, the entrepreneurs that husband these plant-made pharmaceuticals businesses will create their own teams with their own skill sets.  Those needs are so specialized that the overlap of the skill sets needed may be incidental to the larger problems of the biopharmaceutical business.  That is the way that it looks so far.

Paul Christensen

Christensen Consulting

Seed Notes: