BACTERIA BECOME BIG BUSINESS

BACTERIA BECOME BIG BUSINESS

**2005: An update on DIVERSA has been written by GRAIN and is available here**

Recent years have seen a blooming of small biotech companies specialising in providing the industrial giants with biotechnology-based strategies for product development which will help them lower their costs and increase their profits. These companies normally hold patent-protected technology through which they isolate or transform elements from the diversity existing in nature - mainly from the South - to the needs of their would-be corporate clients. They also have developed strategies to gain access to, and patent, biodiversity. For these companies to survive, such strategies are of no lesser importance than their technology portfolios. And their strategies do work.

One of the most active companies in this arena is the US-based Diversa Corporation. Diversa has recently signed controversial bioprospecting agreements to gain access to genetic resources in Mexico, Indonesia and the US. Diversa's approach models itself on the first blanket-access bioprospecting agreement signed between Merck and Costa Rica's InBio in 1991. Merck was provided access to Costa Rica's rainforest diversity for two years - including the right to patent new products derived from it - in exchange of one million dollars, 5% of any royalties generated and the transfer of chemical screening technology. NGOs and other actors indicated that a single institution in Costa Rica had sold 5% of the world's biodiversity heritage to a single company for just US$ 1 million, and in the process it had left its own innovators, indigenous peoples, aside.

Instead of being met with outrage, the Merck/InBio agreement was hailed by many biodiversity negotiators as the way to go to ensure the "equitable sharing of benefits" called for by the Convention of Biological Diversity. Eight years later, blanket access agreements are far from dead, although companies involved are now usually specialised in one category of genetic resources - bacteria, marine resources, etc. Two recent examples illustrate this trend. Amidst huge debate, the US company deCode Genetics has been granted by the Icelandic Parliament a 12-year monopoly to set up and run a national genetic database on the country's inhabitants. DeCode Genetics already has a $200 million contract with Swiss multinational Hoffmann-La Roche for "positional cloning work" involving Icelandic populations (see Sprouting Up). Under much less scrutiny, Diversa has obtained blanket access to bacterial diversity in Mexico through a contract with the Universidad Nacional Autónoma de México (UNAM). Diversa is also known for its deal, in August 1997, with the US' Yellowstone National Park.

Diversa: Untapping the 99%

For most people, the skeletons of whales in the bed of cold Arctic Ocean evoke images of the cycle of life, the mystery of the depths or whaling stories. But for Diversa, the whale skeletons are a source of capital. They are home for bacteria that have enzymes which digest bone fats at very cold temperatures. Selling these enzymes, or "improved" versions of them, to detergent producers so that their powder washes whiter at cold temperatures, is Diversa's business.

Diversa Corp. introduces itself as a "a biotechnology company focused on globally accessing microbial diversity and using this untapped resource for discovering compounds which will benefit pharmaceutical, agricultural, and speciality chemical industries". By "untapped resource", Diversa refers to the enzymes contained in the estimated 99% of microorganisms that cannot be cultivated in the lab and thus have not yet been identified. Within those, the company specialises in "extremophiles," organisms living under extreme conditions, which have the highest economic potential.

A new technological approach

Diversa's main asset is its- patented - cloning technology, which allows it to extract DNA from bacteria sampled from the wild, and clone it. Diversa prepares libraries of DNA coding for enzymes which have the same function, but which work under different conditions. Diversa may also manipulate the DNA to create new strains that produce enzymes that best suit a given process. The company claims to have discovered 700 (patent-pending) novel enzymes.

Diversa has been masterful in using its technology in another way: to gain scientific prestige. The study of some extremophiles - taxonomy, ecology and evolution - yields some clues to the origin of life. Diversa's scientists have teamed up with several university groups and used the results of their screening to publish in the most prestigious scientific periodicals, such as Nature.

Its particular combination of technology and basic research allows Diversa to feed from venture capital financing (from which it raised US$ 20 million in February 1998) and from public research organisms such as the US National Science Foundation, US National Cancer Institute, and US National Institutes of Health. These public institutions have typically subsidised Diversa's technological development, such as its ability to search for pharmaceutical compounds. Venture capitalists are interested in another aspect: Diversa's future portfolio of corporate clients. They may have been seduced by Diversa's mission, "to revolutionise the way the world's products are made" as indicated by Terrance J. Bruggeman, the company's Chairman and CEO. As of now, Diversa has already developed special contracts with the feed, chemical and pharmaceutical industries, as shown in table 1.

Table 1: Diversa contracts with corporate clients

Source: http://www.diversa.com

Selling Science, getting monopolies

Diversa stresses that its scientists can "analyse microbial samples from places all around the world, in areas that range from geothermal pools at Yellowstone Park to rain forests in Costa Rica to corn fields in Iowa". Diversa is not the only company focussing on adapting enzymes to new industrial processes. Its competitors, which include among others Novo Nordisk (which leads the enzyme industry sector), Genencor, and Amgen, have developed different technologies to achieve the same results. For Diversa's technology to be competitive, it has to be fed with biodiversity: that is, with the gene sequences from extremophiles and other bacteria. Access to biodiversity is nearly as important as its the technology, and the company has devoted a huge effort to achieve such access to the highest diversity of ecosystems. Between 1997 and 1998, the company signed blanket bioprospecting agreements with the Yellowstone National Park, the Bogor Agricultural University of Indonesia, and the UNAM. The agreements main characteristics are summarised in Table 2. The company had already established similar agreements with Iceland and Costa Rica. Diversa's strategy is clearly illustrated by its contract with UNAM.

Table 2 . The main traits of the last three access agreements reached by Diversa Corp.

Sources: Several press releases and other articles.

The contract between Diversa and the Instituto de Biotecnolog"a (IBT) of UNAM - a leading research centre - mimics the contract between Merck and INBio. Diversa is allowed to sample bacterial biodiversity in selected Mexican ecosystems - including protected areas - and is granted the right to claim patents on any enzyme it isolates or develops from the extracted bacteria.

In exchange, Diversa commits itself to transfer to the Mexican Instituto de Nacional de Ecología (INE) a percentage of royalties it may generate in the future from the resources it collects. This money is earmarked strictly for conservation purposes. Diversa also agrees to assist in the setting up - but not financing - of a Center for Microbial Diversity in the IBT, which will use Diversa-owned technology. The company will also provide training to IBT scientists, who will actually do the work of going to the chosen protected areas and sample for bacteria. In exchange for this work, Diversa will pay a fee for every sample it receives.

Stewards or salespeople?

One of the main promoters of the agreement between Diversa and the UNAM is Dr. José Sarukhán Kermez, the National Coordinator of CONABIO (the National Commission on Biodiversity Use and Knowledge). CONABIO's mandate includes the promotion and encouragement of scientific research activities for the exploration, study, protection and use of biological resources. With Mexico being party to the Convention on Biological Diversity, CONABIO should be the steward of Mexican's heritage. But in the agreement between Diversa and UNAM, it seems to have taken on the role of broker rather than steward. While the Mexican Parliament is busy in setting up the criteria and the text for federal legislation on access to genetic resources, CONABIO is busy selling off the country's biodiversity. It has also committed itself to provide advice on the best zones to be sampled by Diversa. In exchange, it will be provided with a collection of molecular microbial phylogenies for its databases of Mexico's flora and fauna.

In August 1997, Diversa persuaded another public institution with a special mandate to conserve biodiversity, the US National Parks Service, that its duty could be best served by earning money from selling exclusive rights to biodiversity in exchange for scientific information. In March 1998, a coalition led by three organisations (the Edmonds Institute, the International Center for Technology Assessment, and the Alliance for the Wild Rockies) sued the US Department of the Interior and National Parks Service for allowing the commercial exploitation of natural resources of the Yellowstone National Park, and violating at least five legislative texts in the process. The NGOs contested the Park's decision to allow the privatisation of resources that had been conserved "for the benefit and enjoyment of the American people." Another of the reasons that prompted NGO action was the secrecy maintained on the agreed terms of financial compensation, which may be as low as 0.5% to 10% of any future royalties from the sales of "research products". At the legitimate inquiry of civil society as to the amount that US citizens might earn out from selling off their heritage, the Yellowstone managers answered that letting the public know how much the federal government is receiving for commercialising park resources would harm Diversa's "competitive position" and put Yellowstone "at a competitive disadvantage in negotiating permits with other firms." When Diversa was asked for its opinion on the lawsuit, it washed its hands: "You should talk to the people at the National Park Service and the Interior Department. It really involves them and not Diversa.'

Access to financial information will not be easy for Mexican NGOs, either, since they have unsuccessfully being trying to get a copy of the UNAM-Diversa deal. This situation leaves a lot of unanswered questions. What role has been left - if any - to indigenous communities in the case some sampling activities are conducted in their territories? Is any measure to be established to protect their knowledge? Under what conditions will the transfer of technology be made? Will Diversa exert control on the kind of research Mexican scientists conduct in their planned Microbiological Biodiversity Centre?

More fundamentally, perhaps UNAM and CONABIO should first have asked themselves some more basic questions. Like, is it economically worthwhile for the twelfth most biodiversity-rich country in the world to offer its natural heritage up for patenting in exchange for some technologies which are of little use without the genetic resources to go with them? Will the agreement result in an improvement in the well-being of Mexican local communities, indigenous peoples and city dwellers? If so, does it justify their alienation from biodiversity? Does the Mexican public research sector have any realistic possibility of becoming competitive in the world's industrial enzyme market?

Main Sources:

* Diversa’s website: http://www.diversa.com

* "Diversa Signs Bioprospecting Agreement With the Institute of Biotechnology at the National Autonomous University of Mexico" . Business Wire, (6 Nov 1998), p 1073.

* Cary, S.C.; Shank, T.; Stein, J., "An Extremely Eurythermal Polychaete", Nature 1998, 391: 545-546.

* Danson, M. and Hough, D. (1998), “Les enzymes de l’extreme”, Biofutur 179: 43-46.

* National Commission on Biodiversity Use and Knowledge’s website: http://www.conabio.gov.mx

* Smith, C., "Some Call It Biopiracy", The Salt Lake Tribune, Sunday, November, 1997.