December, 1999
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A few rush to exploit new biotech crop genetics

Young firms such as Ceres see this as a golden age. Despite protests, they are inventing the next generation of plants.

December 31
Los Angeles Times

Worldwide protests against genetically engineered crops are on the rise. America's trading partners are calling for labeling of foods that contain ingredients from genetically modified plants. Federal regulators are reexamining the rules for assuring the safety of biotech foods.

Against this tumultuous backdrop, a handful of young companies are busily inventing the next generation of biotech plants--crops that promise increased food production and improved nutritional content, or that offer a renewable, low-cost supply of medications and industrial chemicals.

These small firms see this as a golden age of plant biology, and they are betting that the controversies will cool and the world will warm to their innovative products.

One of the newest and most promising of these emerging companies is Ceres Inc., started in 1997 by a UCLA professor and his corporate partners with more than $50 million in private capital. After leasing unused lab space on the university campus, the company now sits in what at first blush seems the most unlikely of places for an agricultural research facility--high on a hill above Malibu Canyon, with a glorious view of the Pacific.

Like its competitors, which include the large seed producers as well as smaller firms, the company is rushing to exploit new developments in plant biology. The advances include the rapid decoding of genes, high-speed methods for isolating gene products and discovering their function, and efficient ways to transplant desirable genes from one species into another.

The search for genes is called genomics, and says UCLA biologist Robert B. Goldberg, a co-founder of Ceres, the company is "trying to position itself to be the premiere plant genomics company in the world and compete with DuPont and Monsanto and Novartis."

Goldberg says that unearthing just a few important genes--he calls them "undiscovered diamonds"--from the tens of thousands present in a few species of plants will be enough to put the company over the top. "We're looking for breakthrough traits," he said.

And the company may already have some of them, licensed from UCLA and other University of California campuses. These are genes that can boost grain tonnage by increasing the size of seeds, by growing seeds not just from flowers but in leaves, and by producing seeds without pollination.

Cranking up food production will be increasingly important to feed a growing world population--more important in many parts of the world than advances in genetic engineering that lead to new medications, says Richard Flavell, Ceres' chief scientific officer.

"In that part of the world where 3 billion people suffer from nutritional deficiency, your first thought is not how to get [medicine] to people, but how do I feed them," Flavell said.

The hiring of Flavell was a coup for the fledgling company. He's the former director of the John Innes Centre in England, a world leader in plant genetics. Last year, he was elected to Britain's Royal Society--a body that includes numerous Nobel laureates and that was once headed by Sir Isaac Newton.

"To kick-start the firm," Flavell said, the company has farmed out its gene sequencing--the decoding of the chemical building blocks of plant DNA--to Genset, a French company that has one of the world's largest factories for deciphering plant, animal and microbial genes.

And it is working closely with university scientists at University of California campuses in Los Angeles, Santa Cruz, Berkeley and Davis.

"The business strategy is to get immediate access to mature programs," he said, by licensing technology already developed and working with established researchers. Ceres recently broke ground on its first greenhouse. "Most of our plants are in enclosed cabinets," Flavell said. "But we're moving to a bigger scale, we're ramping up. In a couple of years we'll be into crop plants."

The company is planning to work with the large seed companies to distribute its products. "If we want to penetrate large markets, as a small company, we can't do that efficiently by ourselves," he said.

But eventually, Ceres could develop its own line of seeds. "We want to be a product company, and not just a technical supplier," Flavell said.

Goldberg helped found the company after a successful collaboration with Plant Genetic Systems in Belgium that led to a new method for creating plant hybrids that is widely used in the seed industry.

That work, Goldberg said, convinced him of the power of collaboration in producing improved plant varieties, and he set out to establish a nonprofit institute that would bring together academic scientists from several campuses. 

But he had difficulty finding the money he needed, even with the argument that the new technology could help feed the world. "I went to Hollywood people," he recalled in a recent interview. "They could see cancer, but they couldn't see hunger."

He turned instead to the head of Plant Genetic Systems, Walter De Logi, a Caltech-educated astrophysicist who in 1996 had just sold his company to international seed giant AgrEvo for $750 million.

Goldberg recalls the conversation this way: "I said, 'Do you want to start an institute?' He [De Logi] looked at me and he said, 'Do you want to start a company?' "

They finally agreed to do both. De Logi and venture capitalist Edmund "Ned" M. Olivier of Oxford Bioscience Partners raised the money to start Ceres and fund the Seed Institute at the four UC campuses and the University of Utah. In exchange for providing $5.75 million over five years to underwrite university researchers, Ceres gets first crack at the rights to their inventions. An independent university committee oversees the collaboration to protect the university from potential conflicts of interest.

De Logi is Ceres' CEO; Olivier chairs the company's board of directors; Goldberg sits on the board.

Company executives say they have no immediate plans for a public stock offering. They say they have enough capital to last couple more years, and may get additional rounds of private financing before contemplating a stock offering.

Ceres quickly outgrew its leased university lab and moved to the Hughes Research Laboratories in Malibu, which had space available after downsizing--an illustration of how new technologies can fill the gaps in a local economy left by shrinking, older industries, in this case aerospace. It now has 80 employees, most of them scientists.

And it is not alone in seeing an opportunity to harness the power of plant genomics to create crops with improved traits, including increased production levels. In fact, there seems to be the genetic equivalent of a gold rush going on, with a number of companies racing to stake their claims on useful plant genes.

Insiders say that the research is revving up despite the controversies swirling around genetically modified foods.

"I think contrary to what the public perception is about the state of genetically modified organisms and the state of biotechnology, behind the scenes it is going farther and faster than ever before," said Dean V. Cavey of Verdant Partners, an investment banking and consulting group that specializes in crop genetics.

In fact, investors in Ceres and other companies are hoping that by the time a new generation of genetically modified crops is ready, three to five years from now, the public will be satisfied that the crops present no hazards to consumers or to the environment.

"There's no question that the protests are putting a damper on the field at the moment," said Michael Fromm. president of Mendel Biotechnology in Hayward. But improvements in the speed and scale of gene discovery "reached a fever pitch in the genomics of the 1990s," he said, and promise marked improvements in food production and quality.

"The opportunities are immense," said Richard Kouri, chief business officer at Paradigm Genetics in Research Triangle Park, North Carolina. The early work in plant genetics was mostly to help farmers, Kouri said. "Now we're shifting more to output traits, health related, industrial related, and food related."

Paradigm, Mendel and Ceres are among the newer companies that have joined the race to discover genes for traits that can be transferred to crops.

There's room for many more of these companies, says Verdant Partners' Ken Moonie, but the anti-biotech protests have made it difficult for additional start-ups to enter the field.

And that's good news for companies like Ceres and the others that have already secured the initial capital they need. "Timing in this world is everything," Moonie said.

Whole Foods, Wild Oats chains to ban gene-altered ingredients

December 30
Bloomberg

Austin, Texas  -- Whole Foods Market Inc. and Wild Oats Markets Inc., the two largest natural-food store chains in the U.S., plan to ban genetically modified ingredients from their hundreds of private-label products.

The two grocers would be the largest U.S. food retailers to ban genetically modified ingredients. The Austin-based Whole Foods operates 103 stores in 22 states and Washington, D.C., and has more than 600 products carrying its brand name. Boulder, Colorado-based Wild Oats operates 110 stores in 22 states and British Columbia. It has about 700 products under its own brand. 

The move follows similar bans by major European supermarket chains, reacting to consumer concerns over the foods' safety. 

Though the U.S. Food and Drug Administration has deemed genetically modified foods to be safe and essentially no different than conventionally grown foods, the grocers' decision could influence public opinion, an analyst said. 

``You're seeing more and more examples of this,'' said Frank Mitsch, an analyst with Deutsche Banc Alex Brown who rates DuPont a ``market perform.'' ``I would not be surprised to see labeling at some point.''

Concerns about Monsanto's agriculture business have contributed to a 25 percent decline in the price of its shares this year. The St. Louis-based maker of drugs, farm chemicals and seeds is planning to merge with Pharmacia & Upjohn Inc. to strengthen its pharmaceutical business. It also plans to spin off 20 percent of the agricultural business following the merger. 

Major supermarket chains show no signs they're considering any ban on gene-modified ingredients, said a spokesman for major food processors.

``We don't think it's something we have to worry about for the large retailers,'' said Gene Grabowski, a spokesman for Grocery Manufacturers of America, which represents large brand-name food companies.

Modified Ingredients Widespread

 An estimated 60 percent of U.S. grocery products contain ingredients derived from genetically modified crops such as corn and soybeans. These include products from such well-known companies as Kellogg Co., Nestle SA and Pepsico Inc.  The natural-food grocers say they're acting on customer demand.

``It's really not my position to say genetically engineered is a good thing or a bad thing,'' said Jim Lee, president and chief operating officer of Wild Oats. ``It's a matter of having a shopping choice. A high percentage of our customers are opposed to anything artificially introduced into their food.''

Lee said he hoped to begin changing the labels of Wild Oats products sometime next year to say the foods contained no genetically modified ingredients.

The natural-food companies ``who want to get their message to consumers are doing so,'' said Mitsch. ''People are starting to pay more attention.''

Niche Players

Nick Redfield, an analyst with Banc One Investment Advisors, which holds shares in Monsanto and DuPont, said the two natural-food stores are niche players and that some of their customers would never have embraced genetically modified food. 

``Most people in this country don't give a second thought about the safety of their food,'' said Redfield.

It's unlikely that either Whole Foods or Wild Oats can assure no trace of altered ingredients would be found in their products, which makes the labeling issue difficult. 

Whole Foods has arranged for lab testing of ingredients that might have been genetically modified, while Wild Oats said it would take the word of its supplier. Genetically modified seeds were planted this year on more than half of the U.S. soybean acres and more than a third of U.S. corn acres. 

Seeking Labeling Guidance

Lee said he hoped the FDA would provide some guidance on labeling products that contained no gene-altered ingredients.  Margaret Wittenberg, vice president of governmental and public affairs for Whole Foods, said all but a handful of Whole Foods products are already free of genetically engineered ingredients. The grocer hasn't labeled the products, but has distributed brochures in stores about the plan.

About 12 percent of Whole Foods $1.6 billion in 1999 sales were from its own-label products. Whole Foods' fiscal year ended Sept. 26. Whole Foods also operates stores as Fresh Fields, Bread & Circus, Nature's Heartland, Bread of Life, Merchant of Vino and Wellspring Grocery.

Wild Oats had sales of $478 million for the first nine months of 1999 and products with its own label represented about 7 percent of its total sales. It also operates stores under a variety of names.

Whole Foods' planned move would be similar to European grocers' actions this year. Tesco Plc and J Sainsbury Plc, Britain's two biggest supermarket chains, eliminated genetically modified ingredients from their own-brand products, citing consumer concerns about altered foods.

`It brings the issue more to people's attention,'' said >James Halloran, an analyst with National City Bank in Cleveland, which holds shares in Monsanto Co. and DuPont Co., leaders in the development of genetically engineered foods.

Opposition to GMOs starting to take root in Japan

December 30
Kyodo World Service

TOKYO -- Many people in the Waseda district of Tokyo's Shinjuku Ward are joining a campaign called the "My Tofu" project, organized by shopkeepers promising to provide fresh bean curd every week made exclusively from organically grown soybeans.

"To those who don't feel comfortable with tofu made from imported soybeans, many of which are genetically altered -- why not join us?" a campaign leaflet asks.

The project is part of the rapidly spreading "soybean-field trust" system launched by consumers opposed to imports of farm produce made with genetically modified organism (GMO) technology.

Under the trust system, a consumer becomes the "owner" of about 30 square meters of soybean field for 4,000 yen per year, and entrusts the cultivation of soybeans to contracted farmers.

Crops will be handed to the "owner" in the form of soybean products such as tofu, soybean paste and soy sauce made by food processors who are also taking part in the project.

Junichiro Yasui, leader of the Waseda shopkeepers, calculates that an average 40 kilograms of soybean crops can be expected from the 30 sq. meters of field. That makes 24 standard-size pieces of tofu, after subtracting costs and profits for farmers and processors. 

"Four thousand yen divided by 24 makes the price of the special tofu 170 yen per piece, cheaper than the average 200 yen per piece made from ordinary soybeans," he said.

A condition participants have to accept, however, is that the amount of tofu they receive could vary depending on the weather.

The soybean-field trust system was launched by the Consumer Union of Japan in 1998, with 15 groups each gathering about 100 consumer participants. The number of groups grew in 1999 to more than 60 nationwide, as more people became concerned about the safety of food containing GMOs, said Setsuko Yasuda, leader of the union's No GMO Campaign. 

The Consumer Union launched the campaign in various forms in 1996, when the Japanese government approved imports of GM soybeans, rapeseed and corn.

Public participation in the anti-GMO movement, however, really took off this year when debates intensified on whether or not to introduce a mandatory labeling system for food products containing GMOs to let consumers know and give them a choice in purchases.

GMOs are organisms grown using genetic modification technologies. The technologies include, for example, transplanting a bacteria gene which is resilient to certain types of herbicide into soybeans to make them tolerant of the herbicides.

In the mid-1990s, the United States adopted guidelines for commercial application of some of the technologies, based on a concept endorsed by biotech companies developing GM seeds that GM crops are substantially equivalent to conventional crops unless they differ significantly in composition or nutrition.

The guidelines were later adopted by the Organization for Economic Cooperation and Development (OECD) nations, including Japan. Cultivation of GM crops then spread quickly over the past few years, particularly in North America.

The cultivation acreage of GM soybeans, corn and potatoes in the U.S. increased from several percent of the total in 1996 to around 30 % in 1998, according to the Japanese Ministry of Agriculture, Forestry and Fisheries.

In Japan, which is about 97% dependent on imported soybeans for its tofu, soybean paste and oil, probably 50% of all soybeans consumed in the nation could be GM crops, industry people say, while  30% of potatoes imported for animal feed could also be GM crops.

The ratios are not known exactly because GM crops are mixed with non-GM crops in exporting countries during distribution.

The rapid increases in GMO imports ignited heated debates on the safety of GMO-containing food products.

Those who support GMO development say the safety of GM crops has been tested for years from almost all possible angles. They are as safe as -- or as dangerous as -- conventional farm products, most of which have been developed artificially through generations of pollination and cross-breeding.

Making crops resilient to herbicides reduces the use of agricultural chemicals, thus helping to protect the environment. Ultimately, they also say, GM technologies will save the world from food shortages, a perilous situation in the 21st century given the rapidly increasing global population.

Opponents argue that existing test results are not sufficient to be convincing. The technologies are no longer the same as conventional cross-breeding, because implanting gene information specific to bacteria, insects, or animals into other types of organism is to create organisms that do not exist naturally.

Such technologies could go out of scientists' control, causing unpredictable mutations of organisms, and unexpectedly create new diseases or damage to the environment, they say.

Another problem with GM technologies, opponents say, is that they are currently monopolized by a handful of multinational biotech companies based in developed countries.

With the numerous patents they hold on GMOs and seeds, the companies could control the world's food supplies, and yet their primary purpose is to make profits, not supply food for hungry people, opponents say. 

"There is a wide gap in knowledge between scientists and the ordinary public," said Yutaka Tabei, deputy director at the farm ministry's Innovative Technology Division.

If people understand enough about the technologies, they will understand the safety of GM crops, he said, adding that the technologies are necessary for Japan as it is the single biggest food importing country in the world.

This fall the farm ministry announced it will introduce mandatory labeling at least for 24 processed food items from April 2001, but Japan has generally been slow to react to opposition in the face of pressure from GM crop-exporting countries, saying that mandatory labeling could disrupt world farm trade.

Bug engineered to eat toxic waste

December 29
AP

The bacterium Deinococcus radiodurans already holds the title as the world's toughest organism: It can survive an atomic blast. Now scientists have bioengineered it into a ``superbug'' that can digest the toxic leftovers of the nuclear age.

Government geneticists said they inserted genes from another form of bacteria into Deinococcus, producing a superbug that transforms toxic mercury compounds commonly found at nuclear weapons production sites into less harmful forms.

The scientists said the development shows how bacteria can be customized to attack the heavy metals, radioactive wastes and other substances that pollute the soil and groundwater at nuclear sites.

The superbug works in laboratory experiments but has not been tested in the field. Details of the research were published in the January issue of the scientific journal Nature Biotechnology.

The research was led by Michael J. Daley of the Uniformed Services University of the Health Sciences in Bethesda, Md.

According to a federal study, weapons waste was buried at 3,000 sites nationwide between 1945 and 1986. One-third of the sites include radioactive materials. Many of the sites were tanks and concrete-lined pits, which now are disintegrating and leaking. Cleanup estimates by the Energy Department run as high as $300 billion.

Bioremediation - a cleanup method using specialized microorganisms - may be a cheaper alternative. But conventional bacteria that gobble up solvents, metals and other forms of contamination are killed by radiation from plutonium and uranium.

Daley's lab took Deinococcus and added genes from a strain of E. coli bacteria that were resistant to particularly toxic forms of mercury.

They reported that the superbug strains proliferated when exposed to radioactive waste mixtures commonly found at weapons sites. The superbug does not neutralize radioactivity in metals.

The pink-colored bacterium smells like rotten cabbage. It was discovered in canned meat in 1956.

It is believed to be 2 billion years old, making it one of Earth's earliest life forms. Scientists believe it evolved when Earth was bombarded with more radiation than today.

It can survive 1.5 million rads of gamma radiation, or about 3,000 times the lethal dose for humans. It also can survive high doses of ultraviolet radiation and long periods of dehydration.

Previous studies have demonstrated that its radiation resistance probably involves thousands of genes. Even when hundreds of portions of DNA are damaged by radiation, the microorganism can usually repair itself in a matter of hours, using redundant genetic codes to keep functioning in the meantime.

Portugal green groups urge wider gene maize ban

December 29
Reuters

Portuguese environmental groups on Wednesday hailed a government move to halt production of two genetically modified (GM) strains of maize and called for 15 other strains on trial to be denied official approval.

The agriculture ministry on Tuesday suspended approval of the Elgina and Compa Cb strains due to concern over the possible long-term impact of extensive cultivation.

``This is a courageous measure,'' a joint statement by eight environmental groups said. ``This measure equally implies the suspension of 15 pending new authorizations of GMO maize.

``Organic agriculture will also be spared the inevitable contamination entailed by cross-pollination with GMO maize,'' the statement added.

GM crops have been extensively used by U.S. farmers in recent years, but have come under fire from environmental groups, who are concerned that they may harm the environment.

Corn growers state that farmers should not be blamed for higher food costs

Agriculture Department should pay all farmer costs for testing and segregating

December 29
American Corn Growers Association press release

Tulsa -- A leading economist for the Federal Reserve Bank is predicting that food costs could increase to the consumer because of the costs of harvesting, segregating, testing and labeling genetically modified (GMO) crops. Mike Singer, Agricultural Economist with the Chicago Federal Reserve Bank, also predicted a drop in GMO planted acres for this coming year.

The American Corn Growers Association (ACGA) states very clearly that any increase in food costs should not be blamed on the American farmer. In addition, the ACGA believes that the U.S. Department of Agriculture should pay any cost borne by production agriculture for segregating and testing GMO or non-GMO crops.

"USDA has stated many times that genetically modified crops are safe and marketable. They have approved these products and encouraged farmers to plant them in increased numbers without any concern for risks attributed to loss of marketability due to consumer resistance," said Gary Goldberg, Chief Executive Officer of the ACGA. "Now that higher cost for the planting, harvesting and marketing of GMOs are falling on farmers shoulders, USDA should be responsible for picking up the tab."

With current commodity prices hitting historic lows, corn producers are seeing a minimal return on the consumer food dollar. In fact, there is only 2 cents worth of corn in a one pound box of corn flakes costing over $3.35. Therefore, the farmer can not be held responsible for any increase in wholesale or retail food costs since the farm-level value is such a miniscule portion of total food prices.

"Since much of the grain handling, grain exporting, agri-processing, wholesale and retail grocery associations have endorsed the continued planting of genetically modified food products, we believe that they should eat any cost increases for food products attributed to GMOs. After all, those who proliferate this technology should pay for its resulting consequences, and not the general public that doesn't even know that GMOs are in their food supply," added Goldberg.

The ACGA does agree with one comment made by Mr. Singer when he predicted that there could very well be a reduction in GMO planted acres for this coming growing season. That follows statements made by the Corn Growers who have been predicting a 20 to 25 percent decrease in GMO planted acres.

"Everywhere we turn, more and more problems exist for production agriculture brought about by genetically modified crops. Farmers must decide for themselves whether any perceived benefits outweigh the growing risks to the continued planting of GMOs," concluded Goldberg.

Label genetically modified food, almost all poll respondents say

Two-thirds would refuse to eat genetically altered fare

December 29
Montreal Gazette

A SOM poll done for The Gazette this month was cited in this story as finding that Montrealers almost unanimously support mandatory labeling of genetically modified foods - and just over half think they should be banned, a poll suggests. As well, if the stuff was put on a plate in front of them, two-thirds would refuse to eat it.

Those negative attitudes frustrate the big food companies that make genetically modified foods in Canada. They say people need to be told that the stuff is safe to eat.

Robin Garrett, spokesman for the Food and Consumer Products Manufacturers of Canada, said, ``The consumer needs to have a better understanding about what exactly it is that's happening. It's very complex, and that's the challenge and I guess that's the frustration from our perspective as an industry. It is (hard) to explain to Canadians that these foods are safe and are, for the most part, the same as a traditional crop.''

The story says that in SOM's telephone survey of nearly 1,000 people, 65 percent said they would not eat genetically modified foods, 53 percent thought they should be banned, and 97 percent thought they should at least be labeled.

But the poll also revealed some room for acceptance of genetically modified food: 50 per cent more men than women said they would eat it, and so, too, would close to half the people in upper-income homes.

And the idea of a ban was least supported by young people - 40 percent said they favored a ban, vs. close to 60 percent of people over 45.

Support for labeling, by contrast, crossed all demographic lines. Ottawa is considering a voluntary labeling system: companies could attach labels flagging their products as being free of genetically altered ingredients. But items with such ingredients could still sit unmarked on the shelves.

Garrett said labeling could also be a way to market ``foods from biotechnology'' for people who want more nutritious foods or ones free of allergens.

The Gazette survey was conducted by the polling firm SOM between Dec. 10 and 20, and is based on 966 telephone interviews. SOM says that 19 times out of 20, a poll such as this results in reliable numbers with a margin of error of 3.27 percentage points.