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Bootstrapping via Philanthropy

A Californian start-up chooses a zero-profit project: helping to develop a malaria drug

January 3, 2005 | A version of this story appeared in Volume 83, Issue 1

Amyris' Renninger (clockwise from back left), Reiling, Martin, Keasling, and Newman will take the Gates grant to develop technology and address public health.
Amyris' Renninger (clockwise from back left), Reiling, Martin, Keasling, and Newman will take the Gates grant to develop technology and address public health.

When a start-up company commits to philanthropy, one might assume its executives are napping at the helm. But Amyris Biotechnologies, a University of California, Berkeley, biotech spin-off, is knowingly participating in a nonprofit venture to develop a malaria drug.

The company was founded by Berkeley chemical engineer Jay D. Keasling and four former lab members: Kinkead Reiling, Neil Renninger, Vincent J. Martin, and Jack D. Newman. Newman says the firm sees the project as "a real win-win situation."

Underpinning the venture is technology developed in the Keasling lab and licensed--at no cost--from the university. Carol Mimura, executive director of Berkeley's office of technology licensing, concedes that some people might say, "That's so California." Her office generally focuses on the hard-nosed business of commercializing technologies. In this instance, though, she sees a low opportunity cost and a project that is in line with other socially responsible programs on campus and in her office.

Philanthropy is not usually an option for start-ups. But Amyris has the benefit of receiving part of a $42.6 million grant from the Bill & Melinda Gates Foundation to a three-way alliance of the nonprofit pharmaceutical company Institute for OneWorld Health as grant recipient and the university and Amyris as subcontractors. The university's royalty-free license was issued to OneWorld Health. "They can neither make a profit nor do they have to pay us any royalties," Mimura says.

Amyris will be enlisting the help of an engineered microbe for this drug project. OneWorld Health will contract preclinical and clinical work; manage all regulatory issues; and handle manufacturing, packaging, and distribution of the drug. "This turns out to be a hybrid grant that starts with funding basic research, goes into the translational research mode through our start-up company, and ends up with the pharmaceutical and regulatory mode all in one fell swoop," Mimura says.

According to OneWorld Health, the current three-day malaria treatment containing artemisinin, a terpenoid compound laboriously extracted from Artemisia annua, is nearly 100% effective. But the plant is in short supply and the regimen, at about $2.40, is too costly for most poor regions. The hope is to develop treatment costing "well under" $1.00 per patient, the institute says.

Keasling and his colleagues created a splash [Nat. Biotech., 21, 796 (2003)] when they laid out their engineering of Escherichia coli with a pathway taken from yeast to produce amorphadiene, an intermediate to artemisinin. Newman says visitors from industry who stopped by the labs were surprised by the high titers the scientists obtained in their benchtop shakeflasks.

Using funding from the Gates grant, work at the university will focus on engineering the artemisinin biosynthetic pathway into E. coli so it can produce artemisinin from amorphadiene in high yield. Optimizing that production process is a "careful balancing act," as Keasling puts it. "Now the hardest part is coordinating the expression of all of these genes in concert with the cell's native metabolism," he says.

Amyris will then take "the benchtop strain and make it into an industrial strain," Newman says. Around $12 million of the grant will go to Amyris to optimize the strain for large-scale production and work out the semisynthesis steps necessary to isolate, purify, and chemically finish this compound.

In Newman's view, having a philanthropist as a financial backer means Amyris avoids early-stage involvement with venture capital or big pharma. In venture-backed undertakings, 20%, 50%, or even 80% of a company may be promised to financial partners. The Gates deal lets Amyris avoid this compromise, Newman says. Then, for later funding rounds, the company may look attractive to venture-capital or corporate partners because "we can offer them a whole intact company not diluted out by the initial round," he says.

As Mimura explains, the company licensed intellectual property from the Keasling lab before the nonprofit project started, and further licenses may be granted for new developments. Nonmalarial applications are royalty-bearing, but in developing countries the malaria drug must be distributed for free or at cost. "Realistically, Amyris will spend the lion's share of their share [of the Gates grant] on this nonprofit-making activity first," she says.

THE TIME AND resource investments over the next few years are not without risk for the company. But Mimura and Newman both believe Amyris will bootstrap the grant money to profit-making uses eventually.

"The real upside is that the development is for a platform technology that has broad applicability to all sorts of drugs that are not making it to market because of supply limitations," Newman says. The company calls this approach "drug rescue," referring to natural product extracts that show medical promise but are kept from being developed by material scarcity. "What we can do [is] go to the exotic organism, fish out the genes, put it in our 'firehose' strain, and then start spewing out product instead of extracting it," Newman says. The "firehose" is a microbial strain engineered not just with finishing genes but with a production pathway.

Producing the antimalarial is directly applicable to making nutraceuticals, isoprenoids such as paclitaxel, or even carotenoids such as ß-carotene. "The goals are initially superimposed," he says, as Amyris develops drugs for the developing world while simultaneously developing others for profit.




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