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I. Client: Standard Oil Company (Indiana) Nature of Project: Biological processing of oil. (Further - discussion not appropriate.) `Client:' Standard Oil Company (Indiana) Nature of Project: Production of model compounds using synthetic genes and recombinant DNA technology. (Further .:discussion not appropriate.) Client: Amoco Production Company Nature of Project: Biopolymers useful in tertiary oil recovery. o Tertiary oil recovery is a major concern'of•the oil industry. Secondary recovery techniques (essentially water..flooding) have yielded only 34% of the oil in a'field so<tYie potential for more oil from existing wells is:enormous.~-?,.The biopolymer, xanthan~ gum, has been found, helpful iin forciin`g up recalcitrant oil so•attention has focusedon_its''possibleuse. It has been predicted that polymers will enable U.S. bil producers to .recover upwards of 200,,0Mbbl.-a day by-1986, with xanthan accounting, perhaps, for half..cl, That could mean xanthan annual sales of approximately $100 million. 'An increase in oil prices would enable,evenygreater/faster use of tertiary pro- cedures; that, inurn;;-would increase biopolymer usage. " Probable date of first earnings for Regulatory problems•:~=minimal. :a~ G° 2y, a•' ti 0 Cetus: 1985.

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III. Cetus-Funded Projects A. Recombinant molecular research Nature of Project: Effective recombinant molecular research ' requires (a) genes, (b) vectors and (c) industrial (production) host organisms and various ways to obtain each. Significant activity is underway at Cetus towards developing a proprietary position in all three areas. Use in the synthesis of bio- active peptides is of immediate interest. Planned for the future: human antibody production, first for diagnostic and then for human therapeutic purposes. This program is addressing a multi-billion dollar market by the 1990's, but this market will develop slowly. Rewards could come to Cetus by 1985, however, should,we elect to license others to use our expected proprietary tools and/or developments. 101- Some of the Cetus programs in this;area are described in somewhat greater detail in t"he Appendix. CG' B. Hydrocarbon oxidation o~ b' g cS`~4 0, o, .4 v Nature of Project: The development of novel Cetus technology, now the subject of patent,:filings. Directed towards the economic, biological production of a family of commodity chemicals with U.S. volume„exceeding 10 billion pounds/yr. Sales: $2.5 billion%yr:y.•`Sales growth: 6-10%/yr. for the next five years. Relateespecialty chemicals on which higher profit margins can be expected are not included. We view this as a harbinger of biology replacing or augmenting chemistry for the production of organic chemicals. Oppor- tunities for biosynthetic approaches are now enhanced because of increasing'costs for petroleum-based feedstocks, energy and pollution concerns and, naturally, the improved capabilities of today's microbiologist. Z, Cetus expects significant profits out of commercializing this technology. One plant for one specific chemical could be .pperational by 1983; possible size: 400 million pounds/yr. <C.rSales'value: $100 million/yr. ~,i Potential licensees/joint-venture partners are now under consideration; multiple licensees or partners, both in the U.S. and abroad, are possible. Proper circumstances might also encourage Cetus itself to manufacture special process components or even certain specific low-volume, high-profit specialty chemicals. No regulatory problems are anticipated. <;~F ~ R;:._c ~k~.%<..,.~.-:~...rK~;~,~.-.ra.:«w.-:.<

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Nature of Project: The development of patentable yield- improvement techniques for fermentations of major commercial value. Preliminary research success generates optimism that . licensable technology will result from this work. Nature of Project: The development of enzymes, immobilized enzymes and immobilized cell systems for use in the industrial bioproduction of both commodity and specialty chemicals. This project is supportive of other Cetus programs; it is also meaningful in and of itself. It is Cetus' belief that many potential biosynthetic processes will assume:commercial via- bility only if catalyst-type conversions-can be developed to replace reactor-type fermentations. Enzymes are;catalysts; they must be protected and supported;_so:that they retain maximum catalytic efficiency and are'usable in.`'an industrial process, envirorunent. v This 40' G`U.~ 0 This can be,a good profit generator for Cetus. Properly immobilized enzymes canbe produced and''sold by Cetus. The immobilization art iG'real{~-`:just developing; it is ripe for innovation. ~o oc v p~ E. New antibiotics r.`~' ?~~ Kwa ti~~ Nature of Project .The exploration of a number of different and novel biological protocols for the production of new compounds that havea greatly increased likelihood of being highly useful new antibiotics. See Appendix for elaboration. ~ F. Steroids 0 (The implementation of this project is now under serious study. )-,-.ac; Q,: Nature of Project: The investigation of potential steroid transformations, e.g. of cholesterol to sex hormones and corticosteroids. The precedent for such transformations.is ,c~~,clear but an efficient bioproduction process must still be developed. G. A Novel Fermentation Substrate Nature of Project: A new, low-cost, biomass-derived material with high potential as an economic fermentation substrate will soon be under evaluation for a number of industrial applica- tions. If, as a consequence of Cetus work, markets or li- censable patents result, Cetus will enjoy equity rewards, these already defined in a negotiated formal agreement with Occidental Petroleum's Occidental Research Corporation.

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IV. Negotiations Underway There is no dearth of projects conforming to Cetus' criteria and worthy of our attention. Project evaluation and selection to insure that only the most rewarding projects are pursued and that our chance for success on these is high are our prime concerns. Our ultimate limitation is the availability of seasoned Cetus scientists whose talents we do not wish to squander. We are involved in contract negotiations on a continuous basis. Caution dictates against detailing those now underway, but a few comments are perhaps appropriate. For example, we can say that we expect soon to finalize the following contracts: - A. With a major oil company (not Standard), a project covering the in-situ generation of methane fr=oi1._,. ~,° ~a~ a B. With a major U.S. company and via recoinbinant molecular methods, the production of a specific human neuropeptide, which neuropeptide addresses a significant existing medical market. ' v w~ C. For a major U.S. pharmaceutical company,=-a yield-improvement program on an~important"new-antibiotic:about to be marketed in the U.S. 1~~oa~' o t r~ •~' 2y D. A collaborative agreement calling for the production of a potential male contraceptive developed by a major, non-profit scientific institute. ~-:*.fi~v3.:c:s'~~..''.~a~:,,.rl.a~l..+u.~_.v.e_ i..i.:~...':~. .. ~.........r,i..-i.,C.a.-..,~aisr.f'-~k-~.n•'.~'.~a`i3~'.ss~s~:.~i.~tt~'.

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