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y:~`7 .,:! ~.~,,.•'r v;~. ,.r r r .. ! . . .. 'rr`., . . '.r. , ~-, . C•a:J!.,r. ... ~:~ .. ~.. worked with Micromonospora because one of our clients discovered his unique antibiotics, ~in it-. Biut it's a recalcitrant beast. A••. different genus, Streptomyc4s,; is much more docile, much more apt to give higher yield~y- by anforder of magnitude, perhaps. (Pro- David Hopw~ood, of;"England, a member of the Cetus Board of fessor Scientific Advisors, is the'•world's recognized authority on the genetics of Streptomyces. Up to now, we have historically ac cepted that a'new compound discovered in a particular organism, t~ Recombinant Molecular Research at Cetus Corporation The newest genetics technologies, recombinant DNA and cell fusion, can facilitate previously unheard-of products and processes. Some of them will have revolutionary social and economic impact during the next generation. Just as was the case with~semi-conductor technology, where ~. ,.. 4 :,<'~•'" ~. ~~~~E: i• P i Y Y 9 , P P ..-:~ H ,, ~;~ r ,•!'~. ~"•~' sors, digital watches and the like, we are not doing justice to the `~• ~~ potential of biology in what follows. Nonetheless, it is clear that we are addressing markets in the billions of dollars. ^Lar. d~~ " ~~*Ft: y, 'i~ysF~}~'rr'. *r '. _ r .;; (yi:. F Ir r.C` _i..~ k ~f {( ~ t•t f ~ ,~tr , ' ; . ~ ..; ; •` : b 1. There are some here-and-now opportunities and_-co~Kmitments which represent the first step. o~ , ' r ` ra„a; . , : . b r •:. p > ., Tr ,~ nm; ~< _ ~~nz~ A~I,~~" :' ... '..; .. ::. ..-,. ,.: vr'• : ,r~.• Z -, :,'4. : r =•. .'r, ....~'1Y•1~ , -~ O . d'(.r ' .~=. r " ~`•F~d~'~ 7- iJ'.fnu~i The existing fermentation industry has a Qcombined W~.ume which has,'. _= < been estimated to be well in excess ofIerObillio^dollars: There are many opportunities to improvetodays~processes with~ genetic' approaches. We're already involved,in yield-z0rovement programs for antibiotics.~ But until recently jae've been using conventional mutational methods. Our present;experience`illustrates how much more elegant are the techn3ques;that are today available. We have' .,'"'•~ 1',;:-. now cell fusion-.techniques, and we have used them successfully, v whereby thes ;antibiotic synthesis capabilities may be transferred. from one species or genus to another. Transferring the antibiotic potential• of Micromonospora into Streptomyces was a significant objective,o o.•~ti ~~ __ . . ~ ef ~.;; h •~ ,~a _ " j ' . , ~ Sf If ~•~F.:;1, cs must be producedcommercially in that organism. For example, penicillin is discovered in the mold Penicillium then that's the organism we're.`stuck"with for commercial production. But there are t~;fi .~c.) AnoiexZample: The production of useful cephalosporin deriva- k tivesfrom cephalosporin C has been plagued by the necessity of isolation of the intermediate and the costly chemical removal of the (D)a-aminoadipyL side chain, as no biological system has been found capable of this cleavage. On, the other hand, P. chrysogenum enzymes must have the ability to cleave the (L)a-aminoadipate from the postulated penicillin precursor, isopenicillin N. The fusion of Penicillia and Cephalosporia could provide a mechanism for fb reallocation of the genes that code for these activities and per haps make possible the direct production of useful cephalosporin J ~;F~Y R derivatives in the resultant organism. -~., x~' _ . -. •, ~ ~: , . . , . .;.. ..- .'r.7~-~5'• ~'~i.' ,r~, 1 6 r~.~^; 1'~r5y ~.~` F ;"f. ^ . ', ::~., . , ...?,'L;f - • `. ,;7. . • . .r v';-`1 , ..~~.. .' :\~.~' , . ~4 • . .. .... . ~ i. , . r ~,Y•t~,+~~3-rk +~ ~ ~d'` `" ` . , 1, . • ' RR x 'x r 9 ~}, 7f a. . .^, 7 • r rt;~' ~ ti art` 1 ~;••,.~'~.'gy, •,va: t.. F

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.~., j•:f~,..~'TkFrF'R,if R_~:?~f:i t~•~~1.k~~~~~ Q h _ .,. ..~, i}i•i .~. ~rs ~;.~•~; .;. ~, .~, tt•~ ti ``•i i --~ .. ~..' -!t ~+~ :; . .. ~ , 7. 5 :. `Developi'ng these abilities at Cetus may open the way to many near- term short cuts to analogous non-pharmaceutical industrial prob- lems. For example, these techniques might today be applied to increasing the efficiency of fermentation of an assortment of chemicals now made from petroleum sources and also other compounds now made by fermentation, but comparatively inefficiently. There are also some similar short-term goals for recombinant DNA' work. Some might, in fact, address the above-mentioned problems. , ' . . . . r * ,.. , . . . ,. ' . `.'•. , .. _ 1 . ~ .. Our long-term recombinant DNA program~also includes the following:- understood as well. Because of this familiarity with E. ?1 coli, most work continues te~'be varried out,,with it. But since it is a natural inhabitant'of the hua-an body, concerns have beemexpressed as tQ~its suitability in industrial pro- p e upon e genetics of the common colon bacillus ~t Escherichia coli (E. coli). The work ,hasin tur~ resulted in more and more knowledge about E. co 12: Q No other organism is,: f•. : l af1 y.}L ! • L . .1 The greatest amount of progress in recer~• mo~ecularbiology has de end d th '' ~'~ ~ • ~x x The development of a "stable" of production mieroorganisms proprietary to Cetus. 4 t ~;G ib~ry `f a h^ rQ ,'4': t t~~iiY~t v, duction, particularly wj~th foreign gene5 inserted into it by recombinant DNA techrf iques~ Biological containment means crippling E. coli geneticall~ to make it impossible for thel organism to live oufsidet2ie laboratory. EK2 and EK3 are specifications for the'degree of crippling. We will similarly have to develols organisms'sufficiently crippled that they .j cannot live outside; the: industrial fermentation tank. We can't tell todaywhether or not E. coli will ultimately be `~ acceptable,~ no matter-how crippled, and to this end work is beginning`.to examine"and prepare alternative organisms for molecular genetics. We at Cetus Corporation propose to prepare an`entire stable of such'workhorse microorganisms. commercial use,.o' F; coli has been called the workhorse of ~s r A, But wev can'e-stop there. It will be necessary to catch up' in geneticbackground;knowledge, to bring our understanding of theseynew industrial microorganism candidates to•a state more coinparable to what we know about E. co1i. (David Hopwood has •tiaIready started^to so for Streptomyces, as mentioned above.) Inshort, we must develop dexterity with the genetics of these ne&Worganisms. One more step is essential to bring'these organisms out of the academic world and into the "real" world of industry. They must be genetically developed to grow economically on cheap, .,; wt ~f,• r R plentiful food sources whose continuing supply is assured. It should be stressed that such a program does not, at first,' require recombinant DNA experiments, . ~ , •. - ,. . °:. ,. . . ~ ~r •:~.~ ..r~ t,,.:,..:. ,~+ ..rv ~y•~ ~f°'~ , .<~ .1 .~y.`h _.t~ ,.: •';. . ,.~„ a .~•'~~ .. .~Y. . . . . .., , ~ . . ~ -. . , .. . . . . v~+. ... a~k } : }• ~' " . ~)F V. ~ .;~ ~f R- V;i r'.

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~."'e~r+s.M7f!R!..;*'.~,yti;r,..:t~rt•~ A!.,~+..•~:~~ms;.i•r.'+a~.--.v.r~-',"~wal~ .. . _ . L.~~'- .. ~~ . . . ~ . ~ . .,~ come to us if their results are only in E. co1i. sense. If we have the organisms ready, others may have to production plant which utilizes a new, safer organism, to make large quantities of insulin efficiently at a price which makes a test tube will occur very soon, but that it will be many years, and many millions of dollars more, before we see a In short, the ultimate commercial application of this tech- nology will require a great deal of developmental work after most of the intellectual excitement has gone. Such production organisms will be required for the exploitation of the favora- ble laboratory outcome of successful programs at Cetus or anywhere else! By way of illustration, we believe that the demonstration of the production of human insulin in E. coli in availability (this is not a cell mass, single cell protein project, but a model project for a host of gene=stitching of predicted and optimized amino acid corlten~ and protein , . , i, The development, by synthesizing genes, of artificial proteins ' . . ..~ .~ ~_' ~_: O. •` r over antibiotics ~ti antibodies may be safer, and they may be effective agains.L'virusesand maybe even cancer cells, which ~. safely with human proteins which we call antibodies. It is even more exciting~to talk,of the advantages of antibodies disease quickly, cheaply, very.,effectively, and possibly very antibodies in microorganisms.,,-. It's exciting to talk of treating this technology - the synthesis.'of highly-;specific human The addressing, beginning soon,of the ultimate expression of , L antibiotics, essentially ;do not attack. R° earlier Csmaller,~intermediate target would be the use of this antibody diagnostically in testing for pregnancy. The early stages of this'program, with 3-5 year success delivery expec- tations,.1and $i-2 million running costs, would result in antibodyfor ultimate`use as a birth control drug, then a much In a particular example-, if it were decided to target anti-HCG ri be less stringent than for a therapeutic drug. Later _., `%, - 'll, o .`. ^ xpec a e regu a ory process (FDA, etc.) , 'T-easoiiable t e t th 4- th 1 t LJ . ~V tient,,but is used in a test tube to test for pregnancy, it is ,• ..• _.. tion-of_iintermediate term scientific and commercial feasi- bility~: ;;And since the product is not administered to a pa- testing;^'~>TYie appeal of this approach lies in its demonstra- purified'antibody for diagnostic purposes for pregnancy worx would address the much larger birth control market. market as today's multi-billion dollar antibiotics market., F - existent today, but perhaps representing at least as big a above, is to prevent and treat disease. Ultimately, the expectation is to establish preeminence in that market, non- Of course, the largest imaginable use of antibodies, as stated Estimates vary, but we believe the utilization of antibodies produced this way to protect against epidemics, as well as to

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=•z y.qs p~r{• , .<..:..~ :'~.;•T 'F~6/~~• ~-•. ~~~ `~.'afi - . . ~ . ~. ' . ...~ .. ~~.,. .. treat their victims, and to treat a host of other conditions including the common cold, is at least 15 years away. The scientific work may take 10 or more years, and may cost as much as $5,000,000 the first five years. But we are budgeting less, expecting that scientific success in early years will generate'sources of additional funds. Facilities. dictable directions. It is, however, highly`'desirabl to build a are c cens ian n , an era aw an n ma e g g 3 may yet ta e unpre- We believe that conscientious development of this field will re- quire substantial physical containment facilities. This fact will, of itself, restrict responsible entry into the field. Our percep- tion now is that, although some of the above projects can be carried out, for a period of 2-3 years, in what are called P2 surroundings,T the really exciting work will requ~re at least P3~. and maybe even require 7a •: P4 facilities. It is not a good idea at this ~tinie to plan to build -41 a P4 laboratory. It may become a white elephant; specifications d li h l l i d f d Tc v n P3 facility right away, and we are doinq: t.x-ka',,. ...- .,:aa•a.,.~a l-,.~ st~~•~e t ;.ir~~v.i~ •..:Q.O r~ Cetus does all its work in its 'own laboratories'JSt•r Our P2 exceeds NSH requirements, as will ouz,J3 labs: Cetus -,3 facilities will include small-scale productzo capability. Our recombinant molecu- lar research staffing presently consists of'about twelve persons with varied skills. The-s~aff"continues to grow. We insist on the highest caliber of perso~iinel,rid we are encouraged by the ease with which this can be accoplished: Our recruiting is facilitated largely because of the luAre of the staff and consultants already assembled. _ G~~ 'a,GO~J'~ sti ,~~ - • '. . . . ~* O . • r tio S~; Gwt o o oQt~ afi ~`b P3 O1 110 GGO~ t.. o . , ~~a~{•'~ o;,v _ . • • , s '~ , .. ,.. '•Y~`~'.~,s~_;..'.6fi,..~.~~'~ ~, t's 'l?r: . +. . ~. .~ . s,. . .: ~Q rli!~.4...- t . µ. k; :'r`f:as- r •,. ,•! a.# • ~~.F:~>

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