Genentech proves that research does pay off

By Yoke Har Lee

Professor Ross Clark at the University of Auckland has the distinction of working in one of biotechnology's more successful stories - Genentech Inc, a San Francisco company with the pedigree of being able to take some 12 laboratory ideas into the marketplace.

Genentech has 3200 patents to its name and another 2000 pending. Genentech and the University of San Francisco are locking horns, in a 20-year old battle, over intellectual property for a growth hormone which could end in over a $US1 billion legal suit.

"We could do with a few of those [intellectual properties]," Prof Clark told the Business Herald. He is a director of the university's Research Centre for Developmental Medicine and Biology and chief scientist at NeuronZ, a unit of the university's commercial arm called Auckland UniServices.

But then, Genentech spends more than 35 per cent of its turnover on research while New Zealand companies spend an average of 0.5 per cent of sales on R&D.

Furthermore, neither the New Zealand universities nor the Crown Research Institutes (CRIs) seem to be able to fork out $US500,000 ($1 million) to buy an up-to-date model of a gene sequencing machine. The country's most sophisticated gene sequencing machine is owned by a private company - Jim Watson's Genesis.

It must be remembered that a gene sequencing machine is a very basic piece of equipment for any biotech wannabe.

And it is not the only piece of equipment New Zealand lacks. There is a stark gap in the facilities needed to support our biotech industry.

Prof Clark said: "In my area of work, for example, to make recombinant proteins, there is also no facility. That to me is also a basic. My patents are mostly in molecule discoveries and functions of molecules. And for that you need the molecules and large proteins made. There is no facility in Auckland to make recombinant proteins, or if there is, it is at a small scale - you can make a few milligrams at once."

Genentech, in comparison, can make at least 100 kilograms of recombinant proteins, for commercial sales, according to the company's website.

The problem in Auckland and New Zealand is that no one is big enough to do things of any significant scale.

"There is no capital investment in universities. Lots of things are quite old and there isn't the investment in new equipment that there should be. Things haven't been organised well and are continually not being organised in a focused way to bring New Zealand science up to where it needs to be," Prof Clark said.

Take another example: because he has had the fortune to work outside the US, Prof Clark has got more patents to his name than most institutions here have got in the last five years.

Without what the industry jargon calls "output" - and in the biotech field this is in the form of patents on discoveries made in biological science - New Zealand cannot even dream of attracting venture capitalists.

This lack of equipment and basic infrastructure to support research would lead quickly to New Zealand losing its intellectual property, Prof Clark said.

"To actually do high-tech leading edge research, what you have to do in New Zealand is you go offshore. You can go to them and say 'can I have such and such a thing made or can I work with this company on this research? - we have got an idea here and we need something from you.'

"Even if you have a patent that you own currently, or a molecule that you need, you can't source it out of New Zealand.

"At various early stages, having just filed a patent, you then go offshore to say can I get this reagent [made]. They can give you that under a Material Transfer Agreement and may own the research completely or your outputs of it.

"It is interesting to search the US patents office. I have 20 of them in the last five years - and you can search how many the CRIs or the universities have. It just reflects that even though it may be a New Zealand patent, it is not owned in a New Zealand name but a US company name.

"Thus they own the intellectual property early. That's just a reflection of the lack of science infrastructure and the lack of ability of New Zealand to protect its intellectual property or to get the value out of it. The way the whole thing has been set up, the intellectual property disappears."

Money, he said, should be spent by the Government to make sure the CRIs or universities keep the intellectual property. "That's not happening at the moment," Prof Clark said. To be part of the biotech industry is an expensive exercise, something which New Zealand has been slow to catch up on.

"To fund the biotech industry, you need a much higher level of funding than what is available. I have been back [in New Zealand] for two years and I haven't seen anyone doing it [the basic funding for infrastructure]."

Prof Clark said the campaign against genetically-modified organisms in New Zealand could well throw us into third world status in health and economic standards. Regulations in New Zealand were already punitive for the biotech industry, he said.

A scientist who wanted to work on a genetically modified animal, for instance, could write a letter or send an e-mail to the US and get one made, for $US5,000, Prof Clark said.

"It would cost almost as much, I think, in an ERMA (Environmental Risk Management Authority) application, and to make a [genetically engineered] animal here than it would to get a contract lab in the US to make it for you. So the money is being spent offshore rather than staying in New Zealand. Which way would you do it if you took six months to do it or six months to get the application?"

He said the current ERMA set-up would not help push New Zealand's biotech industry forward.

"Is it going to stop New Zealand scientists doing genetic engineering? - yes if you do it in New Zealand but not if you do it offshore," Prof Clark said.