Searching for a genetic jackpot

SIMON COLLINS reports on why scientists are attempting to short-circuit the life cycle of cattle.

Mongrel calves on a Waikato farm are unwitting guinea-pigs in a genetic experiment which could eventually transform New Zealand's dairy industry.

The Friesian-Jersey crossbreed calves have been bred by the Dairy Board's biotechnology subsidiary ViaLactia and the Livestock Improvement Corporation to inherit a medley of conflicting genes: Friesian and Jersey, high and low milkfats, and so on.

The calves are a year old, and using conventional breeding procedures it will be another year before they can have calves themselves, then a further year before reliable measures of their milk production can be taken.

It can take eight years to work through the generations to be sure that particular calves have inherited the characteristics, such as high milk yields, that farmers want.

ViaLactia has set itself the task of trying to short-circuit this process. If it can identify the genes that produce the desired characteristics, then it may be able to tell whether a calf will have the required traits even before it is born.

The company has $150 million of funding from the Dairy Board, which dwarfs the country's other biotechnology ventures such as Genesis Research and Development, which raised $60 million in a share float last year.

It is New Zealand's biggest single commitment to a field which University of Queensland professor John Mattick has called "the third great technology revolution."

"It's not just the fact that this technology will transform all existing industries, but it will create entirely new ones," Professor Mattick says.

But Professor Mattick, a scientific adviser to ViaLactia, is concerned that the company's structure as a wholly owned Dairy Board subsidiary will inhibit it from becoming a leading-edge global player.

"It was a terrific attempt to participate in the knowledge economy. It had a chance to establish itself as the genomic company for the dairy industry [worldwide]," he says.

"But it is constrained and won't reach its full potential. It should have been a separate company."

A year ago the company announced a deal with the leading American firm Celera to specify the genetic structure of the cow. But it has now backed out of the deal, saying it was too expensive and most of the information was becoming available on public databases anyway.

On June 1 it announced an alliance with another American firm, Orion Genomics, to specify the genetic structure of a grass species.

But the extent of its future work in New Zealand depends on the Royal Commission on Genetic Modification, which reports on July 27. A national moratorium on field testing or release of genetically modified organisms is in place until August 31.

A former AgResearch scientist, Dr Robert Welch, says there had been moves in the dairy industry to set up a biotech business for 10 years before it was finally approved in May 1999.

Ironically, he says, one of the sceptics at first was the Dairy Board's research and development director, a chemical engineer and former head of the Dairy Research Institute, Dr Kevin Marshall. Dr Marshall is now ViaLactia's managing director.

Dr Welch says the board at that time had a strategy of adding value to milk by putting its research effort into further processing.

"The idea that you could add value on the farm by, say, manipulating milk composition by altering what the cows ate or produced - they didn't feel that was a path that they wanted to go down."

However, a group of board directors and executives made a study tour to biotech firms in the United States, visiting Genentech, Monsanto, Dupont and a Celera subsidiary, among others.

Kiwi Dairies' technical director Howard Moore, who was on the trip, says: "That really motivated me to come back and see that the dairy industry put some money into biotech."

A $3 million project team was set up, spearheaded by consultants McKinsey & Co, which led to the board's decision to invest $150 million into a new biotech company during the five years from 1999 to 2004.

Professor Dorian Garrick, a Massey University specialist in animal breeding and genetics, says the decision was driven by the fear that someone else might make the long-predicted breakthrough of being able to identify the future characteristics of a calf and its offspring before it is born: "it's been done as an insurance policy."

Dr Marshall says that whoever makes that breakthrough may be able to cut costs dramatically by breeding cows which transform grass or crops into milk more efficiently - threatening the low-cost advantage that NZ dairy farmers now have.

Ethical issues will be involved in the work. Once scientists can identify a calf's genes with particular characteristics before birth, they will have to decide what to do about it.

"If you are dealing with embryos, you could end up not producing the ones that are no good, or intervening on them, maybe with a vaccination or some other approach, to make them better," Professor Garrick says.

"A lot of the breakthroughs might end up giving us the ability to produce cows with different kinds of milk - designer milks for particular uses, so there could be certain cows whose milk is used for cappuccinos and other cows made for special kinds of cheeses."

Dr Marshall says much the same thing may be possible if ViaLactia's deal with Orion Genomics leads to identifying genes associated with particular characteristics in grass, such as being drought-resistant or growing more evenly in all seasons.

"Maybe we can increase the energy level in the plant so the cow can benefit. Maybe we can increase the protein content," he says.

"One of the things we will be targeting is things that will allow the cow to process the grass that she ingests more efficiently, so you get a higher yield of milk or meat from the same quantity of grass.

"We expect that if that does occur, if she does get more efficient at converting that feed, there will be less methane emitted - less waste per unit of milk, and so less greenhouse gases."

ViaLactia - the name means 'Milky Way' in Latin - is a small company with just 15 staff, including three scientists recruited from Europe. Apart from the deals with Celera and Orion, it expects to contract out most of its work to NZ universities, crown research institutes and seed companies.

The company is based in the Auckland Medical School to make it easier to recruit top scientists.

Dr Marshall says the company has spent $20 million of its $150 million budget so far, without earning any revenue. It is still "two to five years away from producing products," and the aim is to make a profit.

He rejects Professor Mattick's suggestion that the company should be separate from the Dairy Board, with outside shareholders - a common line of attack against the Dairy Board itself from economists such as Dr Gareth Morgan and the Treasury.

"This is economic theory gone mad. We are not constrained by capital," he says.

"At the present time the industry wishes to fund this venture itself, but we don't preclude outside equity some time in the future."

Dr Welch believes that the industry's whole biotech strategy will be reviewed when the proposed Global Dairy Company takes over from the Dairy Board and the country's two big dairy groups, if approved by farmers.

He says Dr Marshall, who has worked in the dairy industry since 1963, is expected to find a new chief executive to replace him.

ViaLactia's board, chaired by former Dairy Board chief executive Murray Gough, is also likely to change. The other directors are former NZ Dairy Group chief executive Graeme Milne, two dairy farmers and a biologist, the New York-based chief executive of Physiome Sciences, Dr Jeremy Levin.

As Dr Welch puts it: "Whether or not GlobalCo goes ahead, there will be new ways of looking at the world."

Links

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