8/10/2019 Dna Dollars Biotechnology

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BIOTECHNOLOGY

DNA dollarsLinnaea Ostroffexamines a history of Genentech, the

US company that first made biology a business.

As the mysteries and mechanics ofDNA were being revealed, it wasunclear whether the molecule would

be used for good or evil. Debates raged:utopian fantasies of ending disease andfamine competed with fears of mutated lifeforms running amok. A suitably startling,if less popcorn-worthy, event occurred inOctober 1980, when the promise of DNAmodification raised US$35 million in alandmark initial public offering (IPO),

which saw the fastest stock-price rise in themarkets history.The record-breaking IPO was that of

Genentech, a small company based in SanFrancisco, California, whose plan was toproduce drugs using recombinant DNAtechnology. This was the f irst commercialmanipulation of DNA and the f irst sale ofbiological science as a commodity in itsown right. The biotech industry was born.Genentechs unique corporate structure,which blurred the boundary between aca-demia and industry, was swiftly imitated. Thesometimes uncomfortable entanglement ofpublicly funded basic research with privatebusiness enterprise persists to this day.Genentechby science historian Sally

Smith Hughes gives a detailed account ofthe founding and early years of the com-pany. Much of thematerial in thebook comes fromoral histories col-lected by Hughes,along with writtenarchival material.Hughess book isnot, however, ajournalistic analy-

sis of a unique and important company: itis an account of the key players, as told to asincere admirer.

Nevertheless, Genentechs achieve-ments in science, medicine and businesswere momentous. One of the companysco-founders, Herbert Boyer, a molecularbiologist at the University of California,San Francisco, was at the time a leader inthe development of recombinant DNAtechnology. Boyer and others had recentlydiscovered a means of reorganizing (recom-bining) the sequence of DNA molecules, andwere pursuing a method to use this engi-

neered DNA to generate proteins. This had

profound implicationsfor drug productionand development.

Wh ereas mos tdrugs had been dis-covered by large-scalescreening of syntheticchemicals, a hand-ful, such as insulin,were natural proteinswhose production in

the body was impairedin diseases such as dia-betes. Proteins haveexceptionally com-plex structures, andit is still too difficultto routinely synthesize them from scratch.Therapeutic proteins were at the timesourced from animals organs and humancadavers, making their supply and safetyunreliable. In theory, recombinant DNAcould provide a safe, consistent source ofthis class of therapeutics.

Boyers group was working on a way tocoax bacterial cells to produce therapeuticproteins from recombinant DNA. Moreimportantly, recombinant DNA presenteda means of designing drugs using the bio-logical mechanisms of a particular disease,which seemed to be an obvious advanceover the pharmaceutical industrys randomscreening procedures. Hughes does not,however, touch on any of this, leaving thereader to wonder why recombinant DNA isviewed as so useful.

The reasons the IPO was so successful,and why that success was so shocking, arealso underdeveloped in the book. At thetime it went public, Genentech had the

intention of making pharmaceuticals buthad no actual drugs in the pipeline. Whatit did have was a contract with Eli Lilly, thelargest producer of synthetic insulin. Thecontract was the first of its kind: Eli Lillywas not paying Genentech to produce insu-lin, nor licensing a method to do so, but waspaying it to do the basic scientific researchneeded to develop a method. Never beforehad an independent group of scientists

contracted with a for-profit organizationto make basic scien-tific discoveries, nor

had a publicly traded

company offered research as its sole sourceof revenue.

A patent on recombinant DNA tech-niques was granted in 1980 to Stanford Uni-versity, California, and to the University ofCalifornia, where Boyer and his colleagueshad developed the technology. The assur-ance of intellectual-property protection for

genetic-engineering methods and productsencouraged the explosion of the biotechnol-ogy sector, as academic researchers began toindependently commercialize their findings.The now commonplace practice of scientistsmaintaining ties to both universities andtheir own associated companies, along withthe conflicts it creates, comes directly fromGenentechs initial arrangement.

Although Genentechs business model wasgroundbreaking in its mechanics, the long-term strategy was a classic risk. Genentechsinsulin was intended to be the GutenbergBible of recombinant DNA technology an

established product made in a new way witha guaranteed market. Yet the route betweenbasic knowledge of a disease process and aneffective therapy is punishing, and manysubsequent designer drugs generated usingthe method proved not to be viable.

Rational drug design has not overtakentraditional drug-discovery approaches, andbiotechnology development is shifting backto large pharmaceutical companies, whichcan hedge risk internally although thefuture of drug discovery is a legitimate con-cern. Genentech itself is now wholly ownedby Swiss pharmaceutical giant Roche.

The scant objectivity, the somewhatplodding chronology of unfolding eventsand the sparse explanations of technicalterminology in Hughess account aside,Genentechs story remains a compell ingone. It neatly reveals the divergent chal-lenges of basic science, medical scienceand business, and despite its novelty, thetale illustrates several enduring principlesof science and markets.

In shifting genetic-engineering researchfrom academia to industry, Genentechand the industry it founded acceleratedthe development and distribution of medi-cally and agriculturally valuable products. It

triggered practical decisions on policy andregulation, while effectively sidesteppingphilosophical and ethical questions aboutthe uses of DNA: the market would decidewhat DNA should be used for. Genentechsbusiness model shunted private moneydirectly into basic research, drew inves-tors into basic science and academic sci-entists into business. Even as the industryreorganizes, these relationships remain.

Linnaea Ostroff is a researcher at theCenter for Neural Science, New YorkUniversity, New York 10003, USA.

e-mail: lostroff@nyu.edu

Genentech: TheBeginnings of

BiotechSALLY SMITH HUGHES

University of Chicago

Press: 2011. 232 pp.

$25, 16

AlthoughGenentechsbusinessmodel wasgroundbreaking,the long-termstrategy was aclassic risk.

NATURE.COM

For a review of the

US biotech debate:

go.nature.com/yvffo

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