The First of the Big Spenders

here are a number of that will certainly be impacted by bio• into biotechnology in its most generous myths about biotech• technology [See Tables 1 and 2; data spree ever. Of Ciba's $1.5 million, nologythatBio/Technol• from Scrip and from County NatWest around $100 million was devoted to ogy, asitsearsandvoice, WoodMac (Edinburgh, UK)]. In its 1991 biotechnology activities, with around oughtT to correct. One of them, put about results, announced in March 1992, 60 $65 million for biopharm-aceutical de• by some CEOs trying to grow small com• percent of Ciba-Geigy's turnover• velopment. panies, is thatthere are only two countries SFr.12,622 million ($R,500 million)-was In addition, Ciba-Geigy's recent in• in the world that are really active in bio• either in health-<:are orin agrochemicals/ vestments and collaborations with U.S. technology: the United States and the seeds. Only Bayer (Lever-kusen, Ger- companies such as Tanox Biosystems United Kingdom. Ifyou are trying to raise (Houston, TX), Chi ron (Emeryville, speculative capital to fund your growing CA), Biosys (Palo Alto, CA), Isis business, or if you gather your informa• (Carlsbad, CA) andAffymax (Palo Alto, tion on biotechnology from the general CA) could account for $20 million a media (which tends to get information year of its involvement in biotechnol• from those trying to raise speculative ogy R&D. To that one should certainly capital), then you might be forgiven for add a proportion of the estimated $80 reaching that conclusion: with a few ex• million that the company will spend ceptions, notably Australia and The Neth• setting up its new Biotechnikum R&D I erlands, venture and subsequent phase pilot facility in France. In bio- money for biotechnology is a scarce com• technology R&D spending, modity away from the Northern Anglo• many) gets really close to that. therefore, Ciba-Geigy is way Saxon axis. However, ifyou look beyond Look at Ciba-Geigy in an- above Amgen (Thousand the bubble and fizz of fund-raising, be• other way. In March Oaks, CA) and exceeds the hind the froth and pop ofpublic relations, 1992, Bio/Technologyre• ten most profligate Euro• to the strategy and toil of making money ported that 1991 stock pean biotechnology con• by producing and selling products in bio• offerings by eighty• cerns put together': of the technology, that conclusion is palpably five biotechnology biotechnology specialists, untrue. companies had raised only Genentech (South One sure way of getting a truer per• $3.7 billion in public fi• Francisco, CA) spective on biotechnology is to go into nance.1 Given the figures for spends more. a major chemical company involved in R&D spending by biotechnology pharmaceuticals, agrochemicals, and companies-$646 million for the top seeds. And, if you have to choose one 3R companies during 1990/9!2-it company, there is a good reason for wouldn't be unrealistic to assume that making it Ciba-Geigy of Basel in Swit• most of that money will be spent on zerland: Ciba-Geigy is the company that research and product develop• has the most to gain (or to lose) from ment over, say, the next 2-3 years. biotechnology in the next decade. That Now compare Ciba-Geigy. For is to say, compared with pharmaceuti• 1991, it increased its group R&D cal specialists like Merck (Rahway, NJ) spending 7 percent to $1.5 bil• or Glaxo (London), or with chemical con• lion; that is, in one year, one cerns such as ICI (London), DuPont company put into its R&D 40 (Wilmington, DE) or Hoechst (Frankfurt, percent of the money that the Germany), more ofits turnover is in areas entire investment community put

654 BIO!H:CHNOLOGY VOL 10 JUNE: 1992 • © 1992 Nature Publishing Group http://www.nature.com/naturebiotechnology chantly resistant to becoming part of it variety used and the scale of the test were tion as being "in some very big indication legally or politically. It is a small coun• similar toexperimcntsapprovcd and com• areas butoften with unexciting product~. " try. It~ six and half million people have pleted last year by the company in France Biotechnology and the 250-strongphar• provided neither a sufficiently large and the U.S. However, because there is no maccutical unit at Cibain particular might home market nor an indigenous skills designated approval authority in Switzer• just change all that, according to Kaspar base to satisfy either the drive of the land equivalent to the French Commis• von Meyenbmg. "I believe that going into country's major manufacturers for ex• sion Genie Biomoleculaire (CGB; Paris) new areas, looking at new molecular tar• pansion or the ambitions for high stan• or the USDA's Animal & Plant Health gets, will bring beneficial effects in new dards of Jiving of the six and a half Inspection Service (APHIS; Washington, areas leading to novel mechanisms and million people. For Swiss companies, DC), the trial will not go ahead-even novel compounds. Some of those activi• the dissolution of national barriers in though a Swiss committee of experts had ties (but not all] will be within ourexist• Europe that 1993 is supposed to bring concluded that the test presented no risk ingareasofstrength. "Yet von Meyenburg will bring no change of strategy-they to either manor environment. "It was our is keen to stress that hiopharrnaccu ticals have always yearned for outside mar• decision, based on the company's ethical and biotechnology in general arc but a ket~ and have traded globally. policy," said Ciba spokeswoman, Elke small partofCiba'sR&D approach: "We Being in Switzerland seems, at present Jarchow. Perhaps Ciba's discretion will use biotechnology as a set of tools to at least, to have disadvantages, too. A prove the better part ofvalour. But from produce novel substances thatone had no strident minority of way previously of those six and half producing or ti nd• million people, vo• Table 1. Top 10 pharmaceutical companies worldwide 1990-91. ing. These sub• ciferously trammel• stanceswill notre- ing all available av• Company Pharm. Sales 0/o change place existing enues in the highly vs 1989/90 drugs or effective participatory Swiss new drugs." Von democratic system Meyenburg sees Merck & Co ...... 6365 +17.8 (sec Dateline, this biotechnology as issue), has proved Glaxo ...... 6062 +16.3 something that to be a thorn in Bristol-Myers Squibb ...... 5261 +18.4 "complemcn ts Ciba-Geigy's flesh. Hoechst ...... 4992 +18.8 the conventional Ciba submitted its Bayer ...... 4956 ...... + 16.9 approaches," as "a plans for a new Ciba-Geigy ...... 4582 ...... +21.3 modern pillar of R&D/pilot labora• Eastman Kodak ...... 4349 ...... +8.5 drug discovery." tory, the SKB ...... 4242 ...... +15.6 Lack of produc• Biotechnikum, to Sandoz ...... 4088 ...... + 18.0 tion capacity may, the Rase! authori• Eli Lilly ...... 3700 ...... +26. 1 in one way at least, tiesin l990,expect• have constrained Source:Scrip pharmaceutical company league tables. ing that the facility Ciba's efforts in would come on hiopharmaceutical stream in I 992. The plans were ap• outside it looks like a cave-in in the face development. According to von proved-butonlyinjuly ofl99l. In the oflethargic bureaucracy and aggressive Meyenhmg, Ciba has "always been lim• face of those delays, and anticipating activism. ited [in bio-logicals production] dur• more, Ciba withdrew its Basel applica• ing the past five years. We have a some• tions in December 1991 and applied A PILLAR OF DRUG DISCOVERY what elderly facility- cranking out all instead to the French authorities to Despite being sixth in the pharm• sorts of wonderful compounds-and build the Riotechnikum at another com• aceutical sales league [ Sfr. 7,824 million we will be even more limited in the pany site across the River Rhine. The ($5,350 million); Table 1], only future as clinical demands increase. We company now expects to complete con• Voltaren, Ciba's non-steroid anti-inflam• endeavour, therefore, to have close col• struction at Huningue, Alsace 4-!i years matory drug for arthritis tops $500 mil• laborations with outside companies; from now. Kaspar von Meyenburg, lion a year in sales (and those sales Synergen, Chiron, Tanox, for in• Ciba's head of biotechnology, was dis• might be affected as Ciba begins to take stance-that's one way of having more turbed by the delays in approval: "It was on board severe criticism from FDA facilities." an unhealthy surprise to have it. take so (Bethesda, MD) ofiL~ Voltaren promotion long in this town of Basel l where the in the U.S.). The company seems to main• BmER THAN CURE chemical industry is such a major em• tain its strengths in inflammation, cardi(>• Ciba has made use of Chiron's yeast ployer]; so now we are going to move to vascular disease, and hypertension by production facility in Emeryville to pro• France." gradual improverncntandforcc of num• duce what are probably the nearest• In May, Ciba had another "unhealthy bers rather than dependence on a few market of its recombinant products. In surprise" brought about by its sensitivity blockbusting drugs: fur instance, its hy• 19H7, Ciba established The Biocine to public uncertainty about biotechnol• pertension drug, Lotcnsin, 1·eceived only Company as a !i0/50 joint venture in ogy-this time with respect to its plant a 1C rating (new chemical entity with vaccine development with Chiron. A breeding activities. The company had little or no significant improvement over year later, the Swiss maj01· took a $20 planned to conduct a small-scale field existing therapies) when approved re• million equity stake in Chinn1. Now trial of a recombinant commercial maize cently by FDA. One pharmaceutical in• Biocine has four vaccine candidates in variety containing a marker gene. The dustry observer summarises Ciba's posi- phase-II clinical trials: an influenza vac-

656 RI0/:1::0 INOLUGY VOL 1Cl .JUNI 1992 • © 1992 Nature Publishing Group http://www.nature.com/naturebiotechnology cine, a modified gp-~0 AIDS vaccine, a ments. First, there is the anti-IgE anti• interferons are in late phase I against can• glycoprotein subunit vaccine against bodyproduced byTanox and lice nsed to cer and viral disease. genital herpes that may have potential as Ciba thatisabouttoenterclinical trials as Ciba is also going beyond the isolation a therapeutic, and a malaria vaccine based a treatment for allergy (Ciba also has its and production of biological products on P. vivaxcircumsporozoitesurfaceanti• own anti-IgE at an earlier stage of devel• to screening f()r active small molecules. gen. In addition, thejointventureisdevel• opment). And then there is Ciba's re• However, this is an area about which oping candidate vaccines for hcpati tis C combinant thrombolytic hirudin, Kaspar von Meyenburg is somewhat (phase I) . Chiron 'scarlicr-stageviral vac• which, like other leech-derived com• cagey: "If you [as a company] are in cines-for hepatitis A and cytomegalovi• pounds is remarkable for its non• blood pressure, and we have blood pres• rus, for instance-might also enter the immunogencity. Hirudin entered phase sure control drugs, then it would be an Biocine development pipeline. II trials in japan in September 1991 and obvious conclusion that we are probably Nearestofall its recombinant vaccines d emonstrated coagulant properties at using high-technology screening in this to the market is a whooping cough doses of 0 . 0~- 1.0 mg/ kg. area: angiotensin II and its receptor. (pertussis) vaccine that came to Ciba Behind this advanced guard comes a renin, would be obvious targets. The when Biocine acquired Sclavo (Siena, slew of early-stage project~. Extending its same logic would apply in inflamma• Italy). The vaccine is a toxoid from work on leech product~ . Ciba has cloned tion, for instance with in t.crleuki ns, or· in Badlluspertussisthat has been detoxified the gene for the protea-;e inhibitor Eglin C, allergy with IgE." Additional work with by substituting for high technology lysine and glycine screens takes place residues in the Sl in the separate Table 2. Top ten agrochemical companies by turnover: Estimates for 1991. subunit. The therapeutic units at produc t is ex• Basel. pected to reach Company Rank Sales Range ($M) As in other areas, the U.S. market in Ciba supplements 1993. The Sclavo Ciba-Geigy ...... 1 ...... >3200 its in-house effC:Jrts acquisition also Bayer ...... 2 ...... with outside col• brings Biocine an ICI ...... 3 ...... 2100-2300 laborations. In July existing conven• Rhone-Poulenc ...... 4 ...... 1991 , the company tional vaccine DuPont ...... 5 ...... e stablished an business that had DowEianco ...... 6 ...... 1 500-1 800 agreement with sales in 1991 of Affymax covering Monsanto ...... 7 ...... Lit. 55 billion product discovc1·y ($45 million). Hoechst ...... 8 ...... research directed at Ciba appears to BASF ...... 9 ...... 1000-1500 selected molecular be looking to Schering Plough ...... 1 ...... targets in arthritis, maximize its ben- Source:Data from County NatWest WoodMac (Edinburgh, U.K. ). cance r, and autoim• efits from the vac- munity. As with its cine products that are now appearing and is looking at using the protein as a collaborations with Chi ron and Tan ox, on the horizon. As a result of a deal possible therapeutic in protease-associ• Ciba has taken a minority equity stake in struck in January 1992, Ciba may reap ated conditions such as emphysema, sep• Aff)'max, 5-6 pe rce nt in this case. While the lion's share of Biocine's earnings: tic shock, arthritis, and osteoarthl'itis. In taking responsibility for clinical devel• over the n ext four years it will invest$45 O ctober 1991, Ciba entered a collabo• opment and gaining exclusive world• million in the joint venture above its ration with Isis Pharmaceuticals to de• wide marketing rights to any products existing contributions in exchange for ve lop an antisense approach to inhibit• developed, the pharmaceutical company "a preferred interest" in the earnings. ing the expression of the e ndothelial will provide Affyrnax with R&D funding, Chironcan maintain its50percentstake cell adhesion molecules ICAM and milestone payme nts, and royalties on in Biocinc by repurchasing 50 perce nt EIAM. Another immunological project sales. of Ciba's prefe rred position before is the development of its own anti-IgE Tan ox, AfJYmax, Chiron, Isis, Gencntcch: March 3 1st 1996foran amount equal to monoclonal antibody in allergy. Ciba is collaborating with them all. It has Ciba's pre ferred investment plus inter• also broken off its two rela tionships with est. (UNICALITY Synergen (Boulder, CO), one through its Ciba is also involved with clinical stud• Zyma subsidiary for recombinant fibro• IMMUNOLOGICALITY ies on a number of other recombinant blast growth factor. Kaspar von Meyen burg Ciba's involvement in vaccines develop• products outside immunology: insulin• is quite clear on the difference between ment is relative ly recent and stems pri• like growthfactor-1 (1GF-l) produced in these biotechnology companies and marily from its continuing work in im• yeast by Chiron (Ciba is the worldwide companies like Ciba. "Their business is munology:i ts immunostimulatory com• licensee) has been in phase II trials for developing technology .... Our projects pounds, such as muramyl tripeptide type II diabetes and acute re nal failure; arc in the direction of treatment." (NTP-PE/ MF-59) , are used as adjuvants an anti-H!V monoclonal antibody, RA "J~ in several of the Biocine vaccine candi• 123, isolated byTanox (another company AGROPHILIA dates. The thread of immunology runs in which Cibahasa minorityequitystake) In healthcare, Ciba maintains a delib• through other of Ciba's development has undergone phase I trials in Switzer• erate policy of enhancing R&D through work including two of the more ad• land and has been well-tolerated; and alliances. In the agricultural sector, how• vanced biopharmaceutical develop- patented hybrid lymphoblastoid-derived ever, the nature of those alliances has

lliO/F CitNCJ: C;CY V')l 1() 657 •© 1992 Nature Publishing Group http://www.nature.com/naturebiotechnology changed with time. "There has certainly quality, one of the first outcomes of the diagnostic tests for plant diseases. At been an evolution in our external col• mapping exercise was the isolation of the beginning of 1992, the company laborations," explains John Duesing, histidinol dehydrogenase, a plant en• launched a monoclonal antibody-based Head ofResearch Services at Ciba-Geigy zyme responsible for herbicide resis• diagnostic test developed with Agri-di• Seeds: "In the early days, we were not tance. Ciba's continued interest in this agnostics Associates for the wheat fun• sure where the underlying principles area may come as something of a sur• gil pathogen Septaria triticii and that were going to lead so we put a lot of seed prise. Following comments from the may be followed soon by tests for money into general biology. Now we Head of Ciba's Agricultural Division, Mycosphaerella spp. Another recent link• have either brought the technology in Heimo Brunetti, about the ethics of up has extended Ciba's involvement in house, identified collaborators, or herbicide-resistant plants, observers be• plant protection against nematodes. In moved away from specific areas. We are lieved that the company would concen• February 1992, Ciba agreed to fund not as diversified as we were." trate in the future on insect-and dis• R&D at Biosys (Palo Alto, CA) for two That focussing-in can be seen in the ease-resistance. However, Daniel years to the tune of $5 million. In ex• way Ciba has gathered biological tech• Blancpain,Headofthecompany'sSeeds change, Ciba gets the exclusive rights nology around its maize and wheat Division maintains that "the combina• marketingrightsfor the resultantagenl~ breeding programme. It was the first tion of genetics and herbicides, allow• in marketsoutsidethe U.S. to add to rights company to regenerate fertile maize ing the use of more environmentally in the U.S. already negotiated in 1991 plants from protoplasts, and in 1991 friendly herbicides" is still the likely with Ciba'sAmerican subsidiary. conducted field trials on recombinant first step for Ciba, at least in the U.S.: maize in both the U.S. and France. It "then will come the disease-resistance." THENCE TO MARKET licensed in "biolistic" technology from he adds. In agriculture, says Daniel Blancpain, DuPont, and has used itsucessfullywith One of Ciba's most exciting disease• 'The winner is the [company] that can maize. Thecompanywasgranteda U.S. resistance projects, according to John bring solutions to the farm in the form patent covering the genetic sequence Duesing, is the cloning and expression of integrated pest management. Ciba's of the maize nitrate reductase and has in plants of a series of genes involved in philosophy for success in agriculture is recent application for a European fungal resistance. The discovery of the to combine its chemical and biological patent on root-specific promotor se• genes stems from work on understand• technological approaches with its posi• quences. ing the mechanism ofaction offungicidal tion in the market: We know field chemicals. Certain compounds appear crops-we arc organised in the market. MAIZE ON THE MAP not to interact directly with the fungal We will offer both seeds and chemicals Perhaps one ofthe most important tech• pathogen but by inducing the induc• but not as a package. The seeds business nologies that Ciba-Geigy Seeds has taken tion of plants compounds that attack depends on bringing crop solutions." in-house and refined is RFLP gene map• the fungus. A recent European patent Global activity is a key component of ping in maize and wheat. The technology application indicates that those com• Ciba's strategy both in agriculture and was licensed on a non-exclusive basis pounds include lytic peptides and the healthcare: interest in technologywher• from the Agricultural Genetics Company enzymes, chitinase and glucanase "By ever it is generated, access to markets (AGC, Cambridge, U.K.), another com• inducing the expression of those genes, wherever products can be sold. pany in which Ciba has an equity stake we can induce resistance," says Duesing. If Ciba-Geigy is typical (and that will (5.1 percent). Other licensees include ICI, Thus far, Cibahasevaluated a series of become clearer from subsequent Bio/ Nickersonintemationa!Seed (Cambridge, genes by expressing them constitutively Technology profiles), then the top rank U.K.) which is now part of Limagrain both singly and pairwise in tobacco and pharmaceutical and agri-business com• (Gerzat, France), and Unilever's Plant then subjected them to pathogen chal• panies are all probably spending 0.5- BreedingInternational (Cambridge, U.K). lenge: synergies between distinct anti• 1.0 percent of sales on biotechnology Ciba project manager Philippe Gay con• fungal activities were noted. Although R&D. Multiply that figure by the turn• trasts the aims mapping in plants with that Duesing is enthusiastic about the over in those industries and you get the for the human genome: "In human genet• project, he recognizes limitations: 'The best possible response to carping small ics, the goal is to walk to the gene. In plant fungicide itself will induce 10-20 differ• company CEOs who opine on the geog• breeding, there is no need ... all you need ent genes. Compare that with the [ge• raphy of biotechnology: biotechnology is a decent linkage to the gene ofinterest." netic] induction of a single gene and R&D-$700-1000 million worth of it a The company's knowledge ofthe genetic you can see it's far more limited. How• year-is happening all over the devel• map in wheat and maize has already been ever, in vegetative crops which are af• opedworld-withouthype, indeed with implemented in its breeding programmes, fected by one or two key pathogens, barely a whisper-in the multinational according to Gay. But as important, he access to the genes could be impor• majors. says, is that Ciba can look beyond single tant." Ciba will license the technology gene traits: "We are now handling to get the genes into those crops. In a projects involving more complex traits related project, Ciba is evaluating work REFERENCES where there may be five separate loci from Jesse .Jaynes at Louisiana State 1. Spalding, BJ 1992. 39 IPOs raise involved .... What we are trying to do is University in which microbial resistance $1.2 billion. Rio/Technology 10:238-239. reduce quantitive genetics to Mende• genes from insect sources have been 2. Spalding, BJ., and D. McCormick. lian genetics." engineered into plants. 1991. R&D spending still soaring. Bio/ As in its healthcare business, there is Technology 9:690. PumNG UP RESISTANCE no evidence of a "not invented here"in 3. Hodgson,.J. 1991. Eurobiotech trails Despite its potential in exploring Ciba's agricultural activities. One illus• U.S. R&D spending.Bio/Technology multigene traits like yield and storage tration of that is in its development of 9:794.

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