A Sapphire Energy Co-Founder Sees Solutions in Algae for Drugs as Well as Biofuels

May 27, 2010 - Denise Gellene - xconomy.com

The potential of algae as a clean energy source has been generating a lot of entrepreneurial excitement in San Diego. At last count, 10 local companies are busy working on technologies focused on transforming ordinary pondscum into “green crude” one day capable of powering aircraft, trucks, automobiles, and even utility plants—and easing the world’s energy problems. It is a bold vision—but one that may be selling algae short. That thought occurred to me after I had a chat with Stephen Mayfield, a leading expert on the genetics of algae who recently moved his lab from The Scripps Research Institute to UC San Diego.

Mayfield has been studying algae for about a quarter of a century—long before it became hot—and he is a co-founder of San Diego-based Sapphire Energy, the oil-from-algae startup backed by billionaire Bill Gates. He’s a big believer in biofuels, and just a few days before Thanksgiving, he was in Washington with other Sapphire representatives, lobbying the Department of Energy for support. But to Mayfield, algae have far more to offer than a potential energy solution. He sees them as a possible answer to an entirely separate problem: the high cost of biotechnology drugs.

First some background. Many biotechnology drugs are made in living organisms, such as bacteria, yeast, or mammalian cells. The genetic code for a therapeutic protein or antibody is inserted into the organisms, which uses the DNA as a blueprint for producing the designated complex molecule. It is impressive technology, although the organisms require plenty of care and feeding in big, expensive factories that take years to build and bring online. And there’s the rub. Companies must often decide whether to construct a drug factory before they are certain they have a product.

Miscalculations are costly. By the time Idec Pharmaceuticals of San Diego broke ground on a $380-million factory in nearby Oceanside, CA, in 2002, all three drugs it planned to manufacture there had hit setbacks in clinical trials. A search for new drugs to produce in the factory led to Idec’s merger with Biogen of Cambridge, MA, which decided to make the multiple sclerosis drug natalizumab (Tysabri) there.

The biotech community in San Diego is well-acquainted with the rest of the story. Not long after the factory was completed, Biogen Idec briefly withdrew natalizumab from the market because a handful of patients developed rare but life-threatening brain infections. The drug never became the blockbuster the company had hoped for, and the factory was sold to Genentech at a loss.

Failing to invest in manufacturing can be just as costly, as Seattle-based Immunex learned. A shortage of production capacity for its blockbuster rheumatoid arthritis drug is one reason why that company sold itself to Amgen.

Mayfield says algae are ideal vehicles in which to produce biotech drugs because they don’t need all the pampering other organisms require. They pull nutrients from water and get their energy from the sun, which makes them easy to grow. A factory that uses algae to produce biotechnology drugs would be significantly cheaper to build than a traditional facility, lowering the investment risk associated with manufacturing, Mayfield says. Production costs would be about 75 percent lower, savings that could translate into cheaper biotechnology drugs, some of which now cost patients tens of thousands of dollars a year.

Roughly five years ago, Mayfield co-founded a company called Rincon Pharmaceuticals to begin commercializing his research. But like many startups, he says, it pursued too many projects at once and was close to running out of money before Sapphire Energy acquired Rincon last year. The deal gave Sapphire some useful intellectual property and expertise, but Mayfield expects the biofuels company to eventually spin out Rincon, which continues its research in Mayfield’s lab.

Earlier this year, Mayfield reported in the journal Biotechnology and Bioengineering that he produced in algae an anti-anthrax antibody with all the characteristics of an antibody produced in mammalian cells. Currently underway are projects involving the development of a targeted cancer drug capable of delivering a toxic payload directly to a tumor, and a malaria vaccine – possibly an edible one. It takes years to develop and test a biotechnology drug, so it will be a while before an algae-produced drug is available. But Mayfield says that day is inevitable. Science—and economics—are on his side.

Denise Gellene is a former Los Angeles Times science writer and regular contributor to Xconomy. You can reach her at dgellene@xconomy.com