CENG 109
Class 3
Recombinant DNA technology
and the birth of Genentech
Announcement about class project
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Grouping for class project:
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If you have problems finding a team to join, or
recruiting members from another school into your
team, send email to TA Stephen with your name
and school (stepheny@ust.hk).
team name and composition due next Monday
(18/09) Send email to Stephen
(stepheny@ust.hk)
From the story of Genentech, you will
learn about:
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The technological idea that is the foundation
of the modern biotechnology movement
The business elements contributing to the
booming of biotechnology since 1970s
Characteristics of a biotechnology company
New Idea
Genetic Engineering Technology
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It is the foundation of modern
biotechnology. Before the
biotechnology revolution, drugs
are either chemically synthesized
/ extracted from natural sources
Genetic engineering opens a new
way to harness knowledge in
biology to make drugs using
nature’s machinery
(Recall the Central Dogma in
Molecular Biology)
Genetic Engineering
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Recombinant DNA technology combines the genetic
materials of more than one species to produce a new
genetic template.
The expression of the recombinant DNA in cell
cultures enables the production of protein products
Genetic Engineering Animation:
http://www.maxanim.com/genetics/Genetic%20Engineering/Gen
etic%20Engineering.htm (Write down terms that sound
unfamiliar to you when you watch the video)
Inside the Genetic Engineering Tool Box
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Plasmid DNA : Gene Carriers
Graphics from “Biotechnology: Demystifying the Concepts” by
Bourgaize, Jewell, Buiser
Inside the Genetic Engineering Tool Box
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Restriction Enzymes: Molecular Scissors
Graphics from “Biotechnology: Demystifying the Concepts” by
Bourgaize, Jewell, Buiser
The first demonstration of a recombinant
plasmid DNA
expressed in bacteria
Steps in gene
cloning and
expression
1.
2.
3.
4.
5.
Obtain the gene of
interest
Insert the gene into host
cells
Select cells that contain
the desired gene
Induce the bacteria to
make protein product
from the “foreign” gene
Collect and purify
products
Lodish, J. Mol. Cell Biol., 2000
New Capital
Venture capital feeds the incubation stage
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Venture capital provides the
initial funding
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Bob Swanson, a venture
capitalist, cofound the
company with Herbert
Boyer, a key scientist
behind the technology
Venture capital firm (Kleiner
& Perkins) provides the
initial seed funding of
$100,000
“Proof-of-concept” work
contracted to Boyer’s lab.
First human protein was
successfully made in
bacteria within 9 months!
The Genentech IPO
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Genentech was the first biotechnology
company to go public. The biotech landscape
was changed on October 14, 1980, when
Genentech issued 1 million shares at $35
each
The market response was enthusiastic, with
the stock closed out its first day at $70
The first generation Biotech’s IPO
Company
IPO Date
Gross amount raised
Genentech
10/80
$35M
Cetus
3/81
$107M
Genetic Systems
4/81
$6M
Ribi Immunochem
5/81
$1.8M
Genome Therapeutics
5/82
$12.9M
Centocor
12/82
$21M
Bio-Technology General
9/83
$8.9M
Scios
1/83
$12M
Immunex
3/83
$16.5M
Amgen
6/83
$42.3M
Biogen
6/83
$57.5M
Chiron
8/83
$17M
Immunomedics
11/83
$2.5M
Repligen
4/86
$17.5M
OSI
4/86
$13.8M
Cytogen
6/86
$35.6M
Xoma
6/86
$32M
Genzyme
6/86
$28M
ImClone
6/86
$32M
Table adapted from “From Alchemy to IPO” by Robbins-Roth
Licensing deals
1978: licensed insulin to Eli Lilly & Co.
1978: licensed human growth hormone to AB
Kabi
1980: licensed interferons to Hoffmann-La
Roche
„ Genentech received upfront licensing fee and
payments for reaching benchmarks
„ Deals generated income, supported product
development, and increased credibility
New Culture
An innovative culture
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Academic root
Entrepreneurial drive
No dress up
Fun
Love of Science
Results driven
Execs “wear many
hats”
Intellectual Property
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In 1974, Cohen and Boyer, on behalf of
Stanford and University of California, filed a
patent on their recombinant DNA technology
In 1980, the US Patent and Trademark Office
granted the patent --- the first significant
patent to cover the new biotechnology
Take a look at the patent (US patent no.
4237224):
http://patimg1.uspto.gov/.piw?docid=US004237224&SectionNum=1&IDKey=87102B2A1FFF&HomeUrl=http://patft.uspto.go
v/netacgi/nphParser?Sect1=PTO2%2526Sect2=HITOFF%2526p=1%2526u=%25252Fnetahtml%25252FPTO%25252Fsearchbool.html%2526r=1%2526f=G%2526l=50%2526co1=AND%2526d=PTXT%2526s1=4237224.PN.%2526OS=PN/4237224%
2526RS=PN/4237224
Patent protection
continues
to fuel innovation
Genentech nowadays
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Market capitalization: 84.4 billion (7/28/06)
Revenue: US$ 5488 million in 2005
Product type: recombinant protein
Product focus areas: Cancer, Immunology,
Tissue growth and repair
Examples:
In the pipeline: >40 candidates (2005)
Information from the company web site of Genentech
www.gene.com
A Business Timeline of Medical
Biotechnology
First expression of a
human gene in
bacteria
Method developed for
Reading DNA
sequences
Genentech
founded
DNA sequencing
discovered
Cohen and Boyer
construct recombinant
DNA in bacteria
1971
Biogen
Hybritech
founded
Recombinant
human insulin
produced
First monoclonal
antibodies
produced
Cetus
founded
1972
1973
1974
1975
1976
Centocor
founded
1977
1978
First monoclonal
antibody diagnostic kit
approved for marketing
Chiron, Genetics
Institute, Genzyme
Founded
Gene Synthesizing
machines developed
Amgen founded
Genetech initial
stock offering
U.S. Supreme
Court rules that
life forms are
patentable
1979
1980
First product
sales of
recombinant
insulin
Orphan Drug
Act passes
FDA approves first
recombinant DNA
product, human
insulin for
marketing
1981
1982
1983
(presentation material from Prof. Langer, MIT)
A Business Timeline of Medical
Biotechnology
Human growth
hormone approved
by FDA
Cetus reports
polymerase chain
reaction technology
Chiron
clones and
sequences
entire HIV
genome
1984
Tissue plasminogen
activator approved
by FDA
1986
Healthcare reform
creates uncertainty
β-interferon approved
by FDA
Erythropoietin
approved by
FDA
FDA approves
α-interferon,
first recominant
vaccine
Eli Lilly acquires
Hyberitech
1985
Number of public companies
falls for the first time
Alliances among drug and
biotech firms increase
Legislation introduced to
reform FDA
Human Genome
project started
First U.S. patent
on transgenic
animal granted
1987
1988
First human gene
therapy attempt
Roche acquires 60%
of Genentech
1989
1990
Amgen becomes a
Fortune 500 company
Factor VIII approved
by FDA
1991
1992
1993
Trade treaty
extends patent
life to 20 years
Product
development
failures keep
investors away
1994
Market for
biotechnology
stocks reaches all
time high2
284 products in
clinical testing or
awaiting approval
1995
1996
(presentation material from Prof. Langer, MIT)