GENET archive


2-Plants: U.S. biotech and flax industry fight over GE pharma flax

                                  PART I
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SOURCE: Grand Forks Herald, USA, by Sam Huttenbauer Jr., Sam Huttenbauer
        III and Eric Murphy
DATE:   19 Jun 2005

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- Sam Huttenbauer Jr., is CEO, Sam Huttenbauer III is president and,
Murphy is chief scientist at Agragen Inc. -

As many in North Dakota and the surrounding region are aware, Agragen is
a plant-based pharmaceutical company focused on production of therapeutic
proteins using genetically modified flax as a production platform. In
addition to flax, we plan to incorporate another plant to produce
therapeutic proteins; one that is a good rotational crop with flax.

The overall thrust of our technology is to insert genes into the plant,
thereby permitting the plant to make and store the protein of interest in
the seed, where it can be stored indefinitely until it is purified. From
a business standpoint, plant-made pharmaceuticals represent a means to
reduce the production costs and to increase the availability of many new
drug therapies, with the downstream effect of dramatically reducing costs
to consumers and allowing life-saving therapies to find their way into
the hands of many patients who would not have access either due to cost
or availability. Recently, there was quite a stir in Missouri, as Ventria
Biosciences, another plant-made pharmaceutical company that uses rice as
a platform, drew criticism from Anheuser-Busch regarding its plans to
plant genetically modified rice.

While a number of articles and letters in the Herald pointed this out,
these same articles and letters failed to identify that both parties and
the rice growers have resolved the issues and reached an agreement. This
agreement permits Ventria Biosciences to plant genetically modified rice
in Missouri, using distance from other rice growers as a means to control
crop commingling.

This deal was brokered by the governor of Missouri because he saw the
tremendous potential for plant-made pharmaceuticals to bring new jobs to
his state. In addition, Northwest Missouri University has established a
plant-made pharmaceutical Center of Excellence around Ventria.

A similar relationship could be forged between Agragen, UND and North
Dakota State University, bringing together all three entities to help
build a new segment of this state's economy.

Agragen selected flax because we feel it is an ideal genomic platform for
production of therapeutic proteins for two main reasons: First, flax is
essentially self-pollinating, greatly limiting the ability of it to
outcross to other plants. This is a natural means of protecting the
nongenetically modified flax grown in North Dakota. Second, flax has a
very short pollen travel distance and half-life; once again a natural
means of protecting against crop commingling. As mentioned above, Agragen
also is working to modify an additional plant that can serve as a
rotational crop, and later, when more science is developed around its
molecular biology, it will serve as another platform for plant made

Currently, the company has selected two products for the initial stages
of production and has several additional candidate proteins. These
initial products are in line with the company's goals; the utilization of
a large amount of acreage and passing value added agricultural profits
back to the farmers.

Both end products represent current billion-dollar plus markets with high
growth potential, both molecules do not require years of discovery
research, only duplication of production in plant, and both require large

The company feels that North Dakota is ideal because the state leads the
nation in flax production, thus it is has the agronomics and
infrastructure in place. Agragen can help anchor the Red River Valley
Research Corridor through potential collaborative research arrangements
with UND and NDSU, thereby employing the outstanding scientific assets of
two major universities.

When Agragen contemplated coming to North Dakota, it immediately met with
leaders in the state's flax industry and members of Ameriflax's board,
including Ernie Hoffert, secretary/treasurer. We assured these
individuals that it was our desire to work closely with them and other
leaders in the state's flax industry because it was critical that all of
the stake holders were part of the decision-making process. Agragen has
stood by this commitment and has continued to have very open discussions
with key members of the state's flax industry, state leaders, and farmers.

Unfortunately, the same cannot be said for the members of Ameriflax
board, who recently convened a closed meeting in Fargo to organize
opposition to Agragen's efforts. Despite Ameriflax's opposition, we will
continue to hold focus group meetings throughout the state where we will
be informing producers about Agragen's plans and where we will be seeking
meaningful input from these same producers.

We also have met with North Dakota agriculture officials including the
agriculture commissioner, openly discussing a number of key issues with
these officials, most important, regulatory issues.

Agragen is bound by FDA and USDA policies concerning what it does in the
field and must work within this regulatory environment. We have proposed
a number of key steps to avoid commingling of our flax with nonmodified
flax. In part, this utilizes a closed loop system in which we will
contract only with producers who will grow our flax within the same
farming operation. We will use large distances between fields and will
demonstrate in field trials pollen travel distance to minimize concerns.

More importantly, Agragen is working at a rapid pace on its own
proprietary control mechanism, which when combined with our dedicated use
equipment and transportation system, will eliminate the possibility of
contamination of the standard flax system.

Plant-made pharmaceuticals are not a new idea, nor is Agragen the only
company in this field. Last year, hundreds of millions of dollars were
spent on plant-made pharmaceutical research and development.

This is not the kind of money thrown at a passing fad or a bad idea. This
is also not a small potential market space. According to a report by
consultancy Frost and Sullivan released in December 2004, the U.S. market
for plant-made pharmaceuticals could be worth $2.2 billion by 2011 with
the first products reaching the market by 2005/2006.

Agragen realizes that flax has long been a staple crop for many North
Dakotan farmers and as such it is tied to many emotions. That is why
Agragen has bent over backward to include as many stakeholders as
possible in its ongoing development.

Hoffert recently stated that his rejection of plant-made pharmaceuticals
is an economic one, not a philosophical one. Edible flax is a $12 million
to- 18 million dollar a year business and used 50,000 to 70,000 acres
last year.

This begs the questions: Is it worth turning your backs on a potential
$200 million industry that has pledged to satisfy all constituents that
it will not harm the current flax industry before moving into North
Dakota? Is it worth rejecting a new sector, high-paying industry that
offers great job opportunities for North Dakota? Is it worth outright
condemning a new potential use for flax that calls for an ultimate
potential of five times more acres than current edible flax because a few
outright refuse to consider the possibility that pharmaceutical flax can
peacefully coexist with nonpharmaceutical flax? Is this really best for
North Dakota?

Is this a sound economic argument? Or is it one fueled by the
understandable emotions of a small, but profitable sector that has
predetermined irrationally that their market niche will be negatively

Other areas of the country are attempting to lure Agragen. Flax can be
grown elsewhere, but the company belongs in North Dakota. We are focused
on providing a broad spectrum of job opportunities in the Greater Grand
Forks region as well as in rural North Dakota. This broad-reaching
economic development is unequaled in the state and is only initiated by
bringing a new sector industry to the state. We look forward to success
in North Dakota and the success of the new pioneers coming to the state
to work with Agragen in its endeavors.

More importantly, we look forward to providing jobs to young people,
ranging from marketing to molecular biology, from chemistry to farming,
from engineering to truck driving. In this time of economic flux in the
Red River Valley and in the state, a new agricultural economic base is
critical for both farmers and young people.

While we know there will always be critics, we certainly hope that the
majority of North Dakota residents will join in supporting these
endeavors. It would be a shame to let a handful of individuals drive the
policies and economic development of North Dakota and miss the
opportunity that Agragen can bring.

                                  PART II
-------------------------------- GENET-news -------------------------------

TITLE:  VIEWPOINT: Agragen sows a crop of false assertions
SOURCE: Grand Forks Herald, USA, by Ernie Hoffert
DATE:   26 Jun 2005

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VIEWPOINT: Agragen sows a crop of false assertions
- Hoffert is secretary and treasurer of Ameriflax -

CARRINGTON, N.D. - In response Agragen Inc. executives Sam Huttenbauer
Jr., Sam Huttenbauer III and Eric Murphy, I would say most of it does not
need to be dignified by my rebuttal.

However, some of their assertions are total fabrications or distortions.

The meeting that Ameriflax organized June 9 in Fargo was not a closed
meeting. One of the authors contacted me about this issue, and I told him
that Ameriflax was bound by the North Dakota open meeting law (in that it
is funded by grower check-off funds) and that the meeting was open but
that he was not welcome and Ann Bailey from Agweek magazine would be
there to report on the discussion.

Agragen states that this is just an edible flax industry concern. Wrong:
This is an entire industry concern. In 2004, flax growers produced about
15 million bushels from 600,000 acres that generated nearly $150 million
for our producers. The food industry as well as the feed industry is at
risk with Agragen's concept.

The U.S. Department of Agriculture's Animal and Plant Health Inspection
Service has a zero tolerance for commingling of plant-made
pharmaceuticals in the food and feed supply, so even the linseed meal
that remains after the linseed oil is extracted is subject to these

We also have our export market to Europe to consider. I was surprised
when one of the major commercial flax buyers told us that 15 percent of
our flax is exported to Europe - and, contrary to Murphy's assertion that
Europe is softening its stance regarding biotech, it is not.

Agragen also claims that this opposition is being promoted by a "small
but profitable sector." This, too, is false. Ameriflax has hosted two
meetings on this subject, with the first in September 2004, where Agragen
was given the whole day to sell this concept. Virtually all of the flax
industry leaders - from the big industrial users to organic interests to
North Dakota State University scientists - were there, including both
major flax organizations from Canada.

And yet between the two meetings, not one - I repeat, not one - word of
support for Agragen or their concept was voiced. In fact, the comments
ranged from being very concerned to outright opposition. I think this is
a little more than a "small, but profitable sector."

Again, the entire industry is at risk and not just in North Dakota. Just
this week, a news story from Winnipeg voiced serious concerns from the
Canadian Flax Council about the very real threat of their flax being
contaminated by plant-made pharmaceutical flax from this side of the border.

Opposition to these pharmaceuticals is not limited to flax, but to all
food and feed commodities in this country, including many of the major
processing groups such as the Grocers Manufacturers Association and the
North American Millers Association.

The entire plant-made pharmaceuticals concept has been a big
disappointment to the biotech industry. Since 1991, there have been more
than 200 open-air trials involving corn, beans and other crops - and to
date, not one has passed the stringent guidelines of the Food and Drug

But Agragen officials would have you believe that this is no problem -
even though their only other experience with plant-made pharmacueticals
tried to use tobacco in Kentucky, but for whatever reason did not succeed.

They also would like you to believe that they have all the answers
regarding accidental comingling, be it by pollen drift, seed mixture or
other means. But they fail to talk about disasters such as Prodigene in
Nebraska in 2002, when failure to monitor a plant-made pharmacueticals
test plot from a previous year's trial led to contamination of 500,000
bushels of soybeans at a local elevator and a $3.5 million liability
problem for Prodigene.

I wonder how much liability insurance Agragen will have to cover such
disasters? Or will this liability fall back on the farmers involved - or
will it be state, local or federal entities who may help fund this
concept? Or will it be the angel investors or venture capital groups they
hope to attract?

"Genetically engineered foods are among the riskiest of all possible
insurance exposures that we have today," according to Robert Hartwig,
chief economist for the Insurance Information Institute.

What about lost markets to foreign or domestic buyers such as in the
Starlink fiasco? Even biotech leader Monsanto has abandoned its
subsidiary, Integrated Protein Technologies, due to "uncertainity of the
longer-term reward from a highly capital-intensive business," Hartwig said.

And farmers don't buy into the idea that this concept will save many
farms in North Dakota. In a recent Farm Industry News issue, Senior
Editor Wayne Wenzel tells farmers to forget "pharming."

Another thing Agragen failed to mention in its letter has to do with the
Ventria rice debacle. Originally, the company introduced a plant-made
pharmaceutical rice concept in California, but the rice growers mounted
such opposition that they were forced to look elsewhere to try their

As a friend of mine in Missouri said recently in an e-mail regarding the
Ventria rice situation: "We are faced with a situation where we have 200
acres and one grower and a promise, versus 250,000 acres, 600 growers and
an existing industry worth $100 million ... tough trade off !"

This is the exact same scenario we are facing in North Dakota. From
everyone's viewpoint in the flax industry, this is a no-brainer; forget
about it. Try a different nonfood or feed crop, and the opposition will

No one can stop a company such as Agragen from proceeding as long as they
follow USDA regulations. Our goal is to prevent tax dollars, state or
federal, from helping fund plant-made pharmaceuticals in projects
involving flax.

Agragen is free to spend all the money it wants as long as it is
Agragen's own nickel, but I doubt Agragen will continue doing that.

Agragen says it will be holding focus group meetings to inform producers
about their plans. The reason for this is that it desperately needs
farmer support to attract federal and state tax dollars. So, as long as
it is not tarred and feathered at these meetings, Agragen will interpret
them as a sign of support.

The first rule in economic development is to do no harm to existing
businesses and industries. Our concern is that harm will happen
eventually, despite all the safeguards that are proposed. Human error
will lead to a breakdown in the system, and then it will be too late.

The flax acres in North Dakota have grown from a low of 100,000 acres in
the late 1980s to maybe as high as 1 million acres in 2005. Flax is an
old crop with exciting new uses. It is probably the fastest-growing grain
commodity in the health-food sector as well as in the feed market for
horses, chickens, dairy and beef cattle. We cannot let these rapidly
expanding markets be jeopardized by high risk concepts such as plant-made

Agragen calls itself "a potential $200 million industry," referring to
its projected sales. The key word is, "projected." Everything has
potential, but I prefer to go with what is "actual - such as our existing
markets, which, this year with a good crop, could be $200 million or
more. This is "actual," not potential.

I worked with Agragen for more than a year, thinking perhaps there was
such thing as coexistence, But the more I learned, the more I realized
this was not possible.

One of the most damaging factors to Agragen's credibility was the
decision by NDSU's biotech department to not aid the company in its
venture. This speaks volumes.


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