0720-A1
S.I. Cameron[1], K.E. Kiersteadand and R.F. Smith
Thousands of bioactive phytochemicals have potential or established nutraceutical, medicinal or pharmaceutical applications. Developing crops for commercial extraction of bioactive compounds involves not only research and development challenges, but market-related factors as well. It is not enough to demonstrate that cultivation is economically viable. Using our experience with Taxus canadensis to provide examples, two types of market factors that must be considered before commercialization are discussed.
Bioproduct market factors include: availability of a cheaper product elsewhere from the same species; existence of another species with the same bioactive compound; existence of a synthetic alternative to the naturally sourced phytochemical; existence of patents covering bioproduct extraction and use; and government bioresource regulation.
A second group of factors relates to the role and suitability of an industrial collaborator proposing to fund research and development (R&D) activities. The R&D partner must gauge the potential commercial partner's fitness. The company's knowledge of the marketplace; its capacity to sustain the proposed R&D funding; whether its intent is to market raw biomass or a value-added product; and how it proposes handling exclusivity and proprietary information must all be assessed.
Consideration of bioproduct marketing realities helps focus R&D goals and crop development timelines based both on biomass cost reduction and meeting the collaborator's specific needs.
Many pharmaceutical commodities (50-60%) contain natural products or are synthesized from them, and 10-25% of prescription drugs contain one or more natural bioactive compounds (Small and Catling 1999). Introduction of new plant crops for the pharmaceutical/medicinal industry is market driven. Determining which plants and compounds are realistic candidates for commercialization-oriented research from among the large number of potentially valuable bioactive compounds requires consideration of market-related factors in addition to the science and technology involved in product development. Some pertinent non-scientific issues surrounding commercial harvest of bioactive compounds from non-timber forest product (NTFP) species are discussed, drawing on the Canadian Forest Service-Atlantic Forestry Centre (CFS-AFC) experience with Taxus canadensis, a woodland species commonly known as ground hemlock or eastern yew.
Paclitaxel, also called Taxolâ, is a well-established cancer drug used clinically since 1992. It is the largest selling anti-cancer drug in the world (Goodman and Walsh 2001). Taxol and Taxotereâ (docetaxel) sales were $2.3 billion USD in 2001 (Anonymous 2002). Market demand is expected to grow by 10% yearly for at least the next decade and new, second-generation formulations and analogs may lengthen the compound's lifespan (Anonymous 2002). Although the paclitaxel molecule can be synthesized, it is an expensive process. Plant biomass continues to be the most economical source of paclitaxel (Anonymous 2002), but woodland sources are increasingly in short supply globally (Schippmann 2001). Commercial nurseries in the United States produce millions of Taxus plants for sale in the horticultural market, but discussions with industrial sources indicate that the amount of nursery biomass remaining for sale to the taxane industry is inadequate to meet demand.
The Taxus domestication project was initiated in 1997 with the goal of rearing T. canadensis as a crop for paclitaxel production by genetically selecting a wild species to produce, propagate, and rear elite cultivars as an industrial crop. Analysis of the commercial potential of yew, particularly T. canadensis, suggests that entry into the pharmaceutical marketplace should be feasible because the woodland resource has limited capacity to meet demand and the price of cultivated biomass is competitive.
Commercial harvesters estimate that the limit for sustainable harvest of biomass in eastern Canada is approximately 5-6 million kg fresh wt per year, sufficient to produce 150-170 kg paclitaxel annually. World market demand is currently about 300 kg per year, with a predicted rise over the next decade to perhaps 1000 kg per year (10% yearly increase). Several large pharmaceutical supply companies have indicated interest in acquiring T. canadensis biomass or crude extract equivalent to over 100 kg of paclitaxel. The woodland resource cannot meet the demand if more than one pharmaceutical client were to enter the eastern Canadian market.
The current price of woodland-collected T. canadensis biomass is approximately $10.00 CAD/kg dry wt. Asian biomass costs approximately $7.00-8.00 CAD/kg dry wt. CFS-AFC's comparative cost analysis showed that neither wildcrafted biomass nor a nursery crop produced from wild stock plants could compete with the price of overseas biomass. However, cultivated crops using cultivars selected for elevated taxane levels are price competitive, even if only very modest assumptions (a doubled taxane content) are made about the magnitude of crop improvement.
Therefore, a strong case can be made for commercial cropping, using a better quality cultivated product. Our analysis suggests that the biomass costs can be decreased by almost 50%. As biomass accounts for 30-50% of total paclitaxel API (active pharmaceutical ingredient) costs, savings are potentially significant.
The domestication project began at the behest of an industrial client who was ultimately unable to find a successful path to commercialization. Subsequently, a number of other prospective collaborators-companies both large and small-were also unable to craft a successful strategy for product sales. A careful analysis by Lyceum Ltd. of ten failed commercial Taxus canadensis initiatives in Atlantic Canada over the past 8 years revealed fairly predictable causes, such as undercapitalization; underestimation of chemical engineering development and validation costs; failure to meet expectations of understandably skeptical clients; lack of SOPs (Standard Operating Procedures); and inadequate knowledge of taxane chemistry and biology.
Taxus R&D infrastructure is similarly limited. Pockets of scientific expertise exist in eastern Canada but they are small, fragmented, and proprietary, with widely differing premises and assumptions. We quickly realized that, in order for the Taxus domestication project to succeed, we needed to know more about both the bioproduct marketplace and the potential commercial partner's suitability to better position scarce R&D resources-despite the obvious apparent demand for paclitaxel, its high value, and the commercial feasibility of cropping.
An R&D group must have elementary knowledge about the commercial aspects of the niche into which the candidate bioproduct will fit. For example, a bioactive compound's product life is an important consideration in planning realistic research objectives. Additional basic questions about the economic consequences of the biology also need to be asked.
a) Can the same species be harvested and extracted more cheaply elsewhere in the world?
Many species have a wide distribution, and the same bioactive compounds may be collected in different regions. Alternatively, and particularly with wild-harvested biomass in short supply and/or high prices, low-tech plant cultivation can make low-cost cropped biomass widely available from regions with low wages.
Although paclitaxel can be extracted from all Taxus species, once a particular species has been specified, due to strict US Food and Drug Agency (FDA) regulations it is not easy to change the source material for the North American pharmaceutical industry, which is the main market for paclitaxel sales. A drug manufacturing file (DMF II) specifies the species and plant part, geographical location and processing of the raw material (McChesney 2000, Shaw 1987). Wildcrafted material is also subject to an FDA sustainability requirement through the US Code of Federal Regulations. Biomass collection must be demonstrated to be sustainable (i.e., wild harvesting must have no effect on abundance or biodiversity).
b) Does another plant species (or genus) with the same phytochemicals exist elsewhere?
Many phytochemicals occur widely in different plant families in different concentrations. The commercial outcome is that wildcraft harvesting or cultivation in a competitive market may be more economically feasible elsewhere with a species other than the one available locally.
Paclitaxel occurs in varying amounts in all Taxus species (Croom 1995), as well as some endophytic fungi (Walker and Croteau 2001). However, information about volumes of potentially competing cultivated biomass sources worldwide is lacking. Nonetheless, the potential of T. canadensis to substitute for other Taxus species is considerable. First, due to uncontrolled harvesting, Taxus species in several of the major wildcraft regions (India, Nepal, China) are CITES listed as at-risk or endangered species (Schippmann 2001). Second, horticultural Taxus varieties were not originally chosen for their taxane content and, therefore, have only limited potential for improved yields through genetic selection. T. canadensis has a wide genetic base from which individuals with exceptional growth and taxane levels may be selected. Third, one taxane found uniquely in ground hemlock, 13-acetyl-9-dihydrobaccatin III (9-DHB), is abundant and can be used for semi-synthesis of paclitaxel (Nikolakakis et al. 2000).
c) Is there an easily synthesized compound that can be commercially produced more economically than the naturally sourced phytochemical?
As over half of all medicines come from natural sources (or have in the past), it is reasonable to expect the substitution of cheaply synthesized, chemically identical, compounds, or even analogs of the natural material modified to improve their medicinal properties. This assumes that the bioactivity derives from a single compound rather than from a synergistic combination of different compounds in the plant extract.
New synthetic taxane analogs are not yet available clinically, and compounds currently in trials are derived from existing taxanes (Anonymous 2002), so biomass remains the primary source for taxane supplies. Genetic diversity and the presence of a unique taxane give T. canadensis a potentially competitive advantage as an intensively cultivated Canadian crop over other Taxus species in regions where labor costs are low.
d) Will commercialization of the bioactive compound(s) be limited significantly by existing patents and/or their licensing costs?
A search of the existing patent literature is a mandatory part of any new commercially oriented R&D project. Patent information helps identify companies in the marketplace, the segment of the market they serve, and which ones might be interested commercializing a particular bioproduct.
A search performed at CFS-AFC in 2001 produced a list of over 1800 US and Canadian patents on taxanes. Knowing which patents are held by a particular company helps determine which taxanes they are likely to find of interest. For instance, a company owning patents only for efficient paclitaxel extraction is less likely to be interested in 9-DHB and, therefore, may not regard T. Canadensis as particularly valuable compared with other Taxus species. Another company, with patents for paclitaxel semi-synthesis from 9-DHB, may value ground hemlock highly, as they may need to purchase only half or less the amount of foliage or crude extract to meet their paclitaxel production target.
e) What role(s) does local government have in regulating access to the bioresource ?
Governments must both protect the wild resource and promote its sustainable development. Jurisdictional positions and policies define the limitations of commercial alternatives, e.g., the ability or inability to export non-processed biomass. Their absence can lead to such abuses as over-harvesting. Conversely, government economic development incentives (grants, loans) may entice prospective industrial clients to invest in the local resource. Government also may be the repository for accurate knowledge of existing wildcraft inventory through biomapping by natural resources departments.
CFS-AFC is coordinating the definition of scientifically validated guidelines for long-term sustainable Taxus harvest practices. However, without government support, there is very little that can be done to ensure compliance and, thus, the long-term sustainability of the species. Therefore, endorsement by various jurisdictions has been sought to ensure universal commercial acceptance. Collateral benefits include increased confidence in the stability of the resource by multi-national pharmaceutical companies and the resulting ability of local harvest contractors to secure long-term agreements with them.
If the R&D partner and the industrial collaborator can get the right fit to the market and to each other, the chances for successful R&D and subsequent commercialization are maximized. Therefore, the R&D partner should ask some basic questions about the qualifications of a prospective business partner, just as the potential collaborator should appraise the proposed research.
a) Does the company intending to finance the R&D work have adequate knowledge of the market in which they intend to sell the end-product?
To submit a realistic business plan to a board of directors and/or external funding agency, the industrial collaborator must be able to show profitability within a reasonable period, or some competitive edge that makes investment in the research worthwhile compared with alternatives. The better their acquaintance with the market, the sooner and more likely it is that a collaborative agreement can be successfully completed.
In discussions with different potential partners, we found that the level of market knowledge varied widely, from the extremes of having heard or read positive (and sometimes unrealistic) information through the public media to a detailed and proprietary appreciation of the paclitaxel market. The reasons for their interest were just as diverse, ranging from businesses with a general desire to expand into new product lines to those already in the taxane industry with very specific requirements.
b) Can the industrial collaborator sustain the proposed R&D funding?
A collaborator does not have to be a large corporation. However, if the company is small and new, their cash flow may be limited. The R&D partner should see (and understand) the collaborator's business plan before signing a collaborative agreement. Doing so can highlight potential problems, such as undue dependence of cash flow on, for instance, yet-unsigned contracts for processing biomass or a need for government assistance not yet granted. Their infrastructure or capitalization, or lack of it, can delay startup.
The potential concerns in collaborating with a large company are different. Such a company, having already invested in the taxane market at another location, may wish to cultivate or do processing elsewhere. Particularly in dealing with a company already in the taxane marketplace, signing a non-disclosure agreement can be a valuable asset. It allows the R&D partner access to market information not available in the public domain.
c) Does the industrial collaborator intend to market the raw biomass or process it into a value-added product?
Biomass harvesting is a valuable source of income for rural, seasonally employed people. High-end employment (chemists, process engineers) accrues during value-added, post-harvest biomass processing.
Generating high-quality employment in eastern Canada is of great interest to both regional and federal governments. Infrastructure exists in eastern Canada to completely process, semi-synthesize, and purify paclitaxel to pharmaceutical grade, reportedly at competitive prices. Nonetheless, the expressed intention of one potential industrial collaborator was to send all biomass overseas for all further processing. Although it may make business sense to process offshore, it becomes more difficult to find a good fit with such a company. They also risk complicating their biomass supply strategy, as several provincial governments are currently legislating restrictions on transporting unprocessed biomass harvested on Crown land outside the province where it was harvested.
d) How does the industrial collaborator propose to handle intellectual property (IP)?
In return for supplying research funds, the collaborator may reasonably expect some degree of exclusive access to findings resulting from that work. In turn, the collaborator may also contribute expertise in developing IP and integrating unique new developments into their existing patents. The value of patenting capability should not be underestimated. It is, at best, a formidable, expensive process of preparation, research, and defense (patent examination) that is characteristically underrated by both the scientists and the industrial development group involved. The collaborator may also know which existing patents are currently unencumbered by commercial licenses and, therefore, potentially useful.
IP within the Taxus domestication project is held jointly between Natural Resources Canada and the industrial collaborator, who has access to patenting resources. The industrial collaborator also has the exclusive right to commercialize the elite cultivars, and the propagation and growing technology subject to a few limitations¾notably, neither the plant material nor technology may be taken out of Canada as the Canadian taxpayer is a co-owner. The intent is to prevent export to other countries where the cost of land or labor may be cheaper, with the concomitant loss of jobs in Atlantic Canada. This fulfills CFS's mandate to promote development of the local economy.
The Taxus domestication project has demonstrated that an R&D partner must be aware of bioproduct market realities in order to focus research objectives, make pragmatic decisions to eliminate non-essential, but interesting, parts of a study, and choose among alternative routes to meet commercial objectives with realistic timelines. The underlying focus must always be to reduce the cost ratio of biomass to API and clearly demonstrate competitiveness on the world market. Five to ten companies control 80% of the worldwide demand for taxane compounds. Only three are known to be seeking a DMF II to include Taxus canadensis, suggesting the reluctance of others. Better solutions to continuing bioproduct market issues may result in additional clients.
Equally important is a critical examination of the strengths and weaknesses of prospective industrial collaborators within the context of the market opportunity and competition. This presentation has focused on the phytopharmaceutical market. However, the barriers to successful collaboration and the commercial or market intelligence needed to address them should generally apply to commercialization of any other plant bioactive product.
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Goodman, J. and V. Walsh, 2001. The Story of Taxol: Nature and Politics in Pursuit of an Anti-Cancer Drug. Cambridge University Press, Cambridge, UK.
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Nikolakakis, A., G. Caron, A. Cherestes, F. Sauriol, O. Mamer and L.O. Zamir, 2000. Taxus canadensis abundant taxane: conversion to paclitaxel and rearrangements. Bioorg. Medicinal Chem. 8: 1269-1280
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| [1] Natural Resources Canada,
Canadian Forest Service - Atlantic Forestry Centre, PO Box 4000, Fredericton,
NB E3B 5P7 Canada. Email: [email protected] |