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A combination of rising food prices and environmental concerns has helped spark a backlash against biofuels. Once viewed as a key component of any successful climate mitigation strategy, biofuels — particularly those derived from food crops, such as corn ethanol — have seen their popularity wane in recent months as scientists and policymakers alike have come to realize that their costs may far outstrip their perceived benefits.

Brazil has arguably become the poster child for biofuel enthusiasts, who point to the success the country’s sugar cane-based ethanol program has achieved in weaning a significant number of consumers off fossil fuels. The government’s early, aggressive use of price controls and subsidies helped jump start a market that now provides over 30% of the country’s automobile fuels — one that Amyris Biotechnologies, an Emeryville, Calif., based synthetic biology startup, is hoping to tap into.

Several startups in the U.S., including LS9, Codexis and Synthetic Genomics, the company started by Craig Venter, are using synthetic biology to engineer microorganisms in order to produce hydrocarbon-based fuels. They have received millions in VC funding from the likes of Lightspeed Venture Partners, Flagship Ventures and Khosla Ventures. Amyris has just announced a partnership with Crystalsev, one of Brazil’s largest ethanol distributors and marketers, to commercialize advanced fuels — diesel, jet fuel and gasoline — derived from sugar cane.

The new venture, Amyris-Crystalsev, expects its first product, a form of diesel that reduces emissions by 80% over conventional diesel due to the less carbon intensive production process, to reach the market in 2010. Amyris will hold the majority the majority stake in the venture. Santelisa Vale, Brazil’s second largest ethanol and sugar producer and Crystalsev’s majority stakeholder, will provide 2 million tons of sugarcane crushing capacity.

Amyris uses a suite of molecular biology and genetic tools to insert new pathways into microorganisms and coax them into secreting hydrocarbon-based fuels. Unlike current biofuels, these are fully compatible with existing engines and distribution infrastructure and achieve net emissions reductions. Moreover, the process can be scaled up to obtain higher cost efficiencies and lower energy consumption during production.

The venture will start producing its fuels with sugarcane to take advantage of Crystalsev’s market clout in Brazil but expects to diversify into other plant-based and cellulosic feed stocks. Though it plans on eventually expanding its distribution worldwide, the partnership will initially focus on the U.S. and Brazilian diesel markets. Amyris-Crystalsev will open their R&D headquarters in Campinas, a region located between Sao Paulo and Ribeirao Preto, Brazil’s sugarcane capital. The first pilot facility will begin operations next year.

Tropical BioEnergia SA, a joint venture operated by Santelisa Vale and Maeda Group, has also just unveiled a new partnership with BP, in which the latter will assume a 50% stake. Tropical BioEnergia SA is currently building a 115 million gallon a year ethanol refinery; the new partnership will invest close to $1 billion — the largest such investment made by an international oil company in the Brazilian ethanol industry — in this and a second refinery. BP and Tropical BioEnergia plan on producing conventional sugarcane-based ethanol.

Amyris cites industry estimates predicting that demand for petroleum diesel is expected to grow 4% annually and to exceed 600 billion gallons by 2020 to underline the appeal of its new venture. With the demand for corn ethanol likely to slow as a result of the current food crisis, sugarcane-based fuels may soon become the favored alternative.

LS9, a Silicon Valley startup that hopes its technology may one day help replace petroleum, has taken $15 million more in funding.

The San Carlos, Calif. company uses synthetic biology to modify microorganisms in order to produce high-energy fuels, including to power cars (see our previous coverage).

According to the company’s own projections, it is two to three years from commercializing and selling a synthetic fuel. LS9 recently recruited president Robert Walsh, who brings several decades of supply-line experience from Royal Dutch Shell.

Despite the huge potential returns from producing synthetic fuels, the number of startups in the field is limited by the small pool of knowledgeable experts in synthetic biology. One pioneer is Craig Venter, who recently added to his own human genome project fame by announcing he is capable of creating life. His own company, Synthetic Genomics, is a competitor to LS9.

Other companies competing in the area include Amyris Biotechnologies and Codexis. Each startup is betting on its own proprietary methods to replace petroleum-based fuels.

LS9’s most recent $15 million in funding was led by Lightspeed Venture Partners. Flagship Ventures and Khosla Ventures, the company’s original backer, also participated. The company has so far taken a total of about $20 million.

House-Senate confrontation set over biogenerics – Late last month, a key group of senators reached agreement on legislative provisions that would authorize copycat versions of biotech drugs, which are typically complex proteins manufactured by genetically engineered cells (see details here and here). These provisions would finally put biotech drugs — which don’t face cut-rate competition once their key patents expire — on a par with traditional pharmaceuticals, and have been a long time in coming. They’re not perfect, but they’re about as good a compromise as we’re likely to see any time soon..

The catch is that biogenerics supporters want to attach this langauge to a reauthorization of the FDA’s user-fees act, the awkwardly named PDUFA, which has to pass by September to keep the FDA operating smoothly. The Senate’s version passed in May, whereas the House just approved its version yesterday — but didn’t include a biogenerics pathway. The senators want to add it to their version of the bill, which has to be reconciled with the House version in a conference committee. But key House members, including Energy and Commerce Chairman John Dingell, a Michigan Democrat, appear likely to object, since they haven’t had a chance to weigh in on the provision.

The upshot: Turf wars between the houses of Congress may cost us our best shot at biogenerics legislation in some time. Tying the measure to PDUFA would be one of the best ways to sidestep legislative roadblocks that opponents and their biotech/pharma backers are likely to throw up — but the window is closing rapidly. The WSJ has more here.

Digital medical records are good for your health — or are they? One of the strongest arguements for digitizing medical records is that they’ll help prevent medical errors and improve medical care. A recent review of other studies in the journal Health Services Research gave digitized records a strong vote of confidence when it found that hospitals that switched to electronic drug-ordering systems saw a 66 percent drop in medication errors. (Such mistakes apparently kill 500,000 U.S. hospital patients every year.) Similarly, a report from the Pharmaceutical Care Management Association predicts that electronic prescribing could save Medicare as much as $29 billion over the next two years while preventing two million medication errors.

As with any technology, however, electronic records are no panacea. Another study of walk-in doctor visits found no improvement in treatment quality among practices that used electronic medical records versus those that still relied on paper. The study’s conclusion: Implementing digitized records is just the first step — doctors and medical groups still need to do a lot of work to get the most out of them.

On a related note, a Senate committee recently passed legislation that would offer subsidies to convince doctors to install digital health-record systems.

RNAi is hot, hot, HOT — Once again, it’s boom times for a new drug technology, and this time the spotlight is on RNA interference — a fascinating but largely unproven method for turning off individual genes by using a short stretch of double-stranded RNA to activate ancient gene-silencing machinery inside cells.

The party really got started last year, when Merck paid $1.1 billion to acquire Sirna Therapeutics, a fledgling RNAi company that had barely managed to move a single drug into an early-stage trial. Now things have heated up even further. Last Friday, AstraZeneca struck a $400 million deal with Silence Therapeutics. Then on Tuesday, Roche stepped up to forge a $1 billion deal with Alnylam, an early pioneer in the area.

What’s worth remembering is that no matter how promising a technology like RNAi seems, putting it to practical use almost always takes far longer and costs more than people expect in the early stages. Just take a look at the roll call of other drug technologies that have undergone similar cycles of hype and disappointment — gene therapy, antisense, therapeutic vaccines. All remain promising — but none of them worked the first time out of the gate. Even monoclonal antibodies took close to two decades before anyone could make a reasonable drug with them. Maybe RNAi will be different — but I wouldn’t bet my wallet on it.

Have cancer vaccines gotten a raw deal? A paper in Clinical Cancer Research (described here) argues that regulators and companies may be too quick to dismiss clinical-trial results if they focus on tumor shrinkage rather than long-term outcomes like survival. That may well be true, as tumor shrinkage is a notoriously bad measure of whether drugs work or not, although it’s also worth noting that a reconsideration still wouldn’t have helped Dendreon’s Provenge vaccine, since its survival data was so statistically equivocal. (Separately, the SEC has now opened an informal inquiry into Dendreon’s public disclosures about Provenge this year.)

DNA transplant “transforms” microbial species – J. Craig Venter’s group at his eponymous institute takes the honors, described here in the WaPo. Next up: Transferring an entirely synthetic genome into a DNA-less microbe to create “artificial life,” something Venter says may happen within months. Similarly, here’s the NYT on the new science of “synthetic biology.” Brace yourselves.

Does “pay for performance” improve medical care? A few weeks ago, the WSJ said no, citing a Medicare experiment. Today, the NYT says yes, citing… a Medicare experiment! I’ll have more to say once my head stops hurting.

Pre-implantation genetic diagnosis may harm fertility – Or so say the authors of a Dutch study described by the WSJ here. Several researchers seem to think the results need to be verified elsewhere before abandoning the procedure, in which a single cell is extracted from an IVF embryo for genetic analysis.

Stem cells tailor their own environments — At least according to Canadian researchers, who explored the specifics of how embryonic stem cells communicate with the cells around them. The Globe and Mail has the story.

Simple enzyme short-circuits bacterial drug resistance – Basically, it prevents bacteria from swapping the genes that confer resistance to antibiotics.

High-throughput output –

• Vermont sets up a Web site comparing pharmacy drug prices (Kaiser)
• Researchers discover molecule that may promote food allergies (BBC)
• Breast-cancer risk genes may not influence survival (WSJ)
• Congressional Democrats want to know who muzzled the former surgeon general (Bloomberg)
• Scientists identify gene linked to autism (BBC)
• Robotics help stroke patients regain function (NYT)

(NOTE: This item originally incorrectly stated that J. Craig Venter’s company, Synthetic Genomics, was involved in the research that transplanted one microbe’s genome into another. In fact, it was Venter’s own research institute, the J. Craig Venter Institute.)

What secrets lurk in the heart of DNA? – Didn’t the Human Genome Project answer that question? Think again. Last week, scientists involved in a project called Encode reported on a detailed analysis of one percent of the genome, and the findings have undercut a host of conventional wisdom about how genes and DNA work. Most notably, the Encode study suggests that much of the genome — the long stretches of seemingly inactive genetic “letters” surrounding functional genes, sometimes unfairly called “junk DNA” — is actually a beehive of complex and little-understood activity.

The WaPo’s Rick Weiss, one of the few mainstream reporters to tackle the consequences of the Encode report (which was published in 29 separate papers), put it this way:

The new work also overturns the conventional notion that genes are discrete packets of information arranged like beads on a thread of DNA. Instead, many genes overlap one another and share stretches of molecular code. As with phone lines that carry many voices at once, that arrangement has prompted the evolution of complex switching, splicing and silencing mechanisms — mostly located between genes — to sort out the interwoven messages.

The new picture of the inner workings of DNA probably will require some rethinking in the search for genetic patterns that dispose people to diseases such as diabetes, cancer and heart disease, the scientists said, but ultimately the findings are likely to speed the development of ways to prevent and treat a variety of illnesses.

One implication is that many, and perhaps most, genetic diseases come from errors in the DNA between genes rather than within the genes, which have been the focus of molecular medicine.

Complicating the picture, it turns out that genes and the DNA sequences that regulate their activity are often far apart along the six-foot-long strands of DNA intricately packaged inside each cell. How they communicate is still largely a mystery.

The implications are preliminary but profound, since so much of today’s cutting-edge medical enterprise is based on the premise that understanding genes and their variation is the key to understanding disease. Increasingly, that appears to be only part of the story — possibly not even a particularly large part. All of which suggests that understanding the genome wasn’t the beginning of the end of the quest to understand the workings of life — just the end of the beginning, and maybe not even that.

Scanning the genome of a DNA pioneer – Much as he must have anticipated, the news last week that James Watson, the co-discoverer of DNA, had sequenced his own genome drew a flurry of largely unenlightening media attention (see here and here for just two examples). Yes, it’s interesting to know that Watson has some of the same reservations about knowing his genetic disease risks as many others — the scientist didn’t want to know the status of his apolipoprotein E gene, which can indicate the risk of Alzheimer’s disease — and yes, as the technology improves, more people are going to want their genome sequenced. As the Encode study referenced above suggests, however, sequencing the genome is probably just the start of actually understanding an individual’s genetic makeup. So two cheers for Jim Watson and the low-cost genome sequencers, but no one should be under the illusion that this event is the “milestone” many have made it out to be.

Genetic-association overload – Scientists employing the technique of “whole-genome association” recently announced that common genetic variations appear to underlie seven common diseases — bipolar disorder, coronary artery disease, Crohn’s disease, hypertension, rheumatoid arthritis, and Type 1 and Type 2 diabetes. (See the NYT piece here, although a subscription may be required). The finding was noteworthy because it suggested that several of the diseases may share common origins — and, of course, because knowing the effect of these genetic variations might provide clues to new treatments.

This study is the latest of several that have recently turned up much more solid evidence of links between DNA variants and disease (see my earlier coverage here, here and here), and it seems safe to say that we’re just at the beginning of an avalanche of such announcements. Which, of course, means, it’s right about time for boredom to set in — and fortunately Tom Goetz is on hand to deliver. Now it’s time to anticipate the backlash.

Synthetic Genomics hits it big – At least in terms of valuation. As Matt reported yesterday, the synthetic-biology startup founded by genomics pioneer Craig Venter raised an undisclosed sum of venture funding and is now valued at something close to $300 million — according, that is, to Venter himself. Synthetic Genomics aims to create artificial microbes that could assist in the production of new clean-burning fuels — for instance, by converting coal into natural gas.

In a separate but related effort, Venter’s own research institute has been trying to determine the minimum number of genes necessary for life by systematically knocking genes out of a simple microbe. Earlier this month, a patent application from Venter’s institute claimed ownership of the 381 genes that resulted from this effort. The idea here is that it should be possible to synthesize that short genome, insert it into a microbe from which the DNA has been removed, and “boot up” a largely synthetic organism. The synthetic genome would be designed so that additional genes could be easily inserted, theoretically making it an ideal platform for industrial use. The patent application, in fact, claims production of ethanol or hydrogen fuel as an initial use.

What’s perhaps most striking about all this are the parallels to Venter’s early attempts to lay claim to large chunks of the human genome. (Those never really worked out, but not for his lack of trying.) As science writer Carl Zimmer points out in this post, Venter’s approach to synthetic biology seems to embody the same sort of land-grab mentality, by attempting to lock up the basic genes necessary for creating synthetic organisms. That stands in sharp contrast to the “open-source biology” movement, in which researchers are building publicly available “genetic toolkits” for designing and building new synthetic organisms.

In any case, it’s far from clear that Venter’s attempted land-grab will work any better this time around, but this could easily turn into another epic battle between “open” and “closed” technology philosophies. So make some popcorn and grab a seat.

Number of human genes finally determined? – One of the early conundrums created by the first human-genome map was the surprisingly small number of human genes turned up by the Human Genome Project. Although some initial estimates had ranged as high as 100,000 to 150,000, the first draft of the genome put the number at 30,000 to 40,000, and that number has been falling steadily ever since. (See here for details.)

Now, an MIT computational biologist named Michele Clamp has a new bottom-line answer: 20,488 genes. As Science’s Elizabeth Pennisi writes in this news story (subscription required):

Clamp compared all the human genes in a database called Ensembl with those cataloged for dog and mouse. In all, 19,209 were the real, protein-coding McCoy, 3009 had been erroneously put on the gene list, and 1177 remained ambiguous, she reported.

She rated the “geneness” of these leftovers by comparing them to random stretches of DNA. Almost all made the grade with respect to a genelike proportion of the bases G and C, but not for features such as the distribution of short insertions and deletions in their sequences. Overall, 1167 were “bogus” and lacked any independent evidence that they coded for proteins, she reported. She did a similar analysis with the other gene databases, then summed the unique genes of all of them to get her final count.

Given the tremendous genome complexity that’s now coming into view, the low number of human genes isn’t quite the shock it once was — but it’s still nice to have an answer.

Synthetic Genomics, the company started by controversial human genome entrepreneur Craig Venter, has raised financing at a whopper valuation even before it has produced its first viable product.

The company, based in Rockville, Md. is using Venter’s background as an expert in sequencing genes and applying it to finding new kinds of alternative energy sources.

The company announced last week that it had raised an undisclosed second round of financing from a group strategic investors, including the oil giant BP. That company’s value after the investment is about “$300 million,” chief executive Venter told VentureWire (sub required).

We first wrote about the company two years ago, when it raised $30 million from Draper Fisher Jurvetson, DFJ Frontier, Biotechonomy and individual investor Alfonso Romo.

Last week, BP and Synthetic Genomics also announced a deal to research the sequence of genes in microbes that live within underground hydrocarbons such as oil, natural gas, coal and shale — the goal being to to find an organism that can make better alternative fuels. One way would be to covert coal to natural gas, which would avoid having to burn coal (a dirty process). Synthetic Genomics is seeking a patent for a “minimal genome,” a type of synthetic biology aimed at creating life forms (our coverage here).

BP has been increasing its investments in alternative energy sources, including cellulosic ethanol, widely expected to be a cleaner and more efficient source of auto fuel than existing sources.