Posted on: Friday, May 13, 2005

Firm asks to use altered algae

By Sean Hao
Advertiser Staff Writer

Big Island algae-farmer Mera Pharmaceuticals Inc. is likely to win state permission to bring genetically modified algae into Hawai'i for the production of pharmaceutical drugs.

The production of high-value drugs could be a boost for the state's $27.7 million aquaculture industry, which currently grows algae for use in human and animal nutritional supplements but not drugs.

An advisory panel of the state Board of Agriculture has recommended Mera be given approval for permits needed to start field trials and the full board will take up the issue later this month. Mera hopes the technology could eventually lead to the discovery of treatments for cancer, inflammation and asthma.

"It's a glimpse into the future that happens to be happening in Hawai'i, which is wonderful," said John Corbin, manager for aquaculture development for the state Department of Agriculture. "It's another crop" with potentially high value.

However, research into genetically modified organisms also raises concerns about possible health and environmental risks. Hawai'i has led the country in open-air test sites of genetically modified crops thanks to the state's geographic isolation, fertile volcanic soil and year-round growing season.

The research has created concerns that genetically-modified organisms could contaminate food crops, harm endangered species and soil the state's reputation as an environmentally conscious community, which is key to a strong tourism trade.

In the case of Mera's planned project the risk is minimal, state and project officials said. And unlike GMO crop research, which often is conducted secretly, Mera has disclosed that the research will be done at its four-acre facility at the Natural Energy Laboratory of Hawaii Authority in Kailua, Kona.

"We don't have anything to hide," said Bruce Steel, chief executive for San Diego, Calif.-based Rincon Pharmaceuticals, which is partnering with Mera on the proposed project. "It will be very public. There's really no risk to people, to plants, to the environment with anything we're doing."

Nancy Redfeather, a director for the Hawaii Genetic Engineering Action Network, which supports natural alternatives to genetically modified crops, agreed that Mera's work isn't much of a concern. The algae will be enclosed in plastic and not open to the environment, which reduces the risk of contamination.

If the project proceeds, it could allow Mera Pharmaceuticals to finally live up to its name. The company reorganized in 2003 following Chapter 11 bankruptcy proceedings and a merger with Aquasearch Inc. However, it has yet to produce pharmaceuticals.

Production of pharmaceuticals could represent greater revenues and margins for Mera. Although Rincon would own any drugs discovered, Mera could benefit from licensing fees for its patented algae growth technology.

"Obviously there will be some revenues that will come from it" just how much is unclear, said Dan Beharry, Mera's chief executive.

In 2004 Mera lost $1.1 million on $910,000 in sales of nutritional products. Yesterday Mera shares closed unchanged at 2.5 cents on the Nasdaq Over-the-Counter Bulletin Board.

While the revenues potential of pharmaceuticals is huge, bringing a new drug to market is risky and requires extensive resources and rigorous clinical trials.

"You can strike out trying to hit a home run very quickly," said Gerald Cysewski, chief executive for Mera neighbor Cyanotech Corp., which also produces nutritional products from algae.

Cyanotech unsuccessfully tested the use of genetically-modified algae to produce a mosquito toxin in the mid-1990s.

"In the world at that time there really wasn't a lot of concern" among the public about the health and environmental impacts of such research, Cysewski said. That has since changed.

Mera's work nearby is "a bit of a concern, but I think it's something we can address," Cysewski added. "I would expect that Mera would follow stringent requirements and that there wouldn't be any problems with cross-contamination."

Both Cyanotech's and Mera's genetics research trace their roots to technology developed at The Scripps Research Institute. Rincon wants to use Mera's high-tech production techniques to grow fresh-water algae that could lead to more affordable antibody therapies.

Should the Board of Agriculture, which meets on May 24, permit Mera to import genetically modified algae, field trials could start within months. If the trials are successful, Rincon may proceed with construction of a pilot production facility at an undecided location.

For Mera, Rincon's work could pave the way for research into the discovery of natural pharmaceutical compounds from algae, Beharry said.

"We do think that down the road there will be opportunities to go forward with our own drug development program," he said.

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.