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4. An Industry Perspective: Development of an MTA Harmonious with a
Microbial Research Commons
– Stephen J. McCormack 22
Exela, LLC, Las Vegas, NV
My early work was done in academia. I was involved in the sequencing and other
research associated with the advent of Sanger dideoxy sequencing in the 1980s at
University of Massachusetts Medical Center in the laboratory of Michael P. Czech, MD.
and then in Rockefeller Institute with Robert G. Roeder, MD. My Ph.D. is in virology,
and since receiving it I have intentionally moved into different fields. I spent five years
here at Georgetown University, for instance. My first professional job was at the
American Type Culture Collection, working for the general counsel, where I was
responsible for putting together many of the early formative material transfer agreements
(MTAs). The one being used now is very different than the one I worked on there. I have
also been involved in the formation of many different companies, including companies
focused on diabetes and cancer, and now I work for a firm that deals with medical
devices.
In my talk I will not address many of the issues associated with copyright and
publication because this is an area that I am not very familiar with, and there are many
people here who are far more well-versed in the copyright and the publication issues.
Let us go back to 1997, when many of the MTAs were being developed for a
number of collections with regard to biological repositories and DNA and other matters.
It was right around the time when Human Genome Sciences (HGS) and The Institute for
Genome Research (TIGR) were formed, and it was also at the time when Craig Venter
had left the National Institutes of Health to start TIGR, a not-for-profit organization, that
was very tightly affiliated with HGS. According to the relationship that was set up, a
number of government findings were coming into each one of these programs, that were
used to sequence microbes and to have a full composite of gene expression data. At the
same time, human expressed sequence tags (ESTs) were being discovered, and these
were then being taken to HGS, where they were being categorized and utilized according
to how they were expressed and what their therapeutic potential could ultimately be.
It was within that framework and during that period that people began to
recognize that there had to be some structures in place with regard to exchanges of
information and biological materials between a not-for-profit or a government-funded
organization, and a for-profit organization, such as HGS.
It was also right around that time that Smith Kline Beecham invested $125
million into HGS on the basis of the promise and potential of those data and the
information that was generated from them. Many of the repositories, including the
American Type Culture Collection (ATCC), were used as warehouses for all of the
sequence data that were being collected, and, according to the Budapest Treaty on the
International Recognition of the Deposit of Microorganisms for the Purposes of Patent
22
Presentation slides available at:
http://sites.nationalacademies.org/xpedio/idcplg?IdcService=GET_FILE&dDocName=PGA_053664&Rev
isionSelectionMethod=Latest.
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Procedure. A very significant percentage of all patented microorganisms were and are
currently stored by ATCC.
So, that is a snapshot of where we were about 12 years ago. Let me switch gears
and talk about the commercialization of microbial resources. Microbes have been of
tremendous societal and commercial value for millennia. Brewer’s yeast is a good
example, as it has been used for baking and brewing for at least 6,000 years. Since the
initiation of modern biotechnology, which takes us back to 1980 or so, these microbes
have formed the basic underpinning of both generalized non-applied research and applied
research. We have just scratched the surface of the commercial potential of these
microbes because relatively few have been identified. In recent years, the genomes of
several of these microbes have been sequenced, and we have just begun to harness the
value of that new information.
Today, some global standards and principles exist, but are being applied unevenly
to the characterization, access, and licensing of these microbes and collections. So, just as
the world culture collections all have minimum scientific and technical standards, a
microbial commons approach—whether it is based on a compensatory liability rule, or on
other approaches—is also a potential means of global legal standardization, which is
essential for the propagation and development of this potential.
It has been suggested that diverse licensing strategies and techniques have
elevated transaction costs and other barriers for relatively simple, collaborative research
projects. I think that we can all agree that there are higher transaction costs and that there
is also an investment of time associated with the discussions and negotiations that take
place. Furthermore, according to the liability rule principle, providing access to all
microbial resources and collections will eliminate any of the competitive advantage that
arises from keeping these materials and data from other organizations.
However, I have run several companies, and I know my duty is to represent the
interests of the shareholder. If I am running a microbial company, the essence of my duty
is to extract as much value as possible out of what I am working on. If that means
withholding that information from the general public or identifying a collection and
utilizing that collection for the best purpose that I can to maximize my competitive
advantage, it would be my fiduciary responsibility to do so.
So, there is a potential caveat: A substantial amount of the data in the collections
are in private organizations and in companies that are very well funded, such as
pharmaceutical companies that are using the data for their own discovery work or for
other purposes. It is clear that the limitation of access to these microorganisms does not
permit a level playing field on the fundamental research but the actual sequence data is
probably of greater value. The primary point to a research commons is that the data and
the collections will not be kept locked away inside private organizations, but that the
majority will be out in the public domain.
When you look at what is being done with the Brain Research Project, two things
are clear: first, that the applied research that will come out of it has not fully manifested
itself as it has in microbiology and, second, that the genesis and the progression of the
research in brain sciences has been within what is fundamentally a very collaborative
government-sponsored research program. While the brain itself is extraordinarily
complex, the policy issues surrounding the data are less so, and the neuroscience
community is taking a far more linear and straightforward approach than is required in
creating a microbial commons.
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One other thing keep in mind with regard to the postulate is that it is a seller’s
market for those who have control of these microbes. As a buyer, if I am negotiating to
acquire a microbial collection for commercial purposes, whether it is a world culture
collection or a collection from another company, I am going to negotiate on the basis of
what I think the fair market value is at that particular time.
As a case study, let us examine ATCC. It is an independent, private, non-for-
profit 501(c)(3) biological resource center, and it is part of the World Federation for
Culture Collections (WFCC). Its primary goal as a biological resource center and as a
research organization is to provide reliable, qualified, and low-priced biological materials
for the advancement of basic research. That was the fundamental founding principle
when it was established in 1925, when a committee of scientists recognized the need to
have a common repository in the United States and a means to exchange microbes among
the scientific community for scientific research. The purposes included the continuation
of the advancement of that research, the validation of some basic research funding
decisions, or other related goals.
However, a lot has changed since 1925. In 1949, the first patent culture deposit
took place at ATCC. In 1981, it began to accept patent materials from any country that
had signed the Budapest Treaty. In 1997, ATCC initiated the first of its special
collections and moved to Manassas, Virginia.
As a case study, ATCC is reflective of many of the other culture collections
throughout the world, so I did a little research to see what the mission statement is
because such statements are indicative of the priorities within an organization. The
mission statement on its Web site states that it is a global, non-for-profit, bioresource
center and research organization that provides products, technical services, and
educational programs to private industry, government, and academic organizations. Its
goal is “to acquire, authenticate, preserve, develop, and distribute biological materials,
information, technology, intellectual property, and standards advancement and
application of sciences.”
Its brochure offers a slightly different mission statement: After saying that its goal
is “to acquire, authenticate, preserve, develop, and distribute biological resources and
knowledge to scientific researchers,” which is very similar to the Web-based statement, it
adds, “We strive to be the preferred provider of high-quality biological reference
standards which, along with products and services developed in-house, enable science to
touch people’s lives.” This is very different. It is saying that ATCC is a product-based
organization.
By contrast, the microbial commons will work in a context that is not product-
based. It will not be a situation where people are sharing their products for open
dissemination so that a competitor or a researcher in Ghent or a company in Tokyo can
use them to create their own products. This is something that needs to be considered as
we move forward.
Another key point is that ATCC’s holdings, which are almost identical to the ones
throughout the world, are growing exponentially. However, while the number of holdings
is growing very rapidly, it is on the order of tens of thousands of samples, perhaps a
couple of hundred thousand at the maximum. When you look at the cloned genes
collection, however, it contains 8 million cloned genes, and the number is continuing to
grow at a rapid rate. In setting rules of commons, whether we consider it a microbial
commons or a biological resource commons, the same principles apply. In creating
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research commons we have to be sure to allow for value creation to be recognized and
patent protection to remain in place.
ATCC, for example, has a number of special collections, including MR4 for
malaria, the mantle cell lymphoma cell bank, and a yeast genetic research collection.
These special collections are microbial semi-commons that hold special value to the
researcher in the field of malaria, lymphomas or yeast research. ATCC, by characterizing
and combining these groups of cells or microbes, has created value that may warrant
some royalty payment out of the discoveries from these special collections.
There is a disincentive to having a research commons. From the industrial
perspective, the sequestering of biological resources and data allows for a perceived
monopoly on the downstream application of research discoveries. If I am running an
organization that is seeking to obtain funding, whether it is a large laboratory where I am
looking for research funding or a large, private organization where I am seeking investor
support, then I definitely want to emphasize the value of this perceived monopoly. I am
trying to sell as a value proposition that I have this great collection I am working with.
It is only when sharing and broad distribution will provide a greater possible
upside to the owner that this material will be disseminated, whether that material is held
within a private corporation or within a culture collection itself. For example, I may want
to get my results out into the public domain as quickly as possible because I am going to
then get the best publications, the research grants, and the talks at the major conferences
that take place.
Consider a commercial licensing program for available microbes. If I want to
create an environmental company and license microbes for, let us say, wastewater
treatment or some environmental purposes, would I sign onto a microbial commons? Not
unless some type of protection would sanction the research investment to commercialize
the discoveries out of this environmental companies R&D laboratory. In almost every
instance, I could not justify an investment into research program that would be equally
accessed and “owned” by my competitors.
The final two issues are what “commercial use” is and how a MTA would be
applied to it. Here is the definition of commercial use in the standard ATCC material
transfer agreement:
“Commercial Use” means the sale, license, lease, export, transfer or other distribution of
the Biological Materials to a third party for financial gain or other commercial purposes
and/or the use of the Biological Material:
(a) to provide a service to a third party for financial gain;
(b) to produce or manufacture products for general sale or products for use in the
manufacture of products ultimately intended for general sale,
(c) in connection with ADME testing;
(d) in connection with drug potency or toxicity testing which does not include either
screening multiple cell lines for potential inclusion in a screening assay system or
screening multiple compounds in a system for internal research purposes only;
(e) in connection with proficiency testing service(s), including but not limited to,
providing the service of determining laboratory performance by means of comparing and
evaluating calibrations or tests on the same or similar items or materials in accordance
with predetermined conditions; or
(f) for research conducted under an agreement wherein a for-profit entity receives a right
whether actual or contingent to the results of the research.
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We can conclude that the definition of commercial use is not very simple in
application or determination. In essence, a commercial use refers to the sale, license,
lease, export, transfer, or other distribution of biological materials to a third party for
financial gain or other commercial purposes and the use of the biological material. The
first two uses described in the definition, (a) and (b), are very clear because they point to
financial gain, either from services provided to a third party or products manufactured for
general sale.
The ADME testing in (c) refers to absorption, distribution, metabolism, and
excretion, which are the essential elements one examines in the early stages of product
development in the pharmaceutical industry. When someone ingests a pill or a compound
or a chemical, you want to know what happens—how it is absorbed, how it is distributed,
whether it is altered within the body, and then, ultimately, how it is excreted. There are
some contract groups that charge quite a bit of money to do this in early testing, so
perhaps some businesses have been formed out of it, but is it a major commercial use? I
do not think so. I would argue that this scenario probably goes right into the category of
“may not be too valuable.” So we could remove those microbes from the MTA and place
them into that microbial commons.
Concerning (d), drug potency or drug toxicity testing, there are some very basic
and general research components and activities that are done in animal studies long
before any product comes into existence. If I am running a company and I have to pay to
use a microbe for which there is a probability of only 1 in 10,000 that it may ultimately
result in a product, I would not use that, and I would not be inclined to buy into a
program under those conditions. It is too early within the process.
The final one, (f), refers to research conducted under an agreement where a for-
profit entity receives a right, whether actual or contingent on the results of the research.
This example is a little bit more open-ended. It supposes that someone is doing sponsored
research: I, Stephen McCormack, sponsor this research, and a laboratory wants to obtain
all the rights and data that come out of that and then eventually may want to build
something out of it. The conclusion that we can draw from this is that the definition of
commercial use is not very simple, either in its application or determination, and it is also
a moving target.
There are various technologies available for licensing from ATCC, the world’s
largest repository of biological materials. These include, for example, materials in ATCC
special collections. If you take a series of microbes or a series of cell lines and bundle
those, can you gain a proprietary value or a perceived proprietary value out of that? The
ATCC also offers pre-1980 cell lines that are not subject to the terms and conditions of
the Bayh-Dole Act.
Another issue to keep in mind concerning liability rules is what happens if the
WFCC organizations pursue value-added research and bundling strategies. In that case,
the collections will move up the value chain, approaching the level of commercial
products, and, indeed, they could be sold directly on the market for general application.
This may invalidate a liability rule approach.
Although the proper balance needs to be found, I do not think these culture
collections should deviate from the basic purpose of preserving, maintaining, and
distributing biological materials. That is why I started out talking about what a mission
statement is and what a founding principle is—it is in these areas identified by the
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mission statement that these culture collections and these biological and microbial
commons will grow.
To wrap up, here are some things to consider as we develop a microbial research
commons. First, in certain cases, the mere characterization of a microbe can create
immediate commercial potential for the products. Consider H1N1. Sequencing and
identifying these epitopes and picking them out is part of their fundamental
characterization because you do not know what you have unless that is done. However,
once one identifies the changes that have taken place, the information is immediately of
value..
Second, microbes and microbial connections should meet certain non-commercial
qualifications for the entry into this microbial commons. The timing is important,
however. Discoveries and advances in scientific research will regularly move the line on
what is eligible for these liability rules because as you learn more about what is
commercially important and what is not important, the point where that liability rule
should be applied will change.
In conclusion, the commercial use of microbial cultures is very difficult to define
because the value changes over time and is subjective to begin with at the time of their
appraisal. Different people may look at the same thing in a different way and value it
differently. So a multifaceted system may be required to form a microbial commons that
will enable broad and effective access to data and to biological materials. The culture
collections will have to continue to lead with MTA agreements that will work as desired
in the core of these microbial commons.
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