St. Louis Post-Dispatch / May 14, 2000, Sunday, FIVE STAR LIFT EDITION / BY Al; Stamborski; Of The Post-Dispatch
The head of Monsanto Co. said Saturday he is all but certain he will base a fledgling subsidiary here, now that Missouri has matched incentives from other parts of the country.
Although just two years old, the little-known Integrated Protein Technologies subsidiary will become one of Monsanto's core businesses, said Chief Executive Officer Hendrik A. Verfaillie. IPT will genetically modify corn and other crops to produce proteins needed to make drugs that fight cancer and other diseases.
Within five to 10 years, IPT should have revenue of $ 300 million to $ 1 billion, Verfaillie said. From the two dozen people who work for the subsidiary now, employment should grow by 200 to 500. These would be new researchers and other highly skilled workers, not transfers from Monsanto's other businesses.
The subsidiary likely would be on 30 acres adjacent to the Missouri Research Park, at Highways 40 and 94 in St. Charles County. The state conservation department owns that land; it would be annexed to the state-owned research park.
Verfaillie said North Carolina, Virginia and Illinois had tried to land IPT, all with incentive packages worth from $ 15 to $ 20 million.
Missouri's incentives lagged behind until Friday night, when state legislators voted to allow Monsanto to sell about $ 6 million in tax credits that it has accumulated but been unable to use over the past four years. Monsanto should be able to sell those credits for at least $ 4.5 million.
Gov. Mel Carnahan is expected to sign the legislation, which would allow other life science companies to sell their credits, too.
Verfaillie said the tax-credit measure would put Missouri's total incentive package in line with those from other states.
From the start, Verfaillie said he had wanted the subsidiary to be based here because he, like many others, is trying to make St. Louis a center of the life sciences industry. But he said he was obligated to his shareholders to take the best offer.
The technique for modifying plants to produce proteins for medicine was developed about two years ago in Madison, Wis., by Monsanto's Agracetus subsidiary, Verfaillie said. Competitors also are involved in such work, but Verfaillie said Monsanto is far ahead of the pack.
The research was moved to Monsanto's headquarters in Creve Coeur. It has advanced to the stage where commercial production must be planned.
Six different kinds of molecules are in clinical tests, Verfaillie said, with one of them in the final stage before seeking government approval. Four of the six molecules would be used in cancer-fighting drugs.
Verfaillie said drug companies get their proteins either from animals or through fermentation of bacteria. Using plants as a source is cheaper and safer, he said.
A fermentation factory for producing one kind of molecule would cost $ 300 million to build, he said. In comparison, IPT will spend $ 15 million on the complex in St. Charles County - where six molecules will be initially made.
Ongoing production costs are also cheaper for the plant process. One gram of protein produced through fermentation costs $ 300, Verfaillie said. Through plants, it costs $ 15. (Protein from animals costs a bit more than plants, Verfaillie said.)
In theory, the lower cost of the plant process should mean a break for consumers, said Bryan Hurley, a spokesman for Monsanto.
Just as important, the plant protein should be safer for consumers, Verfaillie said. Plant viruses can't be spread to humans, he said, whereas diseases can be spread to people through the other two processes.
Consumers won't be seeing any drugs with plant proteins anytime soon, however. Verfaillie said 10 to 12 years is needed to take them to market.
Because only one in 10 proteins will probably pan out, IPT hopes to test 10 to 15 a year.
Verfaillie wouldn't identify which drug companies IPT is working with, other than to say Monsanto's new parent, Pharmacia, is not among them yet.
On a related note, he said IPT will remain under Monsanto's wing, not Pharmacia's. Monsanto is the agriculture side of the business; Pharmacia is the drug side.
Verfaillie indicated that executives had talked about the possibility of eventually spinning off IPT, but no decision had been made. Pharmacia already has announced plans to sell a small part - 20 percent - of Monsanto to the public.
Before making a final decision on locating IPT here, Verfaillie said he still must work out a contract with researchers at the University of Missouri for their fees for any work they contribute.
Richard Fleming, head of the Regional Chamber and Growth Association, said Monsanto's decision to base IPT here would be a major step in making St. Louis the capital of the life sciences industry.
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