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Third Edition

B U I L D I N G
BIOTECHNOLOGY
Business • Regulations • Patents • Law • Politics • Science
Yali Friedman
B u i l d i n g
Biotechnology
Business • Regulations • Patents • Law • Politics • Science

Third Edition

Yali Friedman, Ph.D.

LOGOS
PRESS
Building Biotechnology
Third Edition
by Yali Friedman, Ph.D.

Published in The United States of America

by
thinkBiotech LLC, Washington, DC
www.buildingbiotechnology.com
[email protected]

Copyright © 2008, Yali Friedman, Ph.D.

Third edition

All rights reserved. No part of this book may be reproduced or transmitted in any
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or by any information storage and retrieval system, without written permission from
the publisher, except for the inclusion of brief quotations in a review.

LEGO is a trademark of the LEGO Group, used here with special permission.

10 9 8 7 6 5 4 3 2

ISBN-13
Hardcover: 978-0-9734676-5-9
Softcover: 978-0-9734676-6-6

Library of Congress Cataloging-in-Publication Data

Friedman, Yali.
Building biotechnology : business, regulations, patents, law, politics, science /
Yali Friedman. -- 3rd ed.
p. cm.
ISBN 978-0-9734676-5-9 (hardcover) -- ISBN 978-0-9734676-6-6 (softcover)
1. Biotechnology industries. I. Title.
HD9999.B442F75 2008
660.6068--dc22
2008022042
To my family, who have inspired, motivated, and
supported me.
 Contents
Figures and Tables v
Boxes ix
Preface xiii
Acknowledgments xv
Introduction
Introduction 3
The Development of Biotechnology 7
Knowledge and Skills . . . . . . . . . . . . . . . . . . . . . . . . 8
Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Commercialization . . . . . . . . . . . . . . . . . . . . . . . . . 12
Industry Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Science
Introduction to Molecular Biology 23
Information Flow in Molecular Biology . . . . . . . . . . . . . . . . 23
The Big Picture . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Drug Development 35
Biotechnology vs. Pharmaceutical Drug Development . . . . . . . . 36
The Five Basic Steps of Drug Development . . . . . . . . . . . . . . 39
Qualities of a “Good” Drug . . . . . . . . . . . . . . . . . . . . . 49
Tools and Techniques 51
Bioinformatics . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Combinatorial Chemistry . . . . . . . . . . . . . . . . . . . . . . 55
Functional Genomics . . . . . . . . . . . . . . . . . . . . . . . . 56
Microarrays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Proteomics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Drug Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Nanotechnology . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Applications 69
Green Biotechnology: Agriculture . . . . . . . . . . . . . . . . . . 70
White Biotechnology: Industrial Processes and Bio-based Products . . 79
Red Biotechnology: Medical Applications . . . . . . . . . . . . . . 88

Laws, Regulations, and Politics

Intellectual Property 103
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
When Patents Expire . . . . . . . . . . . . . . . . . . . . . . . 114
Patent Infringement, Challenge, and Exemptions . . . . . . . . . . 116

i
ii Building Biotechnology

Patent Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . 124

Trade Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Copyright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
The Role of Intellectual Property in Biotechnology . . . . . . . . . 132
Regulation 137
Food and Drug Administration . . . . . . . . . . . . . . . . . . . 138
Department of Agriculture . . . . . . . . . . . . . . . . . . . . . 166
Environmental Protection Agency . . . . . . . . . . . . . . . . . 167
Securities and Exchange Commission . . . . . . . . . . . . . . . 169
Politics 171
Supporting Biotechnology Innovation . . . . . . . . . . . . . . . 172
Balancing Innovation Incentives with Economic Constraints . . . . . 177

The Business of Biotechnology

Biotechnology Company Fundamentals 183
Company Formation . . . . . . . . . . . . . . . . . . . . . . . . 183
Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Company Characteristics . . . . . . . . . . . . . . . . . . . . . 197
Finance 209
Development Stages and Funding . . . . . . . . . . . . . . . . . 210
Private Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Public Markets . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Other Funding Sources . . . . . . . . . . . . . . . . . . . . . . 227
Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
Research and Development 241
R&D Stages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Project Selection . . . . . . . . . . . . . . . . . . . . . . . . . 254
Outsourcing Innovation . . . . . . . . . . . . . . . . . . . . . . 258
Marketing 263
Marketing as a Guide for R&D . . . . . . . . . . . . . . . . . . . 263
Market Structure and Marketing Environment . . . . . . . . . . . 271
Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . 280
Marketing Planning and Strategy . . . . . . . . . . . . . . . . . 285
Licensing, Alliances, and Mergers 289
Licensing and Outsourcing . . . . . . . . . . . . . . . . . . . . 290
Alliance Partnerships . . . . . . . . . . . . . . . . . . . . . . . 299
Mergers and Acquisitions . . . . . . . . . . . . . . . . . . . . . 309
Selecting Partnership Options . . . . . . . . . . . . . . . . . . . 312
Managing Biotechnology 315
Starting Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
Managing R&D . . . . . . . . . . . . . . . . . . . . . . . . . . 318
 Contents iii

Intellectual Property Protection . . . . . . . . . . . . . . . . . . 324

Management Changes with Growth . . . . . . . . . . . . . . . . 325
Dealing with Failure . . . . . . . . . . . . . . . . . . . . . . . . 327
Communications and Public Relations . . . . . . . . . . . . . . . 330
International Biotechnology 335
Benchmarking Against the United States . . . . . . . . . . . . . . 337
Intellectual Property Protection . . . . . . . . . . . . . . . . . . 339
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348

Conclusion
Building Biotechnology 353
Business Models . . . . . . . . . . . . . . . . . . . . . . . . . . 355
First Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356
Selecting Opportunities and Business Planning . . . . . . . . . . . 358
Investing 367
Caveat Emptor . . . . . . . . . . . . . . . . . . . . . . . . . . 367
Investing in Biotechnology . . . . . . . . . . . . . . . . . . . . 368
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380
Career Development 383
Job Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . 384
Ph.D., MBA, or Both? . . . . . . . . . . . . . . . . . . . . . . . . 387
Final Words 389
Appendices
Internet Resources 393
News and Information . . . . . . . . . . . . . . . . . . . . . . . 393
Investing and Competitive Intelligence . . . . . . . . . . . . . . . 395
Angel Funding . . . . . . . . . . . . . . . . . . . . . . . . . . 396
Federal Funding . . . . . . . . . . . . . . . . . . . . . . . . . . 396
Industry Organizations . . . . . . . . . . . . . . . . . . . . . . 397
Annotated Bibliography 399
Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
Intellectual Property and Regulation . . . . . . . . . . . . . . . . 401
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402
Glossary 405
Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405
Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412
Regulatory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
Index 423
 Figures and Tables
Table 1.1 What is biotechnology? 4
Figure 1.1 The four pillars of biotechnology 5
Figure 2.1 Knowledge and skills enabling biotechnology 9
Figure 3.1 Simplified model of information flow in molecular
biology 24
Figure 3.2 General scheme of gene expression 25
Figure 3.3 DNA: Chromosomes and genes 27
Figure 3.4 Protein translation 29
Table 3.1 Examples of protein and enzyme functions 31
Table 3.2 Selected RNA types 32
Figure 4.1 Small-molecule and biologic drugs 37
Figure 4.2 Biotechnology drug categories 38
Figure 4.3 Basic and applied research 39
Figure 4.4 The process of drug development 40
Figure 4.5 Biotechnology drug development time 43
Figure 4.6 Median approval times for biotechnology drugs 45
Figure 4.7 Declining time and cost of human genome sequencing 47
Table 4.1 Qualities of a “good” drug 49
Table 5.1 Selected nanotechnology applications in drug delivery 65
Table 6.1 Biotechnology application categories 70
Figure 6.1 Progress in agricultural yields 72
Figure 6.2 How cellulosic ethanol is made 81
Table 6.2 Selected industrial enzymes 86
Figure 6.3 U.S. babies born in states mandating genetic disorder
testing 93
Figure 6.4 Stem cell types 99
Table 7.1 Intellectual property rights 103
Table 7.2 Top biotechnology patent holders 105

v
vi Building Biotechnology

Table 8.1 Biotechnology regulating bodies 137

Table 8.2 Regulation of biotechnology products 138
Figure 8.1 Clinical trial phases 141
Figure 8.2 Protein-based therapeutic development times 147
Figure 8.3 Impact of the Orphan Drug Act 156
Figure 8.4 Impact of generic entry on drug price 159
Table 8.3 Drug names 165
Table 8.4 Selected generic drug naming conventions 165
Table 10.1 Biotechnology application categories 188
Figure 10.1 Biotechnology company activities 189
Table 10.2 Service payments 191
Table 10.3 Biotechnology facility operating costs 201
Table 10.4 Assessing biotechnology company maturity 206
Figure 11.1 Funding stages and sources 211
Table 11.1 Progressive equity dilution by funding stage 213
Figure 11.2 Biotechnology funding sources 223
Figure 12.1 Clinical trials provide valuation milestones 243
Figure 12.2 R&D Stages 244
Figure 12.3 Estimated cost and duration of biotechnology drug
development 247
Figure 13.1 Regulations affect sales: U.S. corn exports following
partial EU ban 270
Table 13.1 Horizontal and vertical products 271
Figure 13.2 Measuring target market size 274
Figure 13.3 Porter’s Five Forces 279
Figure 13.4 Simplified drug market model 281
Figure 13.5 Factors influencing physician prescribing decisions 285
Figure 13.6 Biotechnology product lifecycle 288
Table 14.1 Inter-company transactions 290
Table 14.2 Typical NIH license obligations 293
 Figures vii

Table 14.3 Representative biotechnology alliances 300

Figure 14.1 The contribution of alliances to drug development from
2006-2007 302
Table 14.4 Alliance payment types 303
Figure 14.2 Percent of 2006 product sales attributable to
development paths 313
Figure 15.1 Pharmaceutical industry cost analysis 316
Figure 15.2 Producing and selling biotechnology products and
services 317
Figure 15.3 R&D decision-making tools used by small
biotechnology companies 323
Figure 15.4 Causes of drug development failure 327
Figure 16.1 Distribution of U.S. biotechnology companies 338
Figure 16.2 Global distribution of public biotechnology companies
and revenues 339
Figure 16.3 Globalization of clinical trials for FDA approval 345
Table 17.1 Biotechnology business models 356
Figure 17.1 Building a biotechnology company 357
Table 17.2 Raising funds to reach developmental milestones 361
Figure 17.2 Value creation in biotechnology 363
 Boxes
Genentech: Commercializing a new technology 13
Amgen: Capitalizing on innovation 14
Human chromosomes and genetic trait inheritance 28
Poorly defined diseases discourage drug development 41
The Human Genome Project and drug development 46
Cytochrome p450 and pharmacogenomics 58
GMP: Building quality into products 62
Carnivorous fish as vegetarians 75
Blue jeans and biotechnology 79
Biofuel and bio-products: Back to the future 82
Using bacteria to make snow 84
Personalized medicine and drug sales 94
ESTs lack utility and enablement without proven use 110
Is it worth it for generics to challenge branded drugs? 118
Amgen v. Transkaryotic Therapies: Strategic patenting 120
Monsanto hit by $185 million torpedo 126
Johnson & Johnson sues Red Cross over trademark 131
The SNP Consortium 133
Erbitux: Poor study design 144
Vioxx: Anticipating and disclosing side effects 149
Fen-Phen: Risks of off-label use 150
AIDS and accelerated approval 152
Genzyme: Building an enterprise on orphans 157
The disproportionate returns of rare disease research 158
Biologic manufacturing: The significance of small changes 161
Starlink corn: Controlling biotechnology crops 168
State autonomy and federal laws 173
Directing innovation: The war on cancer 175
ix
x Building Biotechnology

Presidential politics and biotechnology 176

Speedel: Spinning off to develop a shelved drug 186
Shareholder activism 195
Hybritech’s crucial role in San Diego’s biotechnology industry 199
Research Triangle Park 200
Chiron’s flu vaccine facility loses license 202
Venture capital: The poker analogy 216
Alternative route to going public 224
Focus on free cash flow 228
Valuation of biotechnology companies 236
Clinical trials provide valuation milestones 242
The cost of drug development 246
Repurposing thalidomide 248
Inhalable insulin: Holy grail or tiger trap? 250
Non-profit drug development 253
Dangers of not having a pipeline 256
Cetus spreads itself too thin 258
Biotechnology myth: Build it and they will come 264
Risks of selling to “ideal” markets 268
Enbrel: Underestimating market demand 275
Avastin: Controlling off-label use 282
MedImmune v. Genentech: Licensees gain power 294
Cohen-Boyer: Broad licensing to maximize revenues 295
Licensing technology or keeping it in-house 298
Remicade: Resolving valuation disagreements 304
Exubera: When your partner doesn’t sell 308
Entrepreneurial culture in biotechnology: The case of Genentech
320
Replacing founders 325
Flavr Savr tomatoes: Operating in unfamiliar markets 326
 Boxes xi

Preventing a product recall from bankrupting a company 329

Why did the biotechnology industry start, and prosper, in the
United States? 336
Novartis cancels Indian investments over patent dispute 340
When research is done abroad 344
Merck’s Bermuda subsidiary runs afoul of U.S. tax laws 349
Want biotechnology funding? Use a shotgun! 360
Chapter 3
Introduction to Molecular Biology
Everything should be as simple as possible, but not simpler.
Albert Einstein

B
iotechnology research seeks to develop applications of molec-
ular biology. Many sources use analogies to recipe books or
blueprints to explain the role of DNA and genes in molecular
biology. Ultimately, these analogies obscure the importance of topics
such as regulation of gene expression, which is of fundamental im-
portance in understanding molecular biology. When applying one’s
knowledge of biotechnology fundamentals, most metaphors fail. It
is only by understanding molecular biology and biotechnology ap-
plications that one can appreciate the applications and limitations of
techniques used in molecular biology.
This chapter presents a brief, metaphor-free, introduction to mo-
lecular biology. Subsequent chapters describe the tools, techniques,
and applications of biotechnology and provide greater details on the
potential and limitations of molecular biology.

Information Flow in Molecular Biology

In order to understand the basis of most biotechnology applica-
tions, it is necessary to first understand the process by which infor-
mation in genes leads to the formation of structural and functional
proteins.
Proteins serve structural and functional roles that give individ-
ual cells—and by extension whole organisms—specific structures
and functional characteristics. When many people think of proteins,

23
24 Building Biotechnology

Information Flow in Molecular Biology

Genetic information is contained in DNA and leads to the

formation of proteins through an intermediary called mRNA.

they think of foods such as meat and beans. While animal muscle
and plant seeds are excellent sources of dietary protein, proteins play
a central role in all cell types and perform functional and structural
roles (see Table 3.1). Examples of structural proteins include kera-
tin, which makes skin waterproof, and myosin, which interacts with
other proteins in muscles to make them flex.
DNA contains information that describes the construction of
proteins. The process of protein synthesis is as follows:

1. DNA contains the information to produce proteins.

2. Information encoded in DNA is transcribed into a molecule
called messenger RNA (mRNA)—effectively a “working copy”
of the DNA sequence of a given gene.
3. mRNA is translated into proteins by the protein synthesis ma-
chinery, the composition of the resulting protein correspond-
ing to the original DNA instructions.

This basic mechanism is conserved in all life forms, from bac-

teria to humans. The implication of this common process that con-
verts information in DNA into functional proteins is that similar
techniques can be used to investigate and manipulate all biological
systems. Furthermore, it is possible to make human therapeutic pro-

transcription translation
DnA mRnA Protein
Storage of “Working Structural and
genetic copy” of a functional
information gene roles

Figure 3.1 Simplified model of information flow in molecular biology

 3 - Introduction to Molecular Biology 25

teins, for example, in organisms as distantly related as bacteria.

Understanding the roles of DNA, RNA, and protein and their
relationships to each other is essential to understanding molecular
biology. While there are some specific exceptions (e.g., retroviruses
and prions) to the order and direction of information flow shown in
Figure 3.1, these examples still fit within the general framework, and
the majority of biological systems use the framework as presented.

DNA: Storing and Relaying Information

Deoxyribonucleic acid (DNA) is the primary source of genetic
information in cells. Humans, plants, animals, and bacteria all con-
tain DNA. DNA is physically passed from generation to generation,
bestowing certain traits of parents to their children. The reason why
children have physical characteristics from each of their parents—a
child may have their mother’s eye color and father’s hair color—is

DNA

mRNA transcription

Nucleus (in plant

and animal cells)
mRNA

Growing protein
chain
Protein synthesis
(translation)
mRNA

Cell membrane

Figure 3.2 General scheme of gene expression

Modified from National Human Genome Research Institute
26 Building Biotechnology

because they received half their DNA from each parent.

Each of our cells (with a few exceptions like red blood cells, eggs,
and sperm) contain all the DNA required to code our genetic fea-
tures. Individual regions of DNA that confer traits are called genes.
Information in genes is relayed to the protein synthesis machinery
within cells where it dictates the production of proteins. The word
“genome” refers to all the DNA in an organism. The human genome
contains approximately 30,000 genes arrayed on 46 long stretches of
DNA called chromosomes.
DNA is essentially composed of two intertwined strands that
form a double helix. The two strands of DNA are said to be comple-
mentary because the sequence of one strand indicates the sequence
of the opposite strand, like a photograph and its negative. Each
strand is physically composed of four different chemical units called
nucleotides, the sequence of which encodes the genetic information.
These four chemical units, adenine, cytosine, guanine, and thymine,
are often abbreviated as A, C, G, and T, respectively. Just as the Eng-
lish language can be expressed in twenty-six letters, the genetic code
is expressed in these four chemical units. A DNA “sequence” refers
to the specific order of A’s, C’s, G’s, and T’s in a stretch of DNA.
There are two essential elements of genes: coding and regula-
tory elements. The coding elements of genes are first transcribed as
mRNA, which is then translated into protein. The chemical sequence
of A’s, C’s, G’s, and T’s in the coding region of a gene determines the
composition and structure of the resulting protein and, by extension,
its function. Regulatory elements affect the rate at which genes are
transcribed and translated, and may be interspersed within the cod-
ing sequence or outside of it. Regulatory elements also control the
cell types within which specific genes are activated, and the timing
and magnitude of gene expression. Gene regulation thereby allows
individual proteins to be expressed only in certain cells at specific
times and at specific rates.
Proper regulation of gene expression—the production of gene
products—is essential. Under- or over-expression of genes can have
deleterious effects. For example, many forms of cancer are caused by
mis-regulation of gene expression that results in uncontrolled cell
division. A potential solution for diseases resulting from low expres-
 3 - Introduction to Molecular Biology 27

Nucleus (not present in bacteria)

Chromosome

Cell

Gene

Figure 3.3 DNA: Chromosomes and genes

Modified from National Human Genome Research Institute

sion of genes is to use gene therapy to introduce affected genes or

regulatory elements to spur additional production. One of the chal-
lenges of gene therapy is developing methods to regulate the expres-
sion of genes that are introduced into cells and ensure that they are
not over-expressed. A solution for diseases caused by over-expressed
genes is RNA interference. This procedure prevents translation of
mRNA, inhibiting protein production. RNA interference is de-
scribed in further detail in Chapter 6.
28 Building Biotechnology

Box
Human chromosomes and genetic trait inheritance

T he human genome is composed of chromosomes. We get 23

chromosomes from our mother and 23 chromosomes from our
father, constituting 23 pairs. While 22 of the 23 chromosome pairs
are similar in both men and women, the 23rd pair is quite differ-
ent and determines the sex of an individual. For the 23rd pair of
chromosomes, women have two X-chromosomes while men have
one X- and one Y-chromosome. Because X-chromosomes contain
more DNA than Y-chromosomes, they are physically larger than Y-
chromosomes. Having too many or too few chromosomes can af-
fect gene regulation and cause diseases. Down’s Syndrome, for ex-
ample, occurs in individuals with three copies of chromosome 21.
The roles of X- and Y-chromosomes are important in under-
standing sex-linked diseases. Women do not have Y-chromosomes,
so diseases that are caused by defective genes on the Y-chromo-
some can only occur in men. Additionally, men only have one X-
chromosome, so mutations in genes on the X-chromosome are
more likely to affect males, because the second X-chromosome in
women can sometimes compensate for mutations on the first. Col-
or blindness, caused by a mutation on the X-chromosome, is more
common in men than women for this reason.

mRNA: The Messenger

Messenger RNA (mRNA) is used to relay information from genes
in DNA to the protein synthesis machinery. An additional feature of
mRNA is that it can be destroyed once sufficient protein is produced,
permitting an extra level of control of gene expression. RNA is also
present in forms other than mRNA, some of which are described
later in this chapter.
It is possible to affect expression of genes by targeting their
mRNA with antisense RNA or DNA—nucleic acids which can bind
the mRNA. Unlike DNA, which is usually double-stranded, mRNA
is single stranded. Nucleic acids (DNA or RNA) containing a se-
quence that can bind to a given mRNA will prevent translation by
the protein synthesis machinery, inhibiting gene expression. The
Flavr Savr tomato, a tomato engineered to have a long shelf life, was
 3 - Introduction to Molecular Biology 29

produced by introducing antisense RNA corresponding to mRNA

for an enzyme involved in fruit spoilage. Inhibiting expression of
this gene delays spoilage. In 1998 the FDA approved Isis Pharmaceu-
ticals’ Vitravene, the first antisense drug, to treat cytomegalovirus-
induced retinitis.

Translation: Making Proteins

Just as DNA and RNA are composed of linked nucleotides, pro-
teins are comprised of chains of amino acid units. When mRNA
is translated to produce a protein, the protein-synthesis machinery
“reads” the nucleotides three at a time, assembling amino acid chains
that correspond to the mRNA sequence. The basic elements of the
protein-synthesis machinery are tRNA, a form of RNA that trans-
fers amino acids to the protein-synthesis machinery in a way that
enables them to be linked together, and ribosomes, which help form
the chemical bonds that attach amino acids in a protein chain.
The three-nucleotide sequence elements on mRNA that code
for individual amino acids are called codons. These are matched by

Growing
Protein Chain Amino acid

Amino acids tRNA

Anti-codon
Codon

mRNA

Ribosome

Figure 3.4 Protein translation

Modified from National Human Genome Research Institute
30 Building Biotechnology

anti-codons on tRNA to ensure that the appropriate amino acid is

aligned with a given mRNA sequence. The 64 possible combinations
of A, C, G, and T at each codon code for only 20 different amino
acids. This redundancy in the genetic code, permitting multiple
codons to specify common amino acids, is considered a form of pro-
tection against DNA mutations and has applications in identifying
foreign DNA from sources such as viruses which may use different
“dialects” of the genetic code.
The chemical characteristics of amino acids in a protein cause
it to fold into a defined 3-dimensional structure. That determines
the protein’s function. Because the DNA sequence of a gene dictates
the sequence of amino acids in a protein, and the sequence of these
acids in a protein determines its structure, one can deduce a protein
sequence, and potentially its structure and function, from the gene
sequence encoding it.

Proteins and Enzymes

Proteins, the workhorses of cells, are responsible for the majority
of structural features and functional characteristics in cells. Enzymes
are proteins that perform functional roles as part of the cellular pro-
cess. Different types of cells get their characteristics by expressing a
specific array of genes, resulting in production of a complement of
proteins that give each cell type its unique characteristics. Pancre-
atic cells, for example, produce the protein insulin to regulate blood
sugar levels; neurons produce neurotransmitters essential for brain
function; and hemoglobin is made in blood cells, enabling them to
carry oxygen. Examples of enzymes include proteases that break
down proteins or enable digestion of food, and polymerases that as-
semble DNA and RNA. Some genes are expressed only in certain
cell types whereas others are widely expressed. Examples of widely-
expressed genes include those encoding proteins and enzymes in-
volved in general cellular activities such as DNA replication, mRNA
translation, protein synthesis, energy production and maintenance
of structural integrity.
Production of inappropriate proteins in cell types and mis-reg-
ulation of protein expression are at the root of many diseases. As
 3 - introduction to molecular Biology 31

Table 3.1 Examples of protein and enzyme functions

enzyme Function
Amylase Breaks down starches and other complex carbohydrates
into basic sugars
Cellulase Breaks down cellulose, found in the cell walls of plants
Lipase Breaks down fats
Protease Breaks down proteins
Protein Function
Collagen Main protein in connective tissue; structural roles in skin,
cartilage, teeth, bone, and other tissues
Keratin Makes skin waterproof and contributes to strength and
flexibility
Myosin Muscle contraction

mentioned above, many cancers result from mis-regulation of gene

expression that causes uncontrolled cell division.
Molecular biologists can transfer genes from humans and other
animals into bacteria, yeast, and other organisms to confer the abil-
ity to produce specific proteins that may be extracted for therapeutic
use. For example, Genentech produced its first drug by introducing
the gene for human insulin into bacteria and extracted the resulting
protein to produce a treatment for human diabetes. Genes can also
be transferred from one organism to another to confer new attri-
butes. Pesticide-resistant crops have been produced by incorporat-
ing naturally-occuring pesticidal proteins into plants. Bacteria have
also been modified to perform roles such as decomposing oil spills
by adding genes encoding proteins with the ability to break down
components of oil. Additional examples are described in Chapter 6.

other forms of rNA

Traditional molecular biology held that the primary role of RNA
in cells was largely limited to housekeeping functions such as trans-
ferring information from DNA to the protein synthesis machinery
(mRNA), transporting amino acids to be assembled into proteins
(tRNA), and translating mRNA into protein (rRNA).
Sidney Altman and Thomas Cech shared the 1989 Nobel Prize
32 Building Biotechnology

Table 3.2 Selected RNA types

RnA type Function
mRNA Messenger RNA. Contains a working copy of a gene
sequence and is read by the protein synthesis machinery
to produce proteins.
tRNA Transfer RNA. Transfers amino acids to the protein
synthesis machinery to produce proteins.
rRNA Ribosomal RNA. Part of the protein synthesis machinery.
Also useful for determining evolutionary similarity
between organisms.
aRNA Antisense RNA. Used for gene regulation.
siRNA Small Interfering RNA. Used for gene regulation.
snRNA Small Nuclear RNA. Used to edit mRNA, regulate gene
expression, and maintain chromosome tips (telomeres).

in Chemistry for their discovery of catalytic properties of RNA. The

ability to catalyze (increase the rate of) biochemical reactions had
previously been thought to only exist in proteins. Altman and Cech
found a role for RNA in the splicing of mRNAs, ultimately making
it possible for a single gene to give rise to several different proteins.
The significance of Altman and Cech’s discovery was expanded
more than a decade after they received the Nobel Prize. Following
sequencing of the human genome it was discovered that the human
genome contained only a fraction of the genes previously thought
necessary to produce the complete set of proteins comprising hu-
man biology. The ability of this small set of genes to produce the full
complement of human proteins could largely be explained through
mRNA splicing.
More recently myriad forms of RNA have been discovered, and
diverse roles for RNA have also been elucidated (see Table 3.2). These
discoveries indicate that controlling cellular activities is more com-
plex than previously thought, suggesting that there are also more
opportunities to influence cellular activities.
 3 - Introduction to Molecular Biology 33

The Big Picture

Genes interact with the environment and with each other to
confer traits. While the presence or absence of a gene can potentially
confer a given trait, environmental factors also play a role. Our phys-
ical characteristics are a combination of genetic and environmental
factors. A child with a hypothetical tallness gene, for instance, would
not necessarily grow taller than a child without the gene; the child
with the tallness gene would also require adequate nutrition to fuel
the extra growth (and the effect of the tallness gene may be limited
or enhanced by the action of other genes). Rather than thinking of
genes as determinants of physical characteristics, they should be re-
garded as potentials or predispositions for characteristics.
The ability to modify characteristics of cells is similarly limited
by biological and physical constraints. Since some cells are rapidly
replaced, induced changes will be quickly lost. Other cells are dor-
mant, precluding their potential to express modifications.
Furthermore, biology is complicated. In fields such as industrial
chemistry or engineering, applications are developed from well-
characterized principles. With biotechnology on the leading edge of
molecular biology research, it can be difficult or impossible to foretell
the outcomes of manipulations and they can have unforeseen con-
sequences. Because it is not possible to fully predict the outcome of
these procedures, scientists must perform experiments, take obser-
vations, refine theories, and finally develop functional applications.
This is why biotechnology research is so complex, time consuming,
and fraught with unforeseen setbacks and disappointments.