Cloning for Profit

When San Francisco-based Genetic Savings and Clone announced in December it had sold a cloned kitten to a Texas woman, the public seemed caught between feelings of revulsion and excitement over the idea of cloning the family pet.

Jan 31, 2005
Ivan Oransky(ioransky@the-scientist.com)
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Courtesy of Victor Fisher/Polaris

Genetic Savings and Clone's cat manager, Leslie Ungerer and CEO Lou Hawthorne present "Little Nicky" to a Dallas, Texas, resident who paid $50,000 for the kitten.

When San Francisco-based Genetic Savings and Clone announced in December it had sold a cloned kitten to a Texas woman, the public seemed caught between feelings of revulsion and excitement over the idea of cloning the family pet. The Maine Coon cat's genetic replica, dubbed Little Nicky, was not the first cat ever cloned; the company had already cloned four. However, it was the first to be sold commercially, and it will hardly be the last.

Now that cat cloning is a possibility, at least half a dozen companies say they are planning commercial cloning operations. In addition, some companies are focusing on cloning technology rather than producing clones themselves, such as Westport, Conn.-based Aurox. Others, such as Bryan, Texas-based Global Genetics and Biologicals are banking cell lines and partnering with companies that clone animals.

The industry faces a number of obstacles, however. Animal lovers point out that 5 million to 9 million cats and dogs are euthanized in the United States every year, and high-tech efforts to create more are hardly necessary. What's more, a public weaned on science fiction thrillers such as Stephen King's Pet Sematary often has a visceral, it'sjust-plain-wrong reaction to an effort that seems to bring back a dearly departed pet.

But would-be cloning companies may have an even bigger problem than public relations: the bottom line. Currently, each cloned cat at Genetic Savings and Clone costs $50,000, suggesting a limited market for pet cloning until the price drops. In the interim, Genetic Savings and Clone also offers gene banking for potential clients. For $295 plus $100 per year thereafter, pet owners can have biopsy tissue from a live animal mechanically disassociated and stored in liquid nitrogen. For $895 plus $100 per year thereafter, the company will culture the cells before freezing them. Finally, for $1,395 plus $150 per year thereafter, the company will store cells from the biopsy tissue of a deceased animal.

It's difficult to predict how financially successful many of the companies at the forefront of animal cloning will be. None are publicly traded and none have been able to clone a dog – the Holy Grail of commercial animal cloning, in the words of Sara Davis, president of ViaGen, an Austin, Texas-based cloning company. Still, it's clear that companies are looking at a variety of ways to turn animal cloning and related technologies into commercial success. While pet cloning seems to garner the lion's share of attention, companies that focus on less telegenic animals, such as livestock, may have stronger business prospects.

"There's an economic incentive to clone certain cows and horses," says Chuck Long, director of advanced reproductive technologies at Global Genetics and Biologicals. They are "economically valuable animals that may be worth hundreds of thousands of dollars." While pet owners may have the money to spend on a clone, not many may do so, says Long, who is also an assistant professor at Texas A&M University. "The question becomes, are they likely to spend it on another pet when they likely got their pet free to begin with?" says Long, who spent three years at Genetic Savings and Clone. He believes pet cloning is a niche market and that most pet owners who would consider cloning won't do so until the price drops to about $10,000.

HOW MUCH FOR THAT CLONE IN THE WINDOW?

A number of factors determine the cost of cloning. Pet owners don't usually want more than one copy of a beloved animal, but the relatively high failure rate of cloning requires that many embryos are created and implanted in surrogates. Cow cloning efficiencies average around 30%, according to Jim Robl, president and chief scientific officer of Westport, Conn.-based Hematech, which has laboratories in Sioux Falls, SD. About 1% to 6% of transferred swine embryos and about 5% to 10% of cloned sheep embryos result in offspring, but many of those "are not exactly healthy animals," says Jorge Piedrahita, of the North Carolina State College of Veterinary Medicine in Raleigh. Goats have a cloning efficiency of 3% to 7%, and tend to have fewer abnormalities than sheep. Not enough data exists to determine the cloning efficiency of cats, though the first cloned cat reportedly took 87 embryos to produce a kitten, a cloning efficiency of roughly 1 percent. The company declines to say how many attempts it took to create Little Nicky.

<p>CLONING BY CHROMATIN TRANSFER:</p>

© 2004 Society for the Study of Reproduction, Inc.

1. Cells permeabilized with Streptolysin O (SLO) 2. Mitotic extract containing an ATP-generating system promotes chromatin condensation and removal of nuclear components (arrows). 3. Cells resealed with CaCl2. 4. Resealed cells fused to enucleated oocyte. 5. Oocyte activated to elicit pronuclear formation.

Quality control is another issue. Clones can have genetic flaws, be oversized, or just look different from their genetic donors. "Every single clone has to be perfect," says Genetic Savings and Clone CEO Lou Hawthorne. "The public won't put up with a large number of losses."

Genetic Savings and Clone now has several hundred clients who have banked pets' genetic material, and they have garnered about 10 new ones each day since the Little Nicky announcement, says Hawthorne. He estimates the client list would jump into the thousands if the price drops to $20,000 per clone, but too many clients could also overwhelm production capacity. That situation will change in February when the company rolls out a new facility outside of Madison, Wis. In 2005, the company hopes to clone about 40 cats and three or four dogs. Dogs remain a challenge because their complex reproductive systems are poorly understood.

One way companies may be able to lower the price is through sharing resources with related divisions of a larger company. Via-Gen, a 35-employee company that began life three years ago as a spinoff of Genetic Savings and Clone, is one of three components of a larger company called Exeter Life Sciences. The others are Arcadia, an agricultural biotech company, and Kronos Optimal Health, both headquartered in Phoenix, Ariz. The three divisions share corporate functions, and "certain scientific synergies," says Davis.

ViaGen harnesses cloning technology to perform genetic selection on shrimp, specifically trying to produce aquaculture species with resistance to viral disease, "which is about $1 billion a year loss to the industry," says Davis. Such "turbo-charged" selection is a major part of the business model for ViaGen, which recently signed a $5 million deal with Premium Gold Angus Beef for DNA identification of cattle, using Affymetrix technology, "to let customers know they're buying what they say they are."

<p>Cloning Companies</p>

Simon Brodie, CEO of Los Angeles-based Geneticas, another company that has entered the market, says his company plans to announce in July that they have brought the cost of cloning a cat to below $10,000. However, the company has yet to produce a clone, and some doubt such prices are realistic. "I don't think it's going to come down to the day when you can get a clone for $5,000," says Piedrahita. Hawthorne agrees. "There are companies out there promoting lower price points," he says, "but they're just blowing air. They have no staff, no intellectual property." He says his company has an exclusive license to use chromatin-transfer technology in cats.

In chromatin transfer, donor cells are treated with streptolysin to make their membranes more permeable, and mitotic factors to make the chromatin more accessible to oocyte factors. A study in calves suggests that gene-expression profiles characteristic of early embryonic development are more likely to show up in chromatin transfer-derived embryos than nuclear transfer-derived embryos (the older method used to clone Dolly the sheep),1 though the two methods have not yet been compared in a head-to-head trial with sufficient power to determine a significant difference.

Scientists at Hematech developed chromatin-transfer technology, and then spun off Aurox about five years ago, says Aurox CEO James Barton. Aurox has licensed the use of the technology to a number of companies in addition to Genetic Savings and Clone, which holds the exclusive right to use the technology in cats and a research license for its use in dogs. "All of our licensees enter into the same agreement, whereby if they make improvements in the technology they transfer those improvements to Aurox, and every other licensee has access to those improvements," says Barton. "We're hoping that as more people use the chromatin-transfer technology, that everyone will be able to share in the improvements."

HORSES, COWS, AND SWINE

While cats, and possibly dogs, may be the public face of for-profit animal cloning, agricultural applications may be more profitable. Cows are cloned every day. Robl estimates that he did about 75,000 cloning manipulations in 2004, and most breeders don't mind ending up with more than one animal, especially if the price is the same no matter how many clones are produced. Moreover, the difficulties of obtaining quality oocytes, which is a problem for cat cloning, is not an issue for cows; Robl can collect 1,000 to 1,200 eggs per day from slaughterhouses.

A cow's anatomy also makes embryo transfer relatively easy, says Robl. Most animals, including cats, require surgery to transfer cloned embryos into the reproductive tract. In cows, Robl notes, "You can actually grab the reproductive tract through the rectal wall," which allows for nonsurgical injection of embryos. All of these factors keep cattle cloning relatively inexpensive. "The last price I saw in a newspaper was $19,000, and that was for one [cow]," says Davis. Others place the price of cloning a cow between $18,000 and $25,000. The situation is similar for swine, which along with cattle are ViaGen's main interests in cloning. Sheep and goats are easy to clone, says Davis, but are not economically important enough to do so.

Cloning could be used to produce prized breeding animals, although there is a voluntary moratorium in the United States on using cloned animals in the food supply while the Food and Drug Administration studies their safety. "I think when the FDA finally allows cloned animals, or offspring of cloned animals, to go into the food chain, the industry will take off," says Aurox's Barton.

Horses will be much more expensive to clone than cows, because the technology is still inefficient and companies would have to recoup the costs of further research and development, says Davis. Still, she predicts, there will be a decrease in cost over the years, and the company hopes to have three horse cloning clients in 2005. Genetic Savings and Clone also plans to introduce a gene banking and embryonic reproduction business for horses in 2005, says Hawthorne. "The target clients for horses, I would anticipate, would be exceptionally talented animals who are past reproductive life or are gelded," says Davis. However, Jockey Club restrictions prevent any horse born via assisted reproductive technologies, or the offspring of such horses, to race. Long says the American Quarter Horse Association, which does not have the same restrictions, may provide enough business to make horse cloning a viable business proposition.

ANTIBODY FACTORIES

There are other business models in animal cloning. Piedrahita, who says he went into animal cloning research because he believes it has "tremendous biomedical applications," is impressed with Hematech. The company's main project, a cow that has been engineered to lack bovine immunoglobulins, can now be transgenically modified to produce human antibodies that will not be rejected by humans, and then cloned. "It's very, very exciting technology," says Piedrahita, who is not connected to the company but has in the past been a consultant to various cloning companies. "I would put the value of that animal in excess of $100 million."

Robl says the company has had a great deal of interest, particularly from the National Institutes of Health and the Department of Defense, who have given it grants to pursue biodefense applications. The company is working on five serotypes of the botulinum toxin, as well as anthrax and vaccinia. "Once you've got the production system in place," says Robl, speaking of the genetically modified cows, "you can use the same system to immunize with any number of different antigens." The company is also developing collection and purification systems for the antibodies.

Piedrahita isn't as impressed with the business prospects of pet cloning or agricultural cloning. "Companion animals are an extremely limited use of the technology, because the animal will more than likely not behave like your animal," he says. He also called cloning a completely nonviable approach to reproducing a particular phenotype in agriculture, but he sees a future for cloning and xenotransplantation. Animals could be engineered to lack antigens immunogenic to humans, and then could be cloned to produce organs for transplant.

If the industry becomes profitable, some companies say they would consider doing pro bono work to help conservation of endangered species. Others say cloning endangered species is part of their business plan. "Endangered species are a very good use of cloning," says ViaGen's Davis. But it may be a while. "I've been instructed that we need to show some profit before we can do the gratis work," she says.

Genetic Savings and Clone hopes "to use our technology to contribute to the preservation of endangered canids and felids, and to clone the best working dogs," says spokesperson Ben Carlson. Hawthorne hopes to be profitable within two years, at which point the company will consider an initial public offering. "Our investor is kind of traditional; he wants to get into the black before doing that," he says.