~O'~_tOP:G·.HcpVood , I~gl 3112. Advanced tLchnolo Ir_(ellbrldSc) - eurrlnl ProB[IDOc -----~~-I--- -1 In technology terns ATe ~ae~~ to produce new genetic varieties of identified crept using the oodern trchnl~ucs of nolecular b~ologg~ rur:hernore, the focus of ATC's biotechnologg interests is on dounstrean processorlproduct benefits for these crops rather than sioply agronoPlc bcnefli~~ Projects are primarily directed to chose downstream businesses that BIT either has, or plsna to acquire~ Thus bTC will create genetically engineered plants for IPplOVld tobacco, for improved eucalyptus trees, for novel agribusiness products and for general horticultural materials needed by out overseas biotechnorogy companies~ Where the possibility exists to achieve significane processor benefits froi crops that will not be of interest to BlT froa the agribusiness standpoint, providing ATe can establish suitable commercial terPs for the project with a sizeable partner in that business, this avenue will be pursued~ The following prograi~e is proposed for the next two yeats but with iiplications for st least 5 years if conmercial end-products are to resule~ Project I~ Tobacco fn_provenent The comnereial goals of this project area are: i) virginia with Oriental flavou;, ii) Existing tobaccos with aipliffed eastelflavour, iii) existing tobaccos with very high nicotine levels, iv) Reduced nitrosanine lePcls~ These inputs have been identified with Soura eruz, additionally, Input is being gathered fron leaf Departsent, BATeo~ Although it was our intention that ATC should develop independently the skills required in the area of gene·oipping, the keg technology for these projects, we sre evaluating the merit of funding I collaborative project between ATC and NPr who have a lead position in this technology and who have already offered to work with us in this var, This would accelerate the tobacco projects by two years and bring ATC up to speed in gene napping, a technology that will be the baais of genetic developnent of a broad range of crape. Additional costs of Eb00,000 over the next two gears are estiPated for this eolr~boratioa. If the Polecular prograPne is to result in commercially viable strains of tobacco it is essential that the project is run in Co~ldbora~ioa vlth a partner having resources to undertake breeding and IcdiuP scaiegreviag, processfPg~ai;aTi~n 15 final product~ Due to the intended proprietary nature of the new tobaccoa, this partner should be In the Croup~ The sophisticated nature of the research precludes BbTCo operating compsniea snd only BAW or Souta erut can be considered. The torner has an on-going devclopienl with DNIP on tobacco mod~~~ed by cellular techniques (but not Polceulit) and even here davelopnent work Clit; PDF -!::!!::!!::!.f3 StlC.i: 0111 -2- (folloving preliminary selection and evaluation on 1 US farm) has required the full buck-up of Souta Crut, Sours Crur Ire uniquely placed to support the molecular programme on tobacco at ATC and have been fully involved to bate in formulating the targets and setting an approach, The significant investment by Sours eru2 RIO In analytical equipment and staff to complete the Tobacco Processing Research programme initialed' in 1980 means that little further investment 15 rtquired, B6V do not have this resource anilabllityl Project If~ - Advanced Breeding of eucal_yptus Just as ve have defined dounstream processing_lproducr goals for the Ire tobacco programme, ve are nov attempting to define the goals achievable through the advanced techniques If molecular biology for the forestrylpulp and paper interests of B~T~ Discussions vitb Oiggins reaps have started and proj~e~s should be agreed and implemented in tarry 1989· Prefect Ill. · Potato Crisp Contract Walkers Crisps have accepted the assignment to BIT of choir contract at ~TC vith T'Jyfords, This proJect is highly desirable both technically and financially (vorth f989000 p·a~ for st least 3 years). The I1C molecular biologists are developing methods for i~sertlng Into ~be potsta ~U, genes ta produce enigses that reduce the plant's pool of g~ufose~ In commercial terms this vill lead to potato varieties capable of cold storage that do not subsegutntly suffer discoloration in etocessing, This type of research vill have broad implication for storage and processing of other crops, project IV · Soporcel Eucarlptus Propagation Contract I contract agreed betueeo Tvyfords and Soporc?l has been reconstructed vith the agreement of Soporcel~ This vill provide micropropagation technology for multiplying elite crones and for producing elite eucalyptus via the seed route. This is funded It fS0,000 p,al over 5 ycir,~ Project V, - Asrlbuslniss Projects Although not possible yet, vs fully expect to identify projects limed at improved or even novel fruits, vegetables or other produce that vill play 8 key role in the emerging Agribusiness plans of BarCa~ Means of altering the biosynthetfc pathways involved in ripening represent one potentlalll important line of research, Na serioua research in this arei is expected before 1989~ Clit; PDF -!::!!::!!::!.f3 StlC.i: 0111 ·3· Project Vt~ · Yirue·tesist~nce Cena! Several approaches to Introducing virus resistance into crops are being putsucd~ Vork is progressing well and will be taken to the stage Pi field trials with genetically engineered potato plants~ Tals can reasonably be estlaated at 3-4 leari~ Applfcatlon will be through BIT Blotechnology coopanias overseas (Lje potato crop is importsnt in prscticalll all territories) but the technology acquired will have relevance to vital prob;omJ for a wide range of crope~ Ineoai Potiitlal for btC 1~ I_o~!~_c~_lmprovement erogramme focoie could be generated from~· (i) sate of proprietary seed or parental lines for hybrid seed production to Group coPpanles tot third parties); (ii) royalties on use of the new tobacco varieties since they give higher value to leaf and cigarettes; (iii) Operating coipany funding of specific or broad-based research at ATC of insect or virus proble~s in a particular locstion~ 2. Euealyptus A contract has been agreed vith Soporcel (850,000 p~a~ for I years) to provide the basis of a tree i~provamcnt ptognia using cellular tc:jnologicJ~ Preliainery discussions have been held vtth Vlgglns Teape to explore the potential of 8olecular and cellular strategies for achieving fi?rovemenes in eucalyptus both at the forestrf and processor revel, It is anticipated that this prograoie virl receive support of the order of fZ00,000 p~pl for I years~ The financial benefits are difficult to cstiPate at this po~at~ Rowc:er, it is the primary objeetives of the research to provide plaa:ing materials with ipproveients ini· (f) growth on marginal landl (ii) ipproved cycle and yield characteristics; (iii) capability of aggregating traits into Individual plants; (iv) optipisation of fibre and pulping qualities of eucalJptus~ Clit; PDF -!::!!::!!::!.f3 StlC.i: 0111 .g. Becauae of the volume of this business, small benefits have enormous commercial btne[iti~ (Cenetic input materials will be protected as far as possible by the use of hybrid Itrieeg~ea~) 3, Potato_project area Currenrlg this project is funded by Walkers erispi for C9B,000 p.~~ for ~ paaro~ The Technical Director of APD (Amatll's snack food division) will visit ATC (t8th July) to discuss areas of mutual interist~ lfeint, USI has also expressed interest in examining the opportunity for funding research in this area. Outline of the economics for potato improvement for processor benefit:- (i) Dr, (reductlon In free sugars in stored potatoes) pre·proeessing costs associated vith sugar removal Walkers E5009000 p~a~ industry 11.0 m ~ p.a~ (ii) Europe (tonnage for crlps manufacture · Uf) f1.0 I e p.a. (lii) (ctisp production 5 x 's UX) e1l0 a + p.a~ A 5X royalty on planting materials of ilPOleon would equate to 301 of the cost to the processor for pri;tre~tpsnil This 5: royalty value is:- E400,000 p.a. Europe Cb001000 p~e~ USI E2~0 m p~a~ NO estimate can yet be mode of commercial benefit from improved quality of final produces that can be expected from this wottl Clit; PDF -!::!!::!!::!.f3 StlC.i: 0111 ·I- Only a limited number of crisp producers dominate each market and, hence, a high market share can be envisaged. The research for crisp improvement is applicable to the chip market where volumes are higher but the magnitude of the problem Is somewhat lover. All cultivars developed under this programme are patentable and hence ptoprirt~tt~ b~ viral reslsrance_rtogramme these strategies are applicable for use across a broad spectrum of planting materials. Income potential can be derived (i) project funding from third parties (ii) sale of finished technologies to third party seed companies, plus royalty income on product sales (ili) incorporation of technology into proprietary products for direct sale by 1ATCo biotechnolagy ventures ovcrscaJ~ (iv) Cross-licenbing potential for enlarging group seed base for agribusfness dcpelop~cat~ preliminary discussions have been conducted with Pete Seed USI to exchange information on research interests and possible marketing agroanents~ Peto have limited research capabilities for plant i~provemcnrl The application of ATC's technologies could provide a significant advantage to their horticultural and vegetable seed raoge~. Assuming product improvement in Peto's hybrid seed range, this will impact on a turnover of $60 mn and would command a royalty of 10 · 20X of this product range end generate approximately $110 Pnlannui~ harris Horan, a horticultural and vegetable seed company (part of Lfirge coffee) has indicated a v~llingnose to talk with BAT ed discuss joint opportunities~ harris norao is of a similar site to Peto end hence income potential would be Ilollar~ The development of ctoss·licenslng would be of greater value, with hybrid seed commanding at least 50X airgtas~ 5, Income potential from providing the Group with technical support and necessary advise in relation to their biotechnology-based tapuire~enrs~ Clit; PDF -!::!!::!!::!.f3 StlC.i: 0111 ·6· in IUPlltY, ~re·vill generate revenues froi the Iollovlng: funded reeearch (internal and external) technology licenalng royalty incooe on product sales generating proprietary position for planting lpaterial tales providing differentiated (value added products of processor or consuoer benefit in broad areas of ~sribueiness)~ ~ialnET 12tb July 1988 Clit; PDF -!::!!::!!::!.f3 StlC.i: 0111