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THE CUTTING EDGE

When Life Gives You Tomatoes . . .

Calgene more than survived its Flavr-Savr failure. It's got new cash and a new gene pull: enhanced oils.

August 18, 1997|MARTHA GROVES | TIMES STAFF WRITER

DAVIS, Calif. — It was touted three years ago as a miracle tomato perfected by the wonders of gene splicing--plump, sweet, juicy and slow to rot.

But the Flavr-Savr--the first genetically engineered food to win Food and Drug Administration approval--proved too costly to produce and therefore shriveled on the vine, commercially speaking. For a time, it seemed that Calgene Inc., the Davis biotechnology pioneer that developed the product and then wallowed in tomato-red ink, would die with it.

Look again. Rescued by a cash infusion from giant Monsanto Co., which in May completed its purchase of the company, Calgene is now regarded as the world leader in the emerging--and potentially hot--arena of genetically modified vegetable oils.

Calgene's products, led by a canola seed oil enhanced by a gene from the California bay laurel tree, are designed to replace higher-cost tropical or synthetic counterparts in a vast array of goods, from detergents to face creams to chocolate-coated ice cream bars.

Given Monsanto's deep pockets, well-honed marketing talents and oft-reiterated commitment to futuristic food and personal-care products, Calgene finds itself free to pursue the type of trailblazing research that helped the company put agricultural biotech on the map years ago. Though no longer independent, Calgene also is no longer lashed to the whims of Wall Street.

"What Monsanto wants Calgene to be is an innovation engine," Lloyd M. Kunimoto, Calgene president, said recently in his sparely decorated office at Calgene's Davis headquarters. "We'll provide food companies and personal-care product manufacturers with better and more cost-effective raw materials."

Kunimoto, who grew up in Hawaii and received a bachelor's degree from Stanford in math and physics, plans to be on hand in St. Louis today, when Monsanto shareholders are scheduled to approve the company's long-planned split into two pieces: the old-line chemicals business and the life sciences unit, of which Calgene is a part. It's likely that the Monsanto name will remain with the life sciences operations, which also include the G.D. Searle pharmaceutical company, Roundup weed killer and Roundup Ready crops, and NutraSweet Kelco, which markets food ingredients.

Food ingredients have always interested Monsanto, founded in St. Louis as a saccharin maker in 1901. The company has lately put an emphasis on bioengineered nutritional products. One plan is to use Calgene's technology to develop lower-fat, lower-calorie frying and baking fats that could lengthen the shelf life of breads and other products while making them more healthful.

Since 1995, Calgene has been marketing the first of its specialty oils, a "laurate canola," to food manufacturers. Sold as Laurical, it contains a high proportion of lauric acid, a fatty acid found in tropical oils. (Fatty acids make margarine and shortening hard so that they can be used for baking, frying and spreading. They also help give soaps and detergents their foaming properties.)

Among early customers is Procter & Gamble, which has bought millions of pounds of the substance for use in soaps and detergents.

Two other products are in the pipeline: a "stearate canola," containing stearic acid, which will be used as a potentially more cost-effective and healthful liquid shortening for big baking operations, and a "medium-chain" fatty acid, for use in medical nutrition (such as intravenous and infant formulas) and, potentially, in consumer products such as high-energy snacks and beverages and better-tasting low-calorie potato chips. Those products are at least two years away.

Moreover, Kunimoto said, much of Calgene's research is transferable to soybean seeds, in which Monsanto has invested heavily.

Soybeans could emerge as a highly economical way to produce such oils in larger quantities to compete with commodity oil products. Calgene also is experimenting with modifying canola to give it the properties of fish oils, which facilitate brain and eye development in infants and also are thought to help in reducing cholesterol.

"Calgene is a key piece in both our ag biotech and food and nutrition strategies," said Robb Fraley, co-president of Monsanto's agricultural sector.

Calgene's work with oils was, in fact, the magnet that drew Monsanto.

"If you look at the biotech big picture, one of the big pots of gold is changing oil content," said Sano M. Shimoda, president of BioScience Securities Inc., an Orinda, Calif., investment bank focusing solely on agriculture biotechnology.

Jeff Cianci, an investment analyst with Bear, Stearns & Co. in New York, projects that "oils will be big in the next decade."

Calgene, he added, is "leading the pack," given its impressive patents and Monsanto's distribution clout. However, Cianci noted that the products are still in their infancy and that "the market must be developed."

Still, Calgene is confident that oils won't prove as slippery a business as fresh produce.

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