Boom drains vital research

By LIAM DANN

The global commodity boom may have the economy humming, but it is distracting investors from a vital long-term focus on research and development, say two biotechnology executives.

Jim Watson and Peter Lee agree that part of the problem is the easy money commodities such as milk powder and beef are making.

"There is a boom," said Watson, founder of Genesis Research. "There are good markets and prices for commodities and money goes into marketing and farm operations, but that just limits the focus."

He believed the commodity boom took the pressure off the need to develop new aspects of the industry.

Lee said he saw a similar phenomenon in the United States, from where he returned last year after a 27-year corporate career, to take over as chief executive of AgriGenesis, a subsidiary of Genesis Research.

He stepped down from that post on Friday, a casualty of the company downsizing by half because it was unable to raise funds.

AgriGenesis is trying to commercialise several innovative plant-based technologies.

Some of its research, such as its work on new pastures, goes to the heart of what made New Zealand agriculture successful in the first place.

In the US, Lee was vice-president of research and development for corporate giant International Paper, the parent company of Carter Holt Harvey.

"I've seen those cycles in the pulp and paper industry," he said. "The mentality is that when the good times roll, you don't have to be so forward-looking."

He said New Zealand needed to take advantage of its already large investment in technology.

Commercialising science is Lee's speciality. He said he returned to New Zealand because he believed the country had great science and he was determined to make a difference.

While AgriGenesis ended up being too small to justify having its own chief executive, Lee is determined to stay here.

He said it was too early to say what he would get involved in next but he was optimistic.

Lee's parting with AgriGenesis was amicable, he said. "It's the right thing to happen and it's being managed well from all points of view."

Despite all the difficulties Genesis has faced, Watson is also staunchly optimistic.

Many in the biotechnology sector now believe the company listed on the sharemarket too soon.

The local biotech sector is still new and inexperienced. Initial ups and downs are all part of the learning process but, unlike many start-ups, Genesis has had to do its growing-up fully exposed to the public gaze.

Listing in 2000 at the height of a global biotechnology investment boom, its shares rocketed to more than $8 on the back of hype and the unrealistic expectations of local investors. On Friday, the shares closed at 64c.

"Our economy needs biotechnology and the time will come when it is a major contributor to the economy," Watson said.

But for AgriGenesis to be successful, it needed to be careful with its expenditure and stay afloat until the investment environment improved.

Watson said unless investment was focused on science and research then the agricultural biotechnology sector - and ultimately the primary sector in general - would grow only slowly and "I think that's a shame".

Good science

* AgriGenesis holds patents on several plant-based technologies. But after failing to attract enough investment it can afford to develop only about half of these.

* Biofuels and polymers: petrol and plastics made from plants.

* Phloem technology: to control the internal switches that determine plant behaviour (such as when to flower).

* Plant anti-freeze: the proteins that keep grass alive even when frozen can be applied to crops and even industrial processes, such as icecream making.

* Smart trees: by manipulating lignin levels, trees can be grown with softer or harder wood depending on what they will be used for.

* Grasses: easy digesting grass to improve animal growth and reduce greenhouse gas emissions.

* Cartesian: a software product that stores genomic data.

* Botrytis control: a bio-control for grape disease.