16 May 2002

Senator BOSWELL (Queensland-Leader of the National Party of Australia in the Senate and Parliamentary Secretary to the Minister for Transport and Regional Services) (10.47 a.m.)-I have to make a speech now that may sound strange in parts, but I ask senators to listens closely because what I have found out is a challenge to us all. I believe the Senate is the place for such a speech, as it is intimately connected with our business and the forums we provide for issues of importance for the Australian people. The scrutiny by this chamber and careful analysis by the media of issues before the parliament are hallmarks of our democracy. If one group stands to benefit from a piece of legislation, particularly in terms of money, then that group is subject to many probity checks. We must call on those strengths on a very important issue that will shortly come before every parliament in Australia.

The debate on embryo cell research has invoked strong emotions for and against. The scientists, the ethicists and the religious have all made their cases. It will be ultimately up to the legislators to decide what will or will not be done. I call for the same levels of scrutiny by the Senate and the media on this issue as have been shown on other issues in our political history. This is a most significant one. It deals with the key to life itself, and what could warrant analysis more than that? We must bring our famous Australian cynicism into play. We must look beyond the white coats and collars, and that is our job as legislators. The Andrews committee on cloning in its report devoted three sentences to funding cell research. That is understandable, because it was the parliament’s first opportunity to come to grips with the complex ethical and scientific principles involved. But the fact remains that there has been no public discussion on the money side of embryo research, and we ignore that at our peril.

Imagine debating a bill that could make a select group millionaires but not identifying who those people might be or ascertaining whether it is just that they should so profit. Imagine if the potential millionaires were the primary source of information on the issue and no-one knew of their vested interest. We must not let the promise of miracles blind us to our duties as legislators to scrutinise, to check and to know as much as possible about the stakeholders in this issue. I have yet to see any comprehensive analysis of the private and public funding available to embryo research companies. I have not seen any estimates of potential returns, except a guesstimate yesterday from BresaGen CEO, John Smeaton, that embryo research will become a multibillion dollar business. What is the relationship between embryo research companies and the state governments? Who owns the intellectual copyrights or patents? What are the values of the outcomes of this research to pharmaceutical companies? All we have been told so far is that embryo research is about some struggling, noble scientists who want to help sick people, yet it is so much more than that. We cannot be naive; we have to be well informed. I have searched public records, which I hope will lead others to take an interest in the activities and financial characteristics of companies involved in embryo research. The market structure of embryo cell research and its funding are an intricate maze of domestic and overseas private, charity and public organisations. It would be a daunting task to regulate embryo research if there were no clear picture of who is doing what with whose money.

The South Australian government recently announced that they will provide finance for a new $8.9 million facility for biotech company BresaGen in Adelaide. But that is not broken down either. Other state governments have also poured millions into biotechnology, especially Victoria and Queensland, which are in a race to snatch overseas investment. Science writer Allon Lee reported that:

Both BresaGen and the Monash group are forging links with overseas consortiums. In August, ES Cell International announced that a consortium of Australian and Singapore investors would provide $17 million to Monash to develop its ES cell research. BresaGen also moved to expand its base by acquiring US-based biotechnology company, CytoGenesis.

As Kate Cregan, a research fellow in politics at Monash University says:

How different is biotech-fever from gold-fever or dot.com fever? We now have a biotechnology index, a new NASDAQ. And one of the new territories ripe for excavation, commodification and consumption, is us. If we uncritically accept biotechnology, under the guise of supporting the creation and proliferation of knowledge, or allow our governments to defer ethical debate indefinitely, we invite the patenting and commercialisation of ourselves.

In my brief look at the publicly available material, I have been surprised at what I have not found in terms of hard data on funding. Some of what I have come across, however, is curious to say the least. I welcome others to follow the same road and see whether or not they agree.

Australia is a world leader in embryonic cell research. There are two main groups: BresaGen based in South Australia and ES Cell International, which is a partnership between ES Cell Australia and a Singapore venture capital company. The ES Cell companies are based in Melbourne and are the backers of the notable Alan Trounson, the chief spokesperson advocating embryonic cell research in Australia and, naturally, a director of ES Cell Australia. Both these companies have qualified for big injections of funds from the US National Institute of Health. These grants will enable the increase of embryonic cell production for distribution around the world. The process of commercialisation will be greatly enhanced by these grants. The ES Cell International website reveals: ES Cell International is the exclusive worldwide licensee of intellectual property covering hES cells and techniques for culturing these cells into certain cell lineages jointly owned by these four research organisations. . . . ES Cell International will own the outcomes of any research. . . . ES Cell International has also entered into significant material transfer agreements with academic and commercial groups in North America, Europe and Australasia, for the provision of hES cells in return for access to any resultant IP emerging from their use.

Ultimately ES Cell International aims to be the world-leading provider of products and technologies derived from hES cells.

In effect, ES Cell International makes the embryonic cells available for free so long as the researchers who use them come in and talk to ES Cell if they discover anything. So Alan Trounson and his shareholders have a kind of first option on discovery, the patents and their commercialisation.

ES Cell International even has its own intellectual property manager who looks after their growing patent portfolio, as they put it. Their chief scientific officer, Dr Alan Colman, was recruited to take the company into the next stage of commercialisation because of experience with other companies that he steered towards public listing on the London Stock Exchange. His career also involved work with the Rosslyn Institute, cloning Dolly the sheep.

The general manager of ES Cell International, Robert Klupacs, told the Andrews committee about their business plan, and he said:

If we own the intellectual property over the genes that can turn an embryonic stem cell or even an adult stem cell, from the phenotype into something else, and I can licence that perhaps non-exclusively, to everyone in the world, that is fantastic. Maybe I keep it for myself and then I have got a monopoly that I can say is worth x amount in value. That is the real driver for me. Obviously downstream, when I get to that point, drug development and therapeutic development is fairly routine but expensive and risky. But if you own the intellectual property at least you trade that and that will have a value.

After a question from the chair, Mr Klupacs elaborated:

Ultimately in this game you place a lot of bets and you hope your bets come home.

This is a world of high finance, patents, trades and deals where monopolies on human genes are traded like football hero cards, only the stakes are much higher.

ES Cell Australia has millions of paid-up shares. Publicly available ASIC records show that the directors and shareholders include the who’s who of the Richmond Football Club. That is a curious discovery. Former Richmond player and current AFL Players’ Association president Brendon Gale is a shareholder, as is Michael Gale and the captain of the Richmond Tigers, Wayne Campbell. Then there is one of the former directors of both the Richmond Football Club and the cricket club, Terrence Grigg. There is the current director Peter Welsh. They have also recruited Ray King, director of the St Kilda Football Club. Grigg and King are fellow directors of ES Cell Australia and the former president and director of the Richmond Tigers, Leon Daphne, is another shareholder. We know that football is big business, but we did not know that that business included embryo cell research. Who wants to be a millionaire? Obviously a few Richmond Tigers do. There is nothing wrong with that. Everyone is free to invest where they want, but how is it that no-one has ever looked behind the public face of these corporations? Do the shareholders themselves even know? Perhaps the Tigers have finally come up with the ultimate weapon to enable them to win a premiership-to clone their best players and breed a dream gene team.

Another investor is a venture capital company currently in the process of being struck off. Its name is Australian Mezzanine Investments. Senators may recall that this company was involved with the Victorian Imaging Group. One of its directors is Joe Skrzynski who, among other things, is chairman of the Sydney Opera House Trust. Maybe they want to find a cure for the phantom of the opera.

Medibank Private director Ron Meikle has turned up as another shareholder in ES Cell Australia. Marian Wilkinson reported in the Sydney Morning Herald on 13 March 2000:

Dr Meikle’s Victorian Imaging group ordered two more scanners, now subject to HIC inquiry, before the 1998 Budget. This was shortly after he and his colleagues sold a huge chunk of their business in a deal with one of Australia’s top venture capitalists, Mr Joe Skrzynski.

Mr Skrzynski and his long time partner, Mr Bill Ferris, former chairman of Austrade, run the highflying Mezzanine Investments.

We must now open our eyes to the real nature of what is going on. There is big money at stake and we must know who is who in the zoo. Professor Trounson calls one of his other commercial ventures Copyrat Pty Ltd-something to do with rats and cloning. ASIC records show it has 40 million ordinary shares and 20 million preference shares. Another of his companies is called, IngenKO. The ‘KO’ refers to mice with genes that have been knocked out for certain characteristics. ‘Ingen’, the first part of the company name, is the same as the company used in the fictional blockbuster Jurassic Park, where they bred dinosaurs from DNA.

Strangely, there is another island off the southern coast of west Java, in Indonesia, called Tinjil Island. It has won awards for its orang-utang conservation program. The other side of its activities however involves the farming of macaque monkeys for research. The Bogor Agricultural University in Indonesia runs a primate program in association with international interests. A Washington-Indonesian group is working with the US naval medical research unit in Jakarta on primate genomics. The man who runs the Bogor primate program on Tinjil is Dr Dondin Sajuthi. He is a director of a company called Maccine Pty Ltd. Their web site describes Maccine Pty Ltd as:

A recent spin-off from Monash University, one of Australia’s leading medical research institutions. It is headquartered in Melbourne, Australia (the hub of medical research and biotechnology in Australia) and it also operates facilities in Indonesia. Leveraging its origin at Monash, Maccine is also marrying state-of-the-art embryology and nuclear transfer cloning techniques with its CRO function to develop and supply the best possible models for its clients.

Our unique collaboration with the Bogor Agricultural University primate research facility is aimed at improving knowledge regarding the preservation of primates and the use and the development of medicines to treat human diseases. Consultants from Monash will bring their world-leading embryology technologies to Maccine’s international R&D program so we can produce genetically identical macaque monkeys. These genetically identical animals will be used in our contract research activities and made available for direct supply to research institutions.

It is not hard to conjure up a picture in your mind of a remote jungle island where men in white coats clone monkeys for military research. It sounds like a movie-and yet it is real. Professor Trounson is a shareholder and a director in the identical monkey company, Maccine Pty Ltd. He also sits on Maccine’s scientific advisory panel. The Monash Institute of Reproduction and Development has stored on ice the skin samples of dogs and horses in anticipation of cloning technology for pet owners. Senior research fellow Ian Gunn was quoted in the Australian on 8 May as seeing no ethical problem with pet cloning. He said:

Who are we to say you can’t do it even if you want to invest that money.

Their approach is: if you have the money and the technology you can do whatever you want. All this comes at a time when the creator of Dolly the cloned sheep, Ian Wilmut, has just published findings that every cloned animal in the world is genetically and physically defective.

The members of this Senate are called on to be legislative pioneers in biotechnology. It is crucial that we are as informed as possible. We are moving in the current of history. The Senate’s duty, as always, is not to be dragged along with it or overthrown by it but to control and direct it toward the salvation, not the shipwreck, of our citizens.

It somehow seems fitting to end with a quote from a character in the movie Jurassic Park. He is talking about the same company, Ingen-the same name used by Professor Trounson for one of his corporate ventures. He says:

Genetic power’s the most awesome force the planet has ever seen, but you wield it like a kid that has found his dad’s gun. Before you even knew what you had, you patented it and packaged it and slapped it on a plastic lunch box and now you’re selling it.