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Mention bioengineering, or gene modification, and some folks conjure images
of mad scientists, cloned species and evil experiments gone awry by Chuck
Bowen .
However, an Indianapolis-based life-sciences company is pioneering ways to
genetically modify the simplest of plants - single-celled algae - to help
create better vaccines, food products called nutraceuticals and even
biofuels.

By tinkering with the chloroplasts inside each algal cell, Richard Wagner
and the other researchers at Phycotransgenics can get the plants to produce
recombinant proteins that can be harvested and used in various products.

"It's like a little factory for producing a protein," said Wagner, president
of Phycotransgenics, a wholly owned subsidiary of PhycoBiologics.

Researchers at Phycotransgenics and two sister companies - Phylein in Vero
Beach, Fla., and PhycoBiologics Canada on Prince Edward Island in Canada --
are modifying the well-known, single-celled algal species, Chlamydomonas
reinhardtii.

About seven years ago, Wagner founded Phycotransgenics - "phyco" is the
Greek root for algae; "transgenic" means changing genes - in a business
incubator in Columbus, Ohio.

In 2004, Wagner received a 21st Century Fund grant for $1.8 million; the
next year, he moved his startup here to Indiana University's Emerging
Technologies Center located Downtown. Wagner has raised almost $3 million
for his company.

He said the parent company, PhycoBiologics, which employs 15 people at its
three locations in the U.S. and Canada, is "still an R&D company" at heart,
but he hopes to crack $1 million in revenue in 2008.

Mark Long, chief executive of the Emerging Technologies Center, said
Phycotransgenics, which operates in about 1,200 square feet of labs where it
cultivates its algae, is a good tenant to have.

Other companies at the center have relied on Phycotransgenics' technology
and talent at working with single-celled organisms for help on contracts
with clients such as the Defense Department.

"It's nice to have tenants with that expertise and (who are) willing to help
out for the good of everybody," Long said.

Wagner said algae are sort of the public domain of the plant world: most
algal plants are single-celled and their genes are not owned by anyone else.

Companies like Monsanto and DuPont often take out patents on certain genes
they' have developed for "higher plant technology" - corn or soybean plants
made more resistant to disease or engineered to produce higher yields.

One of the benefits of algae is simplicity, Wagner said. Of the chloroplasts
Phycotransgenics works with, algae each have one; a corn plant can have as
many as 100 per cell. Research becomes a "much more challenging task" with
more complicated plants, he said.

By introducing a certain protein into the chloroplast of algae, Wagner said,
he can make the plants, in effect, grow certain vaccines. Those vaccines can
be easily adapted for both humans and industries such as aquaculture, where
thousands of fish have to be inoculated against disease.

The process is also cost-effective, he said. Innoculating a fish by hand can
cost as much as 50 cents per vaccination. By adding a vaccine to a food
source, it costs less than a penny per treatment.

Wagner also said algae make more sense as a source of biofuel than corn or
soybeans because they're rich in certain types of oils and using them
doesn't bite into the food supply. He estimated he could harvest about
15,000 gallons of biofuel per acre, at a price acceptable to consumers, in
about three years.

And in five to 10 years, Wagner hopes to have made more progress with his
hydrogen experiments. Working with a lab in Geneva, Switzerland, he and
other researchers are developing a way to manipulate the photosynthesis
process to make algae produce hydrogen on demand.

"You're actually directly harvesting sunlight and converting it into
hydrogen," Wagner said. "It's extremely promising."

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