TWN
Info Service on Biodiversity and Traditional Knowledge (Oct14/01)
7
October 2014
Third
World Network
Dear
friends and colleagues,
When
the Convention on Biological Diversity (CBD) entered into force in
1993, a wave of optimistic bioprospectors flooded into rainforests
worldwide, looking for “green gold”. Shaman Pharmaceutical was a prominent
California-based company that received media attention and praise
from many quarters for its “embrace” of the CBD.
More
than 20 years and US $200 million later, the corporate transformation
from the now defunct Shaman to Jaguar Animal Health, which announced
a new product launch on 29 September, tells a cautionary tale.
The
report below by Edward Hammond of Prickly Research (USA) reveals that
derivatives from the sap of sangre grado, an Amazonian tree used in
indigenous peoples' traditional medicine, have become part of corporate
portfolios but the outlook for benefit sharing for Amazonian indigenous
peoples remains bleak.
The
report states that “the Nagoya Protocol to the CBD, which enters into
force on 12 October 2014, is intended to ‘put meat on the bones’ of
the Convention's access and benefit sharing requirements. Mobilizing
the private sector to finance biodiversity conservation and sustainable
use is another growing call from some quarters.”
However,
“the continuing saga of Shaman/Napo/Jaguar, and the indigenous peoples
who have been failed in that effort, however, warns that private sector
investment – even if ostensibly in support of the CBD and its objectives
– doesn’t necessarily translate into effective benefit sharing and
productive partnerships with indigenous peoples and local communities
to conserve and utilize biodiversity.”
With
best wishes,
Third
World Network
Sangre
grado: The Amazonian Medicinal Plant that Keeps Giving (Life
to New Companies)
By Edward Hammond
With
a gushing news release, on 29 September 2014, Jaguar Animal Health
launched its first product, an anti-diarrhea pill for calves that
is derived from the sangre grado, an Amazonian tree.[1]
California-based Jaguar is on a public relations push, having recently
announced a US $70 million initial public stock offering.[2]
It is wooing investors on the promise of a series of products, based
on active ingredients from the same plant, to treat gastrointestinal
problems in farm animals and family pets – from camels to cats.
Jaguar has applied to list its stock on NASDAQ, a major United States
stock exchange, and says it will become a significant player in animal
health.
For the people who run Jaguar, it's been a long and twisty road, started
in 1989, to go from the Amazon rainforest to September’s product launch
at a dairy farming convention in Wisconsin. Jaguar's quarter
century trip revolves around the sap of an Amazonian tree used in
indigenous peoples' traditional medicine but, until recently, cows
had nothing to do with the story.
Investors and customers may not realize that Jaguar is a company in
its third incarnation. Most of the products it has announced
to date are reformulations of the same ingredients, from the sangre
grado (Croton lechleri) tree,[3]
that Jaguar's corporate predecessors sought to sell as human pharmaceuticals
for more than two decades.
For the management of Jaguar, work with sangre grado has been a career.
They have raised and spent over US $200 on the project, have a new
$70 million stock offering on the table, and a recently-approved human
pharmaceutical that has begun to generate income, albeit probably
not in the way Jaguar’s managers may have planned.
For Amazonian indigenous people, the benefits of this spending and
corporate activity have been fewer, and the value less clear.
The Brief and Unhappy Life of Shaman Pharmaceuticals
Longtime followers of access and benefit sharing at the Convention
on Biological Diversity (CBD) will remember the early 1990s, when
the CBD was new and a wave of optimistic bioprospectors flooded into
rainforests worldwide, looking for “green gold”.
Prominent in the first wave of CBD-inspired bioprospectors was a California-based
company named Shaman Pharmaceuticals. Founded in 1989, Shaman
was led by the same duo that now runs Jaguar Animal Health - Lisa
Conte, an entrepreneur with a knack for fundraising and attracting
attention, especially from wealthy American liberals, and Steven King,
an ethnobotanist with the environmental cachet of having gone into
drug development from a job at the US NGO, The Nature Conservancy.
Unusual among pharmaceutical companies in the mid-1990s, Shaman embraced
the CBD, at least an idea of it, expressing admiration for indigenous
peoples and their traditional knowledge, seeking relationships with
indigenous peoples' organizations, and declaring its intent to sell
and share benefits from drugs derived from traditional medicinal plants,
especially from the Amazon. Many praised it as a good corporate citizen.
Shaman was most active in the western Amazon. It amassed traditional
knowledge and medicinal plants from the region, including collections
from the famed Jivaroan peoples of the Mara๑on River basin in
Ecuador and Peru – the Shuar, Achuar, Huambisa, and Awajun peoples,
who fiercely resisted Inca, Spanish, and later corporate predations
on their territories. Shaman supplemented these collections with plants
from collaborations in West Africa and possibly other regions.
Back in the mid-1990s, Shaman raised over US $100 million in funding
from high profile investors including Microsoft co-founder Paul Allen.
The company’s fundraising success and promises of benefit sharing
raised hope among indigenous peoples in the western Amazon that their
traditional knowledge and genetic resources might be transformed into
products in a tangible timeframe, and in a just relationship with
bioprospecting partners. While it may seem na๏ve today,
in both the Peruvian rainforest and on the shore of the San Francisco
Bay, it seemed at that time as if just a few years might separate
a rainforest remedy from a blockbuster drug and large scale benefit
sharing.
The buzz that Shaman's activity created in South America was hottest
around sangre grado, leading to the tree's exploitation by a number
of companies in homeopathic-type products and a demand, not always
well regulated from medicine and environmental standpoints, for the
tree's blood red latex.
But as time wore on without news of progress from Shaman, by the late
1990s the company’s reception from Amazonian indigenous peoples was
getting cold. The company's promises of benefit sharing had
not materialized; its patents were increasingly predatory on traditional
knowledge, and its actual benefit sharing paltry at best.
Shaman refused to discuss approaches to knowledge other than agglomerating
patents on indigenous peoples' plants under its name and exclusive
control, a strategy, the company said, that its investors demanded.
Sure, the company had bought some sangre grado for research use, providing
a small economic stimulus, and for benefit sharing it had provided
a few grants for small community projects, but the vision wasn't materializing.
As relationships soured, Shaman hired an activist away from Rainforest
Action Network to help manage increasingly thorny exchanges with indigenous
peoples and NGOs, and it tried to lower expectations saying that benefits
would come when it reached the commercialization stage.
Transformation into Napo Pharmaceuticals
By 1999, having spent over $100 million, Shaman found itself unable
to pay the cost of clinical trials for its sangre grado-based anti-diarrheal
drug, its only product with a serious shot at approval. Cash-squeezed
Shaman had to give up the idea of bringing a pharmaceutical to market,[4]
and after a brief dalliance with selling the drug as an “herbal remedy”
(without need for US FDA approval), the company folded in early 2001,
declaring bankruptcy.
Sort of. Shaman Pharmaceuticals was legally dead, but its leadership
had merely molted. A new company named Napo Pharmaceuticals quickly
appeared,[5]
with the same leadership as Shaman. Napo bought Shaman's key assets
out of the previous company's bankruptcy and picked up where Shaman
had left off. Napo pursued a strategy of entering into research and
development agreements for the sangre grado drug with other, wealthier,
companies. As these studies progressed, in 2006 Napo raised a further
$24 million on the stock market, thought an offering on the London
Stock Exchange. (The company was only briefly publicly traded before
being delisted in 2008.[6])
Napo chose to work with two companies. Salix Pharmaceuticals, in North
Carolina, which obtained rights in the US, Europe, and Japan, and
Glenmark Pharmaceuticals, of Mumbai, India which obtained rights in
140 developing countries.
With assistance from Glenmark and Salix, a sangre grado drug for treatment
of diarrhea in AIDS patients finally achieved US approval at the end
of 2012 (and later in India). It has since come to market –
more than 20 years after Shaman began research.[7]
Called Fulyzaq (crofelemeler), estimates of US sales of the new drug
vary, but may be $20 million per year (modest in industry terms).[8]
Glenmark, the Indian partner, manufactures crofelemer for Salix, and
for its own sale. Glenmark has published much larger estimates
of potential sales in the countries where it has rights, but it is
too early to know if these will prove accurate. Details of Glenmark's
supply chain, and what benefit sharing obligations it inherited from
Napo/Shaman, are unknown.
While Napo's strategy of licensing the sangre grado intellectual property
(IP) advanced crofelemer to market, the business relationships did
not go forward smoothly. In 2011, Napo unsuccessfully tried to revoke
the licenses it granted the North Carolina and Mumbai companies.
It lost legal battles with both and, in the process, Napo appears
to have lost control of the sangre grado-based drug.
In early 2014, Salix prevailed over Napo in a suit in which the latter
claimed $150 million in damages and sought to force Salix to invest
more in crofelemer marketing.[9]
Napo also lost a legal fight with Glenmark, which defeated Napo's
attempt to cancel its license to sell crofelemer in 140 countries.
Glenmark alleged, and arbitrators agreed, that Napo had breached the
agreement by revealing data to Laurus Labs, a Glenmark competitor.[10]
Napo's current financial and IP situation is not clear. The outcome
of lawsuits suggests the company has largely lost control of crofelemer
for human use. Napo's website appears to be abandoned and its key
employees have new jobs. It is possible that Napo shareholders
will receive some income from Salix or Glenmark sales; however, apart
from potentially receiving royalties from former business partners,
Napo does not appear to be a viable concern.
Enter Jaguar Animal Health
But, as with the death of its predecessor Shaman Pharmaceuticals,
the demise of Napo hasn't meant the end of the road for the same management
team that has run the concern since the beginning, or its focus on
sangre grado as the core product of their company.
While Napo licensed Shaman’s crofelemer patents to Salix and Glenmark
for human pharmaceutical applications, it retained rights to veterinary
use. The new company led by Conte and King, Jaguar Animal Health,
has now licensed veterinary IP from Napo, much of which originated
with Shaman.
Jaguar has also inherited rights to Shaman’s medicinal plant and traditional
knowledge collections, which it declares to be a major asset. Jaguar's
website boasts of “access to powerful compounds,” and “exclusive worldwide
license to a large medicinal plant library”. Such claims, resting
on decades-old collections from indigenous peoples, are fundamental
to Jaguar’s 2014 pitch to potential investors.
On the cusp of becoming a new publicly traded company, and having
launched its first product, Jaguar's future rests on sangre grado,
just like Shaman and Napo before it. If Jaguar's $70 million
initial public offering succeeds, the sum Conte and King's companies
will have raised for development of sangre grado drugs over the last
quarter century will approach or exceed $300 million.
Money for Sangre Grado[11]
[12]
Shaman Era
|
1989-90
|
$10
million in venture capital
|
|
1990-91
|
$20
million, venture capital
|
|
1993
|
$63
million, NASDAQ stock offerings
|
|
1998
|
$20
million corporate note
|
|
1999
|
$8
million corporate note
|
Napo
Era
|
1999
|
$650,000
“angel investors” (reportedly to buy Shaman's intellectual property)
|
|
1999-2008
|
$61
million, private investors
|
|
2006
|
$24
million, LSE stock offering
|
Undisclosed
investments from Salix and Glenmark
Jaguar Era
|
2014
|
$5
million, BioVeda China Fund
|
|
2014
|
$70
million, NASDAQ initial public offering (planned)
|
|
Total:
|
$211.7
million, plus investments from Salix and Glenmark and pending
IPO. Some estimates are higher.
|
Sales
Income
|
2014+
|
Estimates
vary. Salix crofelemer sales are perhaps $20 million per year.
Glenmark sales are unknown, although the company has estimated
a market as high as $300-$500 million annually where it has
rights.[13] Napo
may receive undisclosed royalties.
|
No
Healing for Indigenous Peoples
Although human and veterinary drugs based on sangre grado are now
commercialized, the Amazonian indigenous peoples whose traditional
medicinal knowledge and genetic resources are used have received very
few benefits from Shaman, Napo, and Jaguar’s exploitation of sangre
grado.
Indigenous peoples’ knowledge and resources have been repeatedly patented,
while hundreds of millions of dollars have been mobilized to support
the work of three companies over more than two decades, but precious
little has changed for Amazonian indigenous peoples, for whom the
primary “benefit” has been to collect and provide sangre grado latex
to companies as a raw material, an extractive activity reminiscent
of the more than hundred year old Amazonian rubber trade.
Will the situation change now that human and veterinary drugs are
being sold?
Since the days of Shaman Pharmaceuticals, Conte and King have said
that they will share benefits with through an NGO, of which they are
directors, called the Healing Forest Conservancy (HFC). Even
when Shaman was a viable entity this structure came under criticism,
since it appeared that benefit sharing had been less spelled out in
contractual arrangements and more construed as a voluntary activity
by an American NGO. Adding to the criticisms was the HFC's focus
on activities designed to curry favor among researchers, such as an
ethnobotany prize, which did not qualify as benefit sharing in the
perception of many indigenous peoples and observers.
While the HFC once appeared at CBD and ethnobotany meetings, since
the 1990s it has drifted into oblivion. The small grants given to
HFC by Shaman dried up, its holding of Shaman stock became worthless,
and it even ceased to award its prize for ethnobotanists.
Although HFC has been essentially inactive since the early 2000s and
is little more than a memory of an experiment gone badly, in 2013
Jaguar's Steven King confirmed that HFC remained the benefit sharing
mechanism for Napo Pharmaceuticals, which he said had “informally”
adopted Shaman's benefit sharing obligations.[14]
And in 2014, King and Conte's official biographies at Jaguar note
that they are HFC directors, suggesting a philanthropic type intent,
but not mentioning benefit sharing at all.
So far, however, Jaguar has made no public statements on benefit sharing,
and HFC remains a pipe dream. In its most recent filings with
the US Internal Revenue Service, for fiscal year 2012, HFC declared
assets of $194 in cash and 30,000 shares of Napo Pharmaceuticals,
with a fair market value of $1.[15]
The Conservancy made no grants, and hasn't done so for many years.
If Napo's fortunes change, although there is little to suggest that
they will, HFC had better hurry with benefit sharing, because Napo's
income potential appears linked to the Shaman patents it has rights
to. Key claims on crofelemer expire in 2018, four years from
now, and there is little time to pull together a benefit sharing program
that many would argue was ill-conceived from the beginning, and decades
overdue.
Conclusion
Twenty-five years after Shaman was founded, and with over $200 million
and counting spent to commercialize sangre grado, the outlook for
benefit sharing for Amazonian indigenous peoples remains bleak.
Although a human sangre grado pharmaceutical has recently come onto
market, it appears that Shaman's corporate heir, Napo Pharmaceuticals,
no longer controls the drug. To what extent, if any, that Napo's
erstwhile business partners Salix and Glenmark inherited Shaman's
benefit sharing commitments, to the extent they were ever made clear,
is not known but is likely limited.
Some might note that Shaman/Napo/Jaguar are based in the United States,
about the only country left that is not a Party to the CBD, and suggest
this might explain the situation. But Shaman's arrangements were inspired
by the CBD and intended to be in harmony with it, and the company's
partners over the years have frequently been in countries that are
Parties to the Convention.
In many senses what the CBD was supposed to stop is exactly what happened
anyway. A new drug is put on the market, one that is indisputably
derived from indigenous peoples' knowledge and resources. The drug
was developed by a company ostensibly committed to the CBD, yet for
all the commotion and money spent, these developments have made little
difference for indigenous peoples and biodiversity.
The management of Shaman/Napo/Jaguar has always promised to rectify
such imbalances. Leveraging its good intentions as a business asset,
Shaman and Napo have even successfully recruited wealthy American
backers of indigenous peoples rights as its investors. Yet the management's
chosen benefit sharing mechanism, the Healing Forest Conservancy,
has less than US $200 in assets, hasn't made a grant in perhaps 15
years, and was a minor entity even when it was active.
Despite this deplorable situation, Jaguar Animal Health is pushing
new animal drugs based on sangre grado into the market, and investors
are being invited to sink a further $70 million into the affair. Little
to nothing of that, it can be reasonably anticipated based on Shaman
and Napo's track record, will go to help indigenous peoples defend
and develop their biodiversity, culture, and territory.
The Nagoya Protocol to the CBD, which enters into force on 12 October
2014, is intended to “put meat on the bones” of the Convention's access
and benefit sharing requirements. Mobilizing the private sector to
finance biodiversity conservation and sustainable use is another growing
call from some quarters.
The continuing saga of Shaman/Napo/Jaguar, and the indigenous peoples
who have been failed in that effort, however, warns that private sector
investment – even if ostensibly in support of the CBD and its objectives
– doesn’t necessarily translate into effective benefit sharing and
productive partnerships with indigenous peoples and local communities
to conserve and utilize biodiversity.
[1]Jaguar
Animal Health (2014). Jaguar Animal Health, Inc. Launches First Product,
Neonorm™ Calf, at World Dairy Expo (press release). Business
Wire. 29 September. URL: https://secure.marketwatch.com/story/jaguar-animal-health-inc-launches-first-product-neonorm-calf-at-world-dairy-expo-2014-09-29
[2]Jaguar
Animal Health (2014). US Securities and Exchange Commission
Form S-1. URL: https://www.sec.gov/Archives/edgar/data/1585608/000104746914007210/a2221253zs-1.htm
[3]Also
called sangre de drago, with both Spanish common names translated
as “dragon's blood”, a reference to the tree's dark red latex.
[4]Abate
T (1999). Shaman quits the drug business. San Francisco Chronicle.
3 February. URL: http://www.sfgate.com/business/article/Shaman-Quits-The-Drug-Business-2949240.php
[5]The
company's names have always referenced its rainforest connections.
Napo was named for a river in Ecuador. The jaguar, name
of the current company, is the big cat native to the western Amazon,
and an iconic symbol for Jivaroan and other peoples of the region,
who attribute magical powers to the beautiful but dangerous feline.
[6]Napo
Pharmaceuticals (2008). Napo Pharma Inc. NAPL Cancellation of
Listing (press release). 16 October. URL: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aW4FFb7.TnQc
[7]US
Food and Drug Administration (2012). FDA approves first anti-diarrheal
drug for HIV/AIDS patients (31 December). URL: http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm333701.htm
[8]Edney
A and R Bostick (2012). Salix Wins FDA Approval of Dragon’s Blood
Drug for Diarrhea. Bloomberg. 31 December. URL: http://www.bloomberg.com/news/2012-12-31/salix-wins-fda-approval-of-dragon-s-blood-drug-for-diarrhea-1-.html
[9]Salix
Pharmaceuticals (2014). Salix Wins Napo Pharmaceuticals Litigation
(press release). 25 February. URL: http://www.salix.com/news-media/news/index.aspx/salix-wins-napo-pharmaceuticals-litigation
[10]Reuters
(2012) India's Glenmark gets arbitrator nod to sell Crofelemer drug.
August 23. URL: http://www.reuters.com/article/2012/08/23/india-glenmark-napo-idUSL4E8JN0SR20120823
[11]Coster
H (2010). One Pharma Entrepreneur's Never Ending Quest. Forbes. 30
December. URL: http://www.forbes.com/forbes/2011/0117/entrepeneurs-pharma-prescriptions-lisa-conte-mission-impossible.html
[12]Jaguar
Animal Health (2014). Jaguar Announces Initial Close of Series A Round
(press release). 5 February. URL: http://www.prnewswire.com/news-releases/jaguar-announces-initial-close-of-series-a-round-243778101.html
[13]Somvanshi
KK (2013). What does crofelemer approval mean for Glenmark? Economic
Times. 3 January. URL: http://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/what-does-crofelemer-approval-mean-for-glenmark/articleshow/17873401.cms
[14]Mader
LS (2013). Update: FDA Approves Crofelemer as First Oral Botanical
Drug. Herbalgram 97:69-69. URL: http://cms.herbalgram.org/herbalgram/issue97/hg97-legreg-crofelemer.html
[15]Healing
Forest Conservancy (2013). IRS Form 990-PF for FY 2012.
