Genex Corp., a Rockville biotechnology company, is negotiating with G.D. Searle & Co. to supply genetically engineered raw ingredients for the low-calorie sweetener Aspartame.
An agreement between the two companies--which analysts believe could be close--would be one of the first major commercial contracts for a genetically engineered product, and apparently the first for a nonpharmaceutical product. It would be a boon to Genex, which had sales last year of $6.1 million but could realize revenue of hundreds of millions of dollars in a deal with Searle.
Searle currently is buying Aspartame's ingredients--two amino acids--from their only major source, a Japanese chemical company that produces them through an expensive fermentation process. But analysts say Searle needs to find another, lower cost supplier to expand its production of Aspartame. The sweetener is already available in several forms and products under the brand names Equal and Nutrasweet, and the Food and Drug Administration earlier this month approved its use in carbonated beverages, by far the biggest market for low-calorie sweeteners.
Neither Genex nor Searle would comment at length on the situatuin. "Obviously, Searle is a potential customer and we'd like to sell them our products," Genex President J. Leslie Glick said yesterday. "We are having discussions with them, that's all I can say."
A spokesman for Searle, which is based in Skokie, Ill., would neither confirm nor deny that the company is negotiating with Genex, but he said "we are talking with various people" about supplying the amino acids.
Nelson Schneider, a Washington-based drug-industry analyst for E. F. Hutton, said Genex may be Searle's best hope for a new supply of the two amino acids. "I'm not aware of any other amino acid raw material source in the quantities that we'd be talking about," he said.
The two amino acids that are joined together to make Aspartame are known as L-aspartic acid and L-Phenylalanine. Genex has perfected a processes using enzymes acting on other acids to produce the two amino acids; genetic manipulation increases performance.
Genex has been producing aspartic acid since last year, and has contracted with an unnamed company to produce phenylalanine beginning in a few weeks.
Glick said Genex believes it can produce phenylalaline at a price "significantly" lower than Searle's Japanese supplier, while making aspartic acid at roughly the current price.