The R&D Tax Aspects of Synthetic Biology
Over the last few years, a new and
revolutionary approach to biotechnology innovation has
emerged. Synthetic biology promises to radically restructure
many existing industries and to create significant new ones.
The global market for synthetic biology is expected to reach
$16.8 billion by 2020, driven by expanding commercial
applications in end-use sectors such as energy, medicine,
environment, agriculture, and chemicals.
This article will assess the state of synthetic biology
innovation in the U.S. and discuss how federal R&D tax
credits can favor the advancement of this revolutionary field
The Research &
Development Tax Credit
Enacted in 1981, the Federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent of eligible spending for new and improved products and
processes. Qualified research must meet the following four
Eligible costs include employee wages, cost of supplies, cost
of testing, contract research expenses, and costs associated
with developing a patent. On December 19, 2014, President
Obama signed the bill extending the R&D tax credit for the
2014 tax year.
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
The rapidly evolving field of synthetic
biology is based on the application of engineering principles
to the fundamental components of biology. It can be broadly
defined as, “an emerging area of research that enables the
design and construction of novel artificial biological
pathways, organisms, or devices, and the redesign of existing
natural biological systems."
In other words, synthetic biology is an effort to develop
better tools and technologies for engineering biological
systems, with the overarching goal of creating new biological
functions and enhancing existing ones.
By manipulating genetic information, synthetic biology focuses
on the design, construction, and transformation of core
components (such as parts of enzymes, genetic circuits,
metabolic pathways, etc.) that can be modeled, understood, and
adjusted to achieve specific performance criteria. These
smaller parts and devices are then assembled into larger,
integrated systems designed to solve specific problems.
Different from many other areas of engineering, however, the
design of new and enhanced biological systems involves
non-linear and rather unpredictable interactions. Thus, the
outstanding challenge is to create a set of design rules that
organize and recast the overwhelming physical details of
In order to overcome this obstacle, synthetic biologists
capitalize on advances in chemistry, biology, computer
science, and engineering. The following processes and
technologies are central to their work:
I. DNA sequencing
allows researchers to read genetic material and convert
information encoded within DNA molecules into sequence data.
Sequencing technologies have greatly contributed to an
increased understanding of the components and organization of
natural biological systems.
transformation consists of different methods for the
manual editing of DNA and its subsequent incorporation into
living organisms. Examples include the use of restriction
enzymes to sever DNA strands at specific sequences. The
isolated snippets of DNA can then be inserted into other DNA
synthesis allows biologists to write genetic material
from scratch. Unlike molecular cloning or polymerase chain
reaction, artificial gene synthesis does not have to begin
with preexisting DNA sequences. Synthesis technologies have
enabled the design of new, synthetic biological parts and
Over the last few years, the cost of
commercial gene synthesis has plummeted, leading to
considerable advances in related research. With current
technology, scientists are already able to design a complete
genome, output it, and insert it in a cell. Arguably, they are
creating new life from scratch.
programming, or the development of a programming
language for living cells is similar to the languages used to
program computers and robots. The ultimate objective is to
create both a high-level grammar that allows programmers to
describe a desired function and the computational methods
necessary to convert this language into a linear DNA sequence.
The resulting sequence is then built and inserted into an
organism, which runs the program.
In order to facilitate genetic programming, researchers are
developing banks of standardized DNA sequences, each
responsible for performing specific functions. The most
commonly used standardization framework consists of the
so-called BioBrick parts, or functional sequences of DNA with
uniform prefixes and suffixes. By creating a structural
standard, BioBrick sequences can be linked together and act as
Through all of these processes and technologies, researchers
are continuously developing and enhancing a synthetic biology
“toolkit” that enables the design and fabrication of
biological parts, devices, and systems that would not
otherwise occur in nature. The results are enhanced,
innovative products across various industries.
A Synthetic Biology
Synthetic biology enables the engineering
of organisms that produce useful chemicals from inexpensive,
renewable starting materials. The most prominent synthetic
biology success story is the production of semi-synthetic
artemisinin, an antimalarial drug. Though highly effective -
largely responsible for a 25 percent reduction in deaths from
malaria between 2000 and 2014 - the supply of natural,
plant-derived artemisinin is highly unstable because of the
uncertainties associated with crop success.
Searching for an alternative to the costly and time-consuming
production of the antimalarial drug from sweet wormwood seed,
researchers from the University of California, Berkeley,
resorted to synthetic biology.
They changed the metabolic pathways of the yeast so that it
produces artemisinic acid, which can be easily converted to
artemisinin. In 2013, pharmaceutical company Sanofi began the
large-scale production of semi-synthetic artemisinin from
The time, cost, and environmental gains of this innovative
technique have lead to increased accessibility to this
much-needed treatment and have shed light on the potential
benefits of synthetic biology.
The potential of synthetic biology is both
broad and inspiring. In the words of Dr. J. Craig Venter, a
pioneer in genome sequencing, “over the next 20 years,
synthetic genomics is going to become the standard for making
The following sections explore some of the key applied market
areas for synthetic biology.
I. Medicine: The ability to use
synthetic biology parts as “programmable entities” can
revolutionize the medical world. It can enable new
biotechnology processes that are more likely to promote
innovation, accelerate discovery, reduce clinical failures,
and ultimately be more cost-efficient.
Stem cells, for instance, can be programmed to self-organize
and differentiate to form tissues and organs. Viruses and
bacteria can be enabled with “seek-and-destroy” programs and
act as highly effective antibiotics. Likewise, the sensing and
computing capabilities of bacteria can be used to convert them
into targeted drug delivery devices, capable of identifying
diseased cells and specific regions of the body that need
Synthetic biology can also help unveil the potential of
microbiome-based therapies, which explore the symbiotic
relationships between the human body and the immense community
of microbes it hosts.
In February 2014, MIT’s Synthetic Biology Center announced a
three-year research collaboration with Pfizer, Inc. designed
to capitalize on leading discoveries in synthetic biology to
advance drug discovery and development technologies.
The joint effort is expected to unveil better ways to
manufacture drugs and to reduce the cost of making some of the
most complex types of biological treatments. The so-called
biologics, or large molecule drugs, are medications derived
from living material - human, animal, or microorganism.
Generally speaking, biological medicines present better
long-term treatment outcomes with fewer side effects than
traditional drugs, often resulting in abbreviated
recoveries. However, the production of such drugs
remains costly and time-consuming. By harnessing advances in
genomic sequence and bioinformatics, synthetic biology can
help change this scenario.
The development of new, synthetic versions of existing drugs
can also be a major contribution of synthetic biology.
Researchers from the University of North Carolina and the
Rensselaer Polytechnic Institute, for instance, have created a
simplified version of heparin, a largely used anticoagulant.
In addition to having drastically fewer steps to produce than
the only existing synthetic heparin in the market, the new
version is safer than the natural drug, which is extracted
from tissues of cows and pigs and therefore highly susceptible
Finally, synthetic biology can help overcome some of the most
pressing challenges in public health. MIT engineers have
recently developed two novel strategies for combating
drug-resistant bacteria, or superbugs that infect more than
two million people nationwide every year. The first method
uses a gene-editing mechanism to selectively kill bacteria
carrying harmful genes that confer antibiotic
resistance. The second consists of identifying
combinations of genes that work together to make bacteria more
susceptible to antibiotics.
II. Environment: Synthetic
biology can be the key to addressing major environmental
concerns, such as water shortage and pollution. For
instance, synthetic life forms could be at the basis of
innovative water decontamination systems.
Based in La Jolla, California, Synthetic Genomics, Inc. aims
at harnessing microbial fuel cell technology as a biological
system to clean water and generate electricity. When consuming
the waste materials found in water, the bacteria produce
electrons and protons. The voltage that arises between these
particles generates energy. Meanwhile, the water itself
Synthetic Genomics’ Aquacela initiative has conducted several
successful test programs in a variety of wastewater streams
including brewery waste and wastewater from a sanitation
Similarly, synthetic microbes capable of “eating” waste oil
and removing poisonous chemicals and heavy metal pollutants
could revolutionize our ability to deal with toxic spills and
The process of bioremediation gained attention in the 2010
Deepwater Horizon oil spill in the Gulf of Mexico. Thanks to
the natural occurrence of oil-gobbling bacteria in the area,
the majority of BP’s oil was quickly cleaned up.
Ongoing research has used genome-sequencing technology to
enable a better understanding of the mechanisms that allow
bacteria to metabolize hydrocarbons. The findings could shed
light on how to optimize conditions for new, synthetic
versions of these bugs, allowing them to perform more quickly
and more stable than natural strains. Synthetic bacteria could
be placed in affected areas that are not as naturally endowed
as the Gulf of Mexico.
III. Agriculture and Nutrition:
Synthetic biology promises to pave the way for revolutionary
agricultural discoveries. In addition to improving crops and
reducing the need for pesticides, emerging technology could
contribute to greater food security and enhanced nutrition.
Agriculture is one
of the biggest drivers of environmental impacts on the planet,
occupying about 40 percent of Earth’s ice-free landscape and
accounting for some 70% of water use.
growth as well as the imminent intensification in climate
change should place tight constraints on food systems around
the globe. In this context, synthetic biology stands out
as a strategic alternative.
engineered plants are probably the most well known example.
Precision breeding, a technique that identifies the genetic
cause of a desirable trait and reproduces it, has been widely
used to promote disease and flood resistance, or to ensure a
certain color or sugar content.
Headquartered in Chicago, Illinois, Chromatin, Inc. focuses on
sorghum, a high-yielding, nutrient-efficient, and drought
tolerant crop that could be vital to meeting the world’s
growing demand for sustainable agricultural systems that can
be cultivated on a variety of agricultural lands.
With a state-of-the-art breeding program, the company develops
and sells high quality hybrid sorghum seed from a proprietary
and commercially-validated sorghum genetic pool. By
combining sorghum varieties with diverse traits, Chromatin
develops and customizes new seed products for a wide range of
purposes, including animal feed, use in gluten-free food, and
conversion into chemicals, materials, or fuels.
With synthetic biology, researchers are no longer limited to
the reproduction of what is already occurring in nature. They
can create DNA from scratch and design specific traits. For
instance, the development of biological sensing and circuitry
could enable agricultural organisms to sense and respond to
In other words, synthetic biology could create “smart” plants
programmed to identify and respond to multiple threats,
including pathogens, toxins, desiccation, and nutrient
availability. This would be possible through the engineering
of microbes in the rhizome, which could be programmed to
perform such functions.
Synthetic biology could also contribute to enhanced nutrition.
With operations in New York, San Francisco, and San Diego,
Swiss company Evolva uses biosynthetic and evolutionary
technologies to create and optimize small molecule compounds
and their production routes. Its objective is to provide
innovative, cost-effective, and sustainable ingredients for
better human nutrition.
With groundbreaking technology, the company modifies yeast
cells enabling them to produce existing compounds in
disruptively new ways, or to make new compounds that were
previously out of reach. Evolva’s proprietary,
fermentation-based platform has been used to produce
Resveratrol, Stevia, Saffron, and Vanilla.
IV. Innovative Materials: A
recent publication from the National Institute for Materials
Science underlines that, “like all cellular functions,
biomaterial synthesis processes are governed by underlying
biological networks - programs encoded in their DNA - and
synthetic biology aims to directly engineer these biological
networks. As a result, synthetic biology holds significant
promise in materials science.”
In other words, the combination of synthetic biology and
materials sciences can enable the development of innovative
materials with genetically encoded properties. This is
particularly true in the context of nanobiomaterials, which
are synthesized across different biological species, from
bacteria to animal.
Synthetic biology promises to transform engineered biological
cells beyond their role as metabolic catalysts in the
production of simple organic molecules, allowing them to serve
as cellular foundries and nanofactories.
Through a process of enzyme-directed bio-mineralization, for
instance, it is possible to produce nanoparticles with unique
structural and functional properties that are difficult to
obtain by chemical routes. These particles can be used in a
wide range of technologies, such as electronics, photonics,
MEMS, catalysis, and energy production and storage.
One example is the manufacturing of nanofibers that are
genetically programmed for specific functions, such as
adhesion to substrates, nanoparticle templating, and protein
immobilization. Researchers from Harvard University and the
MIT have worked on the development of programmable
biofilm-based materials from engineered curli nanofibers found
in E. coli biofilms.
Biofilms consist of any group of microorganisms in which cells
stick to each other on a surface. Even though they are
typically thought of in the context of infectious diseases,
where they provide a protective community for bacterial cells,
biofilms can be useful tools for material science and
nanotechnology. This is particularly true for curli
nanofibers, which can contribute to the formation, patterning,
and assembly of nanomateirals.
Using synthetic biology technology, researchers were able to
design a synthetic genetic circuit that controls the
biogenesis of curli nanofibers. By attaching the resulting
material to inorganic nanoparticles, they were able to create
a functional, conductive biofilm-based nanowire.
This innovative nanomaterial system could be applied to
bioelectricity, biosensing, and bioelectrosynthesis uses.
Generally speaking, engineered biofilms could become central
to biomedicine and nanotechnology applications.
V. Bio-Based Chemicals: From
biodegradable plastics to plant-based cleaning supplies, the
bio-based chemicals industry represents new, eco-friendly
consumption alternatives. With significant growing prospects,
this high-demand industry promises to introduce inventive ways
to decrease our dependency on limited natural resources and
lower greenhouse emissions, all of which using synthetic
biology processes and technologies.
According to the U.S. Department of Agriculture, bio-based
chemicals currently constitute over 10 percent of the
chemicals market. Cargill and McKinsey & Company believe
that there is potential to produce two-thirds of the total
volume of chemicals from bio-based material, representing over
50,000 products and a $1 trillion annual global market. Most
of the growth should occur in specialty chemicals and
Microbial chemical factories, in particular, provide a
renewable pathway to pharmaceuticals, specialty, and commodity
chemicals. The expansion of DNA sequence databases has helped
scientists construct new pathways to desired chemicals. They
use bioinformatics and DNA synthesis to identify, access, and
assemble the correct enzymes that function together to convert
a metabolite into a desired chemical.
Headquartered in Englewood, Colorado, renewable chemicals
company Gevo has developed bio-based alternatives to
petroleum-based products using a combination of synthetic
biology and chemistry. The company focuses on isobutanol, a
naturally occurring four carbon alcohol with broad
applications in many chemicals markets.
Gevo’s Integrated Fermentation Technology® (GIFT®) is based on
a proprietary yeast biocatalyst, which converts sugars derived
from multiple renewable feedstocks into isobutanol. The
resulting product is a promising alternative to
petroleum-derived raw materials, with potential advantages in
cost, predictability, and life cycle profile.
Isobutanol can be dehydrated to produce butenes, which are
building blocks for the production of materials such as
lubricants, synthetic rubber, PMMA, propylene, xylene, and
PET. In addition to plastics and fibers, potential markets
also include solvents and coatings.
Gevo has worked with The Coca-Cola Company to create renewable
packaging from isobutanol. With a global market of
approximately $100 billion, PET plastic is an iconic
illustration of the huge potential behind bio-based chemicals.
VI. BioFuels: In a context of
limited natural supply of fossil fuels and growing
environmental concerns, synthetic biology can enable the
development of alternative energy solutions. It emerges as a
strategic tool for the biofuel industry to develop, optimize,
and mass-produce new, renewable energy sources.
In 2013, Renewable Energy Group acquired LS-9, Inc. for $40
million, and an additional $21.5 million if technology and
production milestones were met. Now known as REG Life
Sciences, the San Francisco-based company aims to create an
industrial biotechnology platform for the cost competitive
production of sustainable products for the fuel market.
REG Life Sciences has developed proprietary biological
catalysts that selectively convert abundant renewable
feedstocks, such as corn and cane sugars, directly to drop-in
and differentiated products. To create these catalysts, the
company applies synthetic biology to combine the highly
efficient metabolism of microorganisms with new biocatalytic
capabilities engineered into each cell.
REG Life Sciences’ innovative single-step fermentation process
can be found at http://www.reglifesciences.com/technology/technology-overview.
Listed among MIT Technology Review’s 50 Disruptive Companies,
Amyris has engineered yeasts that convert sugars into a
hydrocarbon molecule called farnesene. If hydrogenated, the
hydrocarbon can be turned into a diesel fuel that burns
cleaner than conventional diesel, reducing emissions of
sulfur, nitrogen oxides, and particulates.
Unlike ethanol made from sugarcane or corn, Amyris's diesel
fuel can be distributed through the same pipelines as
conventional fuels. It can also be pumped with existing fuel
pumps and used in conventional vehicles.
The Emeryville, California-based company has partnered with
Total to develop an alternative aviation jet fuel that is
compliant with Jet A/A-1 fuel specifications and outperforms
conventional petroleum-derived fuel in a range of performance
metrics. In 2014, the renewable jet fuel received regulatory
approval for key U.S. and European markets.
The rapidly evolving field of synthetic
biology can greatly benefit public health and promote economic
development. However, the biosafety and biosecurity
concerns surrounding this nascent field must be addressed.
According to a recent report by the National Science Advisory
Board for Biosecurity , biosafety concerns refer to the
necessity of policies, practices, equipment, facilities, and
medical treatments designed to protect workers and the
environment from the accidental exposure to hazardous
laboratory agents and materials.
Concurrently, biosecurity concerns call for the protection,
control of, and accountability for high-consequence biological
agents and toxins, and critical relevant biological materials
and information, to prevent unauthorized possession, loss,
theft, misuse, diversion, or intentional release.
The concept of “dual use research”, an aspect of biosecurity,
is central to synthetic biology. It refers to the potential
for misuse of scientific information to threaten public
health, animal or plant populations, or other aspects of
Examples include the deliberate creation of novel pathogens,
enhancement of the pathogenicity of a naturally occurring
pathogen, and the re-design of a non-pathogen into a pathogen
using synthetic biology technologies.
Tackling these concerns may be more challenging than expected.
Large numbers of synthetic biology practitioners come from
backgrounds that are not traditionally considered life
sciences or lack formal institutional affiliations. Thus,
existing biosafety and biosecurity paradigms, which are aimed
at life sciences research conducted at universities and
research institutions, leave considerable gaps in oversight.
Industry and regulators must work together to create an
environment that guarantees biosecurity and biosafety without
stifling beneficial innovation. The technological progress
driving synthetic biology advances is central to overcoming
both biosecurity and biosafety concerns.
Synthetic biology is currently one of the
most dynamic fields of research in life sciences. By offering
a deeper understanding of biological processes and enabling
the synthesis of new genes, biochemical pathways, and
biological components with specified or novel properties,
synthetic biology can lead to the creation of highly
innovative processes and products across a wide variety of