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• Recombinant
Aprotinin, a protease inhibitor used in medical, research and manufacturing applications
• Vaccines for human and animal healthcare, including antiviral and anticancer applications
• Certain follow-on off-patent biologics and proprietary products, including Interferon alpha 2a and 2b, Alpha-galactosidase A for treatment of Fabry disease and Lysosomal acid lipase for the treatment of Wolman disease and cholesterol ester storage disorder and reduction of plaque in arteries
The technology employed in our product development and biomanufacturing operations includes our proprietary GENEWARE transient gene expression system and GRAMMR system to shuffle and improve gene sequences. Our manufacturing processes can be used to produce follow-on therapeutic products. We believe that our combination of proprietary technologies and existing manufacturing infrastructure enables us to rapidly and economically develop partner-specified products and to participate in market opportunities in major disease categories.
Our wholly-owned subsidiary company, Predictive Diagnostics, Inc., or PDI, is a diagnostics company established for the commercial development of a proprietary approach to early diagnosis of life-threatening diseases. PDI's products are supported by our technology developed in the course of our past genomics and medical product development programs. PDI's initial product focus is in the field of oncology. Our Biomarker Amplification Filter, or BAMF Technology, potentially provides low-cost and rapid analysis of multiple biomarkers derived from profiling thousands of individual proteins, peptides and other metabolites found in clinical blood samples. Current typical diagnostic tests rely on measuring the variations from the normal amount of a single protein or biomarker. Our BAMF Technology finds multiple proteins or biomarkers in blood samples and creates a disease "fingerprint," potentially leading to an accurate and early detection of disease.
Our history of negative cash flows and our cash balance of $1,112,000 at December 31, 2004, raise substantial doubt about the Company's ability to continue as a going concern, absent any new sources of significant cash flows. In an effort to mitigate this near-term concern, we are seeking debt or equity financing, sale of stock of our subsidiary, PDI, and joint development and commercialization of products with other companies. However, we cannot assure you that we will successfully obtain equity or debt financing or product related revenues as such events are subject to factors beyond our control. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of recorded liabilities that might be necessary should the Company be unable to continue as a going concern.
We were incorporated in California in 1987 and reincorporated in Delaware in 2000. From our inception until the end of 2000, our main focus was to develop our GENEWARE, genomics, proteomics and bioinformatics platforms, and to provide research and development services to customers. In 2001, our focus shifted to developing products and bringing our manufacturing operations up to regulatory standards for current good manufacturing practices, or cGMP.
The Company is headquartered in Vacaville, California, and its mailing address is 3333 Vaca Valley Parkway, Vacaville, California, 95688, and our telephone number is (707) 446-5501. Our corporate web site address is www.lsbc.com. We have made all reports and amendments to reports available on our website. We make available free of charge through our web site our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the Securities and Exchange Commission.
Developments in 2004
Entered into New Revenue-Generating Initiatives—
• We entered into a commercial distribution agreement with Sigma-Aldrich Fine Chemicals, a division of Sigma-Aldrich Corporation, for our first plant-produced recombinant product and shipped APRONEXIN™ NP, our research-grade Aprotinin, to them. Aprotinin is a protease inhibitor currently used for medical, research and biomanufacturing applications.
• We were awarded a biowarfare defense research program grant to expand our participation in the national biowarfare defense initiatives. The $1.0 million award will be used to develop more effective candidate products for prevention and treatment of biowarfare related illnesses.
• We initiated a biomanufacturing agreement to extract and purify Planet Biotechnology Inc.'s lead product, CaroRx™, a plant-made antibody to control dental caries.
Entered into New Collaborative Agreements—
• We entered into the initial research phase with Cincinnati Children's Hospital Medical Center under the direction of Dr. Gregory A. Grabowski to develop lysosomal acid lipase as a treatment for Wolman disease and cholesterol ester storage disorder and as an atherosclerosis therapeutic.
• Predictive Diagnostics, Inc., or PDI, a wholly owned subsidiary of Large Scale Biology Corporation, entered into an exclusive co-marketing relationship with PerkinElmer Inc. under which PerkinElmer will provide access to PDI's proprietary BAMF™ technology along with its prOTOF™ 2000 MALDI O-TOF mass spectrometer.
• We initiated a collaborative program to jointly develop and evaluate new therapeutics to prevent and treat diseases caused by human papillomaviruses with the University of Louisville.
Closed and Subleased our Germantown, Maryland Facility —The Germantown, Maryland facility was closed and the machinery and equipment was re-deployed, sold or scrapped during 2004. Net proceeds of $0.2 million were received when assets with a net book value of $0.2 million and a gross book value of $2.9 million were sold or scrapped. We entered into a sublease of our entire Germantown, Maryland, facility to the end of the lease term in 2010.
Issued Common Stock— On March 8, 2004, we completed an $8.2 million private placement of 5.2 million shares of newly issued common stock and warrants to purchase an additional 1.5 million shares that resulted in net proceeds after expenses of approximately $7.5 million.
Issued Long-term Debt —We entered into a $2.9 million loan agreement with Kentucky Technology, Inc., a for-profit economic development company formed by the University of Kentucky. During 2004 we received $1.0 million under this arrangement.
Further Established Our Intellectual Property— We obtained 22 new patents worldwide, including 13 patents in the U.S. and 9 foreign counterpart patents, impacting each key component of our technology base, bringing our total patents issued worldwide to 131. These new patents cover anti-cancer molecules, plant and animal viral vectors, and biomanufacturing. We also filed 38 new patent applications, including 24 patents in the U.S. and 14 foreign counterpart patents covering various aspects of our technology base, which increases the total number of pending patents to 190 worldwide.
Recent Developments
On January 14, 2005, we received an additional $1.9 million under the aforementioned $2.9 million loan agreement with Kentucky Technology, Inc.
On January 31, 2005, we extended our research collaboration agreement with Schering-Plough Animal Health Corporation, or Schering-Plough, that will fund additional product development of animal health vaccines. Vaccines for three animal health targets were successfully delivered by us to Schering-Plough for animal clinical evaluation. We developed and produced trial quantities of the vaccines using our patented GENEWARE biomanufacturing platform. Our GENEWARE biomanufacturing technology provides a method for producing animal health vaccines using non-transgenic, non-food/fodder plants as production hosts.
On March 3, 2005, we borrowed $0.6 million from Kevin J. Ryan, our President and Chief Executive Officer and a member of the our Board of Directors and issued him a convertible promissory note. The note is due on July 1, 2005, and is convertible into our common stock.
On April 15, 2005, we borrowed an additional $3.0 million from Kevin J. Ryan and issued him a promissory note due on April 17, 2006.
Science and Industry Background
All living things are made up of one or more cells. Although science still has much to learn about how cells actually function, it is commonly accepted that all cells have several basic components. Inside each plant and animal cell is a nucleus containing deoxyribonucleic acid, or DNA, that makes up its genetic code. Different sections of the DNA are called genes. A gene or a combination of genes encodes the information needed for conducting the various essential life functions. Each gene is composed of a specific, unique sequence of DNA. When a gene is turned on, or "expressed," the genetically coded information is copied into a related molecule called messenger ribonucleic acid, or mRNA. This messenger travels to a location outside the nucleus where proteins are then made according to the genetic information contained in the mRNA.
Private industry and the federal government have each announced the completion of the sequencing of the human genome. Utilizing the genetic information of the human genome, numerous laboratories are rapidly identifying gene sequences that are involved in the causes of diseases. An increasing number of new biological drugs are being tested and are being used to treat diseases. The production of biological drugs requires complicated, and usually, very expensive cellular production systems.
Our plant-based GENEWARE system offers several advantages for the production of biological compounds. A gene sequence, or mRNA, of a target protein is inserted into a plant virus, or vector. Non-recombinant non-food/feed plants are then inoculated with the vector. The virus penetrates cells of the plant and uses the cell's mechanism to replicate and to express the mRNA carried by the virus to produce the target protein. The virus spreads from cell to cell within the plant but does not get incorporated within the DNA of the plant cells. Consequently, the mRNA is not passed on to the next generation of the plant. This system provides a large-scale manufacturing capability to produce commercially valuable proteins rapidly and cost effectively, without the environmental concerns that afflict the cultivation of transgenic food/feed crops used by other companies.
Our Strategy
Our corporate strategy is to focus our platform technologies on developing and commercializing our products and those of our partners. While our GENEWARE platform is broadly applicable, our current emphasis is to primarily use it for biomanufacturing health care products. Our strategic business focus consists of developing the following business opportunities:
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• Development,
manufacture and sale of therapeutics and vaccines
• Development and commercialization of diagnostic tests for diseases such as cancer
• Market gene shuffling technology
We have successfully achieved proof of principle with our own human and animal-health-care therapeutics. While biomanufacturing and some early stages of regulatory and clinical development have been internally financed, we plan to achieve advanced clinical trials, final regulatory approvals and commercialization in collaboration with pharmaceutical and biotechnology companies. Our cat parvovirus vaccine has successfully completed early-stage pre-clinical trials, demonstrating safety and initial efficacy and is moving forward into advanced development. We have completed manufacturing process development of Aprotinin and Alpha-galactosidase A. We have received Orphan Drug designation from the FDA for Alpha-galactosidase A. We are improving our manufacturing process for human lysosomal acid lipase and are conducting research on its potential use as a therapeutic to treat Wolman disease and cholesterol ester storage disorder and to reduce atherosclerotic plaque. We have been developing biomanufacturing capability for proteins and peptides to capitalize on the capacity constraints of the biotechnology industry. We have built a manufacturing facility in Owensboro,
Kentucky, that is ready for FDA-compliant manufacturing of human therapeutics and vaccines developed by our partners and us.
We have created a wholly owned subsidiary, Predictive Diagnostics, Inc., or PDI, to apply our proprietary BAMF technology for diagnostic tests of cancer and other diseases. Predictive Diagnostics expects to perform diagnostic tests for specific diseases as an operating laboratory and in collaboration with major clinical reference labs, hospitals, and managed care laboratories. The reference lab partners would analyze serum samples, or perform mass spectrometry analysis where needed, prior to Predictive's BAMF diagnostic analysis. Upon successful completion of our first phase of our business plan, we expect to implement a fully vertical BAMF test with all laboratory steps performed directly or through outsourcing by PDI. PDI may also license BAMF technology to other organizations to enable them to perform such tests.
We have developed a novel gene shuffling technology called GRAMMR, which can generate large libraries of extensively shuffled gene sequences, and which we believe is faster and more efficient than competing gene shuffling technologies. Our contract with the US Army Medical Research Institute of Infectious Diseases, or USAMRIID, applies our proprietary GRAMMR technology for DNA shuffling and molecular evolution to improve biodefense therapy candidate products. In parallel with our program with the federal government, we plan to market GRAMMR gene shuffling technology to companies seeking to improve their biological drugs.
Commercial Opportunities
Aprotinin— Aprotinin is a natural protein that acts to prevent protein breakdown, and is used in medical procedures to reduce the systemic inflammatory response, or SIR, associated with cardiopulmonary bypass surgery, or CPB. Once triggered, SIR can lead to a cascade of subsequent inflammatory events that can collectively retard patient recovery. When administered intravenously in CPB procedures, aprotinin helps decrease the need for blood transfusions, reduces post-operative bleeding, and thus reduces re-exploration for bleeding.
The only aprotinin product in the United States market for use in CPB is currently obtained by extraction from cow lungs. We have successfully produced pilot-scale quantities of Aprotinin that is identical to this product using our proprietary GENEWARE plant-based biomanufacturing system. Our Aprotinin active pharmaceutical ingredient, or API, has the same biological activity as the animal-derived counterpart. When scaled to commercial-level production, we believe that our Aprotinin can be produced cost effectively and in sufficient quantities to meet worldwide demand, without the safety concerns associated with animal derived products. We are in discussions with potential partners for supplying our Aprotinin to the medical markets.
We entered into a multi-year, non-exclusive agreement with Sigma-Aldrich Fine Chemicals to distribute non-pharmaceutical Aprotinin. Aprotinin sales were 1% of total revenues during 2004.
Alpha-Galactosidase A— Alpha-galactosidase A is an enzyme used for replacement therapy to treat Fabry disease. Fabry disease is a genetic disorder that results in the inability of tissues within organs, primarily the liver, kidney and spleen, to recycle various structural lipid components resulting in the accumulation of these lipids in those organs and the heart. Fabry is a gender-based genetic degenerative disease that shortens a patient's lifespan.
Our Alpha-galactosidase A is produced in plants at our biomanufacturing facility in Owensboro, Kentucky with our proprietary GENEWARE system. The enzyme is recovered and purified to clinical standards in a proprietary process that is validated and compliant with current good manufacturing practices, or cGMP. The preclinical testing was performed in a Fabry mouse model system with Dr. Roscoe Brady at the National Institute of Neurological Disease and Stroke under a collaborative research and development agreement. The preclinical data showed good efficacy and safety in the animals. We received an Orphan Drug designation from the FDA for Alpha-galactosidase A and plan to file an IND with the FDA and begin clinical trials to evaluate its safety and efficacy in humans.
Follow-on Off-patent Biologics— When patent protection for proprietary pharmaceuticals ends, the product becomes eligible for sale as a "generic" version. Often new competition arises, resulting in lower costs and wider availability for the generic product relative to the original patented drug. A number of biological protein and peptide biopharmaceutical products are, or soon will be, off-patent. However, while the composition of a pharmaceutical product may be off patent, the manufacturing method may be further protected by exclusive patents of the innovator company. Consequently, suppliers are blocked from producing the generic product. Our freedom to operate with our proprietary GENEWARE biomanufacturing technology could provide our alliance partners the ability to enter markets otherwise blocked by process patents.
Our GENEWARE technology can produce molecules that are, or will be, off-patent including recombinant versions of aprotinin and interferon alpha 2a and 2b. We are in partnering discussions with several companies for the co-development, marketing and distribution of these types of off-patent molecules for research, manufacturing and medical applications.
Vaccines —Vaccines can represent a cost-efficient form of healthcare. Vaccines recruit the immune system to recognize and combat a wide range of diseases, including viral and microbial infectious diseases and some cancers. We are developing several vaccines for the human and animal care markets. We have conducted early clinical research with our personalized vaccine against the lymphatic cancer non-Hodgkin's lymphoma with successful initial results. With financial support from several US Government agencies, we are in early stage development of vaccines to treat human pappilloma virus and HIV infections. We are also developing vaccines to treat a variety of infectious diseases for animal health and veterinary care. Our GENEWARE biomanufacturing system helps enable the efficient improvement and production of vaccines that are either difficult to produce by using conventional technologies or where high costs of production preclude market expansion.
Human Lysosomal Acid Lipase— Lysosomal acid lipase, or LAL, deficiencies cause lipid metabolism and storage conditions including Wolman disease and cholesterol ester storage disorder, or CESD. Wolman disease is a rare genetic disorder afflicting newborns and infants and has nearly complete mortality. CESD is less lethal but is characterized by progressive morbidity. We would introduce LAL for these two Orphan Drug indications. In addition, cardiovascular disease, especially atherosclerosis, is a major cause of mortality in the US and many other industrialized countries. Several drugs are currently marketed to slow progression of atherosclerotic disease or treat its symptoms. Excessive build-up of plaque, which is a leading cause of heart disease, is often treated surgically and involves invasive procedures and long periods of convalescence. We believe our research on LAL could some day lead to this product's use in the clinical management of atherosclerotic disease without surgery. Discovered by University of Cincinnati scientists, LAL could represent a new approach in the treatment of cardiovascular disease. We have obtained an exclusive, worldwide license for use of LAL in this field and are developing and evaluating the enzyme in collaboration with the discovery team at University of Cincinnati.
BAMF Diagnostics —We plan to commercialize through a wholly owned subsidiary, Predictive Diagnostics, Inc., a diagnostic test for cancer and other serious diseases using our proprietary platform called BAMF technology. BAMF technology is a proprietary pattern recognition discovery platform that identifies protein biomarkers in the blood that can be used to detect cancer and other diseases. We believe that development of commercial diagnostic tests based on our BAMF technology could improve patient outcome through earlier diagnosis of disease and reduce associated medical treatment costs.
GRAMMR Gene Shuffling— Our GRAMMR technology is a new shuffling, or genetic reassortment research tool used to more efficiently develop a wide variety of improved product attributes. Traditional shuffling methods are typically complex, slow, labor-intensive, and have not always yielded the desired results. GRAMMR technology provides a number of significant advantages over traditional gene shuffling procedures, including higher efficiency, more rapid turnaround, greater adaptability and higher cost-efficiency. Our GRAMMR technology can reduce the complications of gene shuffling and empowers the user with greater control over the molecular evolution process. We can offer our partners and clients a complete range of GRAMMR-associated services, from gene shuffling and gene expression to protein manufacturing.
Our Technologies
GENEWARE— Our proprietary and patented GENEWARE system makes use of natural genetic systems for encoding genetic information in plants to rapidly produce biologically-active proteins. A gene sequence of a target protein is cloned into a modified plant virus, or vector that is not harmful to humans. Growing plants are inoculated with the vector to temporarily introduce the genetic information into the plants. The target proteins encoded by the gene sequences are produced in the host plant and after approximately two weeks the plants are harvested. Utilizing proprietary and patented processes we extract and purify the target protein from the plants. These GENEWARE vectors have been used to produce numerous therapeutic proteins and vaccine antigens in large quantities.
The GENEWARE production system is environmentally safe because the viral vector and the genes we insert cannot be incorporated into the plant genome and, thus, cannot be transmitted to the next generation of the plant in the seed or pollen; it has a limited host range; and the modified virus does not persist in the soil to the next planting season. Since 1991, we have conducted more than ten USDA-approved field trials, each demonstrating that GENEWARE is environmentally safe. In addition, we apply our GENEWARE system only to non-food crops and follow standard operating procedures during field and greenhouse production to further ensure environmental safety.
While our GENEWARE technology can be used to identify and alter gene-product functions, we are primarily using the GENEWARE system to manufacture therapeutic proteins, peptides and other molecules in plants. GENEWARE technology can achieve significant time and cost advantages over traditional, transgenic genetic-engineering systems and alternative manufacturing technologies. The GENEWARE protein production system can be efficient and competitive as a result of its potential for high expression, speed of production, safety and minimal capital requirements compared to alternate expression systems. We have used our Owensboro, Kentucky, production facility to extract proteins from hundreds of tons of field-produced plants and have validated this facility for cGMP manufacturing of our Aprotinin and Alpha-galactosidase A.
BAMF Diagnostics —Our proprietary BAMF technology combines our bioinformatics and proteomics technologies. Our proteomics technology allows for the rapid determination of the protein composition, or proteome, of cells, tissues and body fluids that are associated with disease or abnormal conditions. Protein composition is a listing of the specific proteins present in a given sample and their amounts. By assembling and monitoring changes in this data, we are able to identify the presence of proteins that are caused by diseases.
Bioinformatics is the gathering and analysis of the data generated when working with genes and proteins. We use proprietary technologies to integrate and manage biological information, which increases our ability to assess the importance of biological data in the discovery of disease.
Our proprietary BAMF technology was derived from our bioinformatics capability. It utilizes multiple proteins called biomarkers that are derived from profiling thousands of proteins to diagnose disease. We are using our BAMF technology to identify protein biomarkers in the blood as a diagnostic to detect cancer and other diseases. Our ongoing research collaboration on BAMF technology is with Lance Liotta, M.D., Ph.D. and Emanuel Petricoin, Ph.D., who were formerly co-directors of the Clinical Proteomics Program at the National Cancer Institute and Food and Drug Administration.
GRAMMR Gene Shuffling— We invented a gene shuffling and molecular evolution technology that is easier to use, more efficient, and more cost-effective than other gene shuffling methods. Directed molecular evolution is an approach to enhancing the functionality of candidate genes and accelerating the development of improved products. We believe that gene shuffling, or reassortment, is the key to unlocking the potential of genetic diversity and developing biological molecules with novel or improved traits. Various gene-shuffling methods have been applied to improve a variety of commercially important products such as pharmaceutical proteins, vaccines, antibodies, viral vectors, and industrial enzymes. GRAMMR technology enables researchers to improve genes and the protein products derived from those genes which we believe have a number of inherent advantages over other gene shuffling methods, including: yield of a greater variety of chimeric products from fewer rounds of shuffling; rapid generation of thousands of shuffled gene sequences in a single day; adaptability to large genes, divergent genes, and complete gene clones; reliable conservation of the integrity of genes, resulting in improved screening efficiencies; and cost effectiveness.
Intellectual Property
We continually seek patent protection for our proteomics, genomics, biomanufacturing, and plant and animal viral gene expression technologies and for diagnostics. As of December 31, 2004, we had 80 issued and 94 pending U.S. patents. Our issued U.S. patents expire between 2008 and 2022. Foreign patents corresponding to many of the U.S. patents and patent applications have been filed and/or issued in one or more other countries, resulting in a total of 51 issued and 96 pending foreign patents as of December 31, 2004. In the plant and animal viral systems field, we have 22 issued U.S. patents and 38 issued foreign patents with durations ranging from 2011 to 2021. In the bioprocessing field, we have 9 issued U.S. patents and 4 issued foreign patents with durations ranging from 2019 to 2022. In the proteomics field we have 45 issued U.S. patents and 1 issued foreign patent with durations ranging from 2006 to 2020. In the vaccine field we have 1 issued U.S. patent and 6 issued foreign patents with durations ranging from 2020 to 2021. In the genomics field, we have 3 issued U.S. patents and 2 issued foreign patents with durations to 2019. In the diagnostic field, we have 8 pending U.S. patents. While we believe that our patents in various technological areas are valuable to our business, our business as a whole is not materially dependent on any one patent.
We and other companies in the biotechnology field typically apply for and receive, in the aggregate, thousands of patents annually in the U.S. and other countries. These patents give us the right to exclude others from practicing or selling products, technologies or services covered by the methods claimed, and from making, using or selling the products which are the subject of the claims of these patents.
A registered trademark gives the owner the right to exclude others from using identical or confusingly similar marks within the same channels of commerce. We own the GENEWARE registered trademark and the Large Scale Biology Corporation, LSBC, BAMF, GRAMMR and other trademarks in the U.S. and many other countries.
We also rely upon copyright protection, trade secrets, continuing technological innovation and licensing from others to protect our intellectual property. Our success will depend, in part, on our ability to obtain patent protection for our products and processes, to preserve our copyrights and trade secrets, to operate without infringing the proprietary rights of third parties and to acquire licenses, if needed, to support or enhance our intellectual property portfolio.
Collaborations
Our revenues have been derived principally from collaborations with others. The business structure varies depending on the specific product or research objectives of the collaborations. Research agreements may include payments for technology access, costs of research, certain rights to intellectual property developed and participation in sales of products resulting from the agreements. We may also seek to share in the long-term value of the products that we assist our collaborators in developing through the retention of certain product rights. Current agreements include those with Schering-Plough for animal healthcare vaccine products and Sigma-Aldrich Fine Chemicals for the non-exclusive distribution of our research-grade Aprotinin, and Growers Research Group, LLC, for development of a biological pest control product. Other collaborations may take the form of alliances to jointly commercialize product applications evolved from combining specific technologies of each company.
We actively seek revenue from government funding sources that promote the development of products having strategic importance to us. For instance, we have performed research activities under multi-year grants from the National Institute of Standards and Technology and National Institute of Allergy and Infectious Diseases to develop vaccines and new vaccine production technology. In addition, we have performed research activities for the United States Army Medical Research Institute of Infectious Disease to develop more effective candidate products for prevention and treatment of biowarfare related illnesses.
We enter into joint research collaborations to develop products for commercialization. Such collaborations are often accompanied by licenses for exclusive or non-exclusive rights for specific processes, technology or molecules. For example, we acquired an exclusive license for use of human lysosomal acid lipase, or LAL, with the Cincinnati Children's Hospital Medical Center, Cincinnati, Ohio and entered into a research collaboration with them to develop LAL for treating Wolman's disease, a rare genetic disorder afflicting newborns and infants and atherosclerosis, a leading cause of death in the United States and other developed countries. Also, we entered into a collaboration with the University of Louisville to advance our vaccine immunotherapeutics program applicable to the Human Papilloma Virus.
Employees
As of March 31, 2005, we have 78 full-time employees, of which 53 are engaged in research and development and biomanufacturing activities. Seven employees work in our Predictive Diagnostics, Inc. subsidiary. The remainder work in general and administrative areas. Sixteen employees hold Ph.D. degrees.
Research and Development
Our internally funded research and development expenses were $9.3 million, $11.5 million, and $21.2 million in 2004, 2003, and 2002, respectively. Our customer-sponsored research and development expenditures were $2.3 million, $4.7 million, and $1.2 million in 2004, 2003, and 2002, respectively.
Competition
The markets for protein development and production, including human vaccines and therapeutics such as the ones we are developing, are highly competitive. Competitors with substantially greater resources are actively developing products similar to, or competitive with, our products. Several pharmaceutical, biotechnology, chemical and other life sciences companies engage in research and development in the use of novel gene expression systems to produce therapeutic proteins. Two other companies are marketing products that would be competitive with our Alpha-galactosidase A product.
Our recombinant Aprotinin product and follow-on off-patent therapeutics such as interferons are, or will be, off patent protection by the time they are ready for marketing. While we expect to enter pre-existing markets with the same or similar products, our efficient GENEWARE manufacturing and the anticipated favorable cost of production through use of our GENEWARE system, should give us a competitive edge. One of our potential products, Lysosomal acid lipase, has no functional equivalent and thus, no direct competing product.
Technologies competitive with our BAMF technology are under development and being marketed by other companies and academic institutions. The field of bioinformatic analysis of blood serum to diagnose diseases such as cancer is in an early stage. We are not aware of commercially available competitive technology that has been demonstrated to be superior to ours.
Segment Reporting and Information about Geographical Areas
The Company operates in one reportable segment. Revenues from various federal government agencies and the Grower's Research Group were 50% and 19% of our total revenues in 2004, respectively. All revenues are attributed to customers residing within the United States and all long-lived assets are located within the United States. Additional information regarding revenues, loss from operations and total assets may be found in our audited consolidated financial statements and related notes included in Part IV of this Report.
