IN THE SPRAWLING flatlands west of St. Louis, in a nondescript brown building on an industrial cul-de-sac lined with other bland offices, the headquarters of SAGE Labs blends right in. That's the point. "Given some of the sensitivities around animal research, we try to keep a low profile around location," says Phil Simmons, SAGE's manager of marketing and business development.
Inside, save for a modest molecular-biology lab taking up part of the space, SAGE looks like any other startup—a fridge full of Cokes, a pot of bad coffee, and a couple dozen young employees with a sometimes alarming enthusiasm for the company's creation. But as with its main product, there's more to SAGE HQ than meets the eye. Behind a very secure wall that serves as a barrier against germs and unwanted visitors, a 22,000-square-foot vivarium houses a colony of beady-eyed inhabitants that represent the culmination of 20-plus years of research in genomics and genetic engineering—and, perhaps, a key to understanding and curing some of humanity's most vexing ailments.
SAGE, an acronym for Sigma Advanced Genetic Engineering, is in fact no regular startup, but a recently created initiative of St. Louis-based Sigma-Aldrich, the world's largest supplier of research chemicals, which had worldwide sales of $2.3 billion in 2010. SAGE will happily sell you a genetically modified mouse, but you can get those for a dime a dozen (actually, $20 or so for an unmodified off-the-shelf model) elsewhere. SAGE's killer app is its gene-tweaked rat, which costs considerably more—$445 per animal for catalog models and up to $95,000 for a built-to-order pair. Customers in academia and Big Pharma are lining up, hoping to use the rats to attack everything from autism to cancer to Parkinson's disease.
A STYLIZED RAT logo graces the business cards of SAGE's 35 employees. "We're proud to be working with animals," says product development manager Kristen Bettinger. The ads the company runs in scientific journals feature a rat silhouette mowed, crop-circle style, into a cornfield. The copy reads: YOU AREN'T IMAGINING THINGS. KNOCKOUT RATS ARE FINALLY HERE.
The "finally" isn't just hyperbole. So-called knockout mice, engineered by "turning off" selected genes, have been around since 1989. Knock-in mice, whose DNA is spiked with foreign genes—often human—came a few years later. Because of the genetic and physiological similarities between mice and humans, these mice have become widely used to study the function of genes and to model human diseases including cancer, heart disease, diabetes, neurological disorders, and obesity. The inventors of the knockout mouse were awarded the Nobel Prize in Physiology or Medicine in 2007.
Rats are even more physiologically similar to humans; their size makes certain experiments easier, and their bigger brains make them a better model for studying neurological conditions. But for almost two decades, efforts to genetically engineer rats via the standard mouse method—manipulating and culturing embryonic stem cells, implanting them in an embryo, and breeding two more generations of animals to produce a mutant strain—failed. That changed a few years ago. Over a decade of research, a company named Sangamo BioSciences developed a technology called zinc-finger nucleases (ZFNs), which it planned to use in therapeutic applications for humans. In 2008, Sigma obtained exclusive rights to use zinc fingers, which are synthetic enzymes, for R&D applications and animal models, and in July 2009, its researchers, along with collaborators from other labs, hailed the creation of the first targeted knockout rats in the prestigious journal Science.
You can think of ZFNs as scissors that snip DNA at any location you choose. (Genes are essentially lined up in a row along two twisting strands of DNA.) Say you want to knock out a gene called p53, which inhibits the growth of tumors. (A rat with fast-growing tumors is a valuable tool for testing potential tumor-shrinking drugs.) You program the ZFNs to find the front end of that gene, inject the ZFNs into the nuclei of one-cell rat embryos, and transfer the modified embryos into a foster mother. At three weeks old, the resulting rat pups are tested for the knockout. DNA has a self-repair mechanism that will "tape up" the cut about 90% of the time, resulting in a normal rat. The other 10% of pups will have the desired knockout. These animals are then bred with one another to create a colony that will consistently pass on the mutation. SAGE has produced knock-in rats the same way.
What may be most remarkable—or, if you've seen Planet of the Apes, disturbing—about SAGE's zinc-finger technology is that it seems to work not just in rats and mice but in any animal that produces an embryo. At press time, SAGE was preparing to announce the first successful effort to produce a knockout rabbit, an animal widely used for ocular and cardiovascular research. Pigs, used in studies on skin conditions and cystic fibrosis, are another potential platform. Researchers collaborating with SAGE have also expressed interest in working with monkeys.
SAGE does have competition. Another company, Transposagen, markets a large variety of knockout rats, created through a less-efficient process of random mutation. And in late 2010, researchers announced success at finally creating knockout rats via the embryonic-stem-cell method used in mice, which might also have commercial potential. Still, SAGE has momentum, not to mention Sigma's sales team, on its side. In March 2010, it acquired a breeding company to handle commercial distribution of animals from its catalog. SAGE projects 2011 revenue "in the millions," says SAGE's Simmons. That's a rounding error for Sigma as a whole, but SAGE has already succeeded in creating buzz among investors, which signals Sigma's ability to innovate and compete in market segments that are growing much faster than commodity chemicals. "In the last few years, Sigma has invested in differentiating itself with more technically complex products," says Jon Groberg, an analyst with Macquarie Research Equities. "The rat is one of the most interesting. If they can get a number of these things to hit, that could start adding a point or so to organic growth."
Of course, not everyone is gung ho about bringing more animals into the lab. "They've become an essential step for high-impact scientific publication, but there's often an unrealistic view on what these models can actually tell us," says Thomas Hartung, director of Johns Hopkins's Center for Alternatives to Animal Testing. In his own field of toxicology, for instance, Hartung points out that mice and rats predict toxicity in each other only about 60% of the time. "Imagine how limited this is as a tool to predict toxicity in humans." What's more, Hartung says, knockout animals haven't brought the promised cures for patients; the number of drugs making it to market has actually gone down dramatically since knockout mice became available. "Very few diseases are explained by one gene only," says Hartung. "An animal, or human, is a damn complicated thing."
The rats' ultimate benefit to humanity will come down to what scientists start finding out in the next couple of years. "The wonderful thing about science is that, good or bad, researchers will tell you what a particular tool can or cannot do," says Andy Shih, vice president for scientific affairs of Autism Speaks, the largest not-for-profit group funding research on autism-spectrum disorders. "The things we're talking about now—diagnostics and drug discovery—would have been pure science fiction five years ago. Now, we could have solutions for families in 5 to 10 years."
A version of this article appeared in the June 2011 issue of Fast Company magazine.