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Can Wall Street cash in on altering genes?

* Archer-Daniels-Midland Company is experimenting with ways to incorporate genetically some of the characteristics of soybeans in corn and wheat. The company would like to add the soybean's ability to absorb nitrogen out of the air into the other grains, saving on expensive nitrogen fertilizer.

* National Distillers & Chemical Corporation hopes by 1985 to have a facility producing alcohol for its chemical business, using genetically engineered micro-organisms. It hopes to save money on energy costs.

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* Koppers Company is trying to develop chemicals genetically that use less energy and give off less pollution in its specialty chemicals business.

These are but a few of the uses of the new "biotechnology" that Wall Street is begining to focus on. It is a complicated subject, involving the recombining of genes to make new chemicals, drugs, and better energy sources.

Dr. Zsolt Harsanyi, project director in the genetics program of the US Office of Technology Assessment, says that by the best of estimates the industry is in a "primitive" stage and that it may take 20 years until it begins to become a commercially important business.

Even so, as institutional investors learned at a recent E. F. Hutton seminar, the potential for the drug, chemical, food, energy, forest products, and even minerals businesses is extensive.

For example, Dr. John Long, director of scientific affairs at Archer-Daniels-Midland, calls dextrose, a product of cornstarch, "the American-corn crude oil." From dextrose, fructose, which is a sweetener, can be produced, as well as ethanol, an alcohol. The fructose, he notes, "gives the food processor better-quality product at lower costs," while the ethanol has major implications for the chemical and energy industries. In both the production of fructose and ethanol, major research projects are under way to increase their efficiency genetically.

Genetic tinkering has major potential in the energy industry as well. Through the use of genetically manufactured micro- organisms, ethanol can be produced more efficiently. Already, Dr. Long notes, Archer- Daniels-Midland has icnreased the energy efficiency of its alcohol production so that the company gets the equivalent of four times as much energy from ethanol than it takes to produce it. Early gasohol plants used as much energy as they produced.

Koppers Company, noted B. Otto Wheeley, deputy chairman of the board, decided four years ago to invest in genetic research and development by buying 45 percent of a company called Genex Corporation in Rockville, Md. Genex does research for Koppers involving Kopper's pollution control, chemicals, energy, and minerals businesses. Genex, a privately held company, will expand from 80 employees -- mostly PhDs -- to 150 by next year, Mr. Wheeley notes.

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In fact, the growth of the biotechnology business is made clear by looking at the classified ads in the back of the Sept. 19 issue of Science magazine. There , companies ranging from Campbell Soup to Upjohn, a drug company, are looking for PhDs with expertise in genetics.

For Wall Street, the Hutton seminar illustrated one of the basic problems in trying to find ways to invest in companies doing genetic research. Few companies that have established track records and are publicly held are involved in the business. Clark Green, a portfolio manager for Bankers Trust, noted that genetic research was a small part of such companies as Du Pont, Koppers, and Archer- Daniels-Midland.

And, for the institutional investor, purchases of such companies as Neo-Bionics and Enzo Biochem Inc., both small, public companies involved in genetic research, is difficult because they have no past business history. Still more research is done at unversity laboratories and private institutes. Even so, Wall Street is enthusiastic enough about these companies to push Neo-Bionics stock from its initial public offering price this year of 50 cents per share to a current $1.50 a share and Enzo Biochem from $6.25 early this summer to a current $31 a share.

Sen. Harrison, H. Schmitt (R) of New Mexico questioned whether the best investment opportunities in genetic research will be in the United States. Rather, he said, "probably the best investment opportunities will be in Japan and Europe, where the political climate is more conducie to such research."

Senator Schmitt, ranking Republican on the Subcommittee on Science, Technology, and Space, part of the Commerce, Science, and Transportation Committee, noted that the Senate three years ago was "only 15 minutes" from passing legislation that would have regulated genetic research. The legislation , as proposed by Sen. Edward M. Kennedy, did not pass, however.Still, he concludes, there is pressure for regulation -- which is bound to be passed by Congress at some time -- and "this will probably drive the research abroad."

The senator concludes that the news media and others "will conjure up monsters and build a climate of fear, prompting regulation."

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