CC : GPC

R.J.Reynolds Industries, Inc . Corp . Accounting

Ralph Rowland
PROPOSAL FOR PROFIT, EXPENDITURE, OR POLICY CHANGE
See reverse side for instructions . Attach pertinent supporting information . PEP Number__0-4_ _
Date October 6, 1970

SUBJECT C Lucose Isomerase-Fermentation Dev . DEPT ./DIVISION Research/Analytical

Check Cl as appropriate Estimated
1Xl STUDY/DEVELOPMENT PROPOSAL Long Capital Expenditures $
Range Annual Pre-tax Profit Effect
impact after Implementation $ Unknown
This Year Next Year Future Years Annuai
Amount
Cj(1
~ PROFIT PROPOSAL - Pre-Tax Profit & Loss effect : $ $ $ after fully
---- impie-
Is this a P& L budget change? Yes W No 0 How muchT 25,575 _ ---- ment i ng
El This is also a Capital Expenditure Proposal Disbursement of Funds
Total Request $ _ Timing $ $ $
Is this a budget change? Yes 0 No 0
How much in total $_ Timing $ $ $
Est . by RJR Eng . Yes C7 No O Eng . Coor'd . Project No . /'7 L (Assigned by Comptroller efter approval)

Cl POLICY CHANGE PROPOSAL What literature will be changed?

Description of Opportunity or Probiem An agreement has been reached wi th an outsi de contractor to perform
the fermentation development studies for the production of glucose isomerase . These studies are
required for scale-up of the fermentation process for future commercial development of the glucose
isomerase project by Penick & Ford .
Background (Substantiating References and Facts) Peni ck & Ford has 1 ong expressed a desi re for a process whi ch
will convert a portion of the glucose in corn syrup to a sweeter sugar, fructose . An enzymatic
process for the production of a glucose fructose syrup was developed by RJR Research . The pro-
duction of the enzyme must be scaled-up from the RJR 30-gallon fermentations to 36,000 gallons .
Scale-up studies will be performed by Dawe's Laboratories . Once these studies are completed,
the process and the enzyme will be,, .g**verr to Penick & Ford . Upon commercialization of the process,
Penick & Ford will assume the cost'for the prodUction of the enzvme .
Action Alternatives (If Study Proposal, Def' ~Scope and Method)

1) The production of the ~fizyme (cells) could eventually be performed by Penick & Ford, but this
would involve a largc~ capital expenditure for equipment and personnel . A delay of 2-3 years
in commercial pro#'ction of the glucose-fructose product would result from this alternative .
2) Another ferment tion company could be contracted to perform these studies, but Dawe's pres-
ently has fer ntation capacity and they have quoted a reasonable price for the fermentations .
3) The project ould be terminated, however the substantial interest by the food industry for
this produc and the present success of Clinton's product deem this an undesirable alternative .
~y ;~
4 e-"t~ 64- .~ ttt~~ ~d "

Proposed Action and Results of Proposal (Profit effect, Return on Investment, etc .) Thi S
proposal is a portion of the overall development of the glucose
fructose project . Therefore, the return on investment is
unknown .
The funds spent on this fermentation development project
from the period of January 1, 1966 to August 31, 1970 including
overhead were $90,095 . This brings the total on the project to
$115,670 . No previous PEP forms were filed for this project .
This PEP form has been discussed with Dr . E . C . Ritchell
and Mr. S . A . Angotti and is a necessary part of the overall
project .

Date Planned to Start October 7, 1970 Date Started

~Date P l anned to Complete Decembe r 31 ,197 Date Compieted
50833 0422 _
~ PERSON RESPONSIBLE FOR IMPLEMENTING :_ Charles 6 . Pheil
j~~ DaSAD~A01/FD-F volsnsfin» on Reverse S3de I
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