A new generation of consumers demand sustainability. In response, multinational corporations are increasingly integrating bio-based materials and chemicals into products as a way to market a more sustainable brand. Business savvy leaders will first target opportunities where bio-based materials & chemicals have a clear advantage over incumbents in performance, but most are stumped by where to start in the value chain. Continue reading
After recently announcing it is ending its biopolymer business to focus on its Yield10 crop improvement platform (client registration required), Metabolix (client registration required) announced last week that it has entered into a binding letter of intent (LOI) with CJ CheilJedang Corporation for the sale of its biopolymer assets for a total price of $10 million. This includes Metabolix’s biopolymer intellectual property (IP), such as the platform microbial strains used for the company’s fermentation products and patents for the production/use of PHA. The agreement also includes purchase of related laboratory equipment and an expected sublease of its Woburn, Massachusetts facility. Continue reading
Bio-based materials and chemicals (BBMC) often suffer from a bad reputation, universally thought to be of poorer quality or more expensive than their traditional petroleum-based counterparts. While initial BBMC products like starch-based plastics were inferior substitutes that didn’t perform as well as incumbents, in recent years developers have been putting out materials with competitive, and even, superior price-performance characteristics. Continue reading
On March 1, 2016, IKEA and Newlight Technologies announced that they entered into a supply, collaboration, and technology license agreement. Under the agreement, IKEA will purchase 50% of the material from Newlight’s planned 23,000 MT/yr PHA plant. In addition, IKEA secured exclusive rights in the home furnishings industry to use Newlight’s technology to convert biogas, its ﬁrst target feedstock, or later, carbon dioxide into polyhydroxyalkanoates (PHAs) for its home furnishing products. According to the release, both the companies will work together to identify and select the carbon sources and develop the technology to use a range of renewable substrates, with a long term goal to develop capacities up to 453,000 MT/yr.
IKEA’s announcement with Newlight is, in some ways, not all that surprising. IKEA established a sustainability goal that in August 2020, all plastic material used in its home furnishing products (which excludes polyurethane foams and constitutes a reported 40% of the total plastic volume used by IKEA) will be 100% renewable and/or recycled. According to the company’s 2015 sustainability report, IKEA sourced 23% of the plastics in its plastics category of products from renewable or recycled sources in FY 2015. Though the press release did mention that IKEA will license Newlight’s production technology, the company clariﬁed in a follow up that IKEA “[has] no plans to produce [its] own resins and to move up in the supply chain. [IKEA’s] approach is to have long-term cooperation with [its] suppliers for mutual beneﬁt.” Again, not a signiﬁcant deviation from the company’s typical position in the value chain or industry trends.
However, what does distinguish IKEA is the kind of product they selected: PHA. Continue reading
As the Bio-based Materials and Chemicals industry enters 2016, we looked back on 2015 to see the effects of sustained low oil prices and how the industry responded, and considered what lies on the horizon in the coming year as a result. Despite a full year of low oil prices dampening perception of the bio-based materials and chemicals (BBMC) industry, in reality the space was still quite active, with over 28 noteworthy commercialization announcements, more than $428 million in major fundraisers, four major facilities coming online, and more than 84,000 MT of new capacity announced. The product launches, admittedly front-loaded in the year, were largely driven by large corporations with 15 of the 28 products coming from these entities and ranging from chemical intermediates (e.g., BASF’s new bio-based polyol, #23 in the figure), to polymer resins (e.g., Evonik’s new VESTAMID® polymer, #25), to components for finished goods (e.g., Toray’s Ecodear laminate, #10).
Of course, low cost oil has added some harsh reality in the BBMC space, in addition to just the challenges of perception. This has been most heavily felt by the start-ups in the space. Cobalt, Vertichem and Optinol all met their demise, while delays in funding directly affected at least a few start-ups, such as Micromidas and Avantium, which are worrisome for the scale-up plans of both companies. Three of the four production facilities that came online this year were start-up-driven projects as they have little choice but to soldier on, but the underlying fundamentals aren’t strong in all cases. For example, the 50,000 MT of isobutene capacity announced by Cristal Union and Global Bioenergies is a gamble. Global Bioenergies previously claimed it could compete with $85/bbl for chemical applications (e.g. synthetic rubber and PMMA) without any green premium, a far cry from today’s oil prices that have oscillated around $30/bbl in recent days.
Going into 2016, large companies’ ability to weather the storm creates opportunity, subject to their executives having a requisite level of strategic vision. Continue reading
In 2015, Lux Research analysts profiled 1,189 companies across 20 different emerging technologies. As the year end approaches, we polled the analyst team to select the top 10 companies we covered in 2015 that are poised to make a significant impact on their target industries. These companies may be targets for partnership, investment, or acquisition, but their success also points to new growth areas and business opportunities that clients can capitalize on.
As always, each firm gets a “Lux Take” that ranges from “Strong Caution” to “Strong Positive,” to provide a bottom-line assessment of its prospects, with a “Wait and See” rating for companies that still face too much uncertainty for a definitive call. Full access to the detailed information and analysis in the profiles is for clients only, but the list with a brief explanation of each is available here for everyone.
- NeuroSky (Positive – BioElectonics; Sensors) — NeuroSky develops a number of bioelectrical signal detection and processing systems, most notably its electroencephalography (EEG) sensors that have enabled mind-reading brain-computer interface devices like Uncle Milton’s Star Wars Force Trainer – and will also enable future diagnostic and monitoring solutions as health care shifts to digital technologies.
- Organica Water (Positive – Water) — In addition to providing significant reductions in energy consumption, sludge production, and overall footprint for wastewater treatment, Organica builds low-cost greenhouses around its treatment plants to reduce odor, allowing it to locate plants closer to wastewater sources and enabling cost-effective reuse within cities.
- PFP Cybersecurity (Strong Positive – Connected Objects and Platforms) — PFP uses a physics-based approach to detecting cyber threats by analyzing the electrical patterns of processors, ideal for securing for Internet of Things (IoT) devices that can’t support modern security software or are limited by memory or compute constraints.
- Norsk Titanium (Positive – Advanced Materials) — 3D printing is best known for producing customized but pricey plastic pieces – Norsk’s plasma arc deposition allows it to 3D-print parts from titanium that are up to 70% cheaper than those made via conventional machining methods, due to greater material utilization.
- Nutrigenomix (Positive – Food & Nutrition) — Offering genetic testing to provide individualized recommendations on seven specific dietary components, Nutrigenomix is a step in the right direction for personalized nutrition.
- Fulcrum BioEnergy (Positive – Alternative Fuels) — Biojet fuel and renewable diesel are going to be major plays in 2016 and Fulcrum is well positioned to make both fuels from municipal solid waste (MSW) – it has strong partnerships along its entire value chain, and is the only Fischer-Tropsch biojet process developer with proven production at some scale.
- Zerlux (Positive – Exploration and Production) — The use of lasers in the oil and gas industry isn’t widely known, but Hungarian player Zerlux is a leader, with high-powered lasers for well stimulation, hard-scale removal, and subsea pipeline remediation.
- Hillcrest Labs (Positive – Sensors) — As the number of sensors in products from cars to mobile phones continues to grow, sensor fusion – integrating the interpretation of data from different sensors – is becoming more critical; strategic relationships with Bosch, Atmel, and ARM position Hillcrest to be a dominant player in this market.
- ENS Europe (Wait and See – Intelligent Buildings, Sustainable Building Materials) — More efficient electrostatic filters from ENS Europe can help clean indoor air, much like a HEPA filter does, but the technology has the potential to scale up to clean smog and address other city-wide air quality issues.
- AgDNA (Positive – Agro Innovation) — Finding successful business models for precision agriculture has been challenging, but AgDNA has been able to get traction licensing its technology – which integrates data from existing equipment into a decision-support system for growers – to OEMs like John Deere.
Other notable companies nominated by the analysts earned an honorable mention:
- Alsentis (Positive – Wearable and Flexible Electronics; Sensors) — Touch screens don’t work in high-noise environments – with wet surfaces or gloved hands – but Alsentis is changing that with its multi-touch sensor chips, used now in industrial and automotive applications with planned release for consumer devices in 2016.
- Elevance Renewable Sciences (Positive – Bio-based Materials and Chemicals, Alternative Fuels) — Elevance already has commercial scale production of specialty chemicals from crude palm oil (CPO), and is planning to expand by building or retrofitting plants in the U.S. and in Malaysia – notably deploying its technology outside the “conventional” regions of Europe and the Americas.
- Mapdwell (Wait and See – Solar) — Using Lidar data and an online portal, Mapdwell allows consumers to estimate the solar potential of any rooftop in cities it covers, helping to bring down soft costs associated with customer education, targeting, and system design.
- Sakti3 (Caution – Energy Storage) — Solid-state batteries are one of the key technologies for enabling higher density energy storage beyond the current Li-ion batteries today; while its unproven production process is reason for caution, its acquisition by Dyson later in the year could give it the boost needed to make the leap to commercial production.
- EasyMile (Positive – Autonomous Systems 2.0) — Lightweight, driverless, electric automobiles could revolutionize urban transport and change the current paradigm of car ownership. EasyMile – a joint venture of Ligier Group and Robosoft – is developing autonomous shuttles that could be the basis for future personal rapid transit systems.
Earlier this week Dyadic announced DuPont will acquire its C1 industrial enzyme technology platform for $75 million. While the deal transfers nearly all of Dyadic’s industrial enzyme technology assets to DuPont, the announcement also disclosed that Dyadic will continue to have co-exclusive rights to the C1 technology specifically for pharmaceutical applications. For pharmaceutical applications, DuPont will make royalty payments to Dyadic upon commercialization. Dyadic’s C1 technology is currently licensed to companies such as Abengoa for cellulosic ethanol production and BASF for the animal feed, food, and textile industry. In the pharmaceutical industry, Dyadic licenses its technology to Sanofi-Pasteur for production of vaccines, antibodies, and therapeutic proteins (client registration required).
DuPont is no stranger to bolstering its enzyme technology portfolio through acquisitions, acquiring Danisco in 2011 for a total of $6.3 billion. However, DuPont isn’t alone, as many of the larger companies in the space made similar transactions in the enzyme industry over the last few years. At the start of 2013, Novozymes acquired Iogen Bio-Products, Iogen’s industrial enzyme division that produced enzymes for a range of industries including grain, animal feed, and pulp and paper (client registration required). The transaction totaled $80 million and did not include Iogen’s assets in cellulase enzymes. Later that year, BASF acquired Verenium for approximately $62 million. By this time, BP had already acquired Verenium’s cellulase enzyme portfolio in June 2010 for $98.3 million (client registration required). While all the transactions, except for the Danisco acquisition, are relatively equal in size to the Dyadic acquisition, the economic environment in which they occurred were drastically different.
In January 2013, oil prices were approximately $95 per barrel WTI Crude when Novozymes decided to purchase Iogen without its cellulase enzyme technology. Later that year in October, oil prices were just under $104 per barrel WTI Crude when BASF acquired Verenium. Notably, the Dyadic acquisition stands out, as oil prices have plummeted to approximately $45 per barrel WTI Crude this month. Yet the transaction price is in the same range as the previous examples even though DuPont acquired something more – the cellulase enzyme technology that is licensed to DuPont’s competitor, Abengoa. In May 2012, Abengoa expanded its rights under the non-exclusive license agreement the parties entered into in February 2009. The first iteration of the license agreement gave Abengoa the right to use Dyadic’s C1 platform technology to develop, manufacture and sell enzymes for use in second generation biorefining processes to convert biomass into sugars for the production of fuels, chemicals and/or power in certain territories. This iteration of the license agreement expands the license to worldwide rights and gives Abengoa the ability to produce, use, and sell C1 enzymes in first as well as second generation biofuels and other bio-based processes.
But the reason for the relatively low transaction bill doesn’t necessarily reflect the value of the C1 platform. It’s list of current licensees ranging from small start-ups (client registration required) to large corporations and across various industries made it a prime target and will likely strengthen DuPont’s own enzyme platform. The link to Abengoa’s enzymatic technology is an added bonus as it may mean some leverage over a direct competitor. What it does show is that the current economic climate of low oil prices is ripe for opportunity for those with the capital and long term vision to supplement their current biotechnology portfolios.
Liquid Light recently signed a technology development agreement with The Coca-Cola Company to accelerate the progress of its CO2 to mono-ethylene glycol (MEG) conversion technology. This news follows Coca-Cola’s recent unveiling of its first PET plastic bottle made completely from plant materials.
With this announcement, Liquid Light joins Virent, Gevo, and Avantium on the Coca-Cola PlantBottle project. Gevo focuses on developing bio-PX as a precursor to bio-TPA, Avantium looks into FDCA for polyethylene furanoate (PEF), while Virent focuses on developing an alternative route to bio-PX for the (client registration required) production of bio-PET. Liquid Light aims to produce ethylene glycol from CO2, which would further augment Coca-Cola’s existing PlantBottle Packaging Program when the Liquid Light technology converts biogenic carbon sources.
But if Coca-Cola can already produce 100% bio-based PET, why did the company just sign this agreement with Liquid Light? Now that Coca-Cola has achieved its 100% bio-based PlantBottle, the company wants to implement the exclusive use of this bottle by 2020. However, it will not be able to do this on a global commercial scale while remaining cost competitive with (client registration required) petroleum derived alternatives. This is where Liquid light comes into play. The company claims its route to be a lower cost alternative to the ethanol to MEG route used to produce the bio-MEG in Coca-Cola’s PlantBottles today.
When we spoke with the company last year, we were told of a hypothetical model where a Liquid Light MEG facility would be an alternative to the Quest CCS Project, which plans to bury 1 million tons of CO2 per year underground. In this scenario, a Liquid Light facility would use the 1 million tons per year of CO2 to produce around 625,000 tons per year of ethylene glycol. Assuming a cost of carbon dioxide of $77/ton and a 10% discount rate, the company projected operational expenses of $402 million per year, which translates to approximately $640 per MT of MEG. Current selling prices for commercial volumes of MEG range from roughly $800 per MT to $1,000 per MT, thereby potentially leaving enough margin to compete on price parity with incumbents. If Liquid Light is able to achieve its cost claims, this gives Coca-Cola the ability to kill two birds with one stone: expanding its options for sourcing bio-MEG, while also obtaining it at a price on par, or even lower, than incumbents.
With its recent flurry of bio-PET announcements, Coca-Cola is becoming a leader in developing and implementing bio-based alternatives into its product portfolio; however, we are seeing other companies follow suit. For instance, (client registration required) LEGO’s recent sustainability announcement emphasizes the vast amounts of time and money companies are willing to invest in order to go green. Announcements like this emphasize the growing opportunities for companies looking to address sustainability concerns in existing value chains.
Synthetic biology is now a common tool utilized by large and small players alike, in the bio-based materials and chemicals space. Advances in sequencing and synthesis enabled companies such as Amyris and Metabolix to scale up and put products out on the market, with another wave of startups looking to scale products ranging from squalane, to malonic acid, to isobutene. In looking at 23 companies employing synthetic biology to develop industrial processes for bio-based materials and chemicals (BBMC), it takes 4.7 years, ± 1.9 years, to reach pilot scale from the time of a company’s or project’s inception. Companies hit commercial scale at 6.2 years, ± 3.0 years from inception, provided they scale straight from pilot. For those processes that need an intermediate demonstration scale, the average time to commercial scale bumps up by 4.5 years, bringing the average to 10.7 years from inception, ± 4.1 years. For the 12 companies analyzed with products on the market, the average time it took to put out their first internally developed product was 7.4 years, ± 2.9 years from the time of the company’s founding or the project’s inception.
Clearly, companies able to sell from their demo plant are able to get products out on the market faster, but looking at these companies uncovers other best practices for speed to commercialization. The three companies that reached pilot scale in the shortest amount of time – Nucelis, Reverdia, and Isobionics – all have parent companies with past successes in the industrial biotech space. If companies lack this background, there is a greater need for them to fill the gap through hiring the right management talent, or aggressively partnering with companies with the right legacy. In addition, three out of the five companies that were the fastest launch products – AMSilk, Allylix (which was later acquired by Evolva), and Genomatica – did so with the use of contract manufacturers. This capital light approach took a massive amount of plant design and commissioning time out of the path to revenue.
Using the average values and standard deviations for past key scale-up milestones, Monte Carlo analyses can then predict the probability that each of today’s youngest companies – those currently at lab scale and pilot scale – will put out a product in each of the upcoming years based on past progress, strategy, and foreseeable milestones. For the youngest startups, first products are most likely to be launched from 2017 to 2022. Yet within that group there are some firms set to scale and launch faster. Nucelis aims to launch its first product, squalane, in Q4 2015, several years ahead of the industry average that would put peak likeliness for product launch between 2019 and 2020. After achieving pilot scale in 2014, Lygos aims to hit demonstration scale in 2015, putting it on track to meet the industry’s average for a product launch. For those nearing their peak likelihood for product launch, near-term announcements are key milestones to watch for. Companies like Oakbio that continue to develop lab-scale platforms and intend to scale in conjunction with partners, monitor for continued momentum through partnership announcements. Companies like Global Bioenergies that have announced multiple lab and pilot-scale achievements, monitor for additional scale-up accomplishments. In the case of Global Bioenergies, the next major milestone to look for is the construction of its second industrial isobutene pilot plant, currently set for Q2 2015.
While each company’s path is unique, the lessons learned from the first wave of BBMC scale-ups and product launches provide valuable insight and lessons. Today’s start-ups still have years to go, but prospective partners, customers, competitors, investors and acquirers can now reliably plan for likely outcomes and timelines.
GFBiochemicals recently announced that it is starting commercialization of its 2,000 MT per year levulinic acid production facility. The facility, which is located in Caserta, Italy, is set to come online mid-2015. The company’s technology has been operating at demonstration scale since 2008 and it intends to scale up to 8,000 MT per year by 2017. In similar news, Bio-On announced that Eridanis Sadam, an Italian agro-industrial group, will invest €1.8 million in the development of the Bio-On technology process to produce levulinic acid.
These announcements indicate that, like similar intermediate chemicals such as succinic acid, the levulinic acid space is gaining momentum, and there are parallels to be drawn between levulinic acid and succinic acid. Levulinic acid, like succinic acid, is often referred to as a building block chemical, and levulinic acid can serve as a stepping stone in the production of acrylic acid, succinate, 1,4-pentanediol, and 2-methyl-tetrahydrofuran. Succinic acid can similarly be converted to 1,4-butanediol or PBS, and can be used to replace adipic acid. Like succinic acid, the levulinic acid space is small, with just a handful of companies like Biofine Technology, Segetis, and Arzeda currently producing the chemical.
Despite its small size, Lux Research has seen demand grow within the succinic acid space, given the broad downstream potential it offers for producers. Demand is likely to increase within the levulinic acid space also, given the opportunities it provides as a building block chemical. Developing supply agreements will be important for any company within this space, as success will be dependent on off-takers applications of levulinic acid. With that in mind, it will be important for GFBiochemicals to carve a niche for its technology by securing partnerships with other companies within its value chain. While not as commercially advanced as GFBiochemicals, Bio-On should focus on securing technology development partners and further funding, presenting an opportunity for clients to play a larger role within this growth of this company. Downstream off-takers looking for levulinic acid as feedstock for further processing should monitor the progress of both companies and should consider engaging for off-take agreements and partnerships.