2016 was a turning point for the bio-based materials and chemicals (BBMC) space as the industry realigned to sustained low oil prices, shifting consumer demand, and emerging regulatory drivers. In our latest report, we highlight the big bets investors placed in 2016 (client registration required). To emphasize these trends, we round-up some of the major announcements throughout the year and summarize them into the three key themes outlined below: Continue reading
Synthetic biology (“synbio”) initially attracted high-profile venture capitalists and corporate partnerships for its products – bio-based chemicals and alternative fuels, for example. Today, synbio companies tools are attracting attention as well – from lab automation like DNA synthesis-as-a-service, to software (i.e. BioCAD and BioLIMS), and new genetic engineering tools (i.e. CRISPR). By integrating machine-learning, robotics, and high-throughput engineering, companies like Ginkgo Bioworks and Zymergen are helping customers dramatically reduce the timeline for developing new molecules in the flavor and fragrance, food ingredient, medical, agricultural, and specialty chemicals markets – a key reason that those two startups each raised more than $100 million in 2016. This podcast highlights Lux’s thoughts on the impact of these tools in and beyond in synbio, and the rapidly developing ecosystem of startups within the space.
To listen to the podcast, click here.
By: Mark Bünger and Victor Oh
As the alternative fuels industry rapidly approaches maturity, reports of IPOs and commercialization have blended with headlines about spectacular failures and cheap acquisitions. The remaining players navigate a landscape of prospective partners, funding, and scale as well as serious uncertainty (read: opportunity).
A thorough examination of the field reveals contenders, dark horses, and long-shots within several technology classes, including pretreatment, bioprocessing, and gasification. While many of these companies appear similar on paper, we applied the Lux Innovation Grid in a recent report to rate them in three dimensions – business execution, technical value, and maturity. Drawn from that report, this week’s graphic reveals likely winners and losers among Alternative Fuel bioprocessing companies which, as a group, offer strategic flexibility in feedstock and end-products.
The crowded Dominant Quadrant is due in part to the successful IPOs of Amyris, Gevo, and Solazyme, as well as the impending commercial scale of companies like LS9, Cobalt, and LanzaTech. Aemetis edges into the Dominant Quadrant thanks on the technological potential of its Z microbe, which simultaneously breaks down cellulosic biomass and converts the sugars into isoprene. ZeaChem also lands in the Dominant Quadrant due to high partnership and momentum scores, fueled by a recent funding round and joint development agreement with P&G.
Cellulosic ethanol producers Qteros and Mascoma both claim low cost production and robust organisms, but both fall into the High Potential Quadrant due to sagging business execution scores. Qteros’ Q microbe could lead to more efficient processing of biomass; but it recently laid off most of its staff, including its CEO. Touting similar technology, Mascoma filed for an IPO* in September, but could see its public launch hindered by capital intensity and slowing momentum.
Lastly, OPXBiotechnologies shows some interesting potential for developing microbes for acrylic acid (with partner Dow) and diesel as part of the ARPA-E funded Electrofuels project: https://portal.luxresearchinc.com/research/tidbit/8436*. But, on the fuels side, it falls into the Long-Shot Quadrant due to a competitive landscape score of 2, and a partnership score of 2, with an overall Lux Take of “wait and see.” Joule, on the other hand, we rate as a “caution” thanks to a barrier to growth score of 1, no commercial partners, and wholly unproven claims.
Source: Lux Research report “Refining Alternative Fuels Innovators into Winners and Losers.”
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The foundation of collaboration in synthetic biology may be cracking, specifically where development of bioethics standards for safety and security are concerned.
Synthetic biology’s de facto industry group, the International Association of Synthetic Biology (IASB), has been the major driver of such standards. Until recently, its efforts to develop standards for bioethics safety and security (BESS) culminated in a report released at a meeting in Munich in 2008. It had relied on what might be termed an open-source approach, using publicly available data as the basis for assessing risk. According to IASB guidelines, all incoming DNA sequence orders must be compared to the gene sequences stored at GenBank, the global online database that provides the most comprehensive repository of gene data. If a customer’s sequence completely or nearly matched a gene known to be pathogenic – a smallpox gene, for example – then a human subject matter expert (SME) would step in to evaluate the risk potential. The SME could then order a background check on the customer, contact a bioweapons expert through the IASB, or take other actions to ensure the legitimacy and safety of the customer’s research. The final guidelines were announced on November 3.
So far, so good. However, two leading gene synthesis companies, DNA2.0 and Geneart, broke with the IASB in November to form the International Gene Synthesis Consortium (IGSC) and promote their own set of standards. Blue Heron Biotechnology, GenScript and Integrated DNA Technologies have since joined them.
The IGSC is establishing a closed system, where members could draw on a database built on public sources like GenBank as well as proprietary data and other tools. In addition, IGSC’s model reduces or eliminates the manual SME work that the IASB method requires. Moreover, Geneart is the leader among a small group of companies – including Febit, Ginkgo BioWorks, Biosearch Technologies and Sutro Biopharma – that started a new industry group this month, the Synthetic Biology Industry Association (SynBIA). While the organization is only now communicating its mission, it claims it will collaborate with the IASB, and even endorse the IASB standard. Even so, it’s hard to see the move as an extension of the IASB, rather than a break.
So what’s behind the growing rift? To get one perspective, we spoke with Stephen Maurer of the Goldman School of Public Policy at the University of California Berkeley. Maurer, who helped the IASB develop its standards program, noted that the consortium claims its membership will be limited to “significant” companies, which means that a smaller number of more powerful organizations will be free to make decisions and move ahead without having to build broad consensus like the more inclusive IASB. Indeed, DNA2.0 underscores that the IGSC’s five members represent 80% of global gene synthesis capacity.
More importantly, the IGSC’s more automated approach would lower costs for members (at the expense of quality, Maurer argued), while smaller companies would still need to rely on slower, higher-cost human SMEs – or else join the standard without the benefit of a vote on its content.
Maurer added, “DNA2.0 has in the past told me that they consider the act of cross-checking the customer’s order to be reverse engineering” and a breach of customer trade secrets. However, he doesn’t see that current trade secret law actually requires this result, and that if companies want to take the extra trouble of having SMEs examine customer sequences by hand there is no legal reason why they cannot properly do so. Indeed, U.S. regulatory agencies like the Environmental Protection Agency (EPA) and Food & Drug Administration (FDA) regularly protect such confidential business information.
While this arguably minor point of contention among the nascent industry’s players could be dismissed as growing pains, the number and severity of disagreements evident in these actions indicate a major shift is underway. Firstly, the IGSC’s actions build competitive barriers to smaller companies entering the gene synthesis space. That counters the trend of advancing technologies that have lowered barriers of entry. Non-governmental organizations opposed to synthetic biology in principle are sure to seize the opportunity to portray the start-ups’ discord as evidence that self-regulation is not a viable option. Late last month, as if to warn the squabbling parties about the threat of government intervention if they don’t straighten up, the U.S. federal government reminded the world that it has its own BESS guidelines.
Clients interested in the synthetic biology space should expect this spat to be just the beginning of a tumultuous period, and can look forward to things getting worse before they get better for at least the next twelve months.