Enerkem agrees deal with Twin Cities allowing it to move forward with planning MSW-to-ethanol project

In Minnesota, the Pioneer Press reports that Minneapolis-St. Paul’s Metropolitan Council has made an agreement with Enerkem to move the company’s proposed garbage-to-ethanol plant project forward. The City has agreed to supply 1.6 million gallons of treated wastewater per day for use at the facility. The company is moving forward with a $600,000 investment in project development now that the agreement is in place. If the development continues at pace, the project could be online by 2020.

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Philippines CIF ethanol prices fall to four-month low as it tracks Argo lower

In the Philippines, Platts reports that imported ethanol prices basis CIF Philippines fell to $415.33/cu m earlier this week, a four-month low US ethanol prices continue to fall. Argo Ethanol prices fell to 15-year lows earlier in the week as production continues to pass more than a billion barrels per day despite rising corn prices leading to squeezed and sometimes negative margins. Despite the low prices, no cargos have been seen heading to Malaysia since September while South Korean ethanol imports have also been falling.

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Zimbabwean villagers sue Green Fuel for alleged landgrabbing

In Zimbabwe, villagers are suing Green Fuel claiming that the company is illegally occupying community lands and interfering with their crop production activities. Currently 138 families claim historical use of the land for growing cotton and subsistence corn, saying the company has started to till their land to plant sugarcane. In response, the villagers are seeking a restraining order against the ethanol giant. The company has already set out guard dogs and armed security guards to keep them off the property.

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Edeniq withdraws cross-claims against Aemetis after defeating all claims in court

In California, after its recent success in defeating all claims in the lawsuit filed by Aemetis, Inc., Edeniq, Inc. announced that it has voluntarily withdrawn its cross-claims. Edeniq had brought this countersuit to assist it in defending against Aemetis meritless case; having now achieved that clear victory, Edeniq has chosen not to incur the time and expense of a trial. Edeniq will now turn to recovering the attorney’s fees and costs it believes it is entitled to pursuant to the parties terminated merger agreement.

“By defeating every one of Aemetis claims, Edeniq has fully achieved its goals in this litigation. We look forward to putting this lawsuit behind us and continuing to focus on our industry, our investors, and especially our customers,” stated Brian Thome, President and CEO of Edeniq.

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Benefuel to develop biodiesel plant in British Columbia on the back of expanded LCFS

In Canada, Benefuel Inc. responded to British Columbia’s recently publicized climate change plan that included an expanded Low Carbon Fuel Standard by announcing Dec. 11 that it has begun a site search and discussions with interested parties on a few specific locations for Benefuel’s next state-of-the-art biodiesel facility. This announcement has assisted Benefuel in prioritizing its expansion efforts, given that British Columbia has specific target volumes for biodiesel blending and carbon reductions as well as enticing funding support.

Benefuel will immediately begin the search for a suitable location in British Columbia to build a 150 MMly (40 MMgy) plant. Benefuel’s refining process is one of the most capital-efficient refining solutions for carbon reduction in liquid transportation fuels.

The fuel produced at this facility will have a negative carbon intensity score and is capital efficient. Every dollar of invested capital in Benefuel provides more than four times the greenhouse gas (GHG) reduction compared to ethanol or hydrotreated renewable diesel and will displace any international competitors.

The total project, which will produce roughly 150 million liters annually, will reduce GHG emissions by more than 550,000 metric tons per year, which is equal to roughly 10 percent of British Columbia’s 2030 target reduction for transportation as detailed in the CleanBC Report.

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Maharashtra teams with Praj to test cashew apple as biofuel feedstock

In India, two coastal communities in Maharashtra have been short-listed as potential sites for a government program that will trial the use of cashew apple and press cake as feedstock for biofuel production. Praj as well as a local university and other partners are teaming on the project that could help reduce the 2.2 million metric tons of cashew apple waste resulting from the cashew growing and processing industry. Around 45 million liters of ethanol could be produced from the state’s cashew apple waste annually while research is still underway to determine how much bio-CNG could be produced as well.

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Nigerian university developing mini-biodiesel plant to promote jatropha use

In Nigeria, the University of Ilorin is developing a pilot mini-biodiesel production facility that will use jatropha as feedstock. The mini-plant is meant to show rural communities who already grow the oilseed tree extensively the energy production opportunities available to offset fossil fuel consumption. The university itself already planted 55 hectares of jatropha back in 2010 with an eye on the future project. The Nigerian National Petroleum Corp. has been an investor in the mini production project.

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Indonesia looking at B30 after successful ramp up to B20

In Indonesia, the Jakarta Post reports that the government is looking to expand biodiesel blending to 30% from the current 20% but a target date for the policy implementation wasn’t reported. Already 20% uptake has reached 97% following the blending mandate increase in September. For B20, palm oil demand is 4.3 billion liters. The country already produces 56% of global palm oil production with roughly the same percentage exported annually as well. The policy to boost biodiesel consumption following a weakening of its currency earlier this year due to excessive FX requirements for fossil fuel imports.

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Biobased beer can rings, algae and bugs, chitin-based plastic breakthrough, gribble gut enzymes, banana-based products: The Digest’s Top 10 Innovations for the week of December 14th

The pace of bioeconomy invention and change continues at a frenetic pace. Here are the top innovations for the week of December 14th.

In today’s Digest, biobased beer can rings, algae and bugs, chitin-based plastic breakthrough, gribble gut enzymes, banana based products — these and more, ready for you now at The Digest online.

#1 Find your plastic-free beach: Corona to trial plant-based beer can ring

In Mexico, ubiquitous summer beer Corona has announced it will test biodegradable, plant-based beer rings early next year.
AB InBev, owner of Corona, says the move will help cut down on the growing problem of plastic waste in oceans. The rings were developed with the ocean charity Parley for Oceans
“The beach is an important part of Corona’s DNA and we have been working with Parley to address the issue on the frontlines where plastic is physically accumulating,” Corona Better World director Evan Ellman tells Business Green. “We also recognize the influence a global brand like Corona can have on the industry, and with the support of Parley, are pursuing scalable solutions like plastic-free six pack rings that can become a new standard to avoid plastic for good.”
The beermaker says it plans to expand the trial to the United Kingdom.
More on the story, here.

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New Year, New Farm Bill: BIO Celebrates Legislation’s Role in Strengthening America’s Bio-based Economy

By Brent Erickson, Executive Vice President; Head, Industrial & Environmental Section, Biotechnology Innovation Organization
Special to The Digest

As we move closer to celebrating the end of 2018, Congress has given those working in America’s bio-based and agricultural sectors a reason to celebrate early. The 2018 Farm Bill has passed both chambers of Congress, with overwhelming bipartisan support, and is now set to be delivered to 1600 Pennsylvania Avenue, so it can be signed into law.

The road to this point, however, was years in the making.

BIO and its member companies have been working closely with Congress throughout the bill’s evolution to ensure it provides much-needed support to innovative technologies and rural America.

Contrary to some beliefs, the Farm Bill supports more than just America’s agriculture sector. The bill’s energy title programs provide critical support to companies and manufacturers working on innovations in renewable chemicals, advanced biofuels and other products of industrial biotechnology throughout the value chain. And these technologies are creating new jobs in rural America.

Understanding the importance of these programs, BIO took the lead in advocating for bio-based industries and made sure Congress heard the benefits early and often. BIO’s President and CEO Jim Greenwood noted the benefit of these programs in testimony to Congress when work first began on this important legislation in 2017.

“Farm Bill energy title programs have been incredibly successful in incentivizing the biobased economy,” he explained. “Because of the research, loans, and grants provided by these programs, industrial biotechnology companies are developing new feedstocks, industrial enzymes, and biological catalysts for the conversion of biomass for the production of advanced biofuels, alternative jet fuels, renewable chemicals and biobased products.”

When negotiations began on the bill, BIO’s advocacy was two-fold: improve Farm Bill programs to better support these companies as they continue building the bio-based economy, and ensure these programs are adequately funded so they can be effective.

As a result, several program improvements were made to the energy title due to BIO’s expertise and input, including the Biobased Markets Program, which authorizes the “BioPreferred Program.” The new bill directs USDA to educate agencies on how to navigate voluntary labeling programs in federal purchasing to ensure the value of bio-based products are understood and these products are prioritized. Additionally, the bill instructs USDA to establish a methodology for determining the amount of bio-content in products, and thus eligibility of products for the BioPreferred program and the “USDA Certified Biobased Product” label.

These improvements will allow more bio-based products to qualify for the “BioPreferred” program and raise awareness amongst government agencies to the value and benefit of purchasing bio-products. The new farm bill also increases funding for this program to $3 million annually.

BIO also advocated for improvements to the Biorefinery Assistance Program, which helps companies in rural America who are building new biorefineries—whether for renewable chemicals, biofuels or other bio-based products—secure financing.

Previously, the program required companies to produce an advanced biofuel in order to qualify for the program, leaving standalone renewable chemical facilities out. BIO worked diligently with the agriculture committee leadership to ensure the 2018 Farm Bill allows standalone manufacturers of renewable chemicals, biofuels and bio-based products to qualify for this program. BIO also ensured the final conference committee report provided mandatory funding for this program.

Because of BIO’s advocacy, the bill also directs the Office of Budget and Management to process all applications for this program within 30 days. This will provide a clearer timeline for applicants on when they may secure potential financing and when they can begin building their biorefineries.

Overall, the 2018 Farm Bill includes $625 million in mandatory funding across all energy title programs, and the ”BioPreferred” program received an increase in mandatory funding compared to the 2014 bill.

Mandatory funding is critical because without it, the effectiveness of these programs is at the mercy of Congress and the amount of discretionary funding they permit each year. By including mandatory funding of these programs, Congress is providing much-needed certainty to farmers, companies, manufacturers and others working to build America’s bio-based economy that these programs will continue to exist.

BIO also helped ensure that algae could now qualify as an eligible material under the Biomass Crop Assistance Program (BCAP). While BIO was disappointed the program did not receive mandatory funding, the bill does authorize discretionary funding. BIO will be working in 2019 to secure funding for BCAP in the appropriations process.

Outside of the energy title, BIO worked to ensure the 2018 Farm Bill also provides a clearer description of what biostimulants are and directs an interagency report on how best to regulate them. As companies continue developing these new class of enzymes, microbes and other chemicals to assist with plant and soil health, this clarification will dictate and improve their regulatory pathway to market.

Thanks to Congress and BIO’s advocacy efforts, the Farm Bill’s energy title programs will be fully operational in the new year. And the improvements made to these programs will be seen for years to come through the growth of the bio-based economy.

BIO understands that the road does not end here, however. BIO will continue working closely with Congress and the U.S. Department of Agriculture to ensure proper implementation and to secure and gain more funding for these programs into the future.

 

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Intellectual Property for Project Development

Dr. Terry Mazanec

Justin Krieger, Esq.

By Dr. Terry Mazanec and Justin Krieger, Esq.
Special to The Digest

Early movers in a new field can make audacious claims and often become incredibly wealthy. In 1612, some of the first English settlers in America were able to persuade King James I to grant the “Virginia Company” a Charter to a huge portion of North America spanning the entire coast from New York City to Savannah, Georgia, and inland from “sea to sea,” i.e., from the Atlantic to the Pacific Ocean!  In addition, they were granted any islands up to 300 leagues offshore (~1,000 miles) so they could claim title to Bermuda, which was later sold for profit.  Unfortunately for the Virginia Company, in 1624 their Charter was not renewed and the lands in which they had invested were converted to a ‘royal’ colony, without compensation for their investors, not to mention for the Native Americans inhabiting them.

Embarking on a new technical field can progress similarly, but without the complication of sovereign whim.  Obtaining a patent may be considered a bit like obtaining a Charter in some area of technology for a finite length of time, typically expiring 20 years from filing. A patent allows one to exclude others from making, using, selling, offering for sale, or importing the claimed invention (like the land granted to the Virginia Company) without the owner’s permission.  Careful and thoughtful planning for obtaining intellectual property protection can be crucial to the success of a company.  Without such protection it is possible for another to take advantage of your hard work developing a process or product and jumping right in as a competitor.  Your ‘first mover’s advantage’ will then turn into a disadvantage as your competition avoids the sometimes costly research and development process.

Development of intellectual property (IP) naturally follows the development of the technology and the business.  Delaying the development and implementation of an effective intellectual property policy until one approaches potential funding sources is often too late. Investors need to understand whether intellectual property protection is in place, or at least applied for, before making an investment.

IP development needs to be viewed from two parallel perspectives: internal and external.

Internal development of IP starts with the evaluation of where you are and where you see yourself going.  A handy way to estimate where you are on the development curve is the Technology Readiness Level (TRL) scale, originally created in the 1950’s by NASA and subsequently modified by the US Departments of Energy and Defense to fit their needs.  The first article in this series, Expanded Technology Readiness Level (TRL) Definitions for the Bioeconomyby Dave Humbird, adapts the concept for bioeconomy projects.  The TRL scale starts at 1, defined as “Basic principles observed and reported,” and proceeds through to 9, “Full commercial deployment.”  The intermediate steps proceed along the familiar path of fundamental studies, feasibility studies, pilot plant, demonstration plant, and commercial plant.

Even in the earliest days of fundamental research – TRL 1 – it is important to start developing an IP strategy since patents are granted to the ‘first to file’ at the US Patent & Trademark Office (USPTO).  Like the Virginia Company, an early inventor may be able to lay claim to a vast expanse of the technology landscape, much of it unexplored.  This is particularly important since it is often difficult to determine what part of that landscape will be the most valuable until much later. Brainstorming or ideation sessions are commonly used techniques to expand and articulate the breadth of the invention. Involvement of a team of participants with diverse viewpoints or experiences provides for more flexibility of the patent’s future value, since both the path and the destination are likely to be modified as new information is developed.  Conversely, a poorly conceived and written early patent can become a barrier to obtaining more complete protection of an invention at a later date.

During the feasibility studies that are conducted at the lab bench or with computer simulations, when the technology is at TRL 3 or 4, new insights are typically gathered that may be worth protecting with patents.  While data is not required to obtain a patent, it can be extremely helpful in determining the most valuable aspects of an invention and accurately specifying the scope of the invention in a Patent Application. (This is a bit like Thomas Jefferson sending Lewis and Clark into the newly acquired Louisiana Territory to evaluate what had been purchased.)  In addition, if (read: when) an Examiner initially rejects a patent filing based on information that was available to the public at the time of filing (“prior art” in patent-speak), the data can be used to support patentability arguments made by the Applicant to the Examiner during prosecution.  In other words, data can be used to demonstrate that the invention is not-obvious and a true advance over the state of the art, which can be extremely helpful in convincing the Examiner to allow the application to grant as a patent.

In addition, the process of navigating a patent application through the US and foreign patent offices is complex.  As a result, retaining the services of an experienced patent attorney having the appropriate technical background is essential to ensuring that your patent rights are broad and fully protected.  Early participation of a talented patent attorney helps the technical team sharpen their skills at identifying patentable inventions within their activities and expand their horizons beyond what is on the bench (or computer monitor) before them.  Strong, clear communication between the scientists/engineers and the IP attorney will also permit patent applications to be drafted with more precision and clarity. Many “do-it-yourselfers” regret having undertaken the process alone and later seek the services of a patent attorney to try and salvage whatever they can from an inadequate patent filing.  But with a poorly drafted application, there may be little that can be done to protect the invention(s).  In the end, it’s almost always better to spend a little up front to obtain a solid patent filing rather than having to pay even more later on trying to clean up a sloppy filing.

Concurrent with the internal development of inventions and patents, technological advancements and commercialization continue to change the IP landscape worldwide.  Keeping abreast of these external developments through comprehensive competitive intelligence monitoring  may reveal current technical boundaries and can expose additional areas for exploitation.

Competitive intelligence is best accomplished by professionals who have been following the development of the technology and closely related technologies.  It requires knowledge of patents, academic publications, industrial developments, and grey literature, e.g., government reports and conference proceedings.  IP professionals who have access to additional data resources can greatly enhance the effectiveness of technical experts. Searches done by machine methods and reviewed by non-experts frequently miss key references or fail to make significant connections.

Modern data methods can be used to analyze the resulting materials to generate maps showing key areas of overlap and gaps that are opportunities for IP development. Some technology may be open art due to patent expiration or abandonment.  Patent searches with the guidance of IP professionals and technical experts can serve as a critical strategic tool to advance a project.

It is a common misconception that having a patent gives its owner the right to freely operate within the scope of his or her patent.  That notion is wrong because there may be an earlier, broader, patent that dominates a later issuing patent—preventing the later patent owner from operating under their own patent! Recall: a patent only grants the right to excludeothers from operating within the scope of the patent—it does not grant the affirmative right to the patent owner to operate within its scope.

So how do you know if you have the ability to operate your current or planned commercial process?  A comprehensive freedom to operate (FTO) analysis should be performed involving a skilled patent attorney and technical experts.  Conducting an FTO study early in the development can be important in order to avoid investing money and resources in a process that cannot legally be commercialized without infringing another’s patent.  FTO studies involve: (1) carefully defining the scope of the contemplated process, (2) conducting patentability searches for all “living” patents (patents that have not expired) in all relevant jurisdictions based on the scope of the contemplated process; (3) having a patent attorney work with a technical team to review all of the search results to ensure that none of the prior art patents present a potential FTO issue; and (4) if possible, obtaining a written opinion from the patent attorney documenting that the company has freedom-to-operate the process.  The written opinion of counsel demonstrates that the company has taken appropriate reasonable steps in defending its investment.  More importantly, in the unfortunate event that a company is later found liable for patent infringement, the written opinion can help to significantly limit the amount of recoverable damages.  Here too, it’s typically better to pay a little up front rather than pay much more down the road!

If one or more problem patents are uncovered in the study, that may not be the end of the road.  It may be possible, for example, to conduct a separate invalidity study to see if there is any prior art that the examiner may have missed that invalidates the problem patent.  In fact, there are proceedings in most patent offices to challenge granted patents based on newly discovered prior art.  Alternatively, in some cases, it may be possible to modify the contemplated process to avoid infringing an issued patent.  If neither option is feasible, it might be worth reaching out to the owner of the problem patent and try to obtain a license to their IP.  Of course, seeking a license should be considered a last resort, since it necessarily involves tipping off the patent owner of your commercial plans and could increase the risk of litigation should licensing discussions stall.

Before making a significant commitment, investors should require that a technology developer have an effective IP policy in place in order to capture all the value of the creative process and potential products that arise.  The plan should include:

  • Technology development companies should have an internal process to stimulate, identify, and evaluate new inventions. An IP development process will not only ensure continued flow of potential IP but also encourage communication among employees, often leading to more valuable inventions and better business decisions.  The process should also involve critically analyzing any new inventions to decide which should be moved to the “drafting queue” for preparation of a new patent application and which should be retained as trade secrets.
  • An active competitive intelligence (CI) program should be implemented employing periodic literature and patent searches. Coupled with analytics, a robust CI program will provide key insights by identifying new developments of competitors in the same space as your potential investments. CI programs can help to benchmark technology, spur new ideas, identify potential infringements, and prevent duplication of effort.
  • Evaluation of the competitive patent landscape of the technical field should be undertaken prior to starting projects. As discussed above, an early FTO analysis may avoid the inconvenience (and cost!) of learning that a “new invention” needs to be evaluated in light of a competitor’s existing patent.  It is also advisable to update the FTO analysis at each stage of development to ensure that no later-issuing patents present a barrier to commercialization.

Conclusions

As the British began to develop their American colonies they knew they had to make an effort to properly define the extent and quality of their property to evaluate and substantiate their claims.  One of the key participants in that endeavor was a young surveyor by the name of George Washington.

Just as in surveying and developing a new continent, IP evaluation and development are critical to the advancement at the frontiers of the bioeconomy.  Technical expertise and legal know-how are required to work in unison to properly compile and evaluate technical information to be successful obtaining patents.  At Lee Enterprises we have a number of highly qualified experts with substantial IP experience who are well positioned to perform IP reviews for due diligence evaluations as well as for ongoing investment purposes.  The attorneys at the law firm Kilpatrick Townsend & Stockton, LLP, are highly experienced in all intellectual property fields, including patent procurement, due diligence and IP litigation.

About the Authors

Terry Mazanec, Ph.D., is an Executive Vice for Lee Enterprises Consulting. Dr. Mazanec has been involved in the renewable fuels and chemicals area for much of his 35 years in R&D.  Terry worked 21 years at BP in alternate energy R&D, and then as Chief Scientist at Velocys for 9 years where he led the team developing microchannel processes for natural gas upgrading and chemicals production, including catalyst development, corrosion resistance, and metals coating.  He has been an independent consultant for the past 8 years serving clients in the USA, Europe, and Asia.  He has authored 20 refereed publications and has been granted more than 65 US patents as well as numerous international patents.  He has experience in biomass upgrading, natural gas conversion, solid oxide fuel cells, algae production, chemicals process development, homogeneous and heterogeneous catalysis, FEMA/risk analysis, and intellectual property protection.

Justin Krieger is a Partner and registered patent attorney at the international law firm Kilpatrick Townsend & Stockton, LLP. With an technical background in fuel technology, chemistry and chemical engineering, Mr. Krieger has nearly 20 years of experience practicing before the US Patent & Trademark Office, having prosecuted hundreds of patent applications to issuance. He lectures frequently on US patent law and trade secret law and has authored many publications in the field. He also has a highly successful track record challenging the validity of patents before the USPTO’s Patent Trial and Appeal Board (PTAB) through Inter PartesReview (IPR) proceedings.

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Zymergen, the Porsche 911 of the Materials Superhighway, raises $400M in monumental Series C round

We call it the materials superhighway to suggest an awesome speed of innovation, a connection back to the genetics revolution and the information superhighway, and a focus on the new materials, chemicals, substances, and energies of the advanced bioeconomy. That superhighway may have just found its Porsche 911 — fast as lightning, stunning design and a public reception because of what it can do and is doing that, if it reaches its potential, will have us talking about this one is hushed tones for the rest of the century.

In California, Zymergen has raised over $400 million in Series C funding led by returning investor SoftBank Vision Fund. The round welcomes new investors Goldman Sachs and Hanwha Asset Management, as well as returning investors, DCVC (Data Collective), True Ventures, Two Sigma Ventures, DFJ and Innovation Endeavors.

The amount is believed to be the largest single-round capital raise in the history of industrial biotechnology, and exceeds the haul from most sector IPOs.

Zymergen, once again, does exactly what?

Specifically, Zymergen works on strain development — engineering strains for partners, or creating new ones — as they say, “working across microbes, products and traits”. What makes the company of high interest is the promise of a dramatic acceleration in the pace of strain optimization.

After all, we have classified 200,000 molecules in the material world and it is believed that more than a million might be out there — every one of them has a functional purpose, every one of them is subject to process improvement. It’s a matter of manifestly reducing the Time, Money and Aggravation to do so — and that’s where Big Data, computational speed, and robotics are expected to lend a hand.

To achieve its results, Zymergen uses artificial intelligence algorithms and robotic genomic “factories” to search the microbial genome, running tens of thousands of experiments to spot subtle signals of improvement. The platform then analyzes these signals to identify paths that no human scientist could ever discover, enabling Zymergen to optimize molecules for specific traits. Zymergen’s platform routinely accomplishes inside a year, in a single building, with a few hundred people, what would take thousands of scientists and specialists a decade, in square miles of facilities, and billions of dollars of spend.

photo: Albert Law

Hoffman says, “It’s amazing to know that we can harness activities at a cellular level to churn out the raw materials we use in our everyday lives. And yet the progress in this field has been slow and disappointing, because companies have been constrained, pursuing inefficient approaches. We think this is a problem of data and computation, rather than one of scientific discovery alone. We have developed algorithms for efficiently discovering the best paths for programming microbial DNA. The potential long-term applications are virtually limitless.”

Here’s what you get with Zymergen. You pack up your production microbe — currently making enzymes, PlantBottle precursors, flavors, fragrances, advanced polymers, therapeutics and so on. You ship to Emeryville. California. Zymergen uses a fleet of computers and algorithms to come up with microbial modifications. Then, in come the robots to snip-snip and clip-clip the DNA to perfect performance at industrial scale.

By applying its robotic automation, proprietary machine learning software, and deep computer analytics to the complex field of industrial microbiology, Zymergen can (we think) cost-effectively, and predictably “program” microbes to produce high-value commercial molecules.

“Biology is just too complicated,” Zymergen CEO Josh Hoffman told us. “Our approach is highly differentiated. We don’t use scientific insight and we take the geniuses out of the process. We build machines and use robots that learn to engineer microbes faster than ever, and more predictably, and at a level of performance previously unattainable.  The machines move fast, learn fast, and then they get faster and learn faster. And it’s data driven, so the more you do, the better they get, the better the algorithms become.”

And…aside from the 400 million financial reasons…this is a monumental raise, why?

Purpose and timing, in a nutshell.

First of all, despite this being a Series C financing in the world of microbial engineering, this is not development stage but growth stage finance — it’s about more robots to work on more customer projects with more customers in more places around the world.

As Zymergen CEO Josh Hoffman told The Digest a while back, “now we’ve built the platform and proven it works with multiple contracts. This is not about technical milestones, this is about building a global service for a global sector.”

Zymergen has more customer demand (from Fortune 1000 companies) than they have capacity for, and they want to make sure we can scale to meet existing demand. On the other hand, experienced hands around the Valley know that you “raise money when you can, not when you need it,” and Zymergen is taking good advantage of having built a solid reputation for delivering, against a big sexy target where Silicon Valley thinks it will play, and would like to own, as Big Math hits the world of agriculture and biology.

Here’s the Zymergen claim, and it is nuclear fission in a world of grenades, so get your Los Alamos Trinity Test-ready Hype sunglasses on before viewing:

“Zymergen is enabling real-world product outcomes for Fortune 1000 customers that are orders of magnitude greater than any other similar approach, at 100,000 metric ton and greater scales.”

So, there. Everyone else can go home now.

Why investors are crossing over from the computing space

Well, there are four reasons. One for the money, two for the show, three to make ready and four to go. 

Which is to say, 1) some people are jumping on because everyone else is jumping on, 2) some are investing via partnerships (as in the case of Arzeda) because they see transformative differentiation in the Zymergen platform and are keen to c0-seize the New World;  3) see fantastic organism development results and believe that a turning point has been reached in the industrialization of biology akin to the day that Alan Turing showed up at Bletchley Park and upended cryptography and computing forever; and 4) some are interested in accelerating results in the space and Zymergen is the fastest vehicle available to do so. The Porsche 911 of the Materials Superhighway, so to speak.

Microbes that make what, exactly?

For one, surgical glue, for which current formulations are sub-optimal. Zymergen is developing molecules for biomedical coatings and adhesives. These critical ingredients can be used as more effective surgical glues by first responders – firemen, paramedics, flight crews, etc., either inside the body or on the skin to close a wound or to protect against infection.

What about flexible electronics? Zymergen is also working to develop materials that could potentially enable flexible electronic devices used across mobile phones, monitors, and other portable electronics. Imagine if a mobile phone does not break or shatter when you drop it. Or what if we could roll up a high-def screen and put it on any surface.

A scenario might include remote on-demand degradation of computers that hold sensitive information. The perfect email server for Hillary Clinton, we’d respectfully point out. An ideal file holder for any Russian Colluders lurking around. Not to mention limiting electronics junk in the landfill.

The Zymergen How-To Manual

We’ve seen big potential leaps in productivity before. Revolutionizing the pace of strain optimization, as you may recall, was the core technology within OPX Bio (recently acquired by Cargill). As OPX said of itself, back then.

photo: Albert Law

“The EDGE technology is rapid – up to 5,000 times faster than conventional bioengineering methods for redesigning the genetic code of microbes. EDGE is also rational – meaning that we first determine and then purposefully program the specific, optimum genetic code in a microbe for bio-based production of our products rather than counting on random genetic changes to evolve a microbe that is only slightly improved.”

Computation, as a matter of fact, is at the heart of Genomatica, too, as you might glean from the name — beginning as it did as a venture in computational analysis. Both OPX and Genomatica eventually went down the product route; with more conspicuous success in the case of Genomatica and its BDO activities.

So, what’s different here? Primarily, the automation systems, and an integrated approach. By bringing together the most advanced techniques in biology with the latest in automation and computation we work in high-throughput to engineer and evaluate thousands of strains in parallel,” the company says.

A key component of Zymergen’s Molecular Technology is to use high-throughput processes that combine advanced software, robotics, data science, and wet lab techniques to create a methodology that vastly exceeds the experimentation capacity and potential of manual laboratory work.

The uniquely powerful here — robotics and artificial intelligence. Zymergen’s robots – and the protocols they create to control them – enable them to build and test thousands of strains with resources typically required to build and test tens of strains — faster breakthroughs on a more predictable and affordable basis. And in there is a state-of-the-art laboratory information management system (knowns as LIMS) that supports data capture, analytics and execution across all aspects of the genome design lifecycle.

The company notes:

“Zymergen’s unique Molecular Technology centers on combining a radical approach to empiricism with more conventional research methods. Unlike traditional biotechnology or bioengineering companies, Zymergen does more than simply test predictions based on rational models of a cell. We use radical empiricism to accelerate discovery.

“Radical empiricism in biological engineering entails systematically modifying the microbial genome and carefully measuring what phenotypic changes result; with this approach, we can find the particular genetic modifications that impact a trait of interest without necessarily understanding why that change has an effect. We do this through a combination of a priori knowledge and experiments designed using machine learning, executed using automated workflows, and analyzed using sophisticated algorithms. In the process, we discover beneficial genetic modifications that we carry through an iterative learning model for rapid design, testing, and experimentation.”

And you can learn one heck of a lot more in a new white paper, The Promise of Molecular Technology, just out from Planet Zymergen, which you can find here.

Here’s how the Heroic Deeds work out at the Payment Counter

So, yes, you have to pay your Homeric heroes, these days.  Here’s the basic deal structure: You pay a fee and Zymergen also keeps a percentage of value of the enhanced yield. Not much out there in the wild about how big the percentage is. But if you dial in the elevated rate of return that groups like Obvious Ventures and Iconiq Capital are seeking, you get an idea that a scaled-up molecule, producing a whale of a lot of something, can generate the kind of returns that makes $130M seem like a reasonable growth-stage infusion.

The Backstory

The company began in 2013 — driven, as a number of company formations have been and continue to be — out of the realization that rapid increases in the rate of biological innovation are possible, happening, and of transformative impact. Biology is moving at a “faster than Moore’s Law” pace if we look, for example, at the cost of genome analytics.

Zymergen’s epic $130M Series B

Zymergen’s monster $44M Series A

More about the Materials Superhighway

Reaction from the stakeholders

They’re pleased and delighted, those stakeholders, we’re delighted to report.

“We believe biology will allow us to reinvent all kinds of material products we use in our everyday lives,” said Joshua Hoffman, Zymergen co-founder and CEO. “With the Vision Fund’s continued investment, and the support and validation from top financial institutions, we will lead the discovery, development and engineering of new molecular products and usher in a wave of industrial innovation built on biology. Zymergen enables its globally leading customers to deliver new and existing products faster, more profitably, at higher quality, with a dramatically reduced environmental footprint, all on a repeatable basis.”

“The secular trend of synthetic biology, enabled by the genomics revolution and computational biology, is creating new opportunities across multiple industrial sectors,” said Deep Nishar, Senior Managing Partner at SoftBank Investment Advisers. “We believe the company’s differentiated combination of AI and genomics creates a platform that makes it economically viable to engineer biology and build better, novel, and sustainable products. We are excited to support the Zymergen team in unlocking this potential to advance industries past their dependency on conventional hydrocarbon processing.”

Ok, now the tough talk about roadblocks

Turns out, you can create pathways to a whole bunch of transformative products, but at some stage someone, somewhere has to do the manufacturing. And manufacturing at world-scale based on new bugs has proven just a teensy bit more difficult than expected. And the sugars many of these microbes use for energy haven’t proven as cheap as once hoped.

“You can face a huge bottleneck in the manufacturing,” Dyadic CEO Mark Emalfarb told The Digest. “You have all these labs with amazing talents making amazing things, really useful stuff, and then it gets stuck for years in discovery because there is no way to make it at scale. Thousands of genes get stuck because they can’t make enough protein to even test it, much less manufacturing quantities.”

“And, you need an expression system that is suitable for large-scale production. We’ve seen projections that, in biosimilars alone, companies could save up to $250 billion over 11 years if just 11 biosimilars are approved. But they need manufacturing systems that have the right expression, the right production, the right downstream processing, the right product attributes.”

So, a pathway design deal worth noting

In March 2016, Zymergen and Arzeda signed a multi-year agreement to develop strains and processes to manufacture novel, high utility molecules and materials utilizing Arzeda’s pathway and enzyme design and Zymergen’s strain construction capabilities.

“We have only started to scratch the surface of what synthetic biology can deliver in terms of new molecules and materials. Arzeda’s computational design technology opens up the ability to produce molecules with applications in transportation, medicine, and communications that are not currently biosynthesized,” said Arzeda CEO Alexandre Zanghellini. “Uniting with Zymergen’s innovative strain design platform has the potential to help make our designs a reality. “Zymergen’s scientists are constantly pushing the envelope in synthetic biology, and we are thrilled to be working with their team.”

Arzeda’s Archytas industrial protein design software and Scylax computational pathway design tool will be used to identify and design new enzymatic pathways capable of producing molecules that are impossible to synthesize via conventional chemistry.  These pathway designs will be implemented and tested by Zymergen’s high-throughput strain development and testing platform.

And, eh, a manufacturing deal?

Two thoughts here. One, in theory this is strain improvement, not novel manufacturing of novel materials. The customers are supposed to have their own fermenters. Second, thought, Zymergen may well invest to develop a foundry that can manufacture the improved microbes at scale (as opposed to manufacturing the products that the improved microbes produce) — as with a Novozymes that is manufacturing advanced enzymes even if it is not manufacturing ethanol, to use an example.

The Bottom Line

It’s a towering cash achievement, if the company doesn’t have a billion-dollar valuation at this stage, in fact well beyond that, we’ll expire from shock. More importantly, the company’s armed for epic levels of breakthrough microbial development. If I were a productino microbe, I would ready myself for several months at Camp Zymergen. If I were the server salesman with the Zymergen account, I would be writing my “salesman of the year” speech for the holiday party.

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Biofuels for Marine Engines and Pathways to Success: The Digest’s 2018 Multi-Slide ABLC Guide to BETO

The U.S. Department of Energy’s Bioenergy Technologies Office (BETO) focuses on several bioproducts for R&D and has been assessing the value proposition of biofuels for marine engines.

Zia Haq and Jim Spaeth, both from the U.S. DOE’s Bioenergy Technologies Office, gave individual presentations at ABLC Global 2018 in San Francisco, but we’ve put them together here so you can read about what they see the opportunities for the bioeconomy are – and it’s ready for you now at The Digest online.

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Neste takes the plunge and decides to invest EUR1.4 billion in tripling renewable production in Singapore

In Finland, Neste Corporation has made the final investment decision on additional renewable products production capacity in Singapore. The decision is based on a growing global market demand for low-carbon solutions in transport and cities, aviation, polymers and chemicals.

The investment worth approximately EUR1.4 billion will extend Neste’s renewable product overall capacity in Singapore by up to 1.3 million tons per annum, bringing the total renewable product capacity close to 4.5 million tons annually in 2022. The company’s target is to start up the new production line during the first half of 2022.

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Shuttered Florida biodiesel facility leaking glycerin from old storage tank

In Florida, local news reports that a mothballed biodiesel facility in North Fort Meyers owned by Green Gallon Solutions has begun to leak glycerin-like products that are treated as hazardous materials. The state’s department of environmental protection has called for immediate cleanup of the leaking 10,000-gallon tank that had glycerin oozing from it when inspectors were on site for an annual inspection of the septic tank. So far none has contaminated the soil nor a nearby pond. There are questions regarding the site as one of the former operating officer of the company that shut down in 2017 is seeking funds to restart it as a different company.

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Call for Philippines to boost ethanol blending to 20% in light of higher taxes

In the Philippines, a governor who is running for the Senate next year is calling for an E20 blending mandate to reduce the rising cost of fuel resulting from increased taxes. She claims that the current blending law wouldn’t need to be amended to facilitate the E20 policy because the domestic industry could only support about a quarter of the total demand. The new taxes will come into effect in January but she says the price of fuel would lower by half the value of the news taxes if an additional 10% ethanol was blended.

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Chicago Argo ethanol prices fall to lowest level in 15 years

In Illinois, Platts reports that prices for Chicago Argo ethanol have fallen to $1.1725/gal the lowest level seen in 15 years. Healthy margins kept ethanol producers pumping out more than a billion barrels per day well past the peak summer driving season but that have since fallen into negative margins at around minus 16.41 cents/gal on December 10 compared to 22 cents on July 13. Some ethanol plants have begun to reduce production runs in light of high production levels and stocks in an attempt to ease pressure on prices.

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Brazilian biodiesel auction sees less fuel sold at lower prices than previously

In Brazil, Reuters reports that the most recent biodiesel auction held by the ANP saw nearly 915 million liters of biodiesel sold, down from nearly 965 million liters during the prior auction. The average price for biodiesel sold fell as well to under 68 cents per liter compared to 72 cents last time. In total, nearly 1.05 billion liters of biodiesel was offered for sale by 38 producers of which 98.95% had the social seal. The biodiesel sold is for use in the 10% blending mandate during January and February.

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National Farmers Union pushing Congress to expand use of mid-level ethanol blends

In Washington, as Congress looks to revamp and coordinate federal-level policies that govern the transportation fuels and vehicles sectors, the National Farmers Union is urging legislators to expand use of high-octane, mid-level blends of ethanol in the transportation fuel supply. In doing so, policymakers have the opportunity to create lasting national policy that builds on the significant economic, environmental and national security benefits associated with increased biofuel production and use.

NFU President Roger Johnson submitted a statement to the House Committee on Energy and Commerce’s Subcommittee on the Environment in advance of the subcommittee’s hearing on “Discussion Draft: The 21 Century Transportation Fuels Act.”

The subcommittee met to focus on synergies and opportunities for the nation’s preeminent fuels and vehicles policies – the Renewable Fuel Standard and Corporate Average Fuel Economy and Greenhouse Gas (GHG) standards. In doing so, the subcommittee acknowledged that “high-octane fuels and vehicles may be an economical and technologically feasible path forward for producers and sellers of fuels and vehicles as well as the consumers who use them.”

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Harvard researchers develop yeast bio-hybrid system

In Massachusetts, researchers at Harvard University have expanded the concept of “biological-inorganic hybrid systems” to baker’s yeast that in combination with light-harvesting semiconductors is able to produce shikimic acid, an important precursor of the anti-viral drug Tamiflu, several other medicines, nutraceuticals, and fine chemicals. When kept in the dark, the yeast cells produced ethanol and glycerol. The researchers say that the development could lead to genetically engineering yeast cells to produce a wide range of bioproducts.

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