Codexis, a California-based biotech company, have been active mostly in the pharma and health care sector but its focus has now expanded to next generation biofuels (through its partnership with Shell) and very soon, in carbon capture and water treatment.
President and CEO Alan Shaw highlights the company's proprietary biocatalytic chemical processing technology (which uses synthetic enzymes) and how it can make manufacturing cleaner, faster and more efficient. Shaw also talked about the current state of the industrial biotechnology sector, the importance of partnership, and company milestones in the next few years.
Q: Can you begin with a short summary and an overview of Codexis?
Shaw: We are a biotechnology company but the market that we addressed are those that benefit from clean technology. With our technology, we can improve existing markets like pharmaceuticals and at the same time create new markets such as biofuels and carbon capture. We can create synthetic super enzymes that are customized to do just the job that our customers want them to do. Most of the products we sell are biocatalysts - the solutions they provide and the processes they enable. However, our core technology is largely around bioinformatics and basically the use of high throughput screening methods.
Q: How is the company's current financial standing?
Shaw: Codexis is doing extremely well. We're fairly successful in financing and never had any problems raising money. Unlike other biotechnology companies, financing is never an issue for us. We have a strong balance sheet and more than what we need at the moment. The company is moving towards profitability.
Q: What's on the company agenda when you look out on the industrial biotechnology sector? What specific accomplishments the company made in this field so far?
Shaw: Within the industrial biotech business, our primary aim right now is to deliver on the Shell project, which will allow us to go to the next level as we approach commercialization. Last March, we announced an expanded agreement to develop better biocatalysts that could accelerate commercialization of next generation biofuels. Shell also increased its equity stake in Codexis. We don't disclosed the amount but I can say that we've raised substantial capital in the last 4-5 years approaching $200m.
The other milestone we hope to accomplished this year is to validate our proposition in carbon capture. We hope to go public on that before the end of the year if possible. That would be a very big announcement for us. Carbon capture is still in its very early stage here in the US. The technology being used in carbon capture at the moment is not commercially viable. We are looking at next generation carbon capture technology and we are going to be one of the players in that space.
In water treatment, we are focusing on focusing on extraction of organic materials to make dirty waters potable. This has a huge market particularly for the developing nations.
Other recent activity we had is the opening of our Center of Excellence facility in Budapest, which is one of the world's leading research center in next generation fermentation technology. We are also looking forward to opening another Center of Excellence facility in Hungary.
Q: How do you see the current state of the industrial biotechnology sector? What are the challenges that biotech companies have been facing recently in your view?
Shaw: There used to be great sources of capital but that's closed to us now. We've seen slowing in the industrial biotechnology sector caused by lack of financing. The problem is innovation costs money and it is very expensive. Venture companies have fled this area especially in biofuels because they can't see return 10 years out and by the time they get there, they'll be so diluted due to capital requirements that the model just doesn't make sense anymore. We've got a bit of hiatus at the moment but this doesn't leave me feeling negative at all. There's sufficient money, I think, for companies that are smart and with strong balance sheet. In the next two years, I think you will see quite a lot of consolidation because what limited money there is to invest, people will be selective. Only few companies will be fortunate enough to go public.
Q: What are Codexis' strategies to being successful in this field?
Shaw: Partnership is key. Our approach is to work with global leaders because they bring channel and distribution. Two years ago, people weren't admitting that you have to partner with big companies to survive. When we partnered with Shell, we were the few companies in this space to do that. Shell is the only partner we've announced so far in the industrial biotech area. We already have a partner in our carbon capture program although we haven't announced that yet. We're also looking to identify partners for the water treatment area.
Stay tune for the Green Blog's next Industrial Biotech Interview: Genomatica