Industrial Biotech Interview: Genomatica

This week’s industrial biotech interview is California-based Genomatica, a start-up technology company that focuses on producing cost-economic renewable-based chemicals such as 1,4 butanediol (BDO) and methyl ethyl ketone (MEK) using the biotechnology route.

As opposed to building and operating their own manufacturing facility, Genomatica CEO and co-founder Christophe Schilling plans to base the company’s business model on partnering and licensing their technology. While there are a number of renewable-based chemicals in their pipeline, Genomatica’s focus right now, said Schilling, is to prove that their renewable-based BDO manufacturing process could work in a commercial scale.

Q: Can you begin with a short summary and an overview of Genomatica?

Schilling: Genomatica is a privately-held company that is focused on developing new and cost-effective ways to produce sustainable chemicals from renewable feedstock. Our main goal is to deliver deliver cost advantage and sustainable attributes to the processes. We’re not looking to become a manufacturer of chemicals, however. We’re looking to partner with current producers and companies that are already in the value chain. Our competency is really developing breakthrough processes to produce these chemicals but not necessarily in the construction or operation of a commercial facility or marketing/sales of these chemicals.

Q: How is the company’s current financial standing?

Schilling: The business is doing great considering the current financial environment. We have terrific investors, we’ve been delivering not only on the technical milestones and corporate development objectives but also on our responsibilities for cash management. We’ve been able to manage our resources very well. We had a very well thought-out budget and case scenarios for how to handle different situations. We’ve been able to follow right on track with that plan and so we feel very comfortable about the current environment.

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?

Schilling: Our focus right now is substantially if not almost entirely on producing commercial grade BDO from renewable feedstocks (e.g. natural sugars). We know if we make that work, it will be easier to prove that other products in our pipeline will work as well. We’re currently fully validating our BDO process and plans to begin construction of a demonstration plant in 2010. Ultimately, we’ll start operations and validate this process over the next two years.

Along with that will come the partnership or commercialization deal, whatever format that takes on. Those are the two key milestones that we aim. We’re also looking to ultimately leverage our planned multipurpose demo facility for other products.

As for bio-based MEK, we have talked to a number of ethanol producers and we believe there’s an opportunity in this sector. If this process were to developed and be available in a way that we envision, there would be a lot of interest in it. There is already a lot of interest in general for people in the ethanol industry to figure out other ways that they can use their existing assets to make other products more valuable than ethanol.

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?

Schilling: What this industry really needs is a significant win, not necessarily a breakthrough but a real blockbuster success. I disagreed about the comment that venture capitals are not putting a lot of money because they’re scared about the costs to develop a process. If you look at the drug industry, the costs is much, much higher – at about $800m to $1bn compared to biorefineries that are about maybe around $300m to build. Costs in the biomedical field don’t scare VCs away because they know that there’s a promising new drug that could have a huge market if successful. They can point to 50 to 100 companies that have done that and were successful. These venture capital investors made a lot of money and so they have these companies to compare it to.

We don’t see this yet in the industrial biotech field and that’s what we need. We need to see some good successes where investors came away thrilled with their investment opportunities. We have to see a couple of successes to get investments going.

Q: What are Genomatica’s strategies to being successful in this field?

Schilling: As a small company, you have to focus on taking risks, either in technology development or market risks. Pick one as you can’t have both. As for Genomatica, we pick the technology side as we’ve unique proprietary platforms that allow us to address that technology risks very effectively. We know that if we develop a process to make BDO and that process can, for example, have 25% cost advantage over any other process out there today, and that it is a renewable-based product, we know that there is a good opportunity for it in the marketplace.

I think the intermediate chemical space is also an area where you can see the most rapid uptake of technology and financial opportunity in the chemical side at least over the next 5 to 10 years. One of the things we like the chemical space as oppose to biofuels is that we know how much exactly it costs to make BDO. We know we have to beat that number. It forces us to stay focus as an organization and have a real economic targets driven by the market and not necessarily by a market shift because of substantial government intervention.

One thing any company have to be really careful is to not build a business plans based on any government help. That can be a real trap.

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Stay tune for the Green Blog’s next Industrial Biotech Interview: Verdezyne

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