Allylix, which was briefly mentioned by the blog in the past, is a little bit different compared to other renewable chemical companies I've spoken to. For one thing, they are not focusing on commodity chemicals but in specialty chemicals particularly bio-engineered sesquiterpenes, which are chemical compounds used as flavors and fragrances, in insect repellants, anti-fungal products and pharmaceutical applications among others.
Talking to CEO Carolyn Fritz, Allylix was founded in 2005 and focuses its proprietary metabolic engineering/fermentation platform on renewable production of diverse terpenes at very low cost. Terpenes, in one form or another, have been commercialized for ages but up until now, there are no cost-effective ways to make them. Allylix said its technology uses a low-cost fermentation process based upon bio-engineered yeast strains that produce high-volume, customized terpenes.
In a more scientific wording: "Allylix's production technology utilizes metabolically-engineered yeast Saccharomyces cerevisiae expressing sesquiterpene synthases to produce sesquiterpenes in high-yielding formation."
According to Fritz, the company already has 8 products in the pipeline and all will be on the market by 2012. Their first product, Nootkatone, was launched in late 2009, and their second one, Valencene, was introduced this year. Nootkatone is said to be a highly sought after sesquiterpene with a grapefruit flavor and aroma used in citrus juices and soft drinks as well as in the personal care industry.
I did my stint on flavors and fragrances market before for ICIS Chemical Business (when it was known as Chemical Market Reporter) and according to my research, nootkatone is found in only trace amounts in grapefruit peels. Price and availability of natural nootkatone depends on annual harvest of grapefruit, which like any other flavors and fragrances tends to be very volatile depending on weather and other agricultural influences. Nootkatone must be at least 98% pure to be used as a fragrance ingredient.
Allylix's nootkatone production actually begins with the production of orange flavor and fragrance valencene using a S. cerevisiae strain containing a highly efficient protein-engineered citrus valencene synthase (CVS) enzyme. The valencene is then oxidized, either biologically or chemically, to produce nootkatone.
According to the Netherlands-based Isobionics, another biotech company that deals with flavors and fragrances, nootkatone is a $30mn market (as of 2008) and valencene, a $10mn market. Isobionics, by the way, is a former DSM company but was sold to Tailwind Business Solutions BVBA last year. We'll find more about this company some other time.
Back to Allylix, another product, which is said to be a novel fragrance ingredient, is expected to be launched later this year. All I can get about this ingredient is that it has an insect repellant properties, according to Fritz.
The company's production strategy is to contract manufacture since it generally prefers to work with partners.
"We are in the specialty chemical space so our margins are such that we can work with a third party and do contract manufacturing. The economics work for us, and we don't need to own our own plants," said Fritz.
The company's feedstock is mostly glucose and Fritz said they don't plan to use biomass since that will be an extra technology risk. Allylix's market focus is mostly on the flavors and fragrance space and plans to license their technology to other applications such as biofuels, pharmaceutical, crop protection, pesticide, sweeteners, etc.
Allylix closed a $9m financing this April and was able to raised a total of $15 million in funding from seven investor groups. Fritz said the company is in very good shape fiancial-wise, and it will now focus on bringing their pipeline and newly launched products into the market.
"We have a number of ongoing partnering discussions to widen our technology more broadly," said Fritz.
"Our pricing economics is one of the significant advantage of our technology. We can significantly lower cost compared to products already in the market," said Fritz.