Fermentation, the driving force behind the creation of age-old favorites such as beer, wine, kimchi, and yogurt, is a testament to our innovative use of natural processes. But now, imagine taking fermentation, this age-old process, and injecting it with a dose of 21st-century tech — precision biology, artificial intelligence, and machine learning. Welcome to the world of precision fermentation technology, a transformative innovation with the potential to revolutionize not just food production but a whole range of consumer products.
Precision fermentation technology enables us to program microbes to create specific, customized molecules, opening the door to an array of possibilities. We’re not just talking about improved textures or tastes; we’re talking about creating alternative proteins and other products that mirror their conventional counterparts in a previously inconceivable way.
And the best part? The cost associated with precision fermentation is falling, widening its scope for applications across the food system. But with this rapid advancement comes new challenges and opportunities.
We’ve curated a comprehensive discussion to explore precision fermentation’s potential, the direction it’s heading, and the companies leading its evolution. We’ll delve into the intricacies of making the process more efficient and discuss how we can prepare for the capacity constraints for food proteins produced via synthetic biology.
Industry leaders join us in this enlightening conversation: Dr. Doug Cameron, a seasoned technology investor and advisor in food, agriculture, and applied biology; Mark Warner, a knowledgeable food industry consultant and founder of precision fermentation company Liberation Labs; and Alex Patist, the innovative COO of Geltor.
Are you interested in the future of food technology, or are you an investor looking to grasp the potential of precision fermentation? Don’t miss out on this in-depth discussion. Listen to our Deep Dive on Precision Fermentation to understand and anticipate the food tech evolution underway.
Tom Bunn: This presentation is general industry research based on publicly available information. I select is an early stage venture capital firm in St. Louis focused on early stage companies in food, agriculture, and health. I select invest at the forefront of innovation, seeking emerging problems, solutions and technologies. iSelct uses these deep dive presentations not only as a way to better engage with and understand new science and technology, but also engage with the experts and entrepreneurs who drive and change innovation in their respective fields.
Good morning everybody, and welcome to iSelect Funds deep dive webinar series. My name is Tom Bun, a principal on the iSelect Fund Ventures team, and I’m excited to walk you through today’s discussion. For those new to these webinars, iSelect is a venture capital firm in St. Louis, focused on early-stage companies in food, agriculture, and health.
iSelect invests at the forefront of innovation, seeing emerging problems, solutions, and technologies at their infancy. We use these deep dive discussions not only as a way for us to better engage with and understand new science and technology, but more importantly, more importantly, to engage with the experts and entrepreneurs We’re driving change in innovation in the respective fields.
One theme that we’ve been researching is precision fermentation. Fermentation, as you all know, has been used in food production for centuries. You can thank it for beer, wine, kimchi, yogurt, and much more. But precision fermentation technology is taking this metabolic process to new heights by applying biological engineering, artificial intelligence, machine learning, and more to program microbes to make specific customized molecules in food, pharmaceuticals, materials, fuels, and more.
The result is bioidentical or novel molecules and compounds that use far less water, land and energy to produce as the cost associated with precision fermentation continues to fall. These basic building blocks are finding new applications across the food system in a wide range of other. For these reasons and many others, which we’ll cover in today’s webinar, precision Fermentation is of increasing interest.
I select, and just by way of background or by way of table of contents, we’ll debrief speaker introductions. I’ll give a very brief framework backbone of, uh, what precision fermentation is to, to set the stage. And then we’ll get right into the expert discussions, uh, expert discussion, and then into, uh, probably a broader conversation and q and a.
We should have 10 to 20 minutes at the end for broader questions and answers. So feel free to, uh, start, start pouring in your questions as, as soon as you, uh, think of them. So a big thank you to our guests. We have a great crew with us this morning, uh, this afternoon. I know Alex is in Switzerland. Um, but Dr.
Doug Cameron, do you mind giving a, uh, a quick background introduction on yourself?
Dr. Doug Cameron: Sure. So thanks Thomas for inviting me to this. It’s, it’s great to participate. Um, I. I’m currently an ad advisor and board member to a number of companies in this space and in the agricultural space. But I got my start in this quite a long time ago.
In fact, my first job directly out of college, out of undergrad was with a startup company focused on large scale protein production. So I’ve been thinking about this about a week after getting out of college after working for that startup company for several years. I realized I needed to go to grad school to learn more.
Went to m i t, studied biochemical engineering there and, and ended up, um, becoming a professor of chemical engineering at the University of Wisconsin Madison, where I decided I wanted to. Helped develop this emerging field at the time called metabolic engineering, which is really one of the predecessors of precision biology or precision fermentation.
I had the opportunity to work on one of the first. True industrial metabolic engineering processes. At the time, I worked with DuPont on helping to develop the process for the production of One Three Propane Diol, which is still a viable product today. And one of the first examples of what we now would call precision fermentation.
Um, Loved the academic world, but ended up, um, deciding to join Cargill where I started the corporate biotech group at Cargill and was chief scientist there and was, was responsible for a wide range of different, what would again be called precision fermentation projects at the time. In 2006, I moved into the venture capital and investing world, and I’ve been doing that ever since.
A couple companies that I was involved invest investing in that you may know of, um, Jibo. Um, another one that’s still out there is called Lanza Tech. And, um, um, And, and moved into a number of different venture roles. Um, the most recent investment that I was involved in was while I was working with a Chinese based private equity firm, invested in a company called Moja, which makes vitamin D five and other chemicals in China.
So that’s kind of a high level overview of, of what I’m currently doing.
Tom Bunn: Great. Thanks, Doug. Excited to dive into, um, your, your eye on this technology, uh, momentarily. Dr. Alex Patis, do you mind giving a brief introduction on yourself please?
Dr. Alex Patist: Thanks, Tom for for inviting me. Um, Alex Patis, originally from the Netherlands.
We an accent, you don’t need to guess. I did my BS and m MS in Chemmy, came to the states for a PhD, uh, at University of Florida, also Chemmy, then joined Cargill, where I met Doug. And, uh, basically took Doug’s ideas to scale. So my job was take, uh, Take high fermentation to, um, to tons of us, as we, uh, used to call it, um, after electric acid citric acids.
Uh, and then, uh, Several high-potency sweeteners as well. Then, uh, went to Genea, uh, joined, uh, the, the world of startup and, um, and, uh, worked on developing and scaling the one four B dial process that’s been much talked about all the way to, uh, to Novamont and Italy. It’s still running. Then, uh, after, uh, g uh, GICA went to both threats, spider silk, uh, without a spider.
And letter without a cow developed a supply chain, developed a process and the supply chains for both, uh, both products. And then for the last two years, I’m, uh, I’ve been c o o at Gelter doing the same thing. Basically taking, taking, uh, collagen or designer proteins from the lab to, two tons of Fantastic.
Tom Bunn: Thanks for joining this morning, Alex. And finally, Mark Warner. Mark, do you mind giving a brief background please?
Mark Warner: Thanks Thomas and, uh, appreciate the, uh, opportunity just like the other two, Mark Warner. Um, currently c e o of Liberation Labs. I started my career as a chemical engineer, worked up through plant operations with Monsanto and some other chemical companies.
Worked at some big engineering firms, and in the early two thousand, took the jump into an early stage, uh, biofuels company as one of the. The first employees raised 120 million of equity and kind of got the bug for scaling first of kind biotechnology, like Alex. I’m used to scaling it, but I’m more used to being the design-build side of it.
So the, the capacity build out. That led me eventually after working at some engineering firms and some biofuels company. I’ve been in-house twice. I was with the, uh, With, so I, as their senior Vice president of engineering, uh, led the design build startup of their 3.3 million liter facility in Brazil, and dealt with their partnership with ADM, left there to join Impossible Foods in the early days of scale up as their chief engineering officer became clear to me about seven years ago that most people in the space weren’t building anything at that point.
In fact, they’re just talking about it now. So I started my own consulting. Function Warner Advisors, L l c, and did that for about seven years. Worked for about a hundred different companies in the space, primarily making novel proteins and have published a lot on kind of the need for fermentation capacity and, and what’s out there today, not really fitting what’s needed.
So recently made the jumps to Liberation Labs that’s focused on bringing on some large scale fermentation capacity. So, Thanks, Thomas. Fantastic.
Tom Bunn: Well, I’ll set the stage just a little bit. So, as we all know, fermentation is the process by which microorganisms break down sugars into useful components. So in the traditional fermentation process, live microorganisms are used to change foods, flavor, texture, or nutritional content.
In contrast, precision fermentation uses microbial hosts as cell factories for producing specific functional ingredients. Can be enzymes, flavoring agents, vitamins, natural pigments, or fats. Once a specific target is selected, such as impossible foods, heme, protein, or vitamin b2 to products, uh, that are produced via precision fermentation.
Strain engineering is used to direct the microbe to make the specific molecule or compound in the case of a protein target, the instruction manual for synthesizing that protein is encoded in that host organism’s, D N A. Either as a naturally occurring gene or as a gene introduced through engineering.
Then comes the question of feedstock or what to feed the microbe to optimally produce the target. Feedstocks are one of the major cost drivers for most fermentation processes, and feedstock optimization is key to ensure economic viability and, and also sustainability. Finally, in order to do this at large volumes, the process must scale from the pilot scale of tens of leaders.
To thousands or hundreds of thousands of leaders at the commercial scale. So with this bra basic framework in mind, uh, let’s get into some perspectives from the experts on what it takes to bring a target product from idea to commercialization using, uh, or through the frame, through the lens of strain development, feedstock optimization, uh, capacity, uh, and target selection.
Um, and we’re gonna start with, with Doug. Um, Doug, you’re a veteran in the space. What, what have been some of the most significant technological developments in precision fermentation, uh, that you’ve seen in your career?
Dr. Doug Cameron: So, I’ll divide my comments into two sections. First of all, talk a little bit about product and then about technology.
And I, I would also say, you know, this term, precision fermentation is a fairly new term. I actually like it. Um, it. Is sort of replacing, at least in some applications, the older term, uh, synthetic biology, which, you know, Is great for scientists, not great, not so great for commercial or for marketing or for, um, customers.
So on the product side, I just have to start by highlighting one of the things that was done by Cargill in the early two thousand, which I think is, is a tour to force of the, the synthetic biology precision fermentation, and that’s the development of a yeast based lactic acid process. Um, very. You know, not very widely known, but around that timeframe, Cargill, a developer of polylactic acid, was looking for a more efficient way to make lactic acid.
And the one of the oldest fermentation processes in the world is, is the bacterial based lactic acid process and Cargill rather audaciously decided to. To isolate a brand new yeast, develop all of the tools and engineer lactic acid production into a yeast, and ultimately replaced a large scale commercial process based on the old technology with the yeast technology.
The reason was cuz they wanted to operate at very low PHS to facilitate product recovery. So, not well known, but, uh, uh, really a tour of force. Lately, I think the, the products that are probably the most interesting to me is the explosion in, in all types of proteins for foods, for cosmetics. For, um, other applications outside of pharma that is just an explosive area and many of you could probably name five or 10 companies that do that.
An emerging area that is also, I think starting to grow very rapidly is, is um, lipids. So clearly Solome did this, but there’s now a resurgence of lipids. In yeast and probably four or five companies doing that. Again, many of those are precision biology projects. And, um, so I would say those are some of the, the more exciting things that are happening in the product space, in the technology space.
Uh, just, um, highlight a few things. Um, it’s been stated several times, but it, it bears repeating is that, DNA technology is advancing faster than Moore’s Law. The sequencing of dna n a, the, so the reading of D n A, the writing of D N A and the editing of D n A is just ex explosive growth. And I expect that that will continue to happen for several, several more years.
So that’s one of the huge opportunities and advances in this space. Um, another. Just massive advance is the solving of the protein folding problem many of you have heard of, of, um, alpha fold. Um, developed by Google X. Rosetta Fold is a related one. This will have revolutionary effects starting to today and will continue to have revolutionary implications.
Um, Uh, I’m on the board of a company called D M C, which has developed technology to decouple growth from product formation, and this was kind of a holy grail problem when I was in grad school, and I continue to expect advances in that space. Um, just a couple more points. You know, massive, massive opportunity or, um, companies that have done high throughput work, and I think that’s important, but I just wanna reemphasize that.
What I would call custom or bespoke strain design, I think will continue to be highly significant, so these high throughput tools will make it easier and easier. But designing a microorganism for a fermentation process is more akin to designing a Ferrari than a, than a Ford. I, you know, you, you only have to do it once and then you can use this thing over and over again.
So you don’t really need, you know, large assembly lines to build the organisms You need really artisanal, smart, bespoke engineering, which makes use of all of these tools that are available. And then just one more area that I think is significant there. Is a limited number of people who really understand how to do fermentation, process development, um, optimization of media, you know, going through all of that.
It’s a labor intensive and those types of people are in short supply. So companies like Culture Bio that are trying to make that in more widely accessible are important. Um, those are a few initial thoughts. Happy to discuss any of them later in the discussion sector. Sure. Yeah,
Tom Bunn: I was gonna ask about strain design and engineering, and I think you, you covered that.
Dr. Doug Cameron: I like the Ferrari approach myself, but I, yeah, make use of all the great tools, but use the Ferrari approach as opposed to the assembly line approach.
Tom Bunn: tI love it. Um, can you talk about the importance of stock? So what are you, what are you feeding these bugs? These microbes. Um, how is that changing?
Dr. Doug Cameron: I know, I know there’s some, let me, lemme jump into one, one more thing that I think you were, you were gonna ask me about before I jump into feed stocks and that is, you know, what, what are some of the, the challenges in this field because right now, you know, we can make these organisms, but I think the biggest challenge remains product selection.
And actually deciding what you’re gonna make. You can now make things very fast and it’s pretty easy to come up with an idea and make them, you know, back when I did one three propane isol, it wasn’t even clear whether we’d be able to get the genes. You know, that was a big, big question mark in the process.
Now, finding the genes is, is almost a, a trivial part of this, but product selection continues to be, Very important. What do you make with all of these tools? Um, part of it is, I, I guess, let me quote, um, Hans Van Daikin, who is one of the leaders in this field, he says The most important type of omics is not genomics or metabomics or proteomics, but economics.
Economics. And so, you know, finding what the, the products are is very, very critical. Um, regulatory hurdles are a big barrier, uh, particularly if you’re going into food. Related products and figuring out how to deal with these regulatory barriers, and so looking for manufacturing and strain development techniques that get around.
You know, the, the most extreme forms of genetic engineering. So, you know, how do you use non G M O methods to improve strains? And that is a big part of precision fermentation. Um, I think technologies like laboratory evolution, um, there’s a company in Denmark called Trade Omics that focuses on trying to modify strains without using.
Techniques that will trigger the European regulatory agencies. And then final comment or, or two real quick comments. Downstream processing remains a big, big challenge for everybody. And then as Mark and Alex will discuss contract manufacturing or large scale manufacturing is a big issue. So, you know, I know I jumped in there, um, but.
I’ll, I’ll, I’ll, I’ll address your feed stock question because you introduced the topic as precision fermentation is sugars to chemicals and sugars are by far the most common feed stock. I think that as, as we go on land use issues and sustainability issues will cause two changes to occur. There’ll be more and more interest in using what I call.
Second generation sugars. These are biomass derived sugars. I think we’ll continue to become more and more important in this field. So companies like, grandio and Brazil, and there’s several others that are trying to develop sugars that don’t compete directly with food will be one trend. And then I’m a huge fan of methanol as a feedstock of the future.
There are multiple sustainable ways to make methanol, so it’s a liquid. It’s not as hard to ferment as a gas. And it’s transportable. And there are all sorts of pressures that are pushing industry towards developing better and better and more sustainable forms of methanol. I think, you know, if we’re talking about c1 s I think foric acid is also interesting.
Similar story to methanol and then ascetic acid and ethanol. So if I was gonna predict the feedstocks of the future, it’s gonna be. Second generation sugars, it’s gonna be c1, s like foric and methanol and c2 s like ascetic acid and ethanol.
Tom Bunn: Appreciate that. we’ll come back to, to some of those questions, Doug, I’m sure at the end.
Moving on to Mark Warner. Mark, can you walk us through how you see the problem of, of capacity in this space?
Mark Warner: You know, I, I see it a couple fold. Um, first, I mean, there is just a capacity shortage and, we’ll, we’ll talk about the details of that, but there, you know, the vast majority of the. The contract fermentation today are 40 years old or older.
Most was built predominantly in Europe to make pharmaceuticals and especially I I’ll note upfront while I work on all these different matrixes in recent years. Um, precision protein fermentation has really been my focus, and especially when you, you get into the food proteins, none of the facilities that are out there running today were built to do it.
They were built for something else. They were repurposed as best they can. As I like to say, these facilities are doing amazing work, but it’s what happens when you retask a facility. Usually the fermentation is pretty good. And the one common I’ll make, and I agree with, with everything Doug said, I think we made a lot of progress.
But when you look at a lot of the legacy industries, the electric acid, the citric assets, those don’t have the same profile of fermenter need as the food proteins typically do. So that’s why. Things have migrated to these former pharma facilities cuz they had the agitated high oxygen transfer type fermenters that were needed.
The problem is most of ’em are 60, 70 years old. So with that there’s a capacity issue, but there’s also a similar cost issue in that we’re using the, these facilities that weren’t built of a size, they weren’t built in the geography to make things at the price point for food. Cause we don’t like to pay a lot for food.
So those. Those are go hand in hand. It’s not just the capacity that’s out there, but what’s out there. People are making these products, but they’re making ’em at price point significantly higher than they want to be making a math. So I agree completely. I use almost word for word the same comment Doug does.
It’s, it’s an economics problem as much as a science problem. So I would never say that the technology’s completely, um, Resolved, but I think it’s more we can make the things we want, just not at the price points we want. And then just to touch on the other issue about the downstream, you’ll probably hear a lot about the fermentation generally exists to do, and this is a, a slide from a good food institute.
The presentation I did about a year ago on kind of the contract fermentation markets. And this, um, I think at the time I published this, I think Alex told me that was, that was a pretty good view of what’s happening. All these startups trying to squeeze into the same asset. So, you know, there, there are people trying to, to build out that larger scale capacity.
And if you go to the next slide, you’ll see really kind of summary. This is a view I had on the market, um, through my consulting practice, um, before I moved into Liberation Labs, and it’s, I’ve benchmarked a total C M O market out there today at about 61 million leaders of total capacity worldwide in any given year.
I. About 10 million of that goes in and outta contract. Only a couple million or less was really built to do food. Um, the problem is, so these slides are about a year old from a good Food Institute presentation. As I said, at that point, within 12 to 24 months, I projected that we were gonna basically be out of food fermentation capacity.
I believe we’re there now. Now I need to put the caveat. You can find fermentation capacity. It’s one that has a downstream that can then convert it into a food protein. It’s as I like to talk about the food protein downstream. It’s different than we’re often used to with APIs and other things. It’s basically a high-tech version of sorting rocks.
If you think of sorting rocks, you have boulders, mid-size rocks and small rocks. You’re basically, once you ferment the protein, assuming it’s a secreted protein with the organism, you’re looking for the middle size rock, you want to take out the big rocks, which are the, um, the organism, and you need to get rid of the small rocks, which are the median other components, which sounds, um, pretty straightforward.
But as Doug said, you’ll look at these proteins and you’ll get these kill adult sizes and things. But a lot of it on how it reacts depends on how it folds and in what form it’s in. So this is. Technologies that have come generally out of pharma, microfiltration, ultrafiltration, center, have become much more cost effective in recent years.
So you see them used in the milk industry, you see ’em used in other food industries, um, a fair amount, but it’s getting those to the scale and cost we need. To match with the existing fermentation technology to bring these, um, technologies to commercial viability. Great.
Tom Bunn: And so you mentioned the capacity is 40 to 60 year old, 60 years old in that downstream processing.
I, I believe is the, kind of the crux of that problem. Um, so can you, can you retrofit these or what are the biggest gaps in the existing infrastructure that could, could it be added on or does it need to start anew?
Mark Warner: Well, it, it doesn’t have to be added on, but the question is twofold. So, the majority of the clients I had were going to fermenters in Europe that were 50, 60 years old.
Um, again, they’re, they’re able to make the products. But they often aren’t able to make ’em. So when I build a facility, I worry about how many batches per year do I get, how do I minimize the cycle time, the sterility time? How do I make sure that I’m located in a place that has low sugar costs? Because again, at a smaller scale, there’s one cost structure when I get to very large scale, um, sugar labor, and, um, Um, electrical power are gonna be 70 to 75% of the cost of the operating.
The facility where most of these facilities are built today is where it made sense for a farm facility. It’s not necessarily where you would put, I mean, biggest gap we have today is in the us, especially in the Midwest. Where would you normally put a lot of these facilities? Brazil, you would put it in the US Midwest.
Where’s a lot of the capacity today? It’s in Europe and other places, which again, they’re doing amazing work. They just don’t have the cost structure of what you’d normally build to make food, so that’s why you’re gonna keep reit. Hear us reiterating the cost issue. It’s not that they can make ’em, it’s that there’s a structural cost disadvantage that keeps a lot of these products from reaching economic viability.
Tom Bunn: Got it. Great. I guess just back to back to Doug on the feedstock side, some of the alternative feedstocks you mentioned. Um, how do those compare in, in, in cost?
Dr. Doug Cameron: I think the trend is that they, the, the trend is that the cost will go down over time. So you, um, you know, it’s, it methanol, for example, is a commodity.
It’s got a kind of a complex cost structure at this point, but all of the, all of vectors are moving towards This will become cheaper and more abundant over time. Great, and
Mark Warner: I’ll again, if, if I could add on to that. I meant to comment on that one. Doug said it. It’s, and we didn’t practice this. I am a big believer in methanol too, and it’s, it’s more, it, it’s an issue with these older facilities.
The most common food protein organism today is a methanol fed pick. Now what Doug’s talking about is using it as a primary raw material. In this case, it’s just used in an induction agent. But still a lot of these older facilities have a real hard time using it, and often the C M O market is trying to talk people out of using methanol because it’s hard for them to use.
Like Doug, I’ve just generally found those strains to be the most productive and the closest to economic viability. So like Doug, I believe strongly that methanol is a. Significant feed stock. The only one I might add to his list. I’ve seen a lot of glycerin byproducts that also can be, um, be beneficial. I don’t think they have the scale that methanol and other things do, which is I’m sure why Doug’s bringing them up.
But I also seek glycerin tuck in there as a valuable feed stop. Great.
Dr. Alex Patist: Can I add one comment to that, uh, Tom, please. Cause I, I, I like the second gen, feed Stop discussion. Uh, But, uh, uh, Chris Guskey, who, uh, most of you’ll know, he made a good comment. He said that when you go second, uh, second gen or gly, waste streams, somebody’s gotta pay for.
For takes. And my experience is that, um, that you end up paying, right? You got a cheaper feed stock, but you end up paying, taking out, taking out a trash. So what you see today is these feed stocks like even molasses, right? God knows how many folks have asked us to run molasses. If you can run molasses, but it only works for ethanol because it’s easy to strip off.
Mark Warner: so, and
Dr. Doug Cameron: I, and I, I’m not, I mean, certainly you wanna look at some of these lower cost feed stocks. I’m not a huge fan of, like, the waste feed stocks like Glycerol or others, just because they’re the, the limited availability of them. I’m, I’m, and I’m, I also am a longer term venture investor, so I’m looking at what’s, what’s the future gonna be?
And that’s where I see things like methanol being the future. Clearly they’re not completely here today. There is a great, intriguing paper, I should say, published in P N A S that talks about the electrochemical approach to agriculture, uh, which also talks about methanol. So this is more of a thing, but I, I see it emerging.
Mark Warner: Great.
Tom Bunn: I do want to get back to to, to Mark and Liberation Labs. Um, mark, can you talk about the vision for Liberation Labs and, um, what the ideal time for Liberation Labs to engage with the company is kind of what the economic proof points or otherwise it that, that you look for, that you will look for.
Mark Warner: Sure. I mean, quite simply what we’re looking to do is bring a purpose-built solution that we don’t believe exists today, which is a facility designed and built to host novel proteins. So predominantly secreted food proteins, which I would argue, I think we have a list of 20, 25 companies we believe could be hosted by this.
And it’s, um, It’s not just that we can host it, but we can host it in a purpose-built cost structure to make the food proteins. And I will tell you, I think most of the fermentation. Generally exists today. If you’re building a newer lysine type facility, people are building fermenters closer to the sterility profile and things that are required.
I’m not saying we don’t bring some innovation, but I think a lot of it is downstream. Cuz again, uh, you’re, you’re hearing this theme that the downstream is often. Piece together with what the C M O has existing, not purpose-built in sizing scale. And the things I often see are, for example, coming out of pharma, you’ll often see when you, once you ferment, one question is, how much wash addition water do I need?
As I go through these filtration steps, I’ll often see companies tell me they’re going to use five, 10 times. The, amount of broth in wash water, cuz you can do that and form a very small scale when you’re, when you’re running at very large scale, that’s millions and millions of gallons a day. So those aren’t options.
That’s not what the food industry does. So we’re looking more on the downstream to the way the food industry does it. We’re also looking to build the plants where they’re needed and in the geographies, they’re needed. So one of the downsides today of this ad hoc network of CMOs is it doesn’t really fit the way.
CPG source ingredients. If I’m one a protein for a novel granola bar or something, I’m just picking something generic and I want to sell it North America, south America, Europe, and Asia. I’m not looking to make that product in one geography and ship it around the world. I’m generally looking for a manufacturing partner that can make that component in different parts of the world.
Deal with one vendor with multiple manufacturing sites, generally, that doesn’t exist today cuz most of these contract manufacturing sites are more legacy facilities that came out of another purpose than owned by a lot of the big, um, fermentation and food manufacturing facility. So it’s, you know, it’s really about bringing the scale, the geography, and the cost structure we believe doesn’t exist today in the contract fermentation market.
Tom Bunn: Fantastic. Thank you, Mark. Excited to learn more about Liberation. Um, thanks. Let’s move on to Alex Petista Gel tour. Uh, Alex, can you give us what Geltor is up to? Can you give us a broader picture of, of, uh, what
Mark Warner: Gel Tour is focusing on?
Dr. Alex Patist: So Gelter is about 6, 5, 6 years old, and we do design the proteins, starting with, uh, collagen, several types of collagen, um, that we’ve taken to scale and not in the market.
Uh, initially for the beauty and personal care, uh, space. Uh, you know, we’ve got several products in Southeast Asia. The, uh, the US. And then, uh, last year we had a very successful run with, uh, Lonza, now called Aada, uh, where we produced, um, uh, uh, over, well over 10 tons of, uh, of the fervor food, uh, uh, collagen for food and, uh, nutrition.
Uh, the beauty of it is one of the reasons I joined, I’ll be sincere, is that it’s a, uh, one platform, multiple proteins. So we have one process. And can produce many, uh, many different proteins that way. Uh, which, uh, which makes it a lot more attractive if, um, when you start putting steel in the ground.
Tom Bunn: Sure. And so, as the c o o, what are the problems you were hired to solve at Gel Tour?
Dr. Alex Patist: Um, so, uh, one of the problems I’m trying, I’ve, I’ve been, I’ve been asked to solve is take this to scale, right? Make this a robust. Uh, I like to call it area proof process. And, um, very excited that we, uh, that we did that we, we got a solid proof point.
Uh, the next problem I’m trying to solve is how do we balance the, uh, the commercial hockey stick with, um, with, uh, you know, uh, uh, expensive, uh, VC or, uh, debt dollars and building your own facility? Because to Mark Mark’s point, you know, many of the CMOs today are, um, Obviously not a perfect fit to, uh, to the protein processes.
So, you know, costs are a little higher and so you’re going to partner up or you’re going to build it yourself. Um, and, and when, when do you pull the trigger? Um, so, you know, that’s a tight partnership with the commercial team.
Tom Bunn: Got it. And so more broadly, and with Mark and Doug’s comments in mind, uh, how do you view the biggest challenges in, in the field?
In the field or the industry overall?
Dr. Alex Patist: I think the, uh, this is, this, this is a challenge, like I just said, not, not unique to, to the bioprocess industry. I think it’s; it’s always a, a question of, um, of commercial, uh, uh, pool versus technology push. And so how do we, um, you know, we don’t have a lot of successes in this space, let’s be honest here.
And so how do we, um, how do we scale this, uh, this, uh, wisely? Um, meet, meet customer demand. Don’t make too much, don’t big, build too big. Uh, build smaller multi-geographies. Uh, but again, that’s not just for biotech, that’s for any, any product you bring to market. I think that’s a big, big challenge.
Tom Bunn: And you’ve mentioned that CMOs are getting a little bit more picky about what projects they take on. What proof points do you think need to be proven out before going to A C M O or, um, or, uh, someone to help, help scale?
Dr. Alex Patist: Yeah, so, so, uh, a couple observations, uh, you know, um, tying into Mark’s, uh, apocalypse, uh, um, um, story a while back, what some of the observations I have is that, um, That the large fermentation companies are starting to catch up and see an opportunity and are opening up capacity for, uh, for, uh, for our peers, for folks like us.
Um, the other, the other observation I have is that the CMOs are getting a little more picky. As to who to take, they take on to, uh, to, uh, take, to scale. Uh, in other words, you know, not everyone is ready to, uh, to go. And I sent back to the drawing board, um, before, uh, before, uh, before to go to scale. The other thing is I, I, I, I see startups, um, in this economic environment starting to back out of large commitments.
You know, he talks a lot of money, right? We’re running several months at a cmo. So I see, um, I see, uh, some slots opening up. As folks try to, uh, spend their money more wisely. And if asked us, probably one of CPOs before, um, before we go big. So those are a couple observations now, two to one observation that they’re getting a little more picky, I would say.
You know, you gotta lock in your process early, right? Uh, I’m, I’m an r and d guy myself. Uh, turn manufacturing, but I’m always eager to take the latest and the greatest strain to scale. But that is, uh, that is, uh, that is a bad recipe for success. At some point, you gotta lock in the process, lock in the organism, and I know you’re gonna have a much better organism next week probably, and a much better week after.
But you’ll lock in the process and then you gotta demonstrate that you can run this at, you know, several thousand liters, maybe up to 10,000 liters, three independent times, and you get the exact same result. Um, within, you know, five, 10% error. To me, that is always the, the first qualification to, uh, to, to talk to a c o, right?
So you lock in the process, demonstrate it multiple times, and write it up in a so-called tech transfer package, and that’s the data you take to A C M O say, Hey, here’s Proofpoint. Um, are you ready to, uh, to take me on?
Mark Warner: Got it. Great. Thank you.
Tom Bunn: And you know, you have a first, first row seat at Gel Tour as you’re commercializing these, these, uh, proteins.
How do you, how do you bridge the gap between some of what Doug was talking about in terms of the regulatory hurdles and perhaps consumer perception to, uh, to the, the? The, the science aspect, the biotech of what you’re doing, it seems like that’s, um, that’s a bridge that, uh, needs to be, needs to be gapped.
Um, I’m just wondering how you think end to end in terms of kind of soup to nuts, science to consumers willingness to to purchase.
Dr. Alex Patist: So, so I think, I think we came from a, a time, um, I’m not kind of dating myself here, but we came from a time where I had a hammer and I was looking for nails. And, you know, I come outta grad school, I have this, this hammer, and I’m looking for nails.
And to Doug’s point earlier, um, I think we start with the end in mind here. So what, what problem are we trying to solve for first? Uh, at, at Genome, we always looked at the best alternative process. So, you know, you’ve got a great idea, you’ve got a great product, but what are you trying to solve for it?
And what is the best alternative cost? And do you still have a business case? Um, and so it’s not just about, uh, cheaper, it’s also about regulatory. It’s a story. Uh, it’s the, it’s the, uh, the claim substantiation. Um, because in the end, in the end, they all need to, um, to be true, to go to market, right? So, do you have f to?
There are always four criteria that need to be true. Do you have f t o? Do you have regulatory approval? Can you scale it? And is somebody gonna buy it right? For any product? Any product. Um, so I always refer to those four points, uh, when you’re ready.
Mark Warner: Got it. Great. Thank you
Tom Bunn: Alex. Um, looks like we have some questions coming in.
Uh, Larry Taylor asks, uh, the globally distri distribute distributed processing model is compelling. Can the process be engineered to, to uses, uh, to use various feed stocks that are available in each respective geography? Just Kane Bega, Palm Bega, et cetera.
Mark Warner: Yeah, I’ll jump in first. So I think even when I look at geographies, You know, before we talk the alternate feed stocks, we have to talk the traditional ones. So if I’m looking at building in the US versus Brazil, and I’ve done both US is corn dextrose, Brazil is sucroses. Those are not the same organisms.
Don’t eat the, some organisms eat them the same. Not everybody, as I like to tell people I’ll, I’ll ask startups, oh, does your organism run on supers? And I’m always told, oh, sure it does. But what I’m asking is, does it run in the same efficiency? As dextrose and not always. So I think you can often get the answer with any of these.
But to get to Alex’s question is have you proved it yet? If I go and my organism, this is not uncommon. My organism’s 75% or 85% as efficient on sucrose, say dextrous. Well, that’s two problems. First, that’s yield loss of sugar I’m paying for. And the second thing is, Now I may have other sugar products in there I have to refine.
So I do think it’s possible when I hear Bagga though, Bagga is in the alternate feed stock category. So that’s, I assume the question of converting that into a sugar. And there’s certainly technologies like Doug talked about out there, but I also don’t wanna lose the focus on even the primary feed stocks are not as ubiquitous as I think people often believe.
Dr. Doug Cameron: I think it’s a good response. I don’t have anything to add.
Tom Bunn: well, we’d love each of you to kind of paint the picture of, of what you think, uh, this space looks like in, in five years. Um, perhaps Doug, we can, we can start with you. Like what, what major. Uh, developments, technological or otherwise, do you think we’ll be dealing with or, or, uh, enjoying in the next
Dr. Doug Cameron: five years?
If you can? No good. And that this is, again, the, the other two guys on the call are where the rubber meets the road. I have the pleasure and the advantage of, I can sort of think, you know, futuristic as a, as a more of a venture investor than a manufacturer. So first of all, I think that, you know, identifying what the products you wanna make, I think that.
Computational methods and tools will become better and better for, for modeling materials, for modeling proteins, with things like alpha fold with other techniques that’s gonna continue to advance. I think that opens up. Opportunities even in complex, more complex fields like, um, like, uh, microbial polysaccharides and things.
So we’re gonna have better tools to identify product opportunities. Um, I believe that in the next five years we will have very robust wholesale models that can help guide us in our process design. Um, these are, you know, Sort of modeling cells the way we currently model chemical plants, where we know gory details about how they work.
The trends are there. In five years, these will be pretty good. Um, what will that lead to? You know, just, here’s one kind of crazy prediction. You know, every protein is basically a different chemical. I see the day where we have custom-designed organisms for every single protein. That we wanna make, right?
We pick, we optimize the organism along with the protein. Uh, just a couple of other, uh, future thoughts here. Um, there’s gonna be, uh, Um, more and more hybrid processes. These have been around forever, but I think that they will continue to, we we’ll see combined chemical and biological processes. We’ll use, you know, more hybrids of microbial fermentation with enzymatic processes or with chemical processes so people will, Think out of the box.
I once made up the term syncretic chemistry, playing on the word, you know, of the merger of religions. I think we gotta merge these different types of chemical processes into a broader way of thinking about the world and, um, I think new, you know, new manufacturing approaches. I think what Mark is doing with his new company is really exciting.
That’s gonna be, you know, big, big future impact in the field, and I think these new feedstocks will become more and more significant. Fantastic.
Tom Bunn: Looks like we had some other questions coming from the audience. I do want to get, get to those. Um, an anonymous attendee asks, uh, upcycled waste for agle; otherwise, seems to be a trend that some startups are using as feed stock.
Is that more of a nice story amid the already-constrained production process rather than practical?
Dr. Alex Patist: I, uh, I have an, I have an answer to that. A good example is a company called Full Cycle that uses, uh, uh, waste to, uh, turn into, um, into, uh, fatty acids that then turn into, uh, PhDs, Polycon. I, um, I, I think it comes down to economics again. Um, two things, economics, but also as BSF used to call it, you gotta feed the beast every day.
So if there’s a, if there’s a holiday weekend and there’s no waste, what are you gonna run? Uh, right. You gotta feed that, uh, that plant 24 7. So I don’t think it’s, uh, it’s, uh, it’s hoax. I don’t think it’s fake. I think there’s; there’s a lot of work to be done. Uh, at the same time, your feedstock is free.
So that’s a big savings as su crow or glucose is usually the main, main cost driver. So that’s a big no, it’s never,
Dr. Doug Cameron: it’s never free. As soon as you want it, there’s a price. That’s right. You still gotta haul it. Right. But, um, soon as there’s a demand for it, you know, it’s no longer free.
Dr. Alex Patist: But anyway, it’s not, it’s different from, uh, from, uh, from your glucose supply. So you got feed a beast. And, they got a lot of work to do on the optimization, getting the cogs down. That’s my few cents. And, and I agree. And it’s, I misread that question when you said Nice, I thought it said niche and I decided with that. And this is, I think full cycle is a good example.
I think it makes sense for a certain size. As Alex said, as you get bigger, and I agree completely. I’ve run facilities that were based on other people’s, um, byproducts. You can only make one primary product. So if I’m trying to make a primary product, And I’m taking someone’s byproduct. I don’t get to turn around and say, oh wait, I’d like it with a little more of this, or a little less in my feedstock.
You’re getting what you get. So it’s certainly admirable and makes a ton of sense when it works, but I don’t think it’s gonna be the primary source of most of these technologies. Fantastic.
Tom Bunn: Trent Colbert asks, how much more does the cost of producing per liter go up as you go down in scale? For instance, how much more expensive is it to produce your first 10-liter batch than your first 100,000 liter batch?
Mark Warner: So since this is kind of the Liberation Labs business model, I’ll jump in. So it’s, I mean it’s economies of scale are real. I’ve, I’ve built fermenters up to 625,000 liters. It doesn’t take you that much more labor and other things to run it. So when you look at, if you go to A C M O and look at the cost of, uh, You know, 500 liter run versus a hundred thousand liter run, it’s 20 times bigger in size.
I’d have to do the math of my head. It may only be four or five times more on a per run cost. So economies of scale are real. I would tell you, having lived through the biofuels days and having some. Some, you know, PS P T S D related to it. It’s a big facility, is economically much better as long as you can sell the product.
But if you build a big facility and aren’t running it capacity. So that was, I think, a comment Alex made earlier. So the economies are real as long as it’s supported by being able to run at that capacity.
Tom Bunn: Terrific.
Uh, an attendee s b b asks outside the US and Brazil, what are the common feedstocks used in other geographies? For example, Asia.
Dr. Doug Cameron: Uh, Um, I mean, uh, everybody probably has knows a little bit about this. Um, you know, India has a lot of sugar cane and so sucrose, you often hear about cassava, you know, starch being important in parts of Southeast Asia, I believe. Um, nature NatureWorks has announced they’re building lactic acid plant in Thailand, and I think they’re going with glucose with dextro.
So, Most of them are varieties of sugar that either come from sugar cane or various starch plants. Like, like corn or like cassava. Epi. Yeah. Epi.
Mark Warner: Yep. And I think as we, to kind of go back to your question on the future, and I start this by, I’m working with, or I’m on this with two former cargo guys who know way more about sugar than I do.
But we basically as an industry taken the legacy sugar that was there for other purposes. And the question is, if I look at, say, the corn eth or the ethanol industry, they didn’t in the end source traditional sugar. They co-produce their own purpose-built sugar from starch for their needs. The question is, will will the sources of sugar morph more toward large-scale fermentation?
You know, this is really more of a question that. Can the traditional sources be made cheaper if more focused for the needs of industrial fermentation than what is out there today, even from the conventional feed stocks. And that’s one, I know there’s a lot of people talking about doing it. I, myself, I think the jury’s still out on whether it gets there.
Tom Bunn: Great Any final thoughts that, uh, any of you three would like to, to leave us with, uh, today before we part ways?
Dr. Alex Patist: I have a, I have a couple on the, uh, where this is going, you know, in, uh, in over the next years. So I, I agree with Doug on the design aspect, you know, to target specific functionalities. I think Gelter is an example where we, you know, looking at animal free has nothing to do with vegetarian or vegan.
It has everything to do with, you know, we’ve gone to the moon, we’re gone to Mars, we’re driving electric cars where we’re still killing animals for proteins. And that’s typically a blend of types of proteins. So we have the design of, uh, function building. We can be, uh, can be a lot more specific. And then the other aspect from a processing perspective.
I think we are getting a lot better scaling down. So we, we are very good in, uh, small scale fermentation where we learn what we’re gonna see at scale or mimic what we are gonna, uh, see or the impact for scale. I think the next step is to do the same at D S P. You know, D S P is off, the downstream is often, so we’ve gotta go to the pilot plant or beyond.
I think there’s an opportunity to do some scale, scale down, uh, as well on a small scale in, in the lab, saving a lot of money, smaller, better, faster, cheaper. And then the L c A, you know, water typically as, as Mark mentioned earlier, water typically is ugly, uh, compared to many alternative processes.
So I think the L C A is still an opportunity from that perspective.
Mark Warner: You know, I, I would probably say there’s two things I think we need to work through over the next, you know, five to 10 years. One is this manufacturing versus scale up. We use the term c m o I would argue 99% of what’s being done today is scale-up, not manufacture.
Manufacturing is a multi-year long-term thing to sell a product to make positive cash flow. Most of what we’re still focused on is. You know, smaller scale. So we need to get to the larger scale to get the economics. And I think Alex brought it up earlier, you know, we need to figure out how to fund all this.
Cause we’re doing most of it with equity now. And to build out what we need, we have to get both the technology development and the corresponding off takes to a point. We can get much more of a debt component into this to build out what we need. We may need to prove it on equity, but it’s gonna have to be built out with a bigger debt component than we’re getting today.
Tom Bunn: Great. Appreciate that, mark, and Alex, and I, I appreciate all three of you taking the time, uh, this morning and, and, uh, this evening for you, Alex. Um, thank you all to the attendees for, for joining us. Uh, as a reminder, this, uh, will be available for replay. I believe it will be posted on YouTube. Um, and with that, I, I hope you have a, great day and please let us know.
Please reach out if you have any follow-up questions or want to learn more about iSelect, and we will keep you posted on the next steep dive webinar series, which will be in the next couple of months. Um, and look forward to hopefully seeing you there. Thanks again and have a great day.