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Industrial Biotechnology -          The Industry Of The Future

|Includes: Amyris, Inc. (AMRS)
Summary

The prospects of Industrial Biotechnology and Amyris (NASDAQ, AMRS) as paradigm

"Industrial biotechnology will replace products with petrochemical origin with sustainable products from biological sources."

Oil products are an integral part of our everyday life.

Can you imagine a future where products such as plastics, medicines, food supplements, cosmetics etc. are no longer of petrochemical origin?

The first goal of industrial biotechnology is precisely this, and in future it wants to produce the products from simple biological products such as sugars.

The second aim of industrial biotechnology is to produce natural extracts such as (fragrances, essences, flavors and sweeteners) directly in order to avoid complex extraction processes of the small amount of components presented in plants. Large agricultural areas will thus be available to food production again.

Aspects such as sustainability, climate change and ecology are key factors that will make industrial biotechnology increasingly important in these areas.

The third goal of industrial biotechnology is the production of so-called „impossible molecules“, which cannot be produced by petrochemical processes.

Industrial biotechnology is understood to mean the industrial production of products by means of fermentation using genetically optimized microorganisms.

The baker‘s yeast „saccharomyces cerevisiae“ plays an important role in industrial fermentation processes. Baker‘s yeast is the first higher genome that was fully decoded in 1996 and contains 6000 genes. The genome database of baker‘s yeast is one of the most comprehensive and probably the best documented.

In the ancient fermentation process with yeast for beer production, sugar is decomposed to alcohol and carbonic acid. The process takes place via a plurality of intermediate steps and molecules. If the yeast gene is changed, the process is interrupted and an intermediate is formed. The applied genetic engineering determines the extent of the changes and it is possible to initiate completely new biochemical processes and thus create new molecules. The nature and yield of these molecules is controlled by genetic engineering.

The question now arises as to which factors are decisive, and that industrial biology is becoming a more and more important focus and is called key technology.

On the one hand, there is the artificial intelligence (AI), which allows completely new processes by processing enormous data and machine learning. Automation in the laboratory, both in design, production and analysis, also plays a very important role.

Therefore, the most important factor is the progress in gene editing. An important factor is also the range of products made possible by industrial biotechnology. In the chemical industry based on the petrochemical industry  the starting point of the compounds on which other molecules can build up is very small. Biology offers a much wider range. 60% of the naturally occurring chemical substances are terpenoids. With genetically modified yeasts, many of these terpenoids can be produced. Besides Terpenoids, 9 different molecule families can be produced until today.

But what about safety? The genetic engineering applied should not be confused with the controversial gene manipulation since no genetically manipulated molecules are released. The genedited yeast is only a process aid and no genetically manipulated fragments can be detected in the desired end product. Centuries of experience in brewing and baking processes have shown that the use of yeast is safe, and no negative incidents have been documented in all these years. The advantage of using baker‘s yeast in the fermentation process is that it is easy to grow in the laboratory as well as in the industrial bioreactor and the results are identical.

A major advantage of industrial biotechnology compared to the chemical industry is that only a single reactor and process is necessary for the different molecules and only a fraction of the infrastructure investment is required compared to the chemical industry.

The key factor for individual companies in industrial biotechnology will be to make and reduce the DBTL cycle „design production test learning“(see DBTL cycle below).

The cooperation between different disciplines such as biotechnology, molecular biology, biophysics, genetic editing, AI, metabolism and fermentation engineering plays an important role and is therefore very complex.

The first product of industrial biotechnology was „Artemisinin“, a drug against malaria, which was developed with the support of the „Bill and Melinda Gates Foundation“ in the year 2004.

Amyris has optimized the process in which Artemisinin is produced of sugar cane with the help of genetically modified bakery yeast. The product was developed on a non-profit basis and the drug was produced from 2013 by Sanofi in Italy.

Even in the 1990s, vitamin B2 was produced by a chemical process in an eight-stage synthesis process. With today‘s single-stage fermentation process, 40% of the costs, 60% of the raw materials, 30% of CO2 emissions and 95% of waste can be saved or avoided.

The first products of industrial biotechnology were still developed manually in the laboratory and also the analyses and evaluations were carried out manually or with software which was only applicable for individual steps of the manufacturing process. The next phase of a project could only be tackled when the results of the last analyses and assessments were made. The research was linear and empirical and the time and cost was correspondingly high. The development of „Artemisinin“ lasted 4 years and the effort is estimated at over 150 manyear.

If you consider that at the bakery yeast for editing 6000 genes is available, and each building block has to decide for one of the following possibilities (deleting, replacing, concatenating, inserting before and inserting afterwards), then everybody can imagine that empirical methods were timeconsuming and exhausting.

In R&D in industrial biotechnology, a paradigm shift has taken place, away from an empirical to systematic application-related research and Amyris has become a front leader with the most compendiously DBTL-cycle.

At Amyris, the building blocks of this DBTL cycle (design-build-test-learn) are presented today as follows:

In order to be able to produce a desired molecule from yeast, the DNA is designed on the computer. The individual building blocks are selected from a database in which the possible effects of this building block are listed. At the end of the fermentation process in the laboratory robot, the structure and the yield of the molecule are determined by means of automated spectroscopy and the supercomputer makes suggestions for the next design if the structure of the molecule has not yet been reached or The yield is too low.

Design

Amyris has a database where practically every single gene of baker‘s yeast is collected and continuously flows into the results of the research that captures the properties and effects of the DNS.

Not only the results of thousands of parallel experiments are recorded, but also the results and publications from all over the world are captured and included with artificial intelligence. The super computer Lila which is behind it, can explore complex new routes with „machine learning“ and capture and document correlations between the DNS.

The genes are no more put together in the laboratory, but first on the computer with Thumper, a compilation software that allows you to select the building blocks according to the properties stored in the database. The AI software can submit proposals that refer to the results of previous experiments.

Build

An important standard of genetic engineering today is the CRISPR/CAS9 technology, which enables a faster exchange of a single segment. Amyris has further developed and patented this technology and can use this Hi-RYSE ™ (Hyper integration for rapid Yeast strain) technology to introduce up to 24-48 DNA parts simultaneously at different locations (Low level nucleotic editing), or not just single genes but insert whole sequences in one place.

The laboratory works are carried out with fully automated strain Engineering (ASE) robots, with an improvement of a factor of 25 being achieved.

Test

The HTP-MS (High Throughput Screening) system, which accelerates the analyzes by a factor of 20, is automatically detected by the spectroscopy analysis. The data flows directly into the databases and can be evaluated by LISA.

Learn

Here too, LISA is used with its machine learning functions. It is therefore from the thousands of attempts to select the yeast strain, which indicates the best yield of the product, while at the same time considering possible influences from existing experiments. Example: A high yield is useless if a byproduct develops toxic properties at the same time, and the development of the main product is disturbing.

The fermentation process must be scalable from the lab scale of a few milliliters to an industrial scale of 200,000 liters per tank.

With the described DBTL cycle, Amyris was able to reduce the development time for products by a factor of four.

Today, 120,000 yeast strains are produced and analyzed by Amyris every month. The processing of a cycle with 6 parallel gene transformations takes only 3 weeks.

The aim of the research is also to improve existing processes. In 2017, Amyris was able to adjust the metabolic process of the yeast used in the production of ß-farneses, resulting in 25% more yield and 75% lower oxygen demand.

Amyris is one of the only companies in industrial biotechnology that has a vertical structure with its own production facility in Brazil, placed next to a sugar cane factory to produce sustainably and flexibly.

In other sectors of industry, which are in a mature state, they have long since got over to a horizontal structure. In the start-up phase, however, many of these companies were also vertically positioned. Industrial biotechnology is just ahead of the breakthrough, and the complex processes of the DBLT cycle require close collaboration that benefits from a vertical structure in this initial phase of the industry. Subprojects and tasks can nevertheless be outsourced to specialists.

After the success with artemisinin, Amyris has turned to the field of biofuels, with the goal of producing sustainable fuels from sugar cane. However, the production costs could never be reduced to the market price of kerosene.

In 2012, Amyris changed its strategy and concentrated on the development of complex molecules of higher values. The experience from the production of artemisinin and ß-farnesen can now be implemented by Amyris to optimize the DBTL cycle and to produce molecules with short development times and thus low costs. The high degree of automation, the networking and the vertical structure pay off here and Amyris can offer attractive conditions for the development of different molecules to customers. Statement by John Melo, CEO of Amyris: „We want to be the low cost leader in Synthetic Biology.“

With a number of partner companies and authorities, Amyris has entered into agreements and contracts with key strategic objectives.

Royal DSM, partner of Amyris since 2017, has transformed an incredible transformation from a chemical company for petrochemicals and basic chemicals to a company of hightech materials (performance materials) and nutritional supplements (nutrition) in recent years. In 2017, DSM has invested $ 70 million in Amyris and holds now a 36% stake in the company.

DSM has in the course of this collaboration completed three contracts on the production of two unspecified nutrient molecule and an additive for vitamin A in 2017.

DARPA is the research department of the US Department of Defense and was the initiator of a whole series of groundbreaking inventions. From Kevlar to the GPS system, the first weather satellite to Arpanet, a predecessor to the Internet, the range of projects launched by DARPA is enourmous.

As early as 2013, DAPRA launched the „Living Foundries“ project in the domain of biology, which was initially aimed improving the robustness of processes in synthetic biology. In 2015, DARPA expanded the „Living Foundries“ program. The goal is to produce 1000 new molecules from biological raw materials using industrial biotechnology. The first phase ends in mid-2018, which had the goal of finding new procedures for existing molecules. In the second phase, which is scheduled to continue until the middle of 2019, it is planned to produce so-called „impossible molecules“ (see above). In the third phase, the objective is to produce unnatural polymers, new nanomaterials and new products based on new catalysts.

With Amyris, Darpa has signed a $ 35 million contract for the first phase in 2015.

According to a communication from DARPA, a third of the new molecules are already produced in September 2017, of which over 200 are molecules from Amyris.

With BIOGEN, Amyris ventures into the pharmaceuticals sector. Monoclonal antibodies are traditionally produced by means of cultivated mammalian cells in large bioreactors. The CHO - Cell line abbreviated by "Chinese Hamster Ovary" is one of the most commonly used cell lines in the biotechnological production of active ingredients. However, such cultures develop slowly, require complex media, are sensitive to viral infections and often result in only a low yield. The safety requirements when working with such bioreactors are very high and incur a correspondingly high cost. The separation of the desired antibody is very laborious, in fact often 10 different forms are produced simultaneously.

Biogen has in cooperation with the Massachusetts Institute of Technology (MIT) tried in vain to substantially improve the existing processes. In collaboration with the „Bill and Melinda Gates“ Foundation, Biogen in 2016 has launched a project to test 8 different plant cell culture systems instead of the CHO cell line.

For Biogen Amyris with its "yPharm" platform has to clarify whether the way over yeast is a viable way. Yeast as a cell culture would be much easier to handle, viral infections would be excluded and antibodies could be made very specific (= only one antibody and no elaborate separation). At the same time, you could both produce with such a Amyris platform and investigate new antibodies, which is not possible with CHO cell lines. First results can be expected by March 2018 at the latest and a success would have a major impact on this important area in biotechnology.

Amyris also has a number of additional partners with projects in a wide range of markets (Total, Cofco, Givaudan, Firmenich, Janssen, Michelin, Takasago) which are addressed later.

John Doerr „The next Big Thing“

This is a statement from a person involved in Amyris, who stands out with a glorious background. John Doerr is one of the most successful investors in America. He is a partner of Kleiner Perkins Caufield & Byers and has participated spectacularly in many start-ups. He was one of the first investors on Google and Amazon. With his start-up investion of $ 8M dollars he was involved in 13% at Amazon. 13% of Amazon are today however 60 Billion worth.

John Doerr is on the Board of Directors of Google and Amyris today. Over the years, he has invested several times in Amyris and now holds about 25% share.

John Doerr is very keen to promote the green industries and his original goal was to support the development of biofuels at Amyris. The fact that he recently invested millions of dollars in Amyris again shows that he also supports the new strategy of the CEO John Melo and wants to contribute, as he says, to build a „Living Chemical Factory“.

It is astonishing how wide the range of products that Amyris can ferment from cane sugar be spread. The Amyris divisions are correspondingly broad:

Products:

Health & Nutrition:

Pharma:

Research targets with Biogen, see above, plus an agreement with Janssen Biotech, a subsidiary of Johnson & Johnson, to develop a library of biosynthetic materials to compare these with existing Janssen Biotech targets. There is also a collaboration or agreement with Roche. However, details are not known.

Terpenoids show a wide range of biological activities and are already used as medicines (artemisinin, taxol). Terpenoids are often difficult to produce via chemical processes. The industrial biotechnology with the genetically modified metabolic pathways can show new ways to produce known or derived terpenoids. In the future, more and more pharmaceutical products based on terpenoids will be introduced, which will play a more important role in the pharmaceutical market.

Nutrition:

Since DSM invested in Amyris, the new partner has already signed three contracts for the development and production of three molecules in the areas of functional food and nutritional supplements. Two of the molecules are completely unknown, and the third is an addition to vitamin A. DSM is also the new partner in the area of vitamin E, Amyris has dissolved the previous contracts with Nenter in favor of the new partner DSM.

An interesting area to which Amyris and also DSM are focused is the area of artificial sweeteners. Amyris has announced that they are working on the development of three different sweeteners. A first production batch is to be delivered by the end of 2017 to a sweet beverage producer. See below for more details.

Personal Care:

Fragrance & Flavors

Among the fragrances, Amyris has already developed some products derived from ß-farneses.

  • Firmenich CLEARWOOD™ (Tom Ford PATCHOULI ABSOLU, Innovation Prize Sepawa 2015)
  • Firmenich AMBROX R SUPER™ (Calvin Klein Obsessed, Gucci Guilty absolute)

For the partner companies Givaudan, Firmenich, IFF and Taksago, Amyris wants to develop further products on the same or similar basis.

Cosmetics

Skin care

In the skin care sector, squalane is the most important product produced from ß-farneses. Squalane is a naturally occurring product and is used as a smoothing and moisturizing lipid component, originally derived from the liver of sharks or olive oil. The third generation of Squalane is now derived from sugarcane and is produced in high purity by Amyris.

Squalane is the only product of Amyris which is marketed by Amyris under the Biossance™  brand in the USA and Canada directly through the Sephora shops. Direct selling justifies Amyris with the very good acceptance and evaluation of this long known substance and the high margin which is possible due to the new manufacturing process.

Cosmetics active components:

In the field of cosmetically active components, Amyris and its partners from F & F and DSM want to develop and market other important molecules under the label „Amyris inside“.

Amyris notes that today, 500 brands of cosmetics are already included in Amyris‘ products.

Processing industry

Lubricants:

Over the last few months, Amyris has been partnering with a number of new and sustainable products.

Novvi™  is a joint venture of Amyris, Cosan, Chevron, the American Refining Group and H&R to develop 100% sustainable lubricants. These lubricants often show better technical values than petroleum-based lubricants.

Polymers:

Krasol F3000™  is a sustainable plastic produced by Total Cray Valley, a subsidiary of Total from ß-Farnesene in the Czech Republic, and suitable for new markets such as sprayable coatings in the automotive and electronics industries.

LFR™  (liquid ß-Farnesene rubber) is the first product of Kuraray from Japan, which has concluded a multi-year development cooperation with Amyris. LFR shows a much deeper viscosity versus petroleum based products, and increases the life and grip of car tires. At the beginning of 2017, Sumitomo Rubber Industries launched the first winter tire under the brand name DUNLOP WINTER Maxx 02, which exploits these advantages.

In September, Kuraray launched its first series of sustainable plastics (bioplastics) based on ß-Farnesene under the brand name SEPTON ™ BIO.

Isoprenes:

In collaboration with Michelin and Braskem, Amyris is working on the development of a sustainable isoprene for the production of car tires.

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Future and competition

What does industrial biotechnology expect in the future?

In the fields of industrial biotechnology and synthetic biology, there are many companies with promising approaches, but few with industrial scale products.

Evolva, Ginko Bioworks and Zymergen work in a similar environment as Amyris, but they are not part of industrial biotechnology for the simple reason that they do not (yet) have industrial fermentation facilities.

These companies develop the yeast strains in the laboratory scale and leave it to their partners or clients to scale and produce in an industrial scale.

Combating climate change and sustainable development is one of the most important objectives and we have to tackle this on all fronts. Industrial biotechnology can help conserve resources, produce chemicals and products more easily and more sustainably, and make better use of agricultural land.

The goal of industrial biotechnology will be to optimize and shorten the DBTL cycle, thereby enabling the development of thousands of molecules.

Hitherto, baker‘s yeast „saccharomyces cerevisiae“ is mostly used in the fermentation processes because their genome is completely decoded. However, 700 yeast species are known and soon further yeast species will be decoded. Industrial biotechnology still has a very wide field of activity here.

Another interesting development is the production of products in a cell-free environment. The fermentation process with living organisms is thereby replaced by a development process in which only the necessary constituents from the cells are used.

Important for the future of industrial biotechnology will be the assessment in comparison with existing industries, which is to replace industrial biotechnology.

The extent to which synthetic biology replaces fossil processes depends on the market price of the molecules, which could be substituted. Where is the profit threshold for the conversion to biologically produced chemicals? All chemical products with a market value of $ 2 to $ 2.5 will be produced over these sustainable processes sooner or later.

Industrial biotechnology is now considered part of the third industrial revolution and is one of the emerging technologies in the Global Risk Report 2017 of the WEF. Synthetic biology is, however, in conflict with the same sustainable resources that are also in demand for nutrition and energy demand.

Key market for Amyris - Sweeteners

One of the key markets in the near future is the field of artificial sweeteners, which is subject to a strong competition of actors with different objectives. The beverage industry and the food industry in general are facing the demands of consumers and authorities to reduce sugar levels in food.

An important artificial sweetener is Stevia, originally from the plant „Stevia rebaudian“ native to South America.

The stevia is not particularly popular among consumers because of the metallic and bitter aftertaste. The high effort for the small portions of the sweetener which have to be extracted from the plants are, from an ecological point of view, questionable and controversial.

The stevia, which is on the market today, contains stevioside and rebaudioside A „(Reb-A) with the mentioned taste disadvantages. Since 2015, Coca-Cola Life has been on the market with a stevia proportion.

The industry wants to bridge the cap of negative taste with special variants from the Stevia plant.

The original plant contains a mixture of up to 12 different steviolglycosides. „Rebaudioside D“ (Reb-D) and „Rebaudiosid M“ (Reb-M) are the two molecules which are characterized by a high sweetness as well as a neutral taste. The only problem is that their concentration in the plant is in the low percent range. The extraction process is even more complex and the required cultivation area and the use of pesticides is even greater.

In addition to Amyris, there are a number of other companies (Evolva, Manu Biotech) who are looking for a simpler way to produce Reb-M. Since Reb-M is also a terpenoid, it can also be produced via fermentation processes using genedited yeast. The purity of the molecules thus produced is very high and critical byproducts are excluded.

There are a number of patents for this path through „methabolic engineering“. Evolva has such a patent and wants to bring the sweetener together with Cargill under the name „EverSweet“ on the market. Evolva wants to put $ 60 million into a cooperation agreement, with Cargill standing for the production of „EverSweet“ in Nebraska. At the beginning of 2017, Evolva anticipated construction periods of three years, but at the same time announced the introduction of „EverSweet“ on 2018. How fast the scaling and adaptation of the production, which up to now only has been successfull in a laboratory scale, to an industrial production plant will be shown.

Amyris has an industrial fermentation plant in Brazil with 6 fermenters of 200‘000 liters each, and has optimized the fermentation processes for many years and proved the scaling of different yeast strains. As already mentioned, Amyris plans to launch the first sweetener on the market with partners in 2018 and two further variants by 2019.

Stunning Outlook for Amyris

The strong shortening of the DBTL cycle will allow for the rapid and cost-efficient release of molecules into the market in the future.

Amyris will enter the profit threshold in 2018 and start a new area in industrial biotechnology.

This development is based on the special business model of Amyris.

The development of the products by Amyris occurs only with marginally costing to its partners, but Amyris has always negotiated a percentage profit participation in the case of commercial success. The first products are now on the market and starting from 2018 Amyris can reap the fruits of this strategy.

Disclosure: I am/we are long AMRS.