INDUSTRIAL BIOTECHNOLOGY:As an overview, when was Gen3Bio founded, what is its size and revenue? What criteria were used to decide on its location? What does your company produce and how?
Kelvin Okamoto: Gen3Bio was founded in July of 2014. It is presently pre-revenue, but hopefully not pre-revenue for much longer. Size-wise, it's myself along with a number of advisors who support the technical and business aspects of the company. We're located at the Purdue Research Park in West Lafayette, Indiana.
Originally we were headquartered at the University of Toledo at their LaunchPad Incubator. However, I have been an Indiana resident and moved the company to the Purdue Research Park with the Purdue Foundry as their incubator. The state of Ohio was very supportive for the first two years that we were there. But what we found was that the investment profile and the networking profile for our type of business was actually better here at this location and the state of Indiana and the University of Toledo was fully supportive of this.
We actually do not produce algae. We process algae. What we do is we take algae generated by algae technology companies that are associated with wastewater treatment facilities. The algae technology for them is used to reduce the nutrient load in the discharged water. This is to prevent uncontrolled algae growth in open waters and to reduce things like dead zones due to nutrients.
As a turnabout, the algae technology companies use a controlled algae growth environment to catch the nutrients. However, when they're done, and they've grow all that algae, the question becomes what do you do with it? And that's where Gen3Bio comes in. We offer a way in which to get the sugars, the fats and the proteins out of the algae. Our product is actually the engineering and operation to extract the algae using an enzyme blend. And then, when we get the sugars—the internal cell content—we then turn that into a product, a specialty chemical or some product that can then be sold. The one we focus on right now is succinic acid which would actually be generated through fermentation from the sugars. We have not licensed an organism to produce this succinic acid; Gen3Bio is using non-GMO organisms at this time. Right now there are four companies producing biosuccinic acid. We are also looking at aquaculture food from the precipitate, which would be very high in protein and lipids along with some cell walls.
We use commercially available fungal enzymes that are readily available from China and the United States and several other locations throughout the world. They are reasonably inexpensive, usually a blend of two to three different enzymes to break open the cells. We only break them open, we do not actually dissolve or completely break down the cell walls. So we don't get the sugars, fats, and protein that may be in the cell wall, which would contaminate the internal cell content that we want.
IB:IB likes to share with its readers the human side of innovation. What were the insights (science, technology, market, regulatory) that drove you to establish a microalgae company? What in your diverse background might have been instrumental in your decision making?
Okamoto: I spent thirty-plus years in the plastics and packaging industry. However, I also worked with bioplastics for 20 plus years of that and I've always been interested in sustainability going back to growing up in my elementary, middle school and high school days. I was involved in a lot of recycling programs even back in the 60s and 70s.
The last company I worked for was a bioplastics company that actually formulated and produced bioplastics for compostability and biobased content. That company had licensed this technology from The University of Toledo in Toledo, Ohio. Unfortunately the company went bankrupt for various reasons, but the technology was always interesting. I decided it was something that we just couldn't let go. So when bankruptcy proceedings finished, and the technology had been turned back to The University of Toledo for licensing, myself and a couple of others who had all been involved previously went back to The University of Toledo and licensed the technology from them. And that's what we're working on now to make commercial.
IB:Can you share what made the technology so compelling?
Okamoto: The technology is based on a pretty simple process technology. In essence you are using basic, stirred tank reactors. It's not run at very high temperatures, it runs at about 55 degrees Celsius, with the heat often coming from the waste heat generated in a municipal wastewater treatment facility. So it doesn't take a lot of energy. The equipment is not capital-intensive, and therefore compared to technologies like high-pressure liquefaction (HPL) followed by drying, your capital costs are much less, your energy requirements are much less, and you are also getting a much better recovery of the internal cell contents. Like HPL, there are other technologies too, like high-temperature liquefaction (HTL), that tend to break down a lot of sugars and give you a lot of lipids. The lipids will give you biodiesel and some other things, but really the high-value fraction are the parts that HPL and HTL break down. So fermentation of the sugars to higher-value specialty chemicals and possibly being able to break down the proteins to high-value amino acids will be very valuable.
One other thing we've also found out, is that this technology may also allow us to obtain in the US what is called EPA 503-class A approval for the bioproducts. This means it can be used for food, for animal feed, etc. There are very few technologies that are available for that in municipal waste water treatment facilities. So we would provide an economical way of getting there that really hasn't been available.
IB:Renewable products have a lot of momentum. Can Gen3Bio be considered an engineering firm? Are there key technology pieces that distinguish Gen3Bio from other companies?
Okamoto: In a way we are an engineering firm because we are taking a technology and coming up with pilot plant as well as commercial plant designs for implementing it at wastewater treatment facilities. The plant technology around the enzymolysis is not really that complicated, but what is complicated is taking the output at the back and breaking out the filtrates—the sugars—from the precipiate, which is mostly the lipids, and then being able to take that sugar and convert it to succinic acid through fermentation. That takes a lot more engineering and design. Those technologies are known, but we have to go and develop those ourselves or work with others to bring them them in based on their technology to be able to do this bioconversion.
So, yes we are an engineering firm, but we're also a technology and engineering consolidator, going and finding others that might already have that expertise so that we are not reinventing the wheel again.
IB:Municipal wastewater treatment employs algae to effective reduce nutrient discharge. Through mandated management practices, a large portion of the resulting biosolids have already been used effectively for many years as soil conditioner, fertilizer, and in site restoration including in managing mine tailings. Is your approach intended to complement or replace these practices?
Okamoto: It's really intended to complement or add to. For the process, the biosolids removal process is not affected. Our process is an add-on to algae-process technology already taking the existing discharge water from municipal wastewater treatment facilities that is and add-on process for removing the nutrients, mainly phosphates and nitrates, and so on from the water to reduce that nutrient discharge load even further. The Gen3Bio process then is on the back end of the algae process technology used to remove nutrients. So it's really an add-on technology to what exists now.
IB:It seems like a great opportunity to use “free” biosolids from wastewater and other treatment operations that involve algae. Can your process use both cyanobacteria and eukaryotic algae?
Okamoto: It is possible to use cyanobacteria or eukaryotic algae. That really hasn't been proven yet. However, many of your algae technologies will have bacteria or cyanobacteria already in it. So they come through with the process anyway. And our process is believed to break those cell walls down so they would not become a bacterial contaminant in the process. One of the big issues with some algae, especially macroalgae, is that there is a cellulosic component to that. And our enzymes do not work to break down cellulosic structures. So I would say when it comes to macroalgae, ours is not the best process.
IB:Can you expand on the mix of commercially available enzymes used in the Gen3Bio process? How are they different from cellulosic enzymes being used for cellulosic sugars such as from Novozymes, to monetize other plant-based waste products for chemicals?
Okamoto: Novozymes supplies a lot interesting bacterial, enzyme and other solutions for various applications. The Gen3Bio process does use straight enzyme solutions; Novozymes may be a supplier of them.
The enzyme mixture used by Gen3Bio is patent-pending. A patent has just been issued for Australia. We are going back and doing a divisional to try to get stronger protection. In the US and Europe, the office actions are similar to what the first office action was for Australia. So hopefully we will also have protection in the US and Europe soon too.
IB:What are the top two or three chemical targets or business opportunities that you believe that Gen3Bio or its partners should seize on? Are there pilot plants or developments in these areas that you could share with us?
Okamoto: We have completed our pilot plant design and we have several facilities/organizations that would like us to install the pilot facilities for trials in their operations. In essence, we would put a pilot facility for one or a few weeks at any facility that would use our process because they are all going to generate a slightly different mix of algae strains. There's going to be some seasonality and so on. So what we need to understand is what the change in the lipid, sugar, and protein ratio is for the seasonality so we can develop a good economic model for each of the individual operations.
Our pilot plant fits on a 4 foot by 4 foot skid that we would then move from facility to facility as they want to trial. In time, we'll probably have two to three of those to move around. We would do full analytical analysis on the algae that is generated as well as the separations that we would do for each of them.
For the larger facilities, what we're proposing is fermentation for succinic acid and precipitate the lipids, proteins and cell walls for use as aquaculture fish food. However, if they still want to, we can do further separation for other operations if there are markets for the lipids, proteins, and cell walls. And if the economics make sense.
IB:Why did you choose succinic acid as your first target?
Okamoto: There were actually a few reasons why we chose succinic acid. The first is that it has been proven that the filtrate can go through succinic acid fermentation already. Two, compared to other materials the sugars can ferment to, which are readily available like lactic acid and bioethanol, you get a much better premium on succinic acid. And three, the succinic acid market is very large. It is considered a base specialty chemical that you can make a lot of other specialty chemicals out of. So the market is anywhere from $8 to $16 billion per year on succinic acid and its derivatives alone. And even though there are four major players already in biosuccinic acid today, they can't possibly meet that total market. So a lot of succinic acid today is still produced via petroleum.
IB:Could you identify a couple of key factors (i.e., technology-, policy-, regulatory-, or IP-related) that are inhibiting/slowing progress in the algae bioproducts industry at present, what would those be and what is needed to overcome them? How do these mesh with Gen3Bio's effort to establish itself as a successful major player in the natural algae products bioeconomy?
Okamoto: This is a very interesting question but also a very difficult one to answer. I think one of the ways, and this is not a knock on algae process technology companies or the algae products industry, but to date most of the efforts have been toward biodiesel. Largely because it was eligible for funding by the Department of Defense in the US and several other organizations around the world and has an extremely large market.
The only issue there is that the biodiesel from algae has a very low return versus getting it from petroleum. In the US, diesel is somewhere about $2/lb wholesale, or $0.25/lb. But alot of it was generated with open pond raceways, or even more so like in the case of Solazyme, was heterotrophic. Well, heterotrophic algae has to be fed sugars at $0.20/lb, and you only get a maximum 50% yield of fats from algae. So you really can't make money using that model. Yes, there are subsidies, but what we needed to do was come up with more sustainable business models that didn't require government subsidies to continue and be able to produce products.
But now, as the algae industry moves forward, a lot of companies are moving toward nutraceuticals and astaxanthins and so on. In essence what we need to do is have the industry in total find a more sustainable business model for each of the companies to be able to survive.
So some of the industry issues are self-inflicted. However, what we need is also for the investment community to accept algae-based technologies of other types to move forward. I fully understand the hesitancy of the investment community because of some of the failures that have existed recently. But what we need to do is be able to move beyond that and move to the next phase. As with any new industry, there will be fits and starts to find what is economically viable and what is not.
