BP, DSM invest in green chemistry company Verdezyne

By Bryan Sims | May 12, 2011

Carlsbad, Calif.-based biotech firm Verdezyne secured an undisclosed amount of funding from the closing of a new investment round that involved oil giant BP and Dutch biochemical company Royal DSM N.V. Previous investors OVP Venture Partners and Monitor Ventures also participated in the new round.

Since 2008, Verdezyne has significantly advanced its robust yeast production platforms for the development of the company’s two targeted product offerings: ethanol and adipic acid. Specifically, Verdezyne employs its biological expertise and proprietary advanced computational algorithms to design and synthesize novel gene libraries for engineering proteins, metabolic pathways and microorganisms.

Verdezyne CEO and President William Radany told Biorefining Magazine that having BP and DSM as strategic investors further validates his company’s technology, as well as its scale-up efforts of building out two ongoing programs for the next two years. Radany said he expects pilot plants will be built later this year that will be optimizing the conversion of starch and cellulosic-based feedstocks into ethanol and adipic acid.

“We look forward to extending past just straight equity investments and a long, profitable relationship with both BP and DSM in the future,” Radany said.

Radany didn’t disclose if Verdezyne intends to potentially collaborate with BP or DSM on projects related to its ethanol or adipic acid programs, but admitted that having them as strategic partners offer synergies down the road. “These two strategic partners could provide a commercialization vehicle for the products that we have,” he said.

Verdezyne was founded in 2005 as CODA Genomics, a spin-off from a University of California at Irvine research and development group that focused on computational technology and genomics. Since 2008, the company has since redirected its focus to producing fuels and chemicals from biomass sources. Previously, Verdezyne raised $15 million in 2009 and raised a second undisclosed round in November 2010.

For its ethanol program, Verdezyne has developed yeasts that can ferment starch sugars such as glucose and ribose, into ethanol, according to Radany. Last year, Verdezyne formed a partnership with Lallemand to engineer a yeast that has a higher yield of ethanol per unit of feedstock, whether it be corn or sugarcane. On the cellulosic ethanol side, Radany said Verdezyne has developed novel yeast strains that can ferment both C5 and C6 sugars to someday allow producers to get “the complete bang for their buck,” he said. “We think we’re going to be able to dramatically improve the processes and the economics on the ethanol side.”

Verdezyne also intends to optimize its yeast production platform during its scale-up strategy for biobased adipic acid, Radany said. Adipic acid is a precursor used in the manufacturing of a range of products, such as nylon 6,6, polyeurathanes and engineered plastics and plasticizers to name a few. Radany estimates the market currently for adipic acid stands at about 5 billion pounds and has a selling price of approximately $1.30 per pound.

Radany said the company can produce biobased adipic at a lower cost over incumbent petroleum-derived routes, adding that the company is in discussions with potential off-take candidates for its target chemical offering, such as Patagonia, Timerland, Nike and Addidas, in addition to automotive manufacturers like Toyota, which have made a commitment to incorporate biobased nylon materials within automobile interior components.

“As we deploy assets using biobased sources for adipic acid and our other target molecules, the cash cost advantage for manufacturing gets better and better,” Radany said.

As its fermentation-based platform matures, according to Radany, Verdezyne intends to employ an “Intel inside-like model” whereby it may license its organisms and processes to current ethanol producers and future cellulosic ethanol projects. For its biochemical program, Radany said it may pursue opportunities of potentially out-licensing its technology in addition to forming joint ventures, or “putting steel in the ground ourselves,” he said.