Obama, Malaysia, Verdezyne, and business as unusual in the bioeconomy

April 28, 2014 |

Obama

How a small, development-stage industrial biotech company, making chemicals you never heard of, landed $48M in new investment and a $100M valuation from investors like BP.

And how they got so hot that figures like President Obama and the Malaysian Prime Minister attend an investment signing ceremony.

In Malaysia, Verdezyne has negotiated key terms for an investment of $48 million led by Malaysian multinational conglomerate, Sime Darby Berhad. The initiative was launched in a ceremony on Monday, April 28, at the Ritz-Carlton in Kuala Lumpur, Malaysia, attended by United States President Barack Obama, Malaysian Prime Minister Dato’ Sri Najib Razak, Verdezyne President and CEO E. William Radany, Ph.D., and Sime Darby Berhad President and Group Chief Executive, Tan Sri Dato’ Seri Mohd Bakke Salleh.

Led by Sime Darby, this $48 million financing for Verdezyne was joined by existing investors BP Alternative Energy Ventures, DSM Venturing B.V., OVP Venture Partners, and Monitor Ventures. Individually, Sime Darby was reported to invest $30 million in return for a 30 percent stake in the company, which would give Verdezyne a valuation of $100 million

The funds will be used to accelerate Verdezyne’s technology development in the U.S., and support various collaborative projects with Sime Darby’s newly-formed business unit, Sime Darby Renewables.

The investment was part of an overall $2 billion investment in aviation, insurance and industrial biotechnology announced between Malaysia and the US yesterday.

Why Verdezyne, why Malaysia?

Why Verdezyne? Think nylons, polyesters, giobers, polyurethanes, lubricants and resins. All made from obscure, low-cost feedstocks that allow the company to match (or beat) petroleum-based equivalents on price and performance, while reducing carbon emissions.

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Verdezyne-8Why Malaysia? Think palm production residue. Cost of feedstocks is 50%- 80% of total cost. At the same time, competition with food and fuel creates social tension. Meanwhile, ethanol mandates have increased sugar price and volatility.

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On the other hand, expansion of the crude palm oil market has created a dramatic increase in supply of co-products such as palm kernel oil, palm fatty acid distillate, and palm fruit bunches. This creates a favorable supply vs. demand pricing structure, while not impacting the food supply.

How do they do it? In a word, engineered yeast. OK, that’s two words. So, engineeredyeast. It’s practically one word these days — so prevalent is engineering of yeast to produce wonder products from wonder feedstocks.

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Namely, biobased adipic, sebacic and dodecandioic acid. Notice that there’s a lot of oxygen in these organic acids — that’s an advantage for biobased, because biomass comes with its own oxygen, while petrochemical feedstocks need supplemental oxygen, and lots of it — as much as 50% of the molecule by weight will come from outside the petroleum barrel.

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And, what a range of molecules that can be produced from these platforms.

Meanwhile, the company has been proceeding rapidly towards scale-up and aiming to commercialize its DDDC product line first.

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Reaction from the principals

“It is an honor and a true privilege that both President Barack Obama and Prime Minister Najib Razak chose to attend our signing ceremony today,” commented Dr. Radany. “It speaks to the significance of this agreement for the renewable chemicals space and to strengthening ties between the U.S. and Malaysia. Moreover, it highlights the important environmental and geo-political benefits of replacing petroleum-derived materials with renewable sources.”

“We see this investment as symbolic of stronger business ties between the two countries, and the beginning of a long-term partnership with Verdezyne,” commented Tan Sri Mohd Bakke. “Sime Darby’s investment will accelerate the development of Verdezyne’s technology and create opportunities to leverage our sustainable palm based materials into higher-value downstream renewable products.”

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