GFBiochemicals acquires Segetis, enters the US market

In Washington, GFBiochemicals announced at ABLC 2016 that it has acquired the assets and intellectual property of Segetis, a US-based, venture-backed levulinic acid derivatives producer Segetis has more than 50 patents and over 200 pending patent applications worldwide.

The acquisition matches up GF Biochemical’s commercial-scale technology for producing levulinic acid, with Segetis’ technology for converting levulinic acid into biobased intermediates and speciality chemicals in plasticizers, fragrances, household and industrial cleaners, biobased acrylate polymers, agrochemical formulations, polyester and polyurethane intermediates, polycarbonate co-monomers, and nylon intermediates.

The company acquired Segetis’ pilot production plant based in Minnesota, and will establish a direct presence in the US market through the opening of commercial offices as GFBiochemicals Americas.

Marcel van Berkel, Chief Commercial Officer of GFBiochemicals, commented: “Levulinic acid is one of the world’s most versatile building blocks for substituting hydrocarbons.  With the acquisition of the Segetis, including the Javelin brand of levulinic ketals technology, we can accelerate market entry for levulinic acid and its derivatives.”

“This acquisition marks an important transformational moment for GFBiochemicals,” added van Berkel. “The Company will continue on a development path based on both organic growth and the creation of high-value partnerships with major companies, as well as the potential for further acquisitions of levulinic acid’s derivative technologies and applications”.

The Segetis background

Segetis emerged in the late 2000s as one of the first wave of companies avowedly targeting renewable chemicals — venture-backed by Saudi Basic Industries Corporation (SABIC) Ventures, Khosla Ventures, Malaysia Life Science Capital Fund, DSM Venturing, and PNB Equity Resource Corporation Sdn Bhd. The company raised nearly $40 million in financing as it developed a portfolio of applications for renewable levulinic acid.

For some time, it had been expected that ultimately Segetis might join up strategically with a technology that could produce low-cost, renewable levulinic acid, thereby creating a renewable pathway from underlying biobased feedstock through to product applications. For some time, there was some rumbling that DSM and Segetis would establish ties along these lines, or even that DSM might acquire Segetis. GFBiochemicals CCO Van Berkel was a long-time DSM senior executive prior to joining GF — and, today DSM BioBased is itself led by former Segetis CEO Atul Thakrar.

But by 2013, Segetis instead had focused on developing a technology for making levulinic acid itself — in addition to its portfolio of derivatives. In October 2013, Segetis announced the successful start up of its pilot plant facility in Golden Valley, Minnesota demonstrating the viability of a proprietary process to convert biomass to Levulinic Acid. Segetis had the first fully integrated Levulinic Acid and Derivatives Biorefinery using a variety of carbohydrate feedstocks to meet the global demand for high-performing, safer, non-toxic end use products.”

In 2014, the Iron Range Resources and Rehabilitation Board (IRRRB) approved $21.2 million in funding for Segetis’ plan to construct a commercial-scale plant at the Laskin Energy Park in Hoyt Lakes, Minn. Total project investment was projected at $105 million, 70% of which would have been funded by the company.

GF builds a commercial-scale levulinic acid plant

Ultimately, it was GFBiochemicals that won the global race to build a commercial-scale levulinic acid plant — breaking through at Caserta in Italy.  The process skips intermediate process steps using a proprietary technology, making it significantly more affordable for industry players and consumers.  A range of biomass can be used, including ligno-cellulosics.

By last November, there were signs that GF was on the hunt for a portfolio of derivatives. In Thought Leadership column published last November in The Digest, Van Berkel wrote:

“There is a clear and growing need for new chemical building blocks…however, it is vital that these promising platform chemicals are sustainably derived from biomass, whether directly or otherwise.” Van Berkel added:

In industry, levulinic acid has applications across a wide range of market sectors, though it is particularly useful for bioplastics and coatings.  The levulinic acid derivative diphenolic acid (DPA) can replace bisphenol A and increase biobased content in coatings, for example.  Concerns have been raised about BPA because it exhibits hormone-like properties.  Several governments have investigated its safety and use in food packaging and consumer products which has prompted retailers to withdraw polycarbonate products which are based on BPA.

Phthalate-free ketal plasticizers are another example of levulinic acid’s game changing applications.  These plasticizers are biodegradable and can be used in flexible PVC applications.

For consumer products, levulinic acid has extensive applications for flavors, fragrances and cosmetics.  It has a creamy, buttery whiskey odor which offers a range of options in fragrances.  The platform chemical is also used in food compositions for maple and caramel flavors.

Levulinic acid acts as a pH regulator for both food and cosmetics which means it can replace fossil-derived acidity regulators like acetic acid.  Levulinic acid is an alternative to benzoic or sorbic acid in preservation systems and its antimicrobial properties are already used in perfumes and skin conditioning.

It also demonstrates a range of property opportunities for short and middle chain length polyhydroxyalkanoates.  This could enable durable PHB3HV4HV products for film, fiber, injection molding and extrusion applications.  Such PHBV products have advantages compared to PHB.  These include improved fermentation yield, enhanced toughness and elongation properties.  A wider processing window is also possible due to the lower melt temperature and crystallinity control enabled by levulinic acid.

The Bottom Line

A match made in heaven? For sure, Segetis’ technology finally has the biobased levulinic acid technology it always needed, and GFBiochemicals has taken a gigantic step forward into application development. With the attention, for example, on BPA-free products that can be seen in product packaging in swathes of product that anyone can see in an average Target store — the timing is positive for the Segetis suite of applications. Steering them together as a single company — instead of the JV or strategic partnership route — will provide GFBiochemicals with the least cumbersome path to unlocking the value in its newly combined set of technologies.