Genomatica looks at 2011: pivotal for itself, renewable chemicals industry

Of all the hot companies in renewable chemicals, there aren’t a handful that are hotter, or closer to breakthroughs on scale, than Genomatica. Less well known than many of its biofuels brethren, it has stayed close to its original goal of exploring chemicals, rather than fuels, with its genetically enhanced organisms that can ferment a wide variety of feedstocks into renewable chemicals of interest.

This year’s challenge: Get product #1, butanediol, or BDO, demonstrated at scale. It’s a key intermediate chemical for a wide array of bio-based specialty chemicals and bio-materials. It’s also key to unlocking the value of Genomatica, and is a closely-watched development for the industry as a whole.

We spoke with Genomatica CEO Christophe Schilling.

BD: What is the key in 2011 for Genomatica?

CS: 2011 is key for us in showing how well we will be able to perform at demonstration scale. Everything points to success, and the company continues to make progress technically on BDO and our other products.

BD: For the industry as a whole?

CS: In renewable chemicals, 2011 is a year is a year where key partnerships will set one company apart from another. Whether it is Genomatica and other companies, it will be about showing the industry that the big players are coming in. That’s not so much a prediction but an expectation. We need to be at a place in 2011 where it is not just a bunch of feedstock companies, but the big chemical companies and players like that.

BD: What’s your take on Dupont Danisco – as an example of the kind of increased attention from the major companies towards the sector.

CS: I know what everybody knows – Dupont has a long history with propanediol. It’s an interesting bit of news, not something I saw coming until I read that announcement. It gives Dupont some differentiation, say compared to companies such as BASF and Dow. Dupont and DSM are the two that seem to have substantial activities, but only time will tell if it’s the right acquisition.

Will that cause other chemical companies to follow hard to say. There are different strategies. Some choose to stay in basic chemicals, while Dupont moved into the higher value speciality chemicals a decade or two. It’s not proven yet by the players out there which of the two strategies will be the more successful.

BD: What are the drivers for adoption of renewable chemicals – emissions, cost, volatility?

CS: Renewable chemicals are a differentiator – the main drivers are cost – do you have the technology to drive down cost? A secondary driver is the opportunity to relabel for some niche markets for a premium price, but that doesn’t work in the broad markets.

BD: What is staying the same for Genomatica in this era of rapid change?

CS: What’s consistent is the strategy, to go after large, existing markets for basic and intermediate chemicals. For many potential partners, there is a lot of interest with  Genomatica because of our potential to go after a large section of the portfolio of any major company – at least half a dozen chemicals, sustainably.

BD: How do opportunities in renewable chemicals help with price volatility?

CS: The chemical industry has to manage volatility and has been doing that for decades. The opportunity for us is in diversification of feedstocks, rather than volatility – for example, to diversify beyond natural gas, or syngas, with a biomass alternative.  New feedstocks will help take us away from fossil feedstocks – away but not completely away, and will provide more balance and will do some mitigating of volatility.

BD: Do you hear from companies who are working in BDO, or from companies who see your technology as a new opportunity to compete in BDO.

CS: We don’t hear a lot from companies – about our BDO product – who don’t have business in BDO.

BD: What about other products, or are you entirely focused in your commercialization efforts on BDO at this stage?

CS: BDO is our first product. It’s the most important thing to show it’s successful. It sets the stage for our technology.

BD: What geographies are important to you?

CS: We map towards the chemicals side than the biofuels side, and where the feedstocks are. So, Asia especially, that’s where growth is happening, plus there’s a substantial market in North America and Europe.

BD: Brazil?

CS: It’s a substantial biofuels market, and an area for a lot of opportunity because of the low cost feedstock. The biofuels market in Brazil is second largest behind the US, I believe, so it offers nice confluence for those companies that are doing fuels and chemicals and can work down there. For us, we will need to mature, but there are potential opportunities and we will look at them.

BD: Job number one in 2011?

CS: First and foremost, building a great company for our shareholders and having that transformative impact.

BD: How do you see exits for your investors evolving?

CS: As far as providing liquidity for our investors, at some point we’ll be providing that. Will it come through public market or not? Only time will tell.

BD: They are pushing on commercialization?

CS: There’s a big push on commercialization. It’s clear that we have an advantage, and we have done the R&D work. Great. Now’s the time for Genomatica.

BD: Timelines?

CS: Our timeline is looking to move into demo phase by end of 2011, and throughout the second half of the year, bring at full operation mode in a facility. We’ll have even  more information in coming months about that.

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