Verdezyne, Will & Co ink pact to distribute renewable chemicals in Europe

June 9, 2015 |

verdezyne-300x146The tyros of Triple-D A land a major offtake deal on the road to their 1st commercial plant.

Polymer resins, automotive parts, toothbrush bristles, cosmetics, fragrances in focus, based on Verdezyne’s renewable intermediates.

In California, Verdezyne and Will & Co, announced a distribution agreement for BIOLON DDDA (biobased dodecanedioic acid or “DC12”) in Europe,  which will bring Verdezyne’s first commercial product to one of the world’s largest chemical markets.

Why is this a big deal?

Why is a distribution agreement for a chemical most people can’t pronounce and have never heard of such a big deal that it attracted President Barack Obama and Malaysian PM Dato’ Sri Najib Razak to an investment deal signing last year?

As we pointed out in “The Magic Word is…Adipic”, renewable chemicals are the breakout set of products we are reliably assured will lead eventually to the global revolution in materials — The Materials Superhighway, including fuels, chemicals, and materials from silks to steel.

Accordingly “renewablechemicals” is a seven-syllable word used in investment meetings as the universal answer to any annoyingly difficult question that cannot otherwise be answered with “Low-cost methane”.

How do you expect to make money? Renewablechemicals. Biofuels, aren’t they a money pit? Renewablechemicals. Aren’t there big infrastructure issues? Renewablechemicals. Why should I invest in you? Renewablechemicals.

The big 3 questions on the Road from “Really?” to “Hot Dang”.

It comes down to two questions. Can you make a molecule on a sustainably cost advantaged basis? Are the customers motivated? Is it a significant market?

Cost-advantage? Why DDDA? It’s what’s known as an organic acic — a big group of molecules that includes lactic acid and many others, used in a huge array of applications from clothing to cosmetics to resins to nylons to packaging. Here’s what you need to know: organic acids contain oxygen, as does biomass. But petroleum doesn’t. So, you can make organic acids from biomass without having to figure out a way to oxygenate a molecule — an inherent efficiency advantage.

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Motivation. Verdezyne CEO Bill Radany told The Digest. “There’s a green pull. Brand owners like Nike, Adidas, Patagonia, or Toyota. There are some real significant renewability incentives within their organizations. It’s about what they want to see in a green nylon. and how they are getting weaned off petroleum. [In some cases] if they could do 100 percent, they would like to do that.

Significant market. Verdezyne is targeting three molecules, DDDA, sebacic acid and adipic acid. Hree’s the skinny:

Dodecanedioic acid (DDDA)

$250M annual global market. Dodecanedioic acid (DDDA) is used in the production of high performance nylon 6,12, molding resins, in addition to lubricants, adhesives and powder coatings. It is traditionally produced from butadiene via a multi-step chemical process. Verdezyne has leveraged its yeast platform for cost-advantaged production of DDDA from low cost plant sourced oil feedstocks. With an addressable and rapidly growing market of over $250 million per year, Verdezyne’s bio-based DDDA is a valuable target intermediate which will transform the nylon 6,12 market.

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Sebacic Acid

$600M annual global market. Sebacic acid is an intermediate used in the production of nylon 6,10, a plastic widely used in everyday household items like toothbrush bristles and fishing line. It is also found in coatings, adhesives and polyester resins. Sebacic acid is currently produced from a limited supply of castor oil. Verdezyne has demonstrated proof of concept for cost advantaged production of sebacic acid from widely available low cost plant sourced oil feedstocks. A $600 million annual market provides a compelling opportunity for commercialization of Verdezyne’s technology

Adipic Acid

$6.3B annual global market. Adipic acid is a key component of nylon 6,6 and thermoplastic polyurethanes. Everyday products which contain adipic acid include clothing, footwear, furniture, carpets, automobile parts and nylon fabric. Verdezyne is currently the only company that has demonstrated production and recovery of adipic acid at pilot scale through fermentation of low cost plant sourced oil feedstocks.

The where and what

Verdezyne’s BIOLON DDDA will be used to make engineering polymer resins, automotive parts, toothbrush bristles, cosmetics, fragrances, and more. It will be produced at Verdezyne’s commercial-scale plant in Malaysia. The agreement secures off-take for over 25% of the expected plant capacity. Verdezyne’s plant, expected to open in 2017, is anticipated to have the capacity to produce over 10,000 metric tons of diacids annually, including BIOLON DDDA, drawing on Malaysia’s diverse and abundant base of plant-derived feedstocks.

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The Verdezyne backstory

What’s the secret sauce? It’s a set proven and proprietary metabolic pathway engineering tools to create unique yeast strains for cost-effective production of biobased fuels and chemicals. Right now, their breakout star molecule is adipic.

The company’s first commercial is impending.  Verdezyne and Bio-XCell Malaysia have reached an agreement to construct Verdezyne’s first commercial-scale renewable chemicals manufacturing facility in Bio-XCell’s premier biotechnology and ecosystem park in Nusajaya, Iskandar, in southern Malaysia. The multi-faceted agreement includes the 13-year, renewable lease of a 6.9-acre site, as well as a loan of approximately $75 million from Bio-XCell.

Construction is expected to commence later this year, and will be the world’s first bio-based plant for the production of DDDA and other diacids.

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In April 2014, the company cleared a key technical milestone in producing more than one metric ton of bio-based DDDA using its proprietary yeast platform and downstream process. The Michigan Biotechnology Institute (MBI) and the Michigan State University (MSU) Bioeconomy Institute (BEI) worked with Verdezyne to run the bio-based DDDA process at the 4,000-liter scale. This production confirmed the scalability of Verdezyne’s process and produced polymer-grade material for potential customers and partners.

The same month, Verdezyne landed a $48M investment round led by Malaysian multinational conglomerate, Sime Darby Berhad. 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.

Reaction from the stakeholders

“This agreement with Will & Co is an important milestone for us because it reflects the strong demand for renewable chemicals and the demonstrated high quality of our product,” said E. William Radany, Ph.D., President and CEO of Verdezyne.

“For some time, our customers have been asking us for an alternative to petroleum-derived chemicals, and Verdezyne’s BIOLON DDDA fits the bill perfectly,” commented Jacques van Lindonk, Managing Director at Will & Co.

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