Genomatica develops second biochemical from microbes

San Diego-based Genomatica said today it has developed a second chemical using a microbes instead of petroleum.

CEO Christopher Gann told the Cleantech Group that the company engineered a way to produce methyl ethyl ketone (MEK) from microbes ingesting sugar. The MEK can be made in the same fermentation facilities as ethanol plants, providing a use for shuttered or underused plants and removing the capital cost to build dedicated facilities.

“Right now ethanol is not an attractive market, and we’re allowing them to go after a different market with the same raw materials that’s much more attractive,” Gann said.

Genomatica genetically engineered a microbe based on a pathway its scientists designed on a computer. The gene-splicing process took about two months—a third of the time it took to genetically engineer the E. Coli bacteria to produce 1,4 butanediol, or BDO, which the company announced in September (see Genomatica develops novel bioplastic).

The company expects to begin selling commercial licenses next year. Gann made the announcement at the Cleantech Forum XXI in San Francisco today.

MEK is an industrial solvent used in paints, coatings or varnishes, especially for the furniture-making industry, that is typically made with petroleum. About half the market goes to about a dozen large buyers and is distributed by railcar, while the rest is typically produced in plants and put into drums.

The worldwide market for MEK is 3 billion dry pounds, or about $2 billion. In the U.S., the market is just 400 million pounds—making the global markets a focus for Genomatica, especially in China.

The price of MEK varies based on the cost of petroleum and the demand, but it has recently dropped to about $0.65 per pound from $0.85 per pound. At 65 cents, it’s the equivalent of $4.50 per U.S. gallon, providing a better margin but a smaller market than ethanol.

The corn-based ethanol market has taken a beating, with 24 plants owned by 10 firms closing in the last three months, representing 15 percent of the U.S. ethanol supply, according to the Renewable Fuels Association. While companies such as Valero Energy have made bids on some of the larger plants (see New year money goes to biofuels), the small and medium plants are sitting unused, Gann said.

“We designed the microbe specifically to be used in ethanol plants,” Gann said. “Now the ethanol producer has a chance at the same plant to make ethanol or MEK, but MEK sells for two, three, four times more so it’s a great value proposition to them. .. Imagine the ROI for someone who doesn’t have to build a dedicated plant.”

Gann said he thinks ethanol plants with a production capacity of between 10 million and 30 million gallons per year would be ideal to produce MEK. The boiling temperature for MEK is within one degree as the process for ethanol in distillation. The only adjustments would be that the ethanol plant would need to be cleaned when switching between MEK and ethanol, and the company would have to dispose of byproducts of the MEK process separately because they are genetically modified organisms.

The company has at least seven other chemicals in its development pipeline, Gann said. Six are based on E. Coli, while the rest use other microorganisms. So that it can focus on development, Genomatica decided to license the process instead of selling the production itself. The company is still deciding whether to break up the licenses by geography or end-use of chemicals.

The company is working to improve the efficiency of the BDO chemical and is planning its demonstration plant for the technology. Genomatica has the design and several quotes for engineering at least two sites in Southern California. The plant is expected to cost $10 million to $15 million to produce 1 ton of BDO per day.

Gann began discussions today to raise a round of less than $20 million in equity in the next couple quarters. A debt round could be possible, too, Gann said.

Genomatica has raised $24 million from Mohr Davidow Ventures, Draper Fisher Jurvetson and Alloy Ventures. Gann said the company will likely raise another round for the pilot plant and for speeding development of its other chemicals. 

Gann joined Genomatica in March from Dow Chemical (NYSE: DOW). Genomatica was founded in 2000 by biotech researchers from the University of California at San Diego. The company has 40 employees.

Cleantech developments making news in the past 24 hours

• Metabolix, ADM to open new bioplastics factory
• Rockwool nears construction on Indian insulation factory
• Two Israeli wastewater firms to locate in Michigan
• Al Gore: Super grid is critical to combating the climate crisis
• A quest for CO2 and O2 optimal management with biofuel from algae

View the last week of cleantech developments here | Subscribe to full feed