OPX's microbe experiments attract $17.5M for pilot plant

Boulder, Colo.-based startup OPX Biotechnologies said today it closed a $17.5 million Series B round of financing to build a pilot plant to prove its work in biofuels and bioplastics.

CEO Chas Eggert told the Cleantech Group that the funding should carry the company through the next 24 months, including the design, construction and operation of the pilot facility in Boulder to produce biodiesel and bioacrylic using genetically modified microbes and non-food feedstocks.

"Our technology gets to an optimized organism faster (than competitors)," he said. "The microbe is much more productive, and that means we can use smaller plants for the same level of output." 

Braemer Energy Ventures led the round, which also included new investor Altira Group and previous investors Mohr Davidow Ventures and X/Seed Capital Management. The company previously raised $4.9 million in two rounds of funding from Mohr Davidow and X/Seed Capital in 2007 and 2008 (see European cleantech getting more euros).

The funding closed on the last day of the first quarter, which saw a 41-percent drop in venture capital investment compared to the previous quarter (see Cleantech investment drops but stimulus funds soar in 1Q09). Eggert said the fund-raising took about seven months.

"In this environment in particular, we’re pretty encouraged to have closed the round because it's tough going out there, even for very good companes with very good teams," he said.

Eggert said he thinks OPX was successful in securing backers because its technology has already been proven in the lab to produce biochemicals about 50 percent cheaper than petroleum-based alternatives. The process, called OPX Edge, modifies microbes so that they take in a variety of feedstocks and produce chemicals that can be used in biofuels or bioplastics.

"They key is that the technology allows us to very rapidly understand, map and identify the genetic makeup of an organism and understand how the genes control the various pathways that control the production of the chemicals," Eggert said. "We were able to develop a strategy for changing the genes so that the production can be increased."

The technology is based on work out of the University of Colorado at Boulder. OPX holds the exclusive license to the technology, which is the basis for its subsequent research and development. OPX CSO Mike Lynch helped develop the technology at the university before co-founding OPX.

Other companies are seeking to use microbes to develop biofuels, biochemicals, and bioplastics, but Eggert said the processes have fundamental differences.

OPX takes an experimentally based approach, in which it manipulates the genetics on actual organisms. San Diego-based Genomatica models the genetic pathways on a computer before applying the findings to organisms (see Genomatica develops second biochemical from microbes). 

"We have to actually work with living cells to see how they work," Eggert said. "We (and Genomatica) have a difference in philosophy because we don’t believe a mathematical model developed on a computer can be robust and comprehensive enough to engineer these processes." 

Both companies count Mohr Davidow as an investor (see Genomatica develops novel bioplastic).

There are a number of other competitors (see Is bacteria cleantech's miracle drug?).

Emeryville, Calif.-based Amyris Biotechnologies uses synthetic biology to reprogram microbes to function as living factories for a hydrocarbon that closely resembles components in current gasoline, diesel and jet fuel (see Microbes drive new Amyris biodiesel plant).

And Hadley, Mass.-based Qteros developed a microbe-based system that uses a fermentation method to digest and ferment cellulosic feedstocks to ethanol in a single-step process (see Qteros claims 15-fold improvements in cellulosic ethanol yield).

The competition is fierce because of the potential payoff. The global biodiesel market is estimated at $500 billion a year, while petroleum-based acrylic has a global market of $10 billion. Although the market for biochemicals and bioplastics is smaller than biofuels, the margins are higher.

OPX plans to release a number of products in the biochemical space, but Eggert declined to name the products or the microbes used. The company has filed for 20 patents in the U.S. and internationally and doesn't want to jeopardize its intellectual property, Eggert said.

After production begins at the pilot plant, OPX plans to start work on a demonstration plant. The location is still to be determined, but Eggert said he is aiming for a 2011 start date for production. The company would then need more funding, which could come in the form of venture capital, project financing or strategic partners.

The company plans to sell its own bioproducts instead of licensing the technology out, but OPX might establish joint ventures with larger companies that can offer money, engineering expertise, and operating experience, Eggert said.