Interesting energy survey findings

Thought I would pass on a pointer to an interesting energy survey conducted by researchers from Columbia University, Ohio State University and Carnegie Mellon University, and published in this week’s Proceedings of the National Academy of Sciences. A few fascinating findings:

• Americans largely overestimate the energy savings from obvious energy saving actions (e.g. turning off lights) and underestimate the savings from the actions that actually consume more energy (e.g. central air conditioning)
• People who engage in more energy-saving actions are actually more inaccurate when it comes to estimating their energy savings
• Some obvious choices, such as using glass bottles as opposed to using new Aluminum cans for sodas, may actually consume more energy

You will find the GigaOm article describing this survey here.

Gevo Goes IPO

Gevo, an Osage portfolio company that manufactures iosbutanol from biomass, began trading today on the Nasdaq.  We are very proud of the Gevo team and congratulate them on their IPO.

From Dow Jones:

“Shares of biofuels developer Gevo Inc. (GEVO) rose in early trading Wednesday, its first day as a public company.

The company’s stock opened at $15.52 on the Nasdaq, up 3.5% from its initial public offering price of $15. It sold 7.2 million shares at the high of its expected $13 to $15 price range, and was changing hands recently at $16.49, up 10%.

Gevo is planning to make and sell isobutanol, an alcohol that can be made out of renewable materials such as grains and cellulose plant material. Isobutanol can be used as a replacement for petroleum-based products such as fuel or plastics. The company has developed the technology to produce isobutanol by retrofitting existing ethanol plants, and plans to begin commercial production in the first half of 2012.

Colorado-based Gevo has signed preliminary agreements and is negotiating several definitive agreements with potential customers and partners, including Total Petrochemicals USA and United Air Lines Inc. It acquired an ethanol production facility in Minnesota in September and has a preliminary agreement for a joint venture with another ethanol producer in the Midwest.

Gevo is at a very early stage of development and hasn’t retrofitted any ethanol plants yet. It also hasn’t generated any revenue from the sale of isobutanol, and has never turned a profit. No market currently exists for isobutanol as a fuel or fuel blendstock, and so it’s up to Gevo to gain acceptance and market it as a new product.

The company plans to use corn initially as the raw material in its isobutanol production and wants to sell the leftover protein fermentation meal after production as a feed product for livestock to help defray the expense of buying corn. But it first needs to gain Food and Drug Administration approval for its use as a feed product.

Gevo is currently defending itself against a lawsuit filed by Butamax Advanced Biofuels LLC, which is a joint venture between DuPont Co. (DD) and BP PLC (BP, BP.LN). Butamax alleges that Gevo has infringed on its patent for certain microbe host cells that produce isobutanol.

UBS AG (UBS), Piper Jaffray Cos. (PJC) and Citigroup Inc. (C) managed Gevo’s offering.”

The Booming Omega 3 Market

Since the 1930s, we have known that Omega-3 fatty acids are essential for our normal development and health. Researchers in the 1970s conducted a seminal study of the Greenland Intuits who consumed large amounts of fat from their seafood. Epidemiologists found that even with this large fat intake, the Intuit tribesmen had incredibly low levels of cardiovascular disease.  The high levels of Omega-3 fatty acids in the Intuit’s diet was thought to have reduced blood pressure, atherosclerosis, triglycerides, and heart rate.  Additional population studies (Japan, Denmark, US Indian tribes) confirmed the Intuit data, linking Omega-3 to improved cardiovascular health.

The importance of a diet high in Omega-3 content has become increasingly important, as dietary habits have shifted over the last century. Omega-6 and Omega-3 are types of essential fatty acids – meaning we cannot make them on our own and have to obtain them from our diet.  Omega-3 is typically found in the fat of cold-water fish, while Omega-6 is found in soy, corn, sunflowers, and other oils.  Omega-6 and Omega-3 have opposing effects, as Omega-6 fatty acids tend to increase inflammation, blood clotting, and cell proliferation, while those from Omega-3 fatty acids decrease those functions.

Many nutrition experts believe that before we relied so heavily on processed foods, humans consumed Omega-6 and Omega-3 fatty acids in roughly equal amounts.  Today, we consume so many foods containing partially hydrogenated soybean oil and high fructose corn syrup, that the dietary ratio of Omega-6 to Omega-3 fatty acids is estimated to be >>20:1. 

The Omega-6:Omega-3 dietary imbalance may explain the rise of such diseases as asthma, coronary heart disease, many forms of cancer, autoimmunity, and neurodegenerative diseases - all of which are believed to stem from inflammation in the body. The imbalance between Omega-6 and Omega-3 fatty acids may also contribute to obesity, depression, dyslexia, hyperactivity, and even violent behavior. 

The biotech and pharma community is now actively looking into programs that could help restore the balance of Omega-6 to Omega-3 levels. 

Neutraceutical companies have been selling Omega-3 supplements at health stores for decades.  These products are typically of relatively poor quality, with little Omega-3 actually in them (now there some recent exceptions).  Reliant Pharmaceuticals, a venture-backed startup funded by Bay City Capital, Versant Ventures, and Invemed, launched the first commercial pharma program in 1999.  Crude fish oil contains only ~30% Omega-3 and Reliant sought to isolate the active ingredient of Omega-3, which was thought to be associated with one, or both, of its constituent molecules - eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA).  As it turned out, Reliant found it incredibly challenging to isolate EPA and DHA and locate the active ingredient.  In the end, the company gave up on producing a composition of matter patent, instead choosing a manufacturing method patent to produce Omega-3 at 90% purity (mixture of EPA and DHA).  Reliant would launch their FDA-approved drug, Lovaza (initially called Omacor), in 2005 and was later acquired by GSK in December 2007 for $1.65B.  In 2009, Lovaza had sales of $1B.

The Reliant experience highlights both the promise and challenge of Omega-3 drug development.  It is still unknown whether it is best to take EPA alone, DHA alone, or a mix of both (and if so at what ratio).  Some clinical data links EPA to improved cardiovascular health, while DHA has been linked to improved visual and neuro function.  Further clinical studies will need to be conducted to uncover which ingredient is most efficacious for a particular indication.  

How Omega-3 works is not the only challenge drug development companies have to tackle.  Dosing is a huge problem with Omega-3 as patients typically have to take at least 1 gram of the drug every 8 or so hours for it to work.  Patients have to take “horse pills” just to get enough Omega-3 in their bodies to make a difference.  That requires a lot of bulk drug material and isolation of Omega-3 from fish is not particularly scalable as fish populations around the globe are dwindling and quota restrictions induce seasonality challenges to manufacturing.  Either new sources of Omega-3 need to be created, or dosing has to be decreased while maintaining efficacy. 

To address manufacturing and dosing challenges, a number of interesting university startups and corporate development programs have been launched recently.  The second half of this blog entry contains an accounting of some of the more interesting / promising companies.  

UNIVERSITY SPINOUTS

Algisys: Is a Virginia Tech spinout from the lab of Dr. Zhiyou We.  Algisys is developing a proprietary strain of algae that can produce large quantities of EPA.  Existing algae technologies are limited to DHA production, and Algisys believes it has overcome scaling issues that have plagued competitors in developing algae strains capable of producing large quantities of EPA.  

Aurora Algae:  Is a UC Berkeley spinout from the lab of Dr. Krishna Niyogi. Aurora grows its proprietary algae strain in man-made ponds, allowing open pond growth, which requires less capital equipment than other techniques.  The company was originally focused on biofuels, but with Omega-3 valued at over $1,000 per ton, the company has added a large neutraceutical program.  Aurora believes it can grow algae at unparalleled scale, owning to the company’s “Raceway Track” strategy.  Raceway ponds, shaped like horse tracks, are lined with plastic or cement and are only 20-35 cm deep to ensure adequate exposure to sunlight. Paddlewheels provide motive force and keep the algae suspended in the water. The ponds are supplied with water and nutrients, and mature algae are continuously removed at one end.  It is unknown whether Aurora is focusing on EPA or DHA, or both.

Catabasis Pharmaceuticals:  Is a Harvard spinout from the lab of Dr. Steven Shoelson that is focused on addressing dosing challenges with Omega-3.  Catabsis seeks to create an Omega-3 + salicylate drug conjugate.  Salicylate, like Omega-3, has been shown to have anti-inflammatory properties but requires very high dosing (~4mg / day).  By linking Omega-3 (DHA and EPA) to salicylate, Catabasis believes it can dramatically lower the amount of dose required for each drug and increase overall drug efficacy.  Catabasis seeks to development anti-inflammatory products in the areas of diabetes, irritable bowel disease, lipid disorders, and cardiovascular disease.

CORPORATES

Martek Biosciences Corporation: Specializes in isolating DHA from fish oil.  Martek is publicly traded, with a market cap of around $300 million.  The company has started to develop its own algae program and patented two fermentable strains of microalgae that produce oils rich in DHA. A similar patented process was developed for a fungus that produces oil rich in arachidonic acid, ARA. Both DHA and ARA are important nutrients for infant development, while DHA has health benefits that extend throughout life. 

Ocean Nutrition: Ocean Nutrition controls 70% of the world’s DHA and EPA production.  The company is located on the Nova Scotia coast in Canada, and leverages the nearby fishing grounds to produce its Omega-3 products.  GSK and many other neutraceutical companies source their raw Omega-3 material from Ocean Nutrition. 

Solae Soy Company: Solae was formed in 2003 and is a subsidiary of Dupont.  In 2007, Solae formed a joint venture with Monsanto to generate Omega-3 from soybeans. Monsanto genetically modified the soybean genome by inserting two genes - one from a plant related to primrose and another from a fungus. The modified soybeans will the produce stearidonic acid (SDA), which is converted to EPA in the body. Soybeans are ubiquitous in modern day diets, so people could increase their Omega-3 levels without changing any of their dietary behaviors.