How Designer Microbes and the Organism Industry Will Reshape Our World

By the end of the decade, products created from microorganisms will be in 90% of American households. Source: Amyris.

What would a computer be without transistors? Well, not much. A similar question can be asked of next-generation industrial biotech platforms enabled by synthetic biology: What would Solazyme (NASDAQ: SZYM  ) , Amyris (NASDAQ: AMRS  ) , or any other industrial biotech company be without organisms? And again, a similar conclusion is reached. It may not be obvious from the early days of synthetic biology, but several loose, general terms and businesses used to describe the development of highly optimized custom microorganisms will eventually be combined into one well-defined industry: the organism industry.

Today, Amazon, Apple, and Google leverage suppliers such as Intel and NVIDIA for the graphics cards, processors, and memory drives that power their electronic product portfolios rather than build massive manufacturing facilities to assemble chips and phones/tablets/computers. In the not-so-distant future, industrial biotech companies will be able to leverage the infrastructure of companies that specialize in building organisms and programming genomes rather than build their own in-house capabilities. They'll simply specify a chemical or material needed for commercial production, place an order, and receive a fermentation-ready organism in several months' time.

It may seem farfetched or too good to be true, but I'm sure you can see the power of such infrastructure. And in fact, the foundation of the organism industry is being laid today by companies such as Ginkgo Bioworks, Intrexon (NYSE: XON  ) , Synthace, and others. Their goal is ambitious but simple: Invest in people, robots, software, and biological parts today to drive costs down and make the idea of building an internal organism engineering team an economical nightmare (emphasis on robots). Why invest tens or hundreds of millions of dollars into hundreds of employees or dozens of robots when you can use someone else's for a fraction of the cost?

The robots at Tesla Motors are different than liquid handling robots utilized by the organism industry, but they are both on the same level of awesome. Source: Tesla Motors presentation.

While start-ups and established companies in the agricultural, industrial chemicals and enzymes, and pharmaceutical industries looking to corral the incredible possibilities of synthetic biology can leverage the early infrastructure of the emerging organism industry today, companies hailing from Synthetic Biology 1.0 (the term applied to Solazyme, Amyris, Gevo, and other early adopters) had no choice but to develop their own organism engineering capabilities. The results have varied -- as have public disclosures of the results -- but it's difficult to argue against the fact that Amyris has among the most advanced organism engineering capabilities in the industry.

Introducing "Design, Build, Test"
When it opened its doors in 2003, Amyris simply didn't have the option to leverage existing infrastructure to design organisms. The world was just wrapping up the Human Genome Project, which enabled many advances in DNA sequencing, and DNA synthesis (building genes made-to-order) technologies were still not feasible on a large scale.

Good news for organisms: DNA synthesis costs are falling dramatically. Source: Dr. Rob Carlson / synthesis.cc

The company also had a strong technology base; having spawned from the lab of Jay Keasling at UC Berkeley and its work on engineering the isoprenoid pathway into yeast, the king of fermentation. There was no tangible infrastructure to support it at the time, but Keasling conjured up the possibility that one day biologists and engineers could sit in front of a computer, design and test a virtual organism, and then build its genome and toss it into a fermenter. Yeah right. Right?

Characterizing biology into a set of basic principles with high predictability is still an elusive endeavor today, so Amyris had to settle with a "Design, Build, Test" process for biology. It was less efficient than the "Design, Test, Build" cycle originally conceived; scientists had to build each organism then test it, but it marked a major advance nonetheless. After designing and building thousands of unique yeast strains, the company is left with the problem of screening them for the most efficient specimens. There are several ways to approach screening, but Amyris has invested heavily in High Throughput Screening, or HTS, which relies heavily on automation (robots), software, and learning at each iteration to drive costs down and compound value over time.

Today, Amyris has one of the most powerful organism engineering and screening platforms in the industry. The company can utilize HTS to screen over 100,000 yeast strains each month, test unique (from a genetic material standpoint) strains in micro-wells, and move the most promising to lab scale fermentation tests. Remember that talk about compounding knowledge from each iteration? Well, Amyris can now predict industrial robustness of a yeast strain at 200,000 liter volumes from 2 liter levels. Heavy investment, process tweaking, and data collection have allowed the company to reduce design costs per strain by 95% from 2009 to 2012. 

Source: Amyris presentation.

While built around the production of farnesene, which can be transformed into a range of commodity and specialty chemicals, the same infrastructure can be leveraged for any molecule, such as Amyris' budding portfolio of flavor and fragrance molecules. It's a powerful capability that should not be overlooked by investors. Even if you dismiss it initially, it won't be possible to ignore much longer. As CEO John Melo stated on a past conference call:

Using an intricate cycle of design, build, test, and learn, we are making commercially viable what was once hypothetical production of targeted hydrocarbons from living organisms. Amyris' goal is to build a specific living factory after a single design cycle in a matter of days instead of weeks, or months or in the past, years.

Amyris will continue to create value from its investment in a proprietary "Design, Build, Test" process, but current and future companies will be able to skip the upfront megainvestment altogether. Simply put, Keasling's dream of a "Design, Test, Build" process is closer to reality than you may think.

Hi, My Name is: "The Organism Industry"
The technology industry is insane to me from both a valuation and capital cost standpoint. Consider that you or your crazy Uncle Joe could conceivably sit in pajamas, on a couch, and build a website or mobile app that will generate millions or billions in revenue. It costs you virtually nothing if you have the right tools and requires little outside investment to commercialize and scale. It's lean. Simply reference Angry Birds or Facebook.

Biotechnologies take considerably longer to commercialize, require a jaw-dropping amount of investment and capital, and suffer from a lack of accessible tools from which to start with. It's difficult to conceive a Steve Jobs of the synthetic biology industry building a commercial product (organism) in his or her garage and taking it to investors or consumers. Or, it was anyway.

By switching the "Build" step with the "Test" step, scientists are able to cheaply, quickly, and efficiently learn from mistakes to design the optimal organism for any process. Essentially, the organism industry aims to characterize an organism with lines of software code. That can translate into some incredible possibilities -- such as you sitting in your pajamas, on a couch, and designing a revenue generating organism. No Ph.D required. Think of the explosion in bioeconomy revenue -- already growing at 15% annually -- that can be enabled.

Three things in particular are emerging and combining to make the organism industry possible:

  1. Software: bioCAD/bioCAM software platforms enabling design and testing of virtual organisms (see TeselaGen, Genome Compiler, and even Autodesk).
  2. Automation: Robots that can perform repetitive tasks more quickly and accurately than an overworked intern with an arsenal of pipettes.
  3. Cheap biological parts: Organism builders such as Ginkgo and Synthace can leverage the infrastructure of the DNA synthesis industry (see Gen9, Integrated DNA Technologies, and DNA 2.0) to order specific genes to build customer organisms in a matter of weeks. Likewise, each can keep important parts stored onsite for liquid handling machines to access.

Think it's all hype? Allow me to introduce Tom Knight, an important father of the synthetic biology industry (along with Keasling, Drew Endy, and George Church) that co-founded Ginkgo Bioworks. Knight put his electrical engineering degree to good use at the MIT Computer Science and Artificial Intelligence Laboratory, but foresaw biology becoming programmable and predictable in much the same way transistors were built. So, after teaching himself biochemistry, genetics, and cellular biology, he inspired the construction of the following organism factory at Ginkgo:

Ginkgo utilizes (1) software to design organisms, (2) scalable rows of robots to automate bench work, and (3) a "warehouse" of biological parts to build lifeforms for customers. Source: Ginkgo Bioworks.

Still think it's too good to be true? A lab similar to the one portrayed in the graphic above indeed exists. I've seen it.

Foolish bottom line
What does all of this mean? Does Amyris' HTS platform guarantee success? Absolutely not, but it will continue to drive technology costs and development timelines lower. Even by taking a bigger picture view, we must admit there's a large gap in what we actually understand and need to understand to make biology truly programmable in a highly predictable manner. You may think it's an impossible idea or something that will never happen. That's often how the future works, I suppose. The good news is that the industry has been careful to not hype the potential, and is gradually (or rapidly, relative to your view) turning potential into tangible value: molecules that slash production costs, provide environmental benefits, and return economic value to countries, companies, and consumers. There may be plenty of work left to do, but the organism industry is about to arrive. Get ready.

The organism industry can transform your portfolio

Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980's, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in late 1990's, when they were nothing more than an upstart online bookstore. Or, perhaps, the pioneers of the organism industry. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play", and then watch as it grows in EXPLOSIVE lock-step with it's industry. Our expert team of equity analysts has identified 1 stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.


Read/Post Comments (15) | Recommend This Article (34)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 08, 2014, at 9:44 PM, VitamanD wrote:

    Hippocrates first argued that all disease begins in the gut and modern science is really suggesting that he was more right than we had suspected over the past 50-100 years. Gut microbiota is where it's at; if we can find ways to make the right balance of different organisms we can prevent or treat obesity and in turn other chronic diseases. I'm less interested in off the wall ideas like processors when we are so close to huge breakthroughs in our own gut.

  • Report this Comment On March 09, 2014, at 9:33 AM, TMFBlacknGold wrote:

    @VitamanD

    There are many great discoveries awaiting us in the microbiome (see the Human Microbiome Project). However, it's important to note that the organism industry can extend far beyond industrial biotech. Indeed, many companies are targeting health applications, from startups to established pharma such as GlaxoSmithKline and Pfizer. If it's powered by DNA the organism industry can/will build it.

    Maxxwell

  • Report this Comment On March 09, 2014, at 5:05 PM, Mega wrote:

    Synthetic biology is cool, but 99% of Fool readers (including me) don't have the expertise to invest in these unprofitable, speculative companies.

    Of course, the bull market has convinced everyone that they are an expert on everything. There is no need for risk management or caution when everything goes up.

  • Report this Comment On March 09, 2014, at 7:49 PM, TMFBlacknGold wrote:

    @Mega

    I'm working hard to educate my audience. You should know that Amyris will be cash flow positive in 2014 and profitable in 2015. Solazyme should be profitable soon as well. Better times are ahead, and although both companies could face setbacks in the short term, I feel it's nearly impossible to lose at current market caps with a long term view.

    Maxxwell

  • Report this Comment On March 09, 2014, at 8:14 PM, stockanal45 wrote:

    @Mega

    Looks like I'm in the 1%! Whooooo!!!

  • Report this Comment On March 09, 2014, at 8:21 PM, stockanal45 wrote:

    @Maxxwell

    Solazyme definitely has a future. It may or may not be in biofuels, but their market is so diverse, the potential is endless.

    Amyris, on the other hand, looks to be on life-support.

  • Report this Comment On March 09, 2014, at 9:05 PM, Mega wrote:

    TMFBlacknGold wrote: "I feel it's nearly impossible to lose"

    stockanal45 wrote: "Looks like I'm in the 1%! Whooooo!!!"

    Thanks for proving my point.

    PS Maxx, do you own AMRS? Your profile doesn't match the disclosure on this article.

  • Report this Comment On March 09, 2014, at 9:05 PM, Mega wrote:

    "You should know that Amyris will be cash flow positive in 2014 and profitable in 2015. Solazyme should be profitable soon as well."

    I'm sure there a lot of things that I should know. But I don't know any such thing.

  • Report this Comment On March 09, 2014, at 11:12 PM, TMFBlacknGold wrote:

    @Mega

    "PS Maxx, do you own AMRS? Your profile doesn't match the disclosure on this article."

    Yes. I purchased shares two trading days after this article was published; in compliance with The Motley Fool's disclosure policy and trading rules:

    http://www.fool.com/Legal/fool-disclosure-policy.aspx

    Simply, this article made it to the top of the site on Friday.

    I wrote: "You should know that Amyris will be cash flow positive in 2014 and profitable in 2015. Solazyme should be profitable soon as well."

    That, of course, is what the companies are guiding for. "Will" is a bit strong.

    Maxxwell

  • Report this Comment On March 09, 2014, at 11:14 PM, TMFBlacknGold wrote:

    @stockanal45

    "Amyris, on the other hand, looks to be on life-support."

    I would be interested to know why you think this is true. Please explain,

    Maxxwell

  • Report this Comment On March 10, 2014, at 8:44 AM, TopAustrianFool wrote:

    Its hard to beat the economics of scale with a process that already occurs naturally. Extraction of oil and NG that required less capital and risk to extract will always be cheaper.

    Also these biotech companies assume a certain model process of "fossil" fuel production which may not be correct. If the correct model include energy from the mantle which is due to radioactive decay, then it will be hard to beat with just microbes.

    In short, it is a huge risk to invest in these biotech companies.

  • Report this Comment On March 10, 2014, at 9:51 AM, TMFBlacknGold wrote:

    @TopAustrianFool

    Eh, not quite. For one thing, the petroleum industry got a massive head start in developing processes. Additionally, some chemicals are in fact cheaper to make through biochemical means (succinic acid, for instance). These are called bioadvantaged chemicals. The hope is that as our understanding of biology grows, so, too, will the list of bioadvantaged products.

    The current list is quite massive already, however, and represents a major economic opportunity for the industry.

    Maxxwell

  • Report this Comment On March 10, 2014, at 5:30 PM, TopAustrianFool wrote:

    TMFBlacknGold,

    I hope you are right, but only long-term economics will tell. So far it is oil the one with the record.

  • Report this Comment On March 11, 2014, at 11:55 AM, TMFBlacknGold wrote:

    @TopAustrianFool

    Well, there are bioadvantaged products being produced biologically today. I didn't make up the term. Succinic acid (Genomatica, BioAmber, BASF), various alcohols (ethanol, butanol), farnesene (Amyris), lactic acid, and other important everyday chemicals make the list.

    The hope is that the list will swell as we further our understanding of biology.

    Thanks for your comments.

    Maxxwell

  • Report this Comment On July 19, 2014, at 12:30 PM, bioeconomy wrote:

    @TopAustrianFool

    Re petro vs biology, I'll be more direct than Maxx.

    To be an integrated petroleum company today is at least a $50 billion proposition. There are smaller firms, but they are either on the way up or the way down. You can be a gas company for less, largely because the infrastructure costs are lower and you don't need so much in the way of thermodynamics to process your product before it hits the market. Still, there is lot's of steel in the ground, as they say, even for gas. The physics and economics of fossil fuels (that is, thermodynamics and surface to volume issues) require that companies be gigantic; they can only operate stably at large scales (except in very special, niche circumstances).

    In contrast, biology already works technically and economically at all scales. One word: beer. Brewing works at a million liters and it works at 10 liters. You can be a local microbrewer, or you can be InBev. Both can be profitable, though obviously the absolute revenues vary widely. Beer is an existing example of distributed biological manufacturing.

    But here is where biology really wins: organisms directly manufacture high value compounds. The vast majority of a barrel of oil (~85% by volume and 15% by value) is worth only a ~$1 per liter, and we burn it in our cars or put in in our roads. The other 15% by volume is 85% of the value, and it constitutes the plastics, solvents, and raw materials we build our world out of. Amyris and others made an initial misstep by focussing on low margin fuels (a decision forced by VC investors). Almost everyone in the industry now sees the strategic error, and is focussing on the other end of the barrel. A wide variety of biotech start-ups have already demonstrated that they can make everything now found in a barrel of petroleum; whether they can do so economically at lower oil prices is another question, but that's capitalism, no? Beer is mostly water (especially in the US), and as fermentation (and synthesis) is gradually used to make ever more at the high end of the barrel (with prices up to $1000/liter), many more options will open up for manufacturing using biology. More on "Microbrewing the Bioeconomy" here: http://www.synthesis.cc/2014/05/2014-us-brewery-count-chart....

    It's true that many companies are still figuring out how to make this work on the ground (and in the fermenter). But biotech revenues in the US were more than $350 billion in 2012, growing at more than 15% annually. (Year-to-year growth is very noisy, in the range of 5% to 20%, which I will be publishing later this year in Nature Biotechnology.) Biotech was already more than 2.5% of US GDP in 2012, and the *growth* in biotech revenues accounted for ~7% of total US GDP growth. More here: http://www.synthesis.cc/2014/01/the-us-bioeconomy-in-2012.ht... What else is growing 15% annually?

    Finally, you have to remember that petroleum has a century head start. But scale doesn't win automatically, it only wins if is economical. Ultimately, the market decides, and biology looks to have serious advantages over a wide swath of manufacturing. It will just take time.

    Biology is the future of the economy.

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