Why Are Anti-Monsanto Company Activist Groups Targeting Solazyme?

Activists have turned their misinformation campaign to synthetic biology. Source: Occupy Monsanto/Twitter.

It was only a matter of time before activist groups came knocking on synthetic biology's door to complain about the assumed similarities to biotech crops produced by companies such as Monsanto (NYSE: MON  ) . The host organisms of each platform are, after all, genetically modified organisms. An initial wave of misinformation from activist groups targeted the food ingredients manufacturer Evolva, but went largely unnoticed by the general public or investing community. The company's process for creating vanillin was claimed to potentially harbor unknown health risks stemming from the production process (even though all genetic material is removed from the final product, which is identical to vanillin grown through agricultural means), to be unsustainable (even though 95% of vanillin sold commercially is synthesized from petroleum), and to be unnatural (though if creating something from a living thing isn't natural, then I don't know what is!). Now, activist groups such as ETC Group, Friends of the Earth, Food & Water Watch, Organic Consumers Association, and others have thrown their fury in a different direction.

Renewable oils manufacturer Solazyme (NASDAQ: SZYM  ) and one of its customers, Ecover, the owner of the Method cleaning brand, were attacked with a host of claims similar to those slung at Evolva. The production process was claimed to potentially harbor unknown health risks (again, all genetic material is removed from the final product), to be largely unregulated (it's heavily regulated by multiple institutions in the United States and Brazil), to be spawned from a scary process in a laboratory (meaning industrial fermentation), and to be unsustainable (the algal oil in question is more sustainable and of higher quality than the palm-derived oil it replaces).

The company's feedstock supplier was even indirectly caught in the fearmongering, even though the Orinduiva mill supplying Solazyme's Moema, Brazil, facility is certified by Bonsucro, a third-party organization sponsored by the World Wildlife Fund that promotes sustainable sourcing and harvesting of sugarcane. Unfortunately, this is surely just the beginning of the attack on synthetic biology. What does it mean for investors? Allow me to provide some background information, which will lay the foundation for an in-depth myth-busting article early next week that corrects the misinformation.

What happened?
Several events have occurred in the past month that together resulted in the situation today. The biggest hit to Solazyme came from an article published in The New York Times questioning the use of "biofuels tools in consumer products" (an article that has since had one correction posted). Several more blog posts on other activist websites have been published spreading the misinformation I've mentioned about Ecover's laundry detergent and Solazyme's algal oils (I've reached out to all authors to correct errors and offer an open dialogue, but no one has accepted my offer).

Ecover's natural laundry detergent containing Solazyme's algal oils is only currently sold in Europe. Source: Amazon.com.

Fast-forward one month. Activist groups sent an open letter to Ecover's CEO demanding that the company discontinue its use of renewable algal oils produced by Solazyme, going so far as to call them a "false solution" to sustainability. 

Organizations that support the responsible use of biotechnology have responded to the misinformation with several posts, but this is surely only the beginning. Like it or not, Solazyme and synthetic biology will fall victim to the same wild accusations flung at Monsanto. I've explained why blanket terms, such as GMOs, simplify the discussion regarding the use of modern biotechnology tools related to biotech crops and therefore impede the consumer's ability to make a fact-based decision. Be wary of the same grouping of multiple technologies in the conversation regarding synthetic biology.

What does it mean for investors?
This is something investors should be aware of, but I don't think fearmongering will have much of an effect on Solazyme. Facts tend to win in the end. From a developmental standpoint, sugar producers in Brazil, the United States, China, and Europe have expressed interest in entering higher-value markets. Synthetic biology allows feedstock suppliers to convert sugar, a commodity, into flavors, fragrances, cosmetics, high-value oils, and other more valuable products. That bodes well for continued, long-term growth at Solazyme once it proves it can reliably produce at commercial scale. In fact, the company is already in talks with potential feedstock partners that represent an annual renewable oil capacity of over 1 million MT, which represents an estimated $2 billion in annual revenue. 

In the near term, Solazyme is on track to have 122,000 metric tons of annual renewable oil capacity by the end of 2015, compared with less than 2,000 MT at the beginning of 2014. That will result in an explosion of revenue (although it will be less than what Wall Street expects at the moment) and the ability to further validate its technology. The company may not be profitable until the end of 2015 on a quarterly basis, and not until 2016 on an annual basis, but I believe long-term investors will be rewarded handsomely.

To illustrate the importance and value of Solazyme's approach and how the multiple industries it serves will respond, simply consult the long-term growth chart for Monsanto, which has received much harsher criticism to date.

MON Chart

MON data by YCharts

Fearmongering is no match for creating real, tangible value -- something that Solazyme and synthetic biology are poised to deliver. Better yet, the same synthetic biology platform can serve multiple, unrelated markets that greatly exceed the value of the agricultural industry. Monsanto's growth may be an underestimation of what awaits far-reaching companies such as Solazyme.

Foolish bottom line
Are there valid risks and concerns with synthetic biology? Absolutely, but risks and concerns are not something that affect only synthetic biology. All technologies come with risks and rewards. Many institutions exist to protect consumers by mitigating those risks (they can never be completely eliminated) and are regulating the use of Solazyme's technology as we speak. The industry is open to discussing more modern regulations that adequately mitigate these risks, but activist groups aren't interested in anything that allows safe biotech products onto the market.

This is a complicated issue, but it doesn't have to be. Early next week, I'll debunk myths reported by activist groups accusing Solazyme, its feedstock supplier, and Ecover of offering unsustainable or unsafe products. The takeaway is that Solazyme investors shouldn't be affected by the actions of activist groups.

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Read/Post Comments (17) | Recommend This Article (6)

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 June 14, 2014, at 7:44 AM, TMFmd19 wrote:

    Great stuff Maxx!

  • Report this Comment On June 14, 2014, at 1:47 PM, FoolJohnny5 wrote:

    Maxx, why are you raising issues investors previously had no concern about and then telling them to not worry about it? I am glad that you agree with everyone else that they shouldn't be concerned about it.

    Why you further fan the flames by trying to make it an issue is counter-productive.

  • Report this Comment On June 14, 2014, at 3:18 PM, Ghoztdawg wrote:

    Why would you even give these ridiculous groups credence by acknowledging their behavior? They are members of the flat earth society and are some of the most uninformed people I have ever seen. The anti-GMO crowd is very similiar to the Climate Change Denier crowd...in both cases the scientific consensus is clear, but the don't "believe" the science or statistics, as if that has anything to do with it.

    http://www.realagriculture.com/2013/05/10-reasoned-responses...

    http://www.geneticliteracyproject.org/2013/08/27/glp-infogra...

    http://iopscience.iop.org/1748-9326/8/2/024024/pdf/1748-9326...

  • Report this Comment On June 14, 2014, at 3:34 PM, Ghoztdawg wrote:

    10 Reasons We need Biotech Foods & Crops

    1.Biotech crops can help address the Global Food Crisis

    Biotechnology has helped farmers grow 311.8 million tons more food in the last 15 years! (source: www.croplife.org)

    2. Crop Biotechnology helps small farmers

    90% of the 17 million farmers who grow biotech crops are resource-poor with farms of less than 10 hectares.The growth rate for biotech crops is at least three times as fast and five times as large in developing countries than industrialized countries. (source: ISAAA, New York Times)

    3. Biotech crops spur global economic growth

    Economic benefits of GM crops amounts to an average of over $130/hectareIn the

    last 16 years, planted biotech crop acres have increased 100-fold from 1.7 million hectares to 170 million hectares.(source: ISAAA)

    4. Farming using GM crops reduces chemical use

    Biotechnology saves the equivalent of 521,000 pounds of pesticides each year and

    helps cut herbicide runoff by 70 percent. (sources: ISAAA, PG Economics)

    5. Biotech crops increase yields

    Productivity in GM crops has delivered gains in some cases that are 7–20% higher than conventional varieties (which are on average 33% higher than organic yields (sources: Nature, PG Economics)

    6. Biotech crops help increase income of poorer farmers, reducing poverty and malnutrition

    As the rate of Indian farmers adopting GM cotton has grown, calorie consumption linked to increased incomes has grown and undernourishment in families has dropped, translating into a 15–20 percent reduction in food insecurity if all the non-Bt adopters in India alone take to this technology.(source: PLOS)

    7. Farming with Biotech crops is sustainable

    GM crops in general need fewer field operations, such as tillage, which more residue to remain in the ground, sequestering more CO2 in the soil and reducing greenhouse gas emissions. In 2011, these practices were equivalent to removing 10.2 million cars from the road for one year. (source: PG Economics)

    8. Foods tweaked by Biotechnology are safe to eat

    Over 25 years of independent research,and there is no documented evidence of harm to human health, or deaths from consumption of GM foods since they were introduced to the market. None. Zero. (sources: National Research Council, European Commission)

    9. Genetically modified foods improve nutrition and health

    The new generation of GM crops—Golden Rice, which delivers vitamin A enhanced rice, high carotene mustard seed oil, Vitamin A enhanced cassava, enriched sweet potatoes and even edible vaccines—are just a few innovations awaiting approval. (source: Plant Physiology, Journal of American College of Nutrition, Gates Foundation)

    10. GM crops and foods complement conventional and organic farming

    Independent scientists reject claims that GM crops or animals “contaminate” or in anyway endanger our food supply or produce dangerous “Trojan genes.” (source: NPR, Nature, USDA)

  • Report this Comment On June 14, 2014, at 4:53 PM, TMFBlacknGold wrote:

    @FoolJohnny5

    I'm glad that you don't have an issue with it, and I'm sure others feel the same way, but don't speak for everyone. I'm sure there are plenty of investors that don't see, hear, or otherwise deal with activists and misinformation everyday as those in the industry do.

    The company certainly cares. And there are enough in the industry, in the investing crowd, and among consumers that care about the larger issue at play: limiting synthetic biology before it even gets out of the gate.

    This is larger than Solazyme and much larger than an investment in Solazyme. Debunking claims and introducing the issues here on The Motley Fool allows me to reach a new audience with facts and information, just as I've done with the broader topic of synthetic biology.

    This is important, specifically, because Ecover is one of the first companies to utilize a synthetic biology ingredient in a consumer product so openly and to market it as sustainable and natural (it is also widely admired by activist groups for its Method brand). If you think this is going to blow over and not be an issue in the future for Solazyme and others, then I fear you may be wrong (even if most concerns are b******).

    I know there's a piece of the investment crowd that likes to label my writing "hand-waving", "fear-mongering", and "poking holes in the Company X story", but I won't apologize for not wearing rose-colored glasses in life. There are risks to every investment and they should be discussed as well. So, this isn't about trying to stoke flames or inject fear in investors. Just spreading information.

    Best wishes,

    Maxxwell

  • Report this Comment On June 14, 2014, at 4:57 PM, TMFBlacknGold wrote:

    @Ghoztdawg

    See my comment to FoolJohnny5 above for your first comment.

    Answering your second comment -- yes, I agree that most applications of biotech crops are good and work towards the same goals as activist groups (more sustainable food that lessens our environmental footprint and is accessible to the masses). But I think synthetic biology is different than that and, in some ways, directly competing with Big Ag in several markets and offering even more sustainable solutions to a obstacles facing the food supply.

    Best,

    Maxxwell

  • Report this Comment On June 14, 2014, at 9:40 PM, funfundvierzig wrote:

    We have observed that Freaks of the Earth and other Luddite groups overlap with the anti-vaccination crowd who tragically and ignorantly expose their very own children to measles, mumps, whooping cough, and yes, even polio! ...funfun..

  • Report this Comment On June 14, 2014, at 11:50 PM, Ghoztdawg wrote:

    As far as GMO Food safety, again the facts are clear...

    The American Medical Association (USA)

    “There is no scientific justification for special labeling of genetically modified foods. Bio-engineered foods have been consumed for close to 20 years, and during that time, no overt consequences on human health have been reported and/or substantiated in the peer reviewed literature.”

    The National Academy of Sciences (USA)

    “To date more than 98 million acres of genetically modified crops have been grown worldwide. No evidence of human health problems associated with the ingestion of these crops or resulting food products have been identified."

    Food Standards Australia New Zealand (Australia & NZ)

    “Gene technology has not been shown to introduce any new or altered hazards into the food supply, therefore the potential for long term risks associated with GM foods is considered to be no different to that for conventional foods already in the food supply.”

    The French Academy of Science (France)

    “All criticisms against GMOs can be largely rejected on strictly scientific criteria."

    The Royal Society of Medicine (UK)

    “Foods derived from GM crops have been consumed by hundreds of millions of people across the world for more than 15 years, with no reported ill effects (or legal cases related to human health), despite many of the consumers coming from that most litigious of countries, the USA."

    The European Commission (Belgium)

    “The main conclusion to be drawn from the efforts of more than 130 research projects, covering a period of more than 25 years of research, and involving more than 500 independent research groups, is that biotechnology, and in particular GMOs, are no more risky than conventional plant breeding technologies.”

    The Union of German Academics of Sciences and Humanities (Germany)

    “In consuming food derived from GM plants approved in the EU and in the USA, the risk is in no way higher than in the consumption of food from conventionally grown plants. On the contrary, in some cases food from GM plants appears to be superior in respect to health.“

    Seven of the World’s Leading Academies of Sciences (Brazil, China, India, Mexico, Third World Academy of Sciences, The Royal Society, & The National Academy of Sciences of the U.S.)

    “Foods can be produced through the use of GM technology that are more nutritious, stable in storage, and health promoting—bringing benefits to consumers in both industrialized and developing nations.”

    World Health Organization (Switzerland)

    “No effects on human health have been shown as a result of the consumption of GM foods by the general population in the countries where they haven approved.”

  • Report this Comment On June 14, 2014, at 11:55 PM, Ghoztdawg wrote:

    Ooops. The last one should be...

    World Health Organization (Switzerland)

    “No effects on human health have been shown as a result of the consumption of GM foods by the general population in the countries where they have been approved.”

  • Report this Comment On June 15, 2014, at 12:22 AM, mebrownj wrote:

    There are Luddites with every technology. I remember a discussion my grandparents had about people who were against canning food because of the rare instances of botulism. We who embrace scientific methodology embrace discussion, which include irrational fears generated be changes larger that can be easily comprehended. Maxx, thanks for keeping right on top of the antiGMO, antiSynbio discussions. They could easily have a bad effect on our hoped for good investments and we need cool heads armed with facts to address the very real fear of change that some people have. Without the counterbalance it can spread to a larger movement against technology. It has happened before and we need to work to see that it doesn't happen here.

    Been following some of your tweet discussions. It's a tough job that you've taken on. Best of luck.

    Mack

  • Report this Comment On June 16, 2014, at 1:15 PM, kthor wrote:

    if people stop having kids then the need for GMO goes away, until then ....

  • Report this Comment On June 16, 2014, at 5:15 PM, dockofthebay wrote:

    This is from the New York Times article to which Maxxwell referred: "The industry is preparing to address questions about the impact of using such technology. This month, SynBioBeta, which bills itself as 'an organization dedicated to nurturing stable growth of the fledgling synthetic biology industry,' hosted a forum where companies like Amyris, Evolva, Monsanto and DuPont Industrial Biosciences discussed how best to shape public perception and prevent regulatory scrutiny."

    Maxxwell is Editor-in-Chief for SynBioBeta. So much for objectivity.

  • Report this Comment On June 16, 2014, at 5:34 PM, TMFBlacknGold wrote:

    @dockofthebay

    I don't hide that I am quite involved in the industry, but The New York Times article only referenced the meeting through the eyes of the activist group Friends of the Earth, which dramatically misrepresented what took place at the meeting. That's not very respectable and was not taken lightly.

    If someone as deeply involved as me shouldn't be speaking to the public about synthetic biology, then who do you propose? Do you go to the doctor when you're sick? Do you take your car to the mechanic when it breaks? I bet so, because you trust their opinions. Why should science be any different?

    I welcome you to find anything false or misleading in the article above.

    Maxxwell

  • Report this Comment On June 17, 2014, at 7:49 PM, RealityCounts wrote:

    I'm a few days late reading this; yesterday I read elsewhere that SZYM applied for patents for an algal-based treatment for certain types/stages of Diabetes. Maxx, please help me by indicating to

    your hosts that I gladly volunteer to be a crash dummy for this one. Traditional Meds/Pharma just kill you, sadly. There has to be other ways

    .

    Fear-mongering Liberals will NEVER answer you back-they know they can't-not when you present the clear-cut facts. But what would you expect from this crowd-they can't even get their Poster Boy for Environmental Gloom and Doom to answer his critics. Yeah, that guy, the one who sits at 1600 Pennsylvania Avenue.

    We may be losing focus here; what happened to the Company (SZYM) who (as reported on Conservative Talk Networks) has flown a Boeing Jet across the U.S. with bio-produced synthetic high-grade SOMETHING a few months back, certainly more safe for the environment while reducing the wear and tear caused by corrosive kerosene to the jet itself??

    Yup-Libbies dream about this type of company, then they end up screaming about it because no one in THEIR camp is remotely intelligent enough to change the history of consumption while going forward with positive steps...

  • Report this Comment On June 18, 2014, at 10:55 AM, TMFBlacknGold wrote:

    @RealityCounts

    This isn't a political issue, nor are activist groups representing any one political party. This is about science and modern biotechnology, specifically.

    Maxxwell

  • Report this Comment On June 25, 2014, at 2:27 PM, upl8n8 wrote:

    One big criticism of this article and the NY Times article is the importance given to the activist groups. The ETC Group, whose ringleader Jim Thomas seems to be the most active commentator on Solazyme, is a VERY small group. Facebook likes haven't even reached 2000.

    Friends of the Earth is a much larger organization, and is significant, but I find it ironic that everyone always lists The ETC Group first.

    Ecover has just responded to Jim Thomas' article, and has stated that they are not using Syn Bio:

    goo gl/yj7n5s

  • Report this Comment On June 26, 2014, at 12:35 PM, TMFBlacknGold wrote:

    @upl8n8

    You're right, some of these NGOs are very small. However, when they show up at international assemblies such as the Convention on Biological Diversity and are allowed to sit in on panels next to informed scientists and influence regulations (suggesting that the world impose a moratorium on synthetic biology), then I don't really think Facebook likes are the best way to gauge their influence.

    Ecover stated that it doesn't use synthetic biology -- and I'm not sure if Solazyme is also going along with that -- but calling my car a buggy doesn't change the fact that it's a car. The algal oils it sources are most definitely sourced from synthetic biology production methods. Other than my increasing understanding of the industry, Solazyme told me so in person.

    Maxxwell

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