Daring to Dream Big

Daring to Dream Big

Daring to Dream Big

The definition of insanity is doing the same thing over and over again and expecting a different result – Albert Einstein

 

Another 300 million tonnes of plastic every year

Since World War II we have consumed 5 billion tonnes of plastic, much of which has ended up in a landfill or the oceans.

Making ourselves healthier by depleting global fish stocks.

In 2015, a consensus of expert opinion suggested that a recommended minimum daily dose of 500mg the Omega 3 oil requirement for the world population was 1.3 million metric tonnes. The world fish catch is not elastic and we are already at a plateau. Thankfully we are still producing much less than that each year, but demand continues to grow, while fish stocks continue to be depleted.

 

Daring to think big enough to have an effect

 

In 2009 Patrick Walsh was a Professor at the National University of Galway, Ireland, had a vision of reducing the amount of energy in the production of biodegradable plastic. This biodegradable plastic ingredient is lactic acid. Used as a food preservative, curing agent, and flavoring agent. It is also an ingredient in processed foods and is used as a decontaminant during meat processing.

 

When broken down from poly-lactic acid, the lactic acid derived bio-plastic ingredient converts back to CO2 and water.

 

Humble, or destitute beginnings

 

By 2012 this small company, now named Cellulac, was €300,000 in debt but had secured €2.8m of EU grants for a pilot plant, with the conditions for the release of the grant be, that industry and investors had to contribute a further €9m.

 

New management was brought in. Even with the vision and the size of EU grant, finding €9 million for a pilot plant, that was never going to break-even, let alone be profitable, was equally never going to be built.

 

The team, which came from a previously successful company, Alltracel Pharmaceuticals, altered the direction and mission to address the glaring lack of infrastructure needed to commercialize the technology.

 

  • 25% of the solution, the Bacteria, was in place. Bacteria are easier to explain if I use the term Gremlins. Remember the movies from 1984 and 1990? If you spilled water on them, they multiplied. Just like Gremlins, Lactic Acid and Micro-algae multiply in water. They are incidentally, produced in separate tanks.
  • 25% was an industrial scale engineering solution. There was a need to punch the living daylights out of the Gremlin-like bacteria and micro-algae to begin the release of oils and bio-plastic ingredients into a soup-like mixture.
  • 25% was a low-cost recovery method. Enzymes are like the 80’s video game of Pac-Man. They consume the ghosts of the Gremlins shell to release the oils and lactic acid.
  • The last 25% was a requirement for a production facility that would deliver commercial scale production of the bio-plastic ingredient and Omega-3 oils.

 

Pulling the pieces together

 

In July of 2013, Cellulac reached the 50% milestone when it acquired the SoniqueFlo technology from Pursuit Dynamics (PDX).

 

If you know the history of PDX, you are probably thinking, why buy the failed PDX. Right? They had blown through £68 million GBP.

 

Well, for Cellulac, this was the equivalent of being handed the engineering equivalent of Pfizers side-effect for their heart treatment, turned erectile dysfunctional drug, Viagra.

 

SoniqueFlo was designed as an efficient heater that softened up grains before food, ethanol and beer production. The same technology worked 10 times better at smashing up softer cells on the recovery, or end, stage of oil and bio-plastic ingredient production.

 

It was like having millions of mini-Conor McGregors compressed into each SoniqueFlo reactor punching the oils and bio-plastic ingredient out of the Gremlin Bacteria and Micro-algae, preparing them for the final stage.

 

The beauty of this industrial scale solution is that it was already operationally successful in 25 production facilities across the food, bio-fuel and alcohol industries since 2010.

 

Later in 2013, Cellulac reached the 75% milestone when it secured access to the 2nd largest brewery in Ireland. This had the output equal to 100 times the size of the original pilot plant that had been the subject of the EU Grant in 2012. It was the former Diageo, Harp Lager production plant in Dundalk, Ireland. A state-of-the-art facility, fully automated, food and beverage grade facility.

 

The 100% milestone was reached faster than expected in 2015, with the acquisition of Aer-Bio. This was a small Enzyme expression protocol company. They specialized in the recovery of oils from micro-algae and production of Omega-3 using Enzymes (these are Pac-Man-like proteins that consume the outer layers of cells which have oil inside).

 

Cellulac had worked with Aer-Bio on a combination of SoniqueFlo and Enzymes since early 2014 to deliver a solvent-free production process for Omega-3 oils.

 

Proven Commercial Scale Production

 

In 2016, at a UK industry partner site, the conversion from a conventional solvent-based process to a solvent-free process was responsible for an 81% reduction of the downstream recovery cost of Omega-3 oils.

 

The outcome is a commercial scale solvent-free production process with sales of Omega-3 to one of the largest food ingredient companies in the world.

 

By 2017, Cellulac has achieved 3 out of these 4 stages:

 

  • Laboratory
  • Third-party pilot facility in Potsdam, DE. 1 x 1,000 litre vessel
  • Industry Partner commercial scale in Liverpool, UK. 6-Tonne per batch from one 80,000 litre vessel.
  • Cellulac production site, Dundalk, IE. 10 x 100,000 litre vessels and 10 x 400,000 litre vessels.There is a lot more going on and you can expect some major news before the end of this year.

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Low Energy Microalgae to Biofuel at Commercial Scale

Low Energy Microalgae to Biofuel at Commercial Scale

Low Energy Biomass to Bio-fuel at Commercial Scale

Food and Fuel for the 21st Century

 

Microalgae have come to the attention of the industrial and academic community over recent years because of their ability to harvest the energy of the sun and provide valuable molecules that offer great potential to provide fuel for the coming century and relieve the need and destructive outcomes that are associated with traditional fossil fuels.

 

Solvent-free wet extraction of fuels and sugars

 

For commercial microalgal biofuels to become a reality, the high production cost of oil extraction must be dealt with. A large contributor to the production cost base is the solvent-based process for cell destruction and oil extraction from the algae, which is both expensive and environmentally damaging.

 

4 year pilot to commercial scale success

 

Cellulac recently concluded a 4-year pilot scale to commercial scale project using the SoniqueFlo Sono-Enzymolysis Cell Disruption process with specific objectives to:

 

  1. Demonstrate the technical feasibility of cell wall breakage of Nannochloropsis and Schizochytrium;
  2. Validate a lower cost for enzyme-solvent free extraction compared to the solvent-based process;
  3. Verify environmental benefits of the enzymatic-solvent free process;
  4. Obtain required regulatory approvals for food-grade algal oil extracted using enzymes; and
  5. Leverage project results to commercialize enzymatically extracted algal oil and achieve sales of lysis technology to producers of algal oils.

SoniqueFlo treatment significantly damaged or destroyed cells.

 

Schizochytrium samples post-treated with enzyme:

  • Confirmed a greater than 10 fold reduction in the enzyme dose required for lysis.
  • 87-94 % of available lipid was separated from hydrolysis reaction using a disk stack centrifuge
  • Shortening of hydrolysis time to just 2 hours was also possible.

The success of this trial indicates strongly that SoniqueFlo technology undoubtedly has a role to play in improving the economics of commercial-scale production using an enzyme-based solvent free wet extraction process of algal oils.

 

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Cellulac Formally Requests Metabolix Shareholders to Consider Merger Proposal

Cellulac Formally Requests Metabolix Shareholders to Consider Merger Proposal

Cellulac Formally Requests Metabolix Shareholders to Consider Merger

Cellulac merger proposal to Metabolix worth $40m in assets and offtake agreement of $38m rejected in favor of closing biopolymer business and spending $35m over 7 years on crop science project with no revenue.

 

DEAR METABOLIX SHAREHOLDERS

 

me

London, UK. 25th July, 2016: Cellulac plc (@cellulac), is an industrial biochemicals investment technology company. Cellulac have been interested in Metabolix Inc., ($MBLX) for some time and after their announcement, in May 2016, of a strategic review, Cellulac made a formal proposal via the CEO to merge both companies. The proposal meant Cellulac would contribute industrial scale production assets with biochemical and biopolymer capacity, independently valued at up to $40m. In addition, terms for a manufacturers licensing agreement of the combined Metabolix and Cellulac biopolymer assets with access to debt and equity funding from Cellulac assets and shareholders for a commercially focused growth strategy of the enlarged entity.

 

The Board of Directors of Metabolix decided the $40m merger offer was not important enough to inform shareholders

 

A merger with Cellulac, based on the biopolymer intellectual property and associated institutional knowledge, would reduce Metabolix development overhead to a more manageable level where manufacturing license fees and future royalties would transform Metabolix, for the first time in 24 years, into a profitable part of an enlarged bio-based company. Synergies would contribute shared management and development costs across a larger corporate group, multiple revenue streams comprising of production equipment installations, recurring revenue from biochemical production, manufacturing product licensing agreements, process licensing with biopolymer offtake agreements worth $38m already in place.

 

Right up to July 2016, Metabolix continued to burn $2m a month. This was no surprise considering the content of the presentation at the Roth Investor Conference on the 15th March 2016 and reiterated in the year-end report later that month.

 

March 29th Metabolix conference call to investors the CEO stated:

 

“Looking ahead the company is turning its attention to the next step, moving from commercial pilot-scale operations to a commercial-scale specialties business”.

 

Yet within 7 weeks Metabolix had sold the exclusive global rights and future royalties on PHA use in medical devices for the price of less than one month’s burn rate.

 

Astonishingly, after wasting 2 months and what appears to be a further $4m in costs, the Metabolix Board declined the Cellulac merger offer.

 

The Board of Metabolix has been responsible for:

 

  1. The supervision, over 24 years, of $326m invested by shareholders in biopolymer research and development
  2. Appointing the current CEO in January 2014
  3. Raising and overseeing the current CEO spend $40m on the biopolymer business
  4. Presiding over an 89% drop in shareholder value in the last 30 months; and
  5. A 99% drop from all-time high
The same Board has now decided to:

 

  1. Write off the entire biopolymer business
  2. Dismiss 48 people relating to the biopolymer business
  3. Pursue a path of further shareholder value destruction in questionable scientific research for the next 7 years as a public company.
In a written note a former Metabolix Senior Scientist said:

 

In the case of PHA producing plants the PHA content in one leaf could not represent the low overall content of PHA in the biomass. Many public presentations were not telling the exact picture, but rather the ‘nice numbers’. As a scientist I always challenged this phenomena. The plant project today is on the table for rapid growing biomass. But knowing the rate limiting factors in growing plants it will not solve the world problems…

Cellulac Core Terms

 

  1. Cellulac merge on a 50/50% share for share basis with Metabolix
  2. The immediate cessation of the current business model of Metabolix avoiding further unnecessary expenditure
  3. The restructuring/divestment of the high R&D overhead and associated costs of Metabolix
  4. The business model focused on the commercial activities at the core of Cellulac technology
  5. Metabolix is renamed Cellulac to indicate a change of business model away from the R&D to a commercially focused Company
Questions for the Board

 

 

I have three questions for the Metabolix Board of directors:

 

  1. Why did you decline a merger proposal, without informing shareholders, valuing Metabolix in excess of $35m offering industrial scale biochemical and future biopolymer production capacity, access to asset backed debt and equity funding for commercial growth delivering multiple revenue streams from a combined technology platform that would make Metabolix a profitable contributor of the enlarged corporate entity?
  2. Was there a Board decision in May 2016 to close the biopolymer business when the Board signed off on the sale of patents for the exclusive global use of PHA in the high margin medical device sector for $2m, and if so, why was management allowed to burn through another $4m until the end of July 2016?
  3. Why are you willing to subject shareholders to 7 more years of equity value destruction by dilution, at $5m costs a year, with no foreseeable revenues, in an early stage research and development project, other than for survival with access to government grants?
In Closing

 

 

In my opinion, by declining the offer from Cellulac, current management and Metabolix Board demonstrate a complete lack of business acumen or commercial vision. Displaying utter contempt for shareholder value they are adopting a strategy that requires investment of $35m over the next 7 years leading to further destruction in equity value with no visibility of revenue, other than government grants.

 

It is incumbent upon the Board members, but especially Independent Directors, majority and minority shareholders to immediately review the reasons for this illogical decision and become vocal about Cellulacs’ offer that adds $40m in biochemical and biopolymer assets for commercial scale production and manufacturer licensing and offtake agreements. This is likely to be the last opportunity to transform Metabolix, a 24 year loss making company, into part of a high growth enlarged group with multiple revenue streams for biochemicals and biopolymers, which would be cash generative this year.

Gerard Brandon
Chief Executive

 

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NOTES TO EDITORS:

 

Cellulac is an industrial biochemicals investment technology company that collaborates with, and acquires, companies to exploit the combined production, intellectual property assets and institutional knowledge. We out-license non-core technology and expertise in exclusive and non-exclusive agreements, while at the same time, developing and extracting maximum value from the remaining core production and intellectual property assets that we acquire.

 

We seek to identify enzyme, bacteria, chemical process, fluid dynamic, electrical and software engineering efficiency opportunities within the bio-industrial technology sector that offer management synergies and hybrid integration and value added benefits to our existing technology platform. Such various technology combinations deliver valuable additions to production processes, improving margins and reducing costs in the bio-fuel and bio-chemical sector.

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Extracting real value from the Ethanol Industry

Extracting real value from the Ethanol Industry

Extracting Real Value From the Ethanol industry

Hybrid Solutions

 

There is no need to reinvent a billion dollar wheel of bio-industrial experimental development. True value can be extracted and integrated as hybrid synergistic solutions from the best-in-class of what already exists.

 

Over the last 10 years, the road to industrial biotechnology success, in the biofuel and biochemical sector, has been paved with yellow brick technology, paid for as if it were gold. There have been breakthroughs on many levels in pre-treatment, enzymes, fermentation and even downstream energy efficiency.

 

Cellulosic Ethanol Failure

 

Sadly, no single design has been enough to solve the scaling problems of a stand-alone Cellulosic production plant that is commercially viable. That is not to say that a solution does not exist if you are prepared to think and act outside a two-dimensional business model.

 

Valuable nuggets of gold can be found in this failed development Cellulosic Ethanol gold-rush and across the industrial biochemical industry. When pieced together as a total solution they offer the greatest financial incentive, and potential opportunity, to convert by-products of the $24bn ethanol production industry. This low margin commodity industry has the regulatory backing of the US Government (RFS) along with Federal and State Tax (LCFS) support. It is an industry desperate to reform into a high corn crush marginal return.

 

Dilemma: “Do Things Right” or “Do The Right Thing”

 

Industry participants have been getting financial support from government and pioneering investors. Failures have come on the back of MBA style case studies from managements doing things right. Success going forward lies, not just in doing things right, but doing the right thing by converting the unexploited by-product value that lies within the ethanol industry by building on the foundations of what remains failed, scaled, Cellulosic ethanol aspirations.

 

Gerard Brandon is CEO of Cellulac a company who have collaborated and acquired companies with intellectual property derived specifically from the biofuel and biochemical industry. By entering into exclusive and non-exclusive technology license agreements from the acquired non-core technology, Cellulac has been able to focus on the commercial development of the technology and management synergies. The mission is to extract maximum value from the remaining core production and intellectual property assets that are acquired.

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Have we Reached Peak Biofuel?

Have we Reached Peak Biofuel?

Have We Reached Peak Bio-fuel?

Is there really an energy security risk?

 

Former NATO Secretary General Anders Fogh Rasmussen is calling on Europe to increase the production of biofuels from an energy security perspective because of geopolitical risks. This is a tough ask if such increase in supply levels of 1st generation feedstock for fuel runs counter to the need to provide food security with an ever-increasing population.

 

Do we have any land left to grow food?

 

According to the “Global biofuel production, 1980–2013” U.S. Energy Information Administration, in 2011 the world production of ethanol was 545 billion gallons of which the US produced 61% and Brazil produced 26%. For biodiesel was 147 billion gallons. The EU accounted for 44%, the US 16% and Brazil had 11%.

 

The USDA reported that the growth of biofuel production between 2001 when 7% of the US corn crop was used for Ethanol production rose to 45% by 2013. US Soybean use for biodiesel rose from 2007 at 14% to 30% by 2013. The key reasons for biofuel production are mainly due to subsidies and fuel mandates. However, by 2013 the blending limits for ethanol in gasoline had reached its peak requiring an amendment to fuel mandates in blending ratios of ethanol to gasoline to increase production.

 

In Europe, where the vast majority of ethanol is produced from wheat, the EU 2020 targets require that 10% of transportation should be from biofuels. Adding to the restriction is that these targets have to be met with no more than 7% of the land, where currently as much as 5% is already being used for growing feedstocks for biofuel production. There are many opinions on the sustainability of biofuel production, from my own perspective in a recent article (“Biofuel, even cellulosic ethanol, is wasteful“) or on the use of land relating to the term “Peak Soil”.

 

Where has all the food gone?

 

There is substantial evidence that the increase in biofuel production over the last 10 years has resulted in an increase in volatility of the price of food. Subsidies and minimum fuel mandates that lead to any further growth in biofuel production in Europe, or any of the OECD countries, as suggested by Anders Rasmussen, for first-generation biofuels will likely contribute to food insecurity of consumers of food in low-income countries.

 

Therefore, if public assistance is provided to promote first-generation biofuel production for the purpose of energy security or reducing greenhouse gas emissions, an impact assessment should be undertaken where such policies impose upon food security. The short and long-term implications of such policies on the undernourished and the vulnerable must be explicitly considered in any policy evaluations of their costs and benefits.

 

Where else can they go?

 

There is a risk that negative effects of any growth in biofuel production will add to an increase of economic migration. With the potential of as many as 8 to 10 million migrants moving into Europe due to food price volatility that may not only affect low-income countries.

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