GLOBALYEAST

Tweaking yeast strains to produce sustainable biofuels

For thousands of years, humans have been using yeasts to produce wine, beer and bread. Yet for most of this time, yeasts have essentially been a black box: you feed them sugars and they produce alcohol in return. But not anymore. At GlobalYeast, a Belgian-Brazilian start-up, they understand yeasts inside out.

Using decades of research and rapid advances in biotechnology, they can pinpoint at the genetic level which combinations of elements are responsible for specific traits. Moreover, they can genetically modify yeasts to produce strains with superior performance in industrial settings. Johan Thevelein, founder and chief scientific officer, and Marcelo do Amaral, CEO, talk about combining Brazilian strength in agro-industry with Belgian strength in biotechnology.

How did you found GlobalYeast?

Johan Thevelein: "My research group has a long standing collaboration with the Brazilian ethanol industry and we make regular visits to companies and other institutions. Usually these visits are purely promotional and explorative, until we had a meeting with Performa Investimentos [a Brazilian private equity and venture capital firm - ed.]. They were immediately intrigued by the idea of combining Brazilian strength in agro-industry with the Belgian strength in biotechnology. And we were lucky: Performa had set up a fund in green biotechnology and they were looking for investments in that field. One investor in that fund is the Belgian federal government, so everything fell into place. During our first meeting, Performa made a commitment to invest in us and from then on things started to roll very fast." Marcelo do Amaral: "In fact I’d met Johan once before at one of his road shows, while I was still working for Raízen, the world's largest producer of sugar and ethanol. He tried to explain polygenic analysis and I'm not sure if anybody in the audience understood. However, I was impressed by how he combined a strong fundamental knowledge with an understanding of the needs of industry. And I was lucky too: by the time GlobalYeast was being structured and pitched to investors, I’d left Raízen and I was asked to lead the establishment of GlobalYeast and later join as CEO."

What unique capability did you have that you and your investors thought could form the basis for a successful company?

Johan Thevelein: "The ability to analyse traits of yeast that are defined by multiple genetic elements. Using the polygenic analysis technology that my group helped develop over many years, we can map all these elements simultaneously and determine which is responsible for what. The number of groups in the world that master this technology is very limited, maybe only four or five. What sets our group apart is that we can apply it to traits that are of commercial importance, such as a tolerance for high ethanol or acetic acid concentrations or a high fermentation rate. The final difficult step in yeast development was always the transfer of the superior alleles we had identified into a target industrial strain. But following a breakthrough in gene-editing technology a few years ago, this final step has become very easy. So with our technology, in yeast strains that are superior for a certain characteristic, we can identify the genetic elements responsible for this trait. We can then transfer these elements into an industrial strain and confer it this property."

How can clients benefit from these capabilities?

Johan Thevelein: "In our business plan, we originally focused on the production of second generation bioethanol. We’d been participating in a European research project aimed at improving yeast strains for this. Together with an industrial partner, we were able to engineer a new yeast strain that had the fastest xylose fermentation rate ever reported (see text box). This got investors interested. No existing strain of baker's yeast was capable of fermenting xylose efficiently. For an economically viable way to produce second generation bioethanol, our new strain is absolutely essential" Marcelo do Amaral: "For second generation bioethanol production, our technology does not offer a gradual improvement; it is disruptive!"

At what stage are you in the sales process? Are clients already buying your strains for the production of second generation bioethanol?

Marcelo do Amaral: "GlobalYeast was founded in 2015. In the years leading up to that, there was a strong expectation that the second generation bioethanol market would take off. This was based on efforts by the US government to stimulate the industry and their commitment to producing a given volume of second generation ethanol by 2014. That hasn't happened, because of market dynamics and the complexity of the technology that is still not fully mature. The most conservative market view now postpones this take off by eight to ten years. So we're still very actively targeting the second generation bioethanol market, because all projections show that this market will take off and there is a need for our advanced yeast strains. In parallel, what we have developed is the scientific and technological basis to expand the boundaries of current production of bioethanol. Yeast strains used for this are very limited in terms of performance.

For example, the total amount of ethanol you can have in a vessel is now around 10% in Brazil. We can engineer strains that can still ferment higher sugar concentrations, leading to much higher ethanol contents, without needing to change the equipment. Again, this is disruptive! And that’s crucial in a very conservative industry that has existed for decades. Ethanol producers don't really care for incremental improvements; they'd rather keep working with what they have."

What is the business model of GlobalYeast?

Marcelo do Amaral: "One of the beauties of yeast is that it will simply multiply as long as you feed it! The industry knows perfectly well how to do this. We see ourselves as an R&D company that designs and engineers new yeast strains with superior performance according to our client's needs. For this reason, I always summarise GlobalYeast as the company I dreamt of buying when I was working in the industry myself. We will license this expertise to end users, who may be either ethanol producers or distributors of yeast, together with the know-how of how this strain will perform in an industrial setting. In exchange for that, we get a fixed or variable portion of the benefits earned by the client."

What role does IP play in your business model?

Marcelo do Amaral: "As an R&D company, one of our assets will be IP. In fact, IP will be fundamental. What we do is really at the forefront of science and technology, so there is a need to mark our position and to guarantee adequate protection of what we do. We have inherited a portfolio of patents that were all invented by Johan and that were transferred from the VIB¹ to GlobalYeast. In the pipeline, we have some promising leads that might lead to new patents in the short term. With the projected growth of our research activities here in Belgium, I envision us being an engine of new findings and discoveries. How we will patent these is an open discussion, but patents will certainly remain relevant."

¹ VIB: Flanders Institute of Biotechnology. Johan Thevelein is the scientific director of the VIB's department of Molecular Microbiology, and the VIB is one of the investors in GlobalYeast.

The VIB is often seen as an example of how to do valorisation of biotechnology. Other than as an investor, what specific contributions to GlobalYeast has the VIB made in this respect?

Johan Thevelein: "The VIB has indeed been a showcase for the Flanders biotechnology sector, because they have this strong, obligatory valorisation policy. GlobalYeast has an alliance agreement with the VIB that stipulates that all the results from research performed by my group are first presented to us for commercialisation. That’s a very nice asset for GlobalYeast because a group of 35 researchers can generate quite a lot of interesting outcomes. Plus these results are already derisked: the positive outcomes are presented to GlobalYeast. The rest is considered fundamental research."

What exactly do the patents GlobalYeast inherited cover?

Johan Thevelein: "They cover both the mutant alleles that confer improved characteristics as well as the strains in which these superior alleles have been introduced. The fact that the strains are protected is most important for us. However, protecting new strains is not at all common in the yeast market. Most of the yeast strains used for the production of wine, beer and first generation bioethanol are not protected. As a result, everybody is always picking and using each other's yeast strains. Another consequence is obviously that companies barely invest in improved yeast strains because as soon as you put your new and improved yeast strain on the market, anyone can run away with it. That’s why protecting our improved strains together with the mutant alleles is extremely important to us."

How do you enforce protection of your IP?

Johan Thevelein: "One thing that works in our favour is that the number of road-to-market companies is very small. There are only four major producers of industrial yeast strains left in the world and we have close contacts and collaborations with all of these producers. They would not pick one of our strains and run with it. If they did, we would soon find out."

Marcelo do Amaral: "Patent enforcement is generally a nightmare in our industry. Patent protection will mainly come from a deep understanding and engagement with selected partners. That’s because big companies will usually respect IP, if only because of their internal compliance procedures. Partly because of the need to protect our IP, GlobalYeast doesn’t do business with smaller yeast producers. With smaller companies, there is a greater risk that they might unintentionally infringe on our patents. In addition, what also helps us is that there are only two major markets for bioethanol, the US and Brazil. Both have a clear regulatory framework and in both countries patent infringements would be a violation of federal law."

How do you see the future for GlobalYeast?

Marcelo do Amaral: " There’s a huge market demand for advanced industrial biotech and we have the most sophisticated scientific knowledge and technology to fulfil this need. We have a number of fantastic challenges. The first is to translate our capabilities into products that can be adopted by a conservative market. And if we succeed, we will make our clients richer, create a sustainable source of cleaner fuel and chemicals and we will be allowed to keep a reasonable part of these benefits for ourselves." Johan Thevelein: "The concept for GlobalYeast has always been to be a company that sells things and makes a profit as fast as possible. We were never conceived as an R&D driven company that remains comfortably within the VIB to do interesting research while burning venture capital. That’s what I emphasised very much when we founded GlobalYeast: I want to run a real company, one that earns money. So we are very focused on doing the things that are necessary to get products to the market as fast as possible."

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