Fish Food and Rocket Science

March 14, 2018

I’m a big fan of Elon Musk, CEO of Tesla and SpaceX. I watched the launch of SpaceX’s Falcon-Heavy rocket a few weeks ago with an excitement I have not felt in decades with regards to the space program. Truly awe-inspiring. This launch was the culmination, or more accurately the next milestone, of a journey to space exploration that began as just an idea in an El Segundo warehouse in 2002.

 

SpaceX is an example I have used to my team when explaining the challenges we face. I played the video montage of the rocket crashes to my R&D team as a testament to embrace failure. There are lessons to be borrowed from Elon and his journey.

 

Elon’s company  needed enormous amounts of capital in its first years. The normal investor metrics didn’t apply. No revenues, no customers, no clicks or downloads! Nevertheless, the company was able to gain the confidence of their investors by showing steady progress. In my mind, what SpaceX management achieved in its early years was all about incrementally de-risking its business model. They did this by announcing a clear goal, developing a credible path to achieve that goal, complete with milestones and deadlines, and then working tirelessly to meet those milestones & deadlines. When they succeeded, they were rewarded by increased confidence from investors and by future contracts from customers who believed in their vision and their ability to execute.

 

The SpaceX challenges resonate with me. We believe we are trying to do ‘something big’ too. In our case, “food insecurity” is one of the great challenges facing our swelling global population. We need an enormous quantity of protein in the coming decades - an amount roughly equivalent to all that ever produced on Earth before that. Aquaculture is poised to be a major contributor to this solution, but if only we provide high quality inputs that can be done sustainably and without competing with human food sources. There simply aren't enough forage fish, insects, or acres to produce the quantities of feed required. KnipBio’s answer to this is through single cell proteins (SCP). SCPs derived from microbes will meet the demands of the next generation because they are fast-growing and require relatively little resources. And their fermentation process makes them highly traceable.

 

To make this vision a reality, we needed to find the right candidate microbe, create the bio-engineering tools to develop novel strains of the microbe, develop a fermentation process to optimize growth of the microbe and then scale that process up to a commercial operation. It goes without saying that proving our single cell protein is safe and effective was also a high priority. And then, after all that is done, we need a distribution platform to get our protein to market and start to generate revenues. Until every one of these tasks is accomplished, we will remain dependent on our investors that understand the scale of the opportunity and believe the KnipBio team has the chops to achieve it. In order to maintain investor confidence we needed to do what SpaceX has done- develop a concrete plan and show steady progress in achieving it. In other words: de-risk our business.

 

I write a quarterly newsletter to KnipBio’s shareholders that does two things: tells them what we are going to do over the next year (as well as what’s changed since the last report and why) and score our results for the previous quarter against plan. There’s no grading on the curve in this report card, but I’m lucky to have a team that punches well above their weight so they’ve earned a pretty good grade point average. One of the tricky things about these plans is we are moving on so many interconnected fronts- biotechnology, process engineering, animal trials, and business development. It’s worthwhile going into more detail on each aspect.

 

Our technical team is constantly working on developing ever-better strains of our microbe. Sometimes ‘better’ means a strain with more useful properties. Other times it means a strain that can thrive on lower priced inputs. Last year I challenged them to come up with 3 new strains that could offer new commercial applications and they answered more than what I expected. One of the technologies developed is a high protein, fishmeal analogue that now eclipses >70% protein content. Another strain lineage produces PHB, a prebiotic with important immunonutrient properties that work to maintain fish gut health. Studies have shown PHB can reduce mortality significantly in a range of species. Our scientists engineered a new strain recently with very exciting health benefits. For the first time, we have are able to announce publicly that we have a family of carotenoid-bearing proteins that is poised to lower costs and improve animal welfare.  

 

Our advanced microbes can have subtly different profiles during a given fermentation so we need to test and adjust how they are produced for each specific lineage. To that end, we greatly expanded our internal fermentation capabilities. We are able to evaluate new processes, feedstocks and potential process upsets to develop industrially robust strains.

 

To succeed in the aquaculture market our single cell protein must be competitively priced. This means two things- our process must work well in large-scale vessels and we need to adapt it to incorporate  lower cost feed inputs. To these ends, in 2017 we scaled our fermentation process from 1500 liters to 20,000 liters. This is a big deal in terms of de-risking manufacturing and the final step before full commercial production in the 200k liter size. That will happen in the near future, and at the same time, we will be increasing our feedstock flexibility and efficiency using a variety of carbon input sources such as bio-methanol, ethanol and corn ethanol related waste streams.

 

The next challenge for our team is showing our protein replacement is safe and effective. We ran about a dozen trials last year with species ranging from white shrimp to salmonids. Perhaps my favorite trial to date, we passed an important taste test to see how sashimi made from yellowtail fed our protein tasted, smelled, and looked. The answer? Yum, pretty darn good!  These trials will continue in 2018, and we are planning expanded field trials with major global aquaculture companies.

 

Finally, on the sales/distribution front, we began receiving orders last year. We have still quite a bit of work to do, but it’s certainly a start. Based on the interest we have received, we anticipate adding to that this year as production ramps up. One of the interesting changes I saw in the aquaculture industry last year is a shift from a ‘show me’ skepticism regarding alternative proteins to increasing acceptance. Even the International Fishmeal and Fish Oil Organization (IFFO), spokesmen for the fishmeal industry, recognized there is a role for single cell proteins in feeding fish in a recent publication.  


So enough for now. It’s time to get back to work innovating the future of aquaculture.

 

Oh, and by the way, Elon, I’d like my Tesla in silver, but I guess I will accept a different color.

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Lowell, MA
info@knipbio.com