Synthetic Genomics’ New Plan For Algae

Thanks to the Internet, one can easily go back to the summer of 2009 and experience again the flush of excitement about the potential of fuels made from algae. That July, ExxonMobil announced it would spend $600 million to develop algal strains and production pathways with its partner Synthetic Genomics Inc. (SGI), a technology firm founded by J. Craig Venter, one of the decoders of the human genome.

ExxonMobil promptly took to the airwaves to tout its investment. “We’re making a big commitment to finding out just how much algae can help to meet the fuel demands of the world,” ExxonMobil scientist Joe Weissman said in a television commercial. But in May 2013, the two firms disclosed what they did find out: that much more work needed to be done to gain a basic understanding of the algal genome.

Indeed, the first goal outlined by the partnership—“Identifying and/or developing algal strains that can achieve high bio-oil yields at low cost”—is still the number one target of the algae-to-fuel effort, not just at SGI but everywhere.

A recent review of a three-year research project of the National Alliance for Advanced Biofuels & Bioproducts, managed and funded by the Department of Energy, showed that algal yield is still a barrier to large-scale production. Improved strains and, likely, genetically modified algae will be required, according to the alliance’s report.

But that doesn’t mean SGI’s efforts to commercialize algal technology are dead in the water. The company has charted an intermediate path: to sell higher-value nutrition and chemical products made from algae while advancing its ability to produce larger quantities of feedstock for fuel.

SGI is not the only algae firm that has shifted its business objectives. Solazyme was the first to publicly turn to smaller markets such as personal care ingredients. Cellana now says it has added omega-3 fatty acids and animal feed sales to its strategy. But unlike those firms, SGI has not invested in large-scale production facilities, choosing instead to focus on genomics research. It is betting that understanding the inner workings of algae will be the key to success.

SGI business development executives decided back in 2011 that counting solely on the fuels market was risky. So they started meeting with food and nutrition companies as well as chemical firms to find other options, recalls Jim Flatt, president of Genovia Bio, SGI’s algae business unit.

Those efforts came to fruition in May when the company signed an agreement with Archer Daniels Midland to produce docosahexaenoic acid (DHA), an omega-3 fatty acid used in human and animal nutrition, in ADM facilities. In June it agreed to supply Avoca, a division of Pharmachem Laboratories, with a strain of algae that makes the carotenoid astaxanthin. Avoca will extract the ingredient for use in nutritional supplements.

The market for nutritional supplements is much smaller than that for fuels, but it is more than large enough to help algae firms start making money. In 2013, for example, sales of nutritional lipids reached $3 billion. And demand for omega-3 products is growing by more than 10% per year, according to the consulting firm Frost & Sullivan.

At Solazyme, algal oil sales to the food ingredients, personal care, and lubricants markets have begun to trickle in. Revenues for the first half of 2014 topped $16 million, an 84% increase compared with last year’s first half. And the firm has expanded its collaboration with AkzoNobel to make biobased surfactants. Still, Solazyme posted a first-half net loss of $77 million.

Flatt maintains that SGI has a big advantage over other firms that are investing in algae: its enormous research capability.

In some respects, the company, founded in 2005, is an outgrowth of a fantastic voyage that Venter took after cashing out his stock in Celera Genomics. In 2004, he sailed around the globe in a luxury yacht, prospecting for microbes. Today, SGI’s scientists have a huge library of strains, genomes, and metabolic pathways, plus bioinformatics tools to efficiently mine it. And they have access to fundamental research carried out by the 400 scientists and staff of the nonprofit J. Craig Venter Institute.

These days, low-cost genetic sequencing can make rapid work of selecting, modifying, and testing high-performance algae. But most research money is being directed at downstream production methods, laments John McGowen, director of operations for ATP³, the algae test-bed program at Arizona State University. His experience cultivating algae shows that successful strains are rare and cost a lot to find. “I can’t emphasize enough the importance of that basic research,” McGowen stresses.

While other companies focus on commercializing one or a small number of strains of algae, SGI has its pick of about 2,000 strains, representing all six classes of algae, Flatt says. “Our algae are a product of over six years of consistent biodiscovery efforts. We work with different host countries that have microenvironments that demand the type of strains we are looking for—quick-growing, robust algae that can accumulate the products we want to produce.”

The company’s scientists can use their training in DNA sequencing and synthesis to engineer cells or speed up classical strain improvements through directed evolution. Customers for nutritional and food products often prefer strains that are not genetically modified. “You can track changes in the cell that you drive by random methods, and that gives you insights on how to develop lines further,” Flatt explains.

One research target has been to increase the photosynthetic efficiency of algal cells. When cells grow in the natural environment—say on the broad expanse of the ocean—they can convert a greater amount of sunlight into lipids and carbohydrates than they do in an artificial environment. In a mass culture, the cells shade each other. Those growing in the shade increase their light-harvesting antennae to capture more energy, but when they cycle back into the sunlight they can become damaged. By identifying and modifying the process that cells use to acclimate to different levels of light, scientists could significantly improve rates of energy storage.

Other research projects include enhancing metabolic pathways in algae to get them to produce more of the intended target, such as the astaxanthin carotenoids that some algae use as a sunscreen. Cost-efficient production of an algae-derived product also demands a strain that can grow quickly and thrive on simple, low-cost nutrients. And in its collaboration with ExxonMobil, SGI researchers demonstrated they can construct a fully synthetic chromosome and insert it into algae.

SGI and other algae companies insist that they still plan to make fuels. But to enter that market, they will need to raise highly productive, robust organisms, Arizona State’s McGowen points out. To keep costs down, algae farmers will most likely rely on low-cost open ponds covering hundreds of thousands of acres. This strategy calls for exceptional algae, although not necessarily a genetically modified strain, he suggests.

But, true to its name, Synthetic Genomics stands ready to go well beyond genetic modification to arrive at an optimal crop. “In the long run, it is certainly our vision to develop fully synthetic algae,” Flatt says.

It’s an audacious goal, even for a company that expects to succeed on the basis of its research prowess. Flatt says SGI is getting there. “How do we know exactly the genomic design of a specific organism that will grow, replicate, be very stable, and produce a compound very quickly and efficiently?” he muses. “We have some knowledge today, but it is imperfect.”