It was no small feat getting common microbes to produce biochemicals from cheap, green and plentiful sources in the lab, but Houston-based Glycos Biotechnologies thinks it may have hit the jackpot by getting them to do it in a large scale, commercial-size facility.

The 2½-year-old firm, whose 13 scientists have been quietly toiling on the microbial technology in a small lab off Washington Avenue, recently announced it had produced lactic acid and advanced ethanol in a plant in Hempstead capable of producing 40,000 gallons a year.

That takes the start-up biotech firm an enviable step closer to commercializing its technology of producing high-value biochemicals from non-sugar-based feedstocks in a short amount of time.

Rich Cilento, the company’s CEO, said the firm will be announcing several joint ventures to bring the technology to Latin America. In May, the company said it is expanding in Malaysia, partnering with Malaysian biotech firm, Bio-Xcell Snd. Bhd., to build a new biochemical plant and research facility.

Construction of the plant begins in the third quarter.

The company’s business plan and technology can support the production of 20,000 metric tons of biochemicals, though long-term plans double that capacity.

“We’re moving quite rapidly, and we’re happy with our success,” said Cilento, whose entrepreneurial portfolio includes founding FuelQuest, a prominent energy supply chain technology and consulting company. He began his career as a space shuttle flight controller at NASA in the late 1980s.

The rapid success of Glycos Biotechnologies, which calls itself GlycosBio for short, underscores the push by clean-tech start-ups to position themselves at the forefront of the emerging biochemicals market. It seeks to replace petroleum-based ingredients with renewable ones to make chemicals used in a vast array of consumer goods.

As the U.S. presses forward to find cleaner-burning motor fuels, much of the same technology is being repurposed or extrapolated to also make high-value clean chemicals, said Mike Rosenberg, vice president of business development at OPXBIO in Boulder, Colo.

The fuel market remains the big prize, but biochemicals can provide companies a revenue stream until the market for renewable fuel improves through better technology and stronger demand, Rosenberg said.

Renewable chemicals

Jim Lane, editor and publisher of Biofuels Digest, said many venture capital sources are investing in renewable chemicals, at least in the near term, because chemicals generally sell for higher prices than fuels.

Dan Watkins, a managing director at Houston-based venture capital firm DFJ Mercury, which invested $5 million in Glycos along with Draper Fisher Jurvetson of Menlo Park, Calif., said that as the cost of petrochemical feedstocks continues to rise, industry will be looking to biochemical technology as a low-cost, high-margin alternative.

“Because prices are increasing on petrochemical feedstocks and because of the energy-intensive nature of the petrochemical production, we think that the economics of biological production are going to be increasingly profitable,” Watkins said. “Anecdotal evidence of this shift is that we are seeing a number of traditional petrochemical companies that have started to explore biological production.”

Using technology developed by Dr. Ramon Gonzalez at Rice University, Glycos is genetically engineering common microbes to digest glycerin, a low-value waste from biodiesel production, as opposed to higher-cost sugar-based sources more broadly in use by clean tech companies. Through a fermentation process, the microbes produce the desired chemicals.

Cilento said the technology easily can be added on to existing biodiesel plants to convert those waste streams into advanced ethanol or other chemicals.

“The feedstock is very cheap and economical. If you can get large volumes of it, then you can make very large volumes of very high-valued chemicals,” Cilento said.

International interest

Cilento said the technology is drawing the attention of investors in some Latin American countries that now produce biodiesel from soybean, grape seed and other plant oils and sell or discard the glycerin byproduct. Part of the attraction is that it also offers the option of making ethanol in countries that don’t have their own crude oil reserves, he said.

Malaysia is one of the biggest exporters of palm oil in the world, making the company’s technology a perfect fit, the company said in a news release.

Although Houston is not a biotech hotbed like California’s Silicon Valley or Boston, Cilento said he believes other firms will launch in the area as the sector gains more of a toehold commercially and attracts greater interest from the traditional energy industry centered here.

The area is home to the largest chemical-producing complex in the country, infrastructure that eventually could be used to distill and refine biochemicals on a large scale.

It also has a highly skilled labor force of engineers, microbiologists and chemists who work in the petrochemical and medical industry.

“It makes perfect sense to have this company here now, diversifying away from the petrochemical industry, which is under pressure internationally,” Cilento said.

monica.hatcher@chron.com

CHICAGO: Bio-XCell, a biotechnology eco-system and park to be built in Nusajaya, Iskandar Malaysia, welcomed its first three tenants yesterday after sealing memoranda of agreement (MoA) with the respective companies in deals valued at a collective RM300mil.

“We expect their operations to start in 2012 or latest, by 2013,” Malaysian Biotechnology Bhd (BiotechCorp) CEO Datuk Iskandar Mizal Mahmood said.

The tenants are biotech feedstock technology firm Glycos Biotechnology Inc from the United States, agriculture-related MGM Ingredients AG from Switzerland and an India-based pharmaceutical company.

“These will be our mini anchor tenants. We expect to close three more deals involving platinum-status or main anchor tenants before the year-end,” Iskandar said.

He was speaking to Malaysian journalists after the global launch of Bio-XCell and the signing of MoA at the Bio Chicago 2010 convention here yesterday.

Bio-XCell is a tie-up between government agency BiotechCorp and UEM Land Holdings Bhd. The development, measuring some 70 acres, is expected to be completed by 2015.

Yesterday also saw a series of other significant milestones for BiotechCorp. Among these, it signed a memorandum of collaboration with General Electric International Inc (GE) for the latter to provide strategic infrastructure for the eco-system, particularly for the development of centralised utilities facilities within the park.

“The tie-up with GE may include the provision of life sciences and manufacturing equipment and potential investment into biotech-related innovation,” Iskandar said.

BiotechCorp also launched yesterday the country’s first biotechnology country report in collaboration with Ernst & Young.

“The report allows for benchmarking and tracking of the industry’s initiatives and development, identifies gaps in the implementation framework and allows us to identify key actions which must be put into place to ensure the success of initiatives towards commercialisation.”

It announced that Stempeutics Research Sdn Bhd, a BioNexus-status company with origin in India, would start conducting clinical trials, which include studying the safety of its new drug for patients with Ischemic Cerebral Stroke, after obtaining approvals from the Health Ministry.

It also revealed that Pakistan-based Getz Pharma was looking to invest about RM150mil in Malaysia for R&D and the production and commercialisation of biopharmaceutical products.

Getz Pharma was looking to acquire 15 acres of land in Enstek Tech Park, Negri Sembilan.

Meanwhile, Science, Technology and Innovation Minister Datuk Seri Dr Maximus Ongkili expected the level of commercialisation of public research output in Malaysia to double to 10% in five years from 5% now, aided by the setting up of the National Innovation Centre.

Maximus, who witnessed the global launch and signing of the MoAs, said the ministry had prepared a paper on the proposed centre which would be tabled to the Cabinet by the end of this month.

Among the proposed centre’s objectives is to focus on public research output and ways to market it to generate wealth for the nation.