Tuesday, September 19, 2017

The $100M Synthetic Biology Bet From Bayer and Ginko Bioworks (YAR:Oslo; CF)

You may have noted yesterday's pop in CF Industries (6.7%, largest in the S&P 500) which followed the upgrade of the world's largest nitrogen fertilizer company, Norway's Yara.
If this Bayer joint venture works out CF and Yara may not be long term holds.

Which is a shame, partly because the founder of Yara's predecessor, Norsk Hydro was one of my heroes when I was a kid. And now Norway is taking Birkeland off the 200 Kr banknote and replacing him with a fish. And this, of course.

From Xconomy Boston:

How Bayer and Ginkgo Teamed Up in a $100M Synthetic Biology Bet 

Nitrogen is essential for plant growth and photosynthesis, but plants can’t pull it directly from air. They rely on bacteria on their roots to convert the gas into a usable form. Many major food crops don’t have these bacteria but Bayer wants to change that. The multinational company is teaming up with Boston startup Ginkgo Bioworks to form a new company, placing a big bet on technology to engineer new microorganisms that could bring nitrogen fixation to more crops, and reduce the amount of nitrogen fertilizer farmers need.

The Bayer/Ginkgo joint venture does not yet have a name, but it does have financing. The partners, joined by Viking Global Investors, have committed $100 million to the new company. Bayer already has a biologics business that sells agricultural microbes used to improve plant health. But Mike Miille, vice president of strategy and business management for Bayer’s biologics division, and interim CEO of the new company, says Bayer has been looking for ways to bring agricultural microbials further, taking on problems such as nitrogen fixation.

“Taking the technology that Ginkgo has, and using it with the beneficial microbes that we have at Bayer, we are essentially able to come up with a new line of microbes that address some of these issues,” he says.

At least, that’s the goal. In Ginkgo, Leverkusen, Germany-based Bayer has a partner with experience developing microbes now found in a wide range of uses. Consumers can taste and smell Ginkgo’s work in beverages and perfumes. The company figures out the compounds that produce a particular flavor or odor, then designs microorganisms that produce those compounds, says Ginkgo CEO Jason Kelly. The work combines information technology and biology. Software designs the DNA that gives a microbe the instructions to make something, such as a flavor compound. Once Ginkgo has designed the DNA and developed the new microbe, Ginkgo has the capability to produce the microbes at scale.

Companies that use compounds made from Ginkgo-engineered microbes include food giants Cargill and Archer Daniels Midland (NYSE: ADM). Last year, Ginkgo raised $100 million to expand. Kelly says that though Ginkgo has been looking for new partners, the company was not actively pursuing ways to apply its technology to agriculture. Late last year, he received an inquiry from Bayer....MORE
Some of our previous posts on Birkeland can be found at "Shipping: He May Not Have Received His Nobel Prizes But The World's First Fully Electric Autonomous Container Ship Will Be Called the Birkeland"