Amyris Inc (NASDAQ:AMRS) (FRA:3A01) CEO John Melo explains how the company makes natural products in sustainable fashion, while speaking at the recent Paradigm Capital Biosynthesis Conference. Amyris employs a fermentation process using yeast derived from sustainable sugarcane. The company’s ingredients are used in a wide variety of products including skin care and fragrances. By developing the emollient squalene through a fermentation process, Amyris has significantly expanded the market for the vital skin care ingredient, without harming its natural source. Melo sees increased availability of existing ingredients as the most important result of metabolic engineering. He suggests that making cannabinoids through a fermentation process will make them a viable alternative to other substances and a potential solution to the opioid crisis. Melo addresses the company’s evolution from a renewable fuel company to a metabolic engineering company that is commercializing multiple products annually.
John Melo: We make the world, one molecule at a time. We do it by re-engineering yeast, something that’s been around forever; but instead of yeast making wine or beer, we actually get yeast, through a fermentation process, to make natural products sustainably. Everything from products for skin care ingredients, flavours, fragrances, vitamins, and now, cannabinoids.
We have 10 different ingredients, very different product derivatives off those ingredients, so rather than go through all of them, I’ll pick one: squalene. Squalene is an amazing ingredient; it’s an emollient, which means a moisturizer for your skin. It’s been used in Japan for over 100 years. It was originally sourced from shark liver oil, and how I initially got to know it is, a leading Japanese producer of the ingredient came to me and said, Look, I don’t think it’s right that we take it from shark liver oil; can you find a better answer?
So we found a way to get yeast to make it from sugar cane juice, to squalene. So that’s a perfect example of an amazing ingredient that every formulator in the world knows it’s the best emollient for your skin and for skin care products, but because it wasn’t readily available and it came from sharks, it wasn’t actually broadly used. So by making it more available, more supply at a stable cost and high purity, we’ve actually significantly expanded the market for it. We’re now the market share leader for squalene. We’ve expanded the pie; it’s a bigger market than it was when we started, and the growth rate, the last six months as an example, we’ve sold more squalene to the world’s leading cosmetic companies than the prior year. So we’re growing squalene now at around 60 to 70 percent a year, and it’s just been a fantastic experience for us.
A lot of plant material, and if you think about traditional Chinese medicine, has been around for a very long time. So it’s not like the science is catching up; it’s actually, for once, there is a way for the science to make more available and more accessible, something that actually does good for society. And I think in this particular example, both on the consumer side, but also, if I think about opioids and the real crisis that opioids are causing across the world, I think a scientific approach to making cannabinoids in a high quality, high-purity, low-cost way, will make it more accessible and make them actually in a way that expands the market, just like we’ve seen in other markets that we’re in. And in this particular case, a market that means all of society, not just a niche.
I think that chart tells a story of a company that was deeply focused on becoming the world’s greatest renewable fuel company, and didn’t make it. And then having to restart, and restart already with a pretty significant base of capital invested, which led to very complex financings to get us to where we are.
Where we are is a moment in time where we now have our two biggest shareholders completely backing the company and supporting it because we’ve turned a corner. We’ve turned a corner in now starting to retire debt and having a stable base and having great investors backing to really support the growth going forward.
Out of the 10 products we’ve now commercialized through fermentation – and we’re at a rate of commercializing about two or three a year now, right? So the system is working at a very industrial strength way – all those products compete with an alternative source. And predominantly, plant source, unlike squalene that’s an animal source. And in the plant-sourced materials, we actually see the total pie grow, and we see the plants actually being a niche and opportunity going forward. We don’t see it as plant or sustainable natural; we see a sustainable natural working, even in some cases blending, with plant, but more importantly, making available the amount of supply at the right cost and quality that enables big brands to adopt in a big way.
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