Lessons from microbial growing pains
by Andrew Saintsing | December 22, 2021
How one biotech startup is drawing on a wealth of experience to set itself up for success
A living cell is an incredible synthetic chemist, capable of turning nutrients like sugar into a variety of useful molecules. Biotechnology firms have long capitalized on this fact. For instance, Pfizer became one of the world’s leading pharmaceutical companies during World War II after it started mass-producing penicillin by extracting it from cultured Penicillium rubens fungi. While our society has grown accustomed to microbe-produced medicines like penicillin and insulin, biotechnology startups today, especially those in the San Francisco Bay Area, are increasingly looking to use these microscopic chemists in industries beyond pharmaceuticals.
The Bay Area biotech scene is packed with startups trying to break into a variety of industries. Impossible Foods uses yeast to synthesize heme for its plant-based meat substitutes. Huue uses bacteria to produce indigo dye for denim. Meanwhile, Checkerspot uses microalgae to create triglyceride oils that can be used in plastics and other materials that clients desire. The startup has already turned its triglycerides into polyurethane foam and cast urethane for skis and biomanufactured oil for moisture wicking clothes.
These companies explicitly include sustainability in their mission statements and implicitly take aim at disrupting established, less sustainable industries like beef and petroleum. Although their stated goals are likely to earn them a nod from anyone worried about climate change, Impossible Foods, Huue, and Checkerspot, which are all in different stages of development, have worked hard to turn their ideas into profitable companies. After all, a sustainability-minded biotech startup cannot begin to achieve its loftier, environmentalist ambitions until it can compete in the open marketplace. For any scientist or entrepreneur who’s interested in taking a potentially transformative idea from the bench to market, Checkerspot’s promising start can offer some key insights into the challenges that its founders have encountered and the lessons that they’ve learned.
Challenge 1: Scaling up for industrial production
Today, it’s easier and cheaper than ever to collect genomic data on a diversity of organisms and alter their gene expression to optimize their performance. Startups interested in creating a particular molecular product, like Checkerspot with its triglyceride oils, can shop around for the best microbe for the job. Scott Franklin, Checkerspot’s co-founder and chief scientific officer, first became aware of Checkerspot’s microalgae while he was working at the now-defunct Solazyme, which was focused on using microbes to produce triglyceride oils for biofuels. Before settling on microalgae, he said that he spent time “interrogating a lot of organisms, including yeast and bacteria and microalgae … from a lot of culture collections all over the world.” While cellular-level breakthroughs provide researchers with new tools, they haven’t eliminated the challenges associated with scaling up from growing a microorganism on a plate to growing it in huge, industrial-sized tanks.
As long as people have been trying to use microbes in the mass production of molecules, they have been trying to figure out the ideal conditions that will lead to maximum returns of their product. Anyone who knows the story of penicillin’s transition from lab curiosity to industrial product knows that most of the hard work began after the molecule itself had been discovered. Alexander Fleming observed the antibiotic properties of Penicillium rubens in 1928 and identified penicillin in 1929, but it wasn’t until 1944 that Pfizer began to mass produce the antibiotic. In between discovery and mass production, scientists had to identify strains of the fungus that were robust enough to grow in huge bioreactors; devise a protocol for large-scale fermentation (which is a general term for the microbial-mediated conversion of sugars or other foodstuff to useful end products); and figure out how to extract penicillin from the soup in which the fungus was grown.
In the 1940s, Fleming and the Pfizer team were in uncharted territory when it came to scaling up. Their trailblazing work has provided a roadmap for today’s biotech startups. Still, even though there’s a general roadmap for scaling up, each new combination of microbe and molecule presents unique difficulties. “Sometimes your strain just isn’t stable … or productive under bioreactor conditions,” said Eric Sundstrom, a research scientist at the government-funded Advanced Biofuels and Bioproducts Process Development Unit (ABPDU). Industrial bioreactors are large enough that gradients of temperature, pH, air, and nutrient concentration can develop. Sensitive microorganisms that are unable to survive and produce outside a narrow range of conditions might not be suitable for industrial fermentation.
Even if a startup finds the ideal conditions that keep its microbes alive, maximize the production of its target molecule, and minimize the production of contaminants, it then needs to be able to extract the target molecule. “Fermentations are often relatively standard … but for downstream processing, your unit operations can be totally different,” Sundstrom said. “Is [your molecule] intracellular or extracellular? Is it a protein? Is it water-soluble? Is it oil? And then some separations are cheap, some are expensive.” Before they can even think about selling their product to consumers, startups in this space must expend time, energy, and resources just to verify they can make it reliably and at scale.
Lesson 1.1: Take advantage of the Bay Area’s uniquely fluid biotech space
Start-up costs for these types of biotech ventures make them risky investments. Many startups, like the previously mentioned Solazyme, have failed despite securing strong early interest and investment. However, the Bay Area provides a potential blueprint for alleviating or at least palliating these risks. It fosters the fluid exchange of ideas and people between many diverse companies, as well as between private companies and publicly funded institutions.
When it comes to Checkerspot’s microbial platform, Scott Franklin doesn’t seem to worry much about trade secrets. Rather, he sees value in a free exchange of ideas. Because Checkerspot relies on a microalga species that hasn’t been used as much as bacteria like E. coli or yeast, Franklin said, “We have collaborations with academic institutions where we’re bringing people in, teaching them about the platform, and seeing if they can develop that as a teaching tool in their labs.” Any new research that comes out of an academic lab could help Checkerspot improve its production pipeline.
In addition to the Bay Area’s numerous academic institutions, the U.S. Department of Energy established the ABPDU at Lawrence Berkeley National Laboratory. At ABPDU, engineers help new biotech startups through the piloting stage (i.e., establishing viable protocols for large-scale fermentation and extraction) and conduct research that can improve these processes. “We’ve gone out and pursued projects that we think are enabling for the entire industry; … developing new platforms for fermentations with gaseous feedstocks, new separations technologies, new continuous fermentation technologies,” Sundstrom said. And even while he completes more technically focused research projects aimed at supporting clients in industry, Sundstrom still finds time to pursue his own projects that could one day form the basis of future startups. Currently, he’s working on using “electrons as a source of reducing power for biomanufacturing, to enable production of fuels and chemicals directly from renewable electricity and CO2.”
Like Checkerspot’s Franklin, Sundstrom sees the relatively free exchange of ideas that can happen at a space like the ABPDU as an asset. “We might develop a new capability for one collaboration, and then later adapt and refine it for use in a related application,” Sundstrom said. For the most part, he thinks biotech companies in the Bay Area “benefit from free movement of personnel, as employees frequently circulate between companies, universities, and government labs.” That fluidity of personnel is important not only for cross-pollination of ideas, but also to ensure that biotech researchers will come work on the riskier, non-pharmaceutical ideas that are prominent in Bay Area biotech. The large number of startups in the Bay Area makes prospective employees confident they will be able to find work if the company they’re considering fails. Free from the fear of unemployment, employees of failed companies can even take the lessons they learned and apply them to their next venture, as Franklin and the rest of Checkerspot’s founding team did after departing Solazyme. “Sometimes it can feel like we’re all just branches of one megacompany,” Sundstrom said.
Lesson 1.2: Outsource early
The previous generation of biotech startups recognized the initial hurdles of scaling up and decided to invest heavily in equipment and lab space for piloting, early development, and manufacturing. “Those companies largely went belly up when early-stage revenue couldn’t recoup the invested capital,” Sundstrom said. “The newer model is more to stay lean and outsource everything that you don’t need to have in-house.” Checkerspot has adopted this strategy. The company has benefited from outsourcing in two stages: piloting early at the ABPDU and obtaining its initial oil for fast-tracking applications and materials development from Corbion, a larger, more established biochemicals company based in the Netherlands.
When Checkerspot was founded in 2016, their small team worked in different shared workspaces until they received an industrial sequencing grant. “[The ABPDU] had space, and they basically just let us camp out there,” Franklin said. “We used our own money to order strains [of microalgae] and bring them in and start to do media development work.” Checkerspot used the time not only to work on protocols for fermentation, but also to build out their materials capability and solidify their branding strategy. This helped them secure additional funding, which they used to invest in their own lab space. By the time they moved into a temporary space in 2018 and then a more permanent space in 2021, the company was further along in the development process than a company working with the previous generation’s capex heavy model would have been.
Now, Checkerspot uses its lab space in Alameda to refine its strain and protocols in order to remain as competitive as possible. Checkerspot is following a larger trend in this regard. “Once you’re ready to produce your product, instead of building your own plant, you pay contract manufacturers to run your process,” ABPDU’s Sundstrom said. That’s not to say Checkerspot won’t move toward building its own plant in the future, but for now, outsourcing that aspect of the business frees up resources for research and development and, perhaps even more importantly, increases product awareness and market penetration.
Challenge 2: Carving out market share
While piloting creates many challenges that are unique to biotech companies that use microbes in material production, companies in this space also face the universal challenges of growing their business and boosting product awareness. To establish themselves, Impossible Foods, Huue, and Checkerspot have to compete with more established companies that have had more time to develop and minimize their operating costs. Consequently, companies like Checkerspot have had to become more creative in their efforts to gain early footholds.
Lesson 2.1: Animate through a brand
For a company like Impossible Foods, which sells its products directly to consumers, establishing brand recognition and growth are obviously linked. But for companies like Checkerspot, which seeks out clients who can incorporate its monomers into their own consumer products, establishing a marketable brand is a less obvious, but perhaps even more important step. “When [CEO Charles Dimmler] and I started the company, the fundamental premise was that, whatever we did, we would animate the technology very quickly through a brand and connect directly to consumers,” Checkerspot’s Franklin said.
Through their WNDR Alpine brand, Checkerspot makes skis that incorporate materials derived from microalgae-produced triglyceride oils. “[The outdoor space] is a great community for us to work in and try to educate people about how you can use bio-based materials to move away from petroleum without sacrificing performance,” Franklin said. Their bet seems to be paying off so far. Between the plastics in WNDR Alpine’s skis and other materials created for external outdoor sports and apparel companies, Checkerspot has increased the raw material usage of its triglyceride oils fivefold from 2020 to 2021. Because the WNDR Alpine brand offers potential clients a concrete example of how Checkerspot’s materials can be used, Checkerspot’s team has been able to make these gains without spending on advertising. Instead, interested customers reach out to them.
Lesson 2.2: Vertically integrate
The biotech companies that are best positioned to maximize production and minimize costs are the companies that control every aspect of the process, from fermentation and biosynthesis to extraction and modification. The best and most creative solutions to a particular problem in one step often require a holistic view of all the processes involved, and that view can only be achieved with some degree of vertical integration.
Checkerspot takes this idea even further with WNDR Alpine. Although WNDR Alpine is a distinct brand, it is still a part of Checkerspot. Consequently, Checkerspot uses its own microalgae-produced triglyceride oils to synthesize its own materials that it uses to manufacture its own skis. The company has developed a deep understanding of the tools that it uses in every step along the way, and Franklin and the rest of the team are confident that they can use their knowledge to reformulate those tools as needed.
Not only does this knowledge position the company to improve its own bottom line, it also helps the Checkerspot team to meet new clients’ needs. When an outdoor sports or apparel company approaches Checkerspot with an idea for a new application of triglyceride oil, Checkerspot’s chemists and engineers can speak to those potential clients from a place of experience. The company can assure potential clients that they won’t be left to troubleshoot blindly if they encounter problems. Checkerspot calls its vertically integrated production pipeline and consumer engagement arm the WING™ Platform, which Franklin and the rest of the team view as an essential pillar of their company.
Microbial pathways to the future
Today, companies like Checkerspot and researchers like ABPDU’s Sundstrom are expanding biotech in new and exciting directions by drawing on lessons learned over the past century of experimentation. Thanks to a mixture of public and private investment, as well as a shared enthusiasm and sense of purpose that has fostered a collaborative spirit, Bay Area biotech appears to be thriving. While many current biotech startups still need space and time to mature, their continued success would signal a bright future not just for the Bay Area, but for the nation as a whole. At present, Checkerspot outsources its algae oil-manufacturing, but if it achieves high enough demand, it could invest in its own manufacturing plant. If and when it does, it will have to choose a location carefully.
Because they are living things, microbes need food. Therefore, large biofuel and bio-product manufacturing plants need to be built close to a food source to make economic sense. For instance, Corbion, the aforementioned Dutch biochemical company, recently partnered with the French petroleum company TotalEnergies to build a 75,000-tons-per-year bioplastics manufacturing plant in Rayong, Thailand. The Thai region is responsible for growing much of the sugarcane for the Mitr Phol supply chain, which has supplied Corbion with sugar since 2007.
Sugarcane does not grow as readily in the U.S., but there are still plenty of crops that could feed microbes. “In North America, it’s going to be either sugar beets or corn,” Franklin said. Sundstrom agreed and pointed to Iowa, Illinois, and the Corn Belt as prime locations for large manufacturing plants. Speaking in his capacity as a private citizen, Sundstrom said he hopes to see policies that encourage investments in these types of facilities. “Otherwise we end up with just the high-paying science jobs, but then none of the actual manufacturing employment happens here,” he said.
With the right infrastructure, microbes can transform a variety of industries, reduce society’s impact on the environment, and spread the wealth.
Andrew Saintsing is currently a PhD candidate in UC Berkeley’s Department of Integrative Biology where he studies insect locomotion. After completing his degree, he plans to pursue a career in science journalism.
Image via Checkerspot. Nina Reyes, a Checkerspot employee, and Emily Scott, a Berkeley Lab employee, served as mentors for this story.