Biomedican, a California-headquartered biotech company founded in 2017, known for its high-value compounds and cannabinoids (CBD), has entered the astaxanthin market, aiming to supply the animal feed and aqua feed sectors.
Biomedican says it has been able to produce astaxanthin in less than six months, by developing a biosynthesis process that produces an organic, non-GMO pure form of astaxanthin. The company claims that this process (which uses a bioengineered yeast strain and molasses as a starting material) is 90% less expensive than producing the chemical synthetic form of astaxanthin sold in the market today.
Announcing the entry in the feed grade astaxanthin market in December, Biomedican CEO and founder Maxim Mikheev commented: “The large buyers for fish farms and cattle feed are currently using a chemical synthetic and desperately want to get out of the synthetic market,” adding that Biomedican’s astaxanthin has the potential to really disrupt the market.
As a first step, Biomedican has recently spun off a subsidiary called Bio-Kai that will be totally focused on astaxanthin production, firstly as a feed grade application, and then also as human nutrition applications in the long-term.
We spoke to Dennis O’Neill, President of Biomedican, to get a better idea of the technology, the opportunity, and to find out how far away this disruption to the market could be.
[Feedinfo] Mr. O’Neill, Biomedican estimates that the global astaxanthin market was worth over $1 billion in 2019 and is projected to keep growing. What part of that growth do you think will be associated with demand from the aqua and animal feed sectors?
[Dennis O’Neill] The global astaxanthin market size is expected to reach $3.4 billion by 2027, expanding at a CAGR of 16.2%, according to Grand View Research, Inc. The majority market share is the aqua feed which currently accounts for approximately 80% of the market and we believe that feed grade applications, which are seeing steady growth, will continue to be the majority of the overall market. Moving forward the largest growth in this market will come from human consumption.
[Dennis O’Neill] Biomedican is a biosynthesis platform focused on cannabinoids, therapeutics, and other high-value compounds. The company produces pharmaceutical-grade, bioidentical, plant-derived compounds that provide building blocks for the global pharmaceutical, health and wellness, and consumer packaged goods industries. Our patented low-cost methods of growing high-value compounds at scale with proprietary yeasts increases purity and reduces production costs by 70-90%. The platform can target any high-value compound that is being chemically synthesized or naturally cultivated. We were able to produce astaxanthin in less than six months, which shows that we can biosynthesize high-value compounds quickly and still produce a high-quality, low-cost product. Our production costs have been significantly lowered due to the fact that we use continuous fermentation harvesting every couple of days and developed a process utilizing 60-70% less sugar. Sugar is the most expensive component in biosynthesis. Our team of four PhDs and research partnerships with Clemson University, Imperial College London, Technical University Denmark, and the Institute of Genetics in Moscow, made this possible as they provided significant amounts of knowledge and resources.
Additionally, following the advice of our investors, we decided to diversify because we wanted to offset any uncertainties on the CBD regulatory front, which remains unclear. We looked at market segments and identified which ones would be of the highest value moving forward and that we could disrupt with our biosynthesis process. Astaxanthin is a high value market and we saw that we could disrupt both synthetic astaxanthin and natural astaxanthin. And as we scale up, we have the potential to lower costs even further.
[Feedinfo] Can you give us an overview of the competition you may be facing in the natural astaxanthin market?
[Dennis O’Neill] There are several large players in the feed market, but all of them are producing synthetic products. The existing natural astaxanthin providers are mainly targeting functional human foods. Their products are algae-derived, and their costs are very high (e.g., the algae drying phase). Our technology, unlike theirs, is not exposed to contamination issues and loss of production due to contamination. We also have less production steps, our cycle is faster, and we produce the final astaxanthin product directly in oil during the fermentation process.
[Feedinfo] Can you give us an update on your new spin off company, Bio-Kai?
[Dennis O’Neill] The spinoff has recently taken place. We are building a team to focus solely on this market. The market opportunity is significant, and we want to ensure that we capture a large percentage of this market as soon as possible. To accomplish this, we needed to build a company solely focused on astaxanthin and other carotenoids. This is truly a global market and the opportunities within these markets are vast. Now, we want to scale up. At the pilot facility we are aiming for 30,000 litres, and once that target is achieved, we will move onto larger scale production. We are doing bioavailability tests for the two largest buyers of astaxanthin in the world, and we expect to receive tens of millions of dollars in orders next year. But right now, we are producing approximately 50 kg/week and our objective is to produce 100 tonnes per year, starting late-2022. The company has significant interest from the largest buyers in the market and continues to build interest internationally.
[Feedinfo] How quickly can you scale up to meet the forecasted increased demand? What are the next steps for Bio-Kai?
[Dennis O’Neill] We will be using contract manufacturing initially and ultimately building our own facilities. We have significant demand from the largest buyers in the market and expect to be in large scale production within 6-9 months, once bioavailability tests are done. We have a couple of additional products currently in R&D stage that will be ready for the market within the next 9 months in the category of carotenoids.
We expect that the first production facility will be located in northern Europe, ideally not far from Norway, the largest salmon producing region. We will look for a place with available raw materials such as molasses. It is unlikely that we will go alone in this project, but we are not ruling it out. Today, we are open to partnerships and investments. A joint venture would be a good fit.
[Feedinfo] You claim that the large buyers for fish farms and cattle feed are currently using synthetic astaxanthin and desperately want to get out of the synthetic market. What is your message to the synthetic astaxanthin manufacturers?
[Dennis O’Neill] The markets have changed and the products they are currently selling are outdated and no longer viable. Like most sizable markets it is just a matter of time before they are significantly disrupted. We think we have developed the technology that will most likely take over the market as the largest player in the next 2-3 years. Replacing natural and synthetic astaxanthin products with our technology can go relatively quickly but that depends of course on how fast we expand and on how fast our scaling up goes.
We think that with the shift towards greener production systems and the interest in sustainability, it is just a matter of time before the synthetic astaxanthin manufacturers move their own production to more natural processes. Our message to the chemically synthetic manufacturers is to develop their own organic biosynthesis products or partner with us before it is too late. As the market becomes more educated on GMO products, the less the market wants them. Using synthetic products requires you to label the consumer product as GMO which for more and more consumers this is a showstopper. Consumers want organic, natural products which means the current products will soon be obsolete losing significant market share.