The Discoverer's Game

The world of enzyme technology is filled with explorers scouring the ends of the Earth for new strains of fungi. In the wake of new discoveries is a world of intellectual property intrigue and business maneuvering that has leading enzyme producers—Genencor, Novozymes and Dyadic—aligning with different partners in a race to build the first industrial cellulosic biorefinery.
By Nicholas Zeman | January 04, 2007
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It's paradoxical that a naturally occurring fungus—a filamentous variety widely strewn about in the soil and decaying biomass of Earth—would become a critical element in the high-stakes race to commercialize cellulosic ethanol production. That, however, has been the preordained lot of Trichoderma reesei, the fungi at the heart of a successful government-backed initiative to reduce the cost of producing enzymes that break down plant fiber.

This highly publicized research effort, carried out in phases over the first half of this decade by competing international enzyme makers Genencor International and Novozymes Inc., reduced the amount of "enzymatic loading" needed to unlock the complex sugars within non-grain ethanol feedstocks. Subsequently, some of the economic barriers of the process were effectively chipped away.

Scientific accolades aside, both companies are now maneuvering to integrate their past work into industrial-scale cellulose-to-ethanol projects. Meanwhile, other competitors like Jupiter, Fla.-based Dyadic International Inc. have emerged with their own unique strategies. Dyadic has been working with the Iowa Corn Promotion Board and the U.S. DOE over the past two years to develop a novel process technology to convert distillers grains and corn fibers into ethanol. "Filamented fungi of the world are what break down plant material into sugar in nature," Dyadic President and CEO Mark Emalfarb says. "It's the fungi that are scavenging the forest floor and metabolizing cellulosic materials, and the reason for this is that fungi secrete a variety of enzymes at once."

Indeed, it is the planet's fungi that render industrial-scale cellulosic ethanol production ostensibly possible, if not yet viable. With genetic tools in place, it was speculated that the enzymatic secretions of certain fungi, which digest cellulose in order to live, could be dramatically increased. Moving from theory to practice, however, is rife with struggle.

So what has the DOE's enzyme project enabled its participants to do in the wake of its completion? "We've been continuing to invest in our applications in the research effort around the biomass substrates," says Jack Huttner, vice president of corporate communications and public affairs at Genencor. The enzyme maker is now focused on expanding its reach beyond the dilute acid hydrolysis of corn stover to other substrates and pretreatments. Huttner wasn't specific about feedstocks or conversion platforms, other than saying, "They're all the normal candidates. We're not working on anything exotic."

On a similar front, Novozymes plans to assist Broin Companies in its effort to commercialize corn stover-derived ethanol. "It's our intention to move forward in our efforts with biomass, and we do that by finding partners in the industry to work with—Broin being one of those partners—as an extension of the work that has already gone into developing new cellulases," says Novozymes North America Inc. Marketing Manager Chris Veit.

In fact, the DOE research effort focused not only on corn stover, but also corn fiber, a substrate that already exists at more than 100 corn-to-ethanol dry mills in the United States. Subsequently, Broin Companies has partnered with DuPont to expand an existing 50 MMgy corn dry mill into a 125 MMgy facility that would convert every part of the corn plant into ethanol and its coproducts. Voyager Ethanol, the Emmetsburg, Iowa, plant undergoing this transformation, will couple corn fractionation and lignocellulosic conversion technologies to produce ethanol from corn fiber and corn stover. The project is expected to greatly increase ethanol production efficiency.

The plant, which will also use Broin's trademarked raw starch hydrolysis process, will obtain 11 percent more ethanol from a bushel of corn and 27 percent more ethanol from an acre of corn. The plant is also expected to use 83 percent less energy to operate.

DuPont's process allows the high conversion of both C5 glucose sugars and the difficult-to-ferment C6 xylose sugars to ethanol at high yields, according to the company. The technology uses a microorganism called Zymomonas mobilis to make these conversions. In nature, this organism lives in solutions of high sugar concentrations, such as those derived from fruits and the sugar sap of plants, and is well-suited for the highly efficient conversion of sugar.

Converting corn fiber and stover into ethanol is a logical place to start, Veit says, because the raw materials are readily available and relatively responsive to known enzyme treatments. "You look at most substrates out there today that we are aware of, and the amount of enzyme needed to hydrolyze the substrate is significantly higher than corn stover," Veit says.

The cocktail of enzymes that's going to be needed for corn fiber hasn't been perfected, but the enzymes developed in conjunction with the DOE will serve as a baseline for Novozymes' new research and projects, according to Veit. While Genencor and Novozymes received funding under the same government program, the two didn't collaborate in any way, and the products and services developed by both companies are exclusive and unique.

"The state of the industry can be described as a lot of dancing with different partners to see how everything fits together," Huttner says. "Because it's such an integrated effort—substrate, pretreatment, process conditions, fermentative organism—all of these things affect everything else, and you have to solve every problem all at the same time."

Genencor announced in May its participation in a research partnership with Tembec, a forest products company, and the French University of Bordeaux's Pine Institute to study the production of cellulosic ethanol from wood waste. EPM previously reported on the ways in which pulp and paper industry processes are now being applied to cellulosic ethanol research, and how the existing infrastructure of this industry may serve to advance the purposes of a new generation of fuel ethanol plants.

The Race Is On
"There is certainly a race to be first, but I'm not sure that the winner will be the long-haul winner," Huttner says. "This is a race where coming in second or third may be the better option. All of the elements are in place, and all of the tools needed to succeed are available. I think the issue is making an integrated system function with optimal performance." Indeed, the winners will be the technology integrators who can deploy commercial cellulosic ethanol processes to the market and rapidly build ethanol capacity.

Abengoa Bioenergy S.A. has announced a partnership with SunOpta Inc. to leverage its proprietary steam explosion pretreatment, and most recently bought $10 million worth of stock in Dyadic. If Dyadic successfully develops one or more enzyme manufacturing systems for Abengoa, it may receive licensing and technology fees, and royalties on ethanol sales. With the observation of such examples, evidence indicates that the commercialization of cellulosic ethanol will be the result of a collaborative effort.

All three of the "teams" that include Dyadic, Novozymes and Genencor as players, and are leading the field in cellulose, have received public funding. It seems the DOE has escorted all parties in igniting cellulosic experimentation and application. That begs the question, is the support of government so critical in the commercialization of cutting-edge technologies? It is if the effort occurs in absence of commercial justification. Because there are other fuels available for transportation, companies haven't been investing at the rate needed to employ the technology in an experimental effort.

Therefore, in that context, an actor may not want to be the first. Different companies may hold back and be the third, fourth or fifth, in order to learn from the mistakes of others. This is the rationalization for government intervention. "The DOE is there to manage and reduce the risk of the pioneers," Huttner says. "There is a race, and the winner may not be the first one over the finish line. It might be the third guy who sees where the first guy has stumbled."

The capital costs to build the first generation of biomass plants is going to be somewhere between five and 10 times the cost of a starch-based plant. "The only way you are going to get businesses to go out on a limb, take these risks and build these plants is by offering them some incentives to do that," Veit says.

The ‘Discovery' World
The enzymes touted as "new generation" are created from fungal sources using fungal fermentations with the aid of genetic modification. "What the project enabled us to do is develop a new generation of enzymes specifically for biomass, and helped us to identify models that we could pursue that would enable further cost reduction," Veit says.

It may be too early in the race to predict a winner, however, Emalfarb is betting that trichoderma, the source for the original cellulase research and activity, and the platform that Genencor and Novozymes have built their fuel ethanol research around, can't compete with Dyadic's patented Chrysosporium luknowense fungus, which Emalfarb calls C1. "It's richer in genes than trichoderma by almost a factor of two," he says. "It doesn't mean that the genes are necessarily better, it just gives you more choices."

This was what drew Abengoa Bioenergy to Dyadic. "We recognized that Dyadic's enzyme technology, especially in the field of cellulosic ethanol, is state-of-the-art," said Gerson Santos-Leon, director of research and development at Abengoa Bioenergy, in an official company announcement. "Abengoa Bioenergy is looking forward to working with Dyadic in the development of large-scale enzyme production systems and manufacturing processes for use in the production of abundant low-cost fermentable sugars from biomass, with initial focus on cellulosic ethanol production."

Dyadic's gene discovery platform—the C1 Fungal High-Throughput Robotic Screening (HTRS) system—is the only technology that utilizes HTRS with a nonyeast eukaryotic host. As a result of this breakthrough, Dyadic has innovated the only gene discovery platform by which eukaryotic genes—the genes of complex living organisms—can be discovered via functional expression using robotic equipment in a high-throughput scenario.

These capabilities have taken years to realize. The work involved in growing 12 fungi, identifying the secreted proteins, isolating those proteins and purifying them is staggering. To make enough enzymes to test on different fibers, and calculating what mixture corresponds to the best yield is extremely tedious and has consumed Dyadic researchers for more than 14 years. "We've examined these 12 cellulitic fungi," Emalfarb says. "We have the molecular tools in place to clone and express them into a fungal cell, and we believe our fungal cell is the world's best. Nobody thought you can make a fungus work in a microtiter dish, but I didn't know any better and I got lucky."

Microtiter plates are plastic plates that are divided into compartments and can be used for culturing and testing cells in a variety of conditions. The use of a standard microtiter plate format is beneficial because of the availability of compatible robots, readers and other equipment. Fungi have traditionally not been able to be placed in this "discovery world" because sample strains couldn't fit in the screening plates. "Yeast and bacteria are single cells and they fit in those little wells, and fungi don't," Emalfarb says. "This fungi (C1), however, changed physical form and other morphological properties during the process of mutagenesis."

Dyadic's goal was to breed this fungus into higher and higher cellulase-producing specimens. After several rounds of mutagenesis, Dyadic says it improved C1's ability to make cellulases 200- to 400-fold. "So we were able to improve upon what nature did dramatically," Emalfarb says.

Who's Better, Who's Best
Although it might look like the three leaders in enzyme research are all about laboratories, professors and robots, that's just the tip of the iceberg. Intellectual property disputes between Novozymes and Genencor were settled in August. Dyadic distributed enzymes for Novozymes when its primary business was making stonewashed jeans. Dyadic recently hired Novozymes Chief Science Officer Glenn Nedwin to head its own enterprises. All three of these leaders in the field are locked in competing cellulosic ethanol projects. Along with the research efforts, competition has led the companies into a fierce and often shrouded world of international business, patent infringement skirmishes and trade secret fortification.

Emalfarb says he's convinced that the others can't compete with Dyadic's platform. "The mixture of enzymes [needed to break down sugars in biomass] are produced all at once in C1," he says. "That's why we think fungi are the only thing that will get the job done in the end—because they produce a whole bunch of enzymes at once. C1 is the world's best enzyme as far as discovery, as well as production."

Dyadic received a U.S. patent for its technology for robotic screening in filamentous fungi using the company's proprietary C1 Host Technology platform. The company believes the patent it was granted in November validates Dyadic's technology where gene discovery, improvement and expression, and product manufacturing can all be performed in the same host organism. Emalfarb says this patent effectively puts Dyadic in a power position among the enzyme companies vying for the cellulosic ethanol lead. Time—and technology—will tell.

Nicholas Zeman is an Ethanol Producer Magazine staff writer. He can be reached at nzeman@bbibiofuels.com or (701) 746-8385.