Amyris CEO: Fermentation ingredients redefine markets
John Melo speaks with NutritionInvestor about the game-changing prowess of synthetic biology and producing clean label ingredients for high-growth markets in food, drink, beauty, and cannabinoids
By Murielle Gonzalez
Fermentation technology has taken centre stage in the food and drink industry, particularly on the alternative protein front where cost-efficiencies and sustainability aspects inherent to the process are drivers of innovation. Next-generation food and drink companies now use the technology, but there’s one company that has truly capitalised on the prowess of synthetic biology – Nasdaq-listed ingredients manufacturer Amyris.
Chief executive John Melo describes the company as a business making “amazing chemistry without damaging the planet”. It uses proprietary fermentation technology to produce molecules out of Brazilian sugarcane – one of the most regenerative plants on Earth.
Amyris’ process combines sugar syrup with in-house engineered yeast. The ingredients that come out of bioreactors are used in nutrition and cosmetic applications. Melo claims that one-third of the products we consume today are made with an Amyris molecule in them.
Amyris was founded in 2003 targeting healthcare and energy markets – it began making anti-malaria drugs and biofuels. The company went public in September 2010, and its IPO raised $84.8 million from stocks trading at $16 at an overall valuation of $680.6 million. At the time of writing, its market capitalisation was $5.2 billion.
Two years after the IPO, Amyris made a commercial pivot to focus on the consumer markets its targets today. Melo explains the shift was better suited to achieving the kind of yields seen in lab tests at large-scale production. “We completely shifted the business from producing a renewable source of petroleum to sustainably sourced health and beauty products,” he says.
Melo took up the chief executive role in 2007 and recognises the journey thus far has been bumpy but fertile. “At first, the technology did not perform the way we expected, it took longer to scale, and it was more expensive,” says Melo. “We had great technology and a great idea,” he adds, noting the commercial pivot allowed the company to build out the science and scale it up. “We’ve been focused on identifying the markets and then succeeding in entering them, scaling the company from a revenue perspective.”
Indeed, it was a fruitful pivot. Amyris has registered more than $100 million in recurrent revenue since 2019 across its clean beauty, health and wellness, and flavour and fragrance business – the latter recently sold to Dutch nutrition giant DSM.
Melo forecasts that Amyris will double revenues in its fiscal year 2020. “We’re growing very rapidly,” he says. “We have some fantastic consumer brands, and we have some great ingredients that are shaping or redefining the markets we sell into.”
Amyris: Nature’s best molecules
Amyris’s stocks have gone up and down over the years, but one thing has remained steady in the business – the pace of research and development leading to game-changing ingredients.
The company has spent 15 years and $2 billion to understand the chemistry, discovering enzymes that can recreate the molecules found in nature, but produce them at scale at a fraction of the cost.
The target molecules that Amyris seeks to produce are in high-growth markets – food, drink, nutrition, beauty and cannabinoids. Today, Amyris commercialises 13 molecules and has 18 more in development.
“We’re in the consumer business, and we supply ingredients to food and drink companies,” says Melo. “At the heart of it is the consumer demand – they are really focused on natural and sustainable ingredients, and that combined is hard to get.”
Health and sustainability
In March, Amyris signed a memorandum of understanding with Brazilian beef company Minerva Foods to develop molecules for the sustainable production and distribution of animal protein.
The new molecules will include natural preservatives from fermentation that will enable meat to be transported and sold with a longer shelf life at reduced carbon dioxide emission levels.
Amyris and Minerva also plan to work on developing and producing a fermentation-based alternative to animal protein.
For Melo, Amyris is well-placed to help food and drink manufacturers produce clean label products. He is bullish about the market potential of its Reb M sweetener Purecane – the molecule extracted from the leaves of the stevia plant.
“This particular molecule has the best taste profile,” says Melo, noting Purecane delivers the highest sweeten intensity without any of the bad taste or bitter after taste of other products in the market.
Melo tells me that Amyris has more than 300 prospective clients sampling Purecane, including dairy, confectionery, and snacks manufacturers.
Melo has set his sight on the beverage sector because the category is already struggling. Sugar is increasingly regarded as detrimental to health by consumers, 57% of whom worldwide believe natural sweeteners are the healthier alternative, according to a FI Global Insights report.
“I can tell you that 90% of our clients have converted their formulation using our sweetener,” says Melo. “When they consider the taste profile, level of sweetness and economics of the formulation, we win on all three – and that’s our target.”
Demand in the soda category remains flat, and Melo believes the lacklustre uptake is partly because companies in this sector have been focused on cost-cutting to keep their margins up and not on innovation. “These companies are not risk-taker,” says Melo. “Everyone remembers the new Coke that failed, so everybody is conscious and don’t want to rush on developments.”
Melo recognises that on the better-for-you side of the beverage sector, juices, kombucha, and kefir products have emerged with promising potential. “These are very progressive categories,” he says. “Functional drinks are high-growth businesses, and we have a few of those in the pipeline of sampling companies.”
According to Amyris’s data, its Reb M molecule is not only a zero-calorie sweetener but also has zero impact on the glycaemic index. “For me, the opportunity with Reb M is on the health benefit, but for many brands, it’s the taxation on sugar that started to drive or force them to make the shift,” says Melo.
The GMO conundrum
Melo explains that Amyris’s molecules are non-GMO, but the negative connotation that GMO has in the market cast a shadow on future innovation in the sector. “We don’t know how we’re going to feed the world without fermentation technology,” says Melo. “We need synthetic biology for making animal-free proteins, for example.”
Melo believes the industry will end up with GMO foods, but companies need to do a better job around safety and training. “Today, consumers say they don’t want GMO products, but most have no idea what GMO is. And the fact they don’t understand it is our problem because it’s getting in our way,” says Melo.
Cannabis in the spotlight
Melo has been looking at the penetration of CBD in the consumer space with interest and strategically decided to produce cannabigerol (CBG) instead. He argues CBG is by far the better molecule for multiple applications – and with no trace of the psychoactive compound tetrahydrocannabinol.
For Melo, the CBD market is an industry like the dot-com boom – everybody is chasing it, there’s lots of excitement and lots of investment, but people have not yet figured out the real benefit of it beyond the fad.
“I think the CBD sector lacks science-backed data of what these molecules do,” he says. Melo recognises the anti-inflammatory benefits of CBD and the fact that these cannabinoids are terpenes from nature, but he is adamant about tapping into the sector with clinical data on the molecules Amyris will produce. “For us, it’s all about figuring out what molecule or combination of molecules has a functional benefit,” he says.
Melo tells me that Amyris chose to produce CBG to target the cosmetic market. “CBG’s topical applications are more bioactive than CBD,” he claims. “Our focus was to have something unique that’s hard to extract from the cannabis plant, that is better performing than CBD, and that we can make for the same economics of CBD – and we think that is pretty disruptive.”
Beauty from within
Beauty from within is a crossover trend in the cosmetic and nutrition markets, and Melo is bullish about what Amyris’s molecules can achieve on this front.
“One of our leading molecules, squalane, has been consumed as a vitamin by Koreans for a very long time to nourish and accelerate the cellular renewal of the skin,” says Melo. “I don’t have any doubt of its benefits whether you consume it or apply it on the skin – the question is how do you get inside the cell in the most effective way?”
Melo believes there’s great potential for ingestible cannabinoids, but the market is complex due to the regulatory environment. “Ingestible products are very high-risk in the current regulatory environment until the FDA publishes a framework for how and what you can ingest from the cannabis plant,” he says, noting that’s why the topical approach is an easier one from a market entry standpoint.
Melo tells me that clinical studies of Amyris’s Reb M have shown links to collagen. “Reb M produces collagen at twice the rate of the best collagen ingredient available on the market today – and nobody is talking about it,” he says.
“The trend I’m a big fan of is beauty starts with being healthy,” says Melo. “If you can adopt this approach to all that you consume, then beauty from within falls into place – and all these molecules play a role in that.”
Looking ahead
Melo tells me that Amyris has various molecules in the pipeline waiting for further development. “If I could think about a new class of molecules that I’m most excited about, it would be human milk oligosaccharides (HMOs), which are critical for infant gut health development – and that’s probably the most interesting molecule in our pipeline,” he says.
Melo wholeheartedly believes that synthetic biology can play a much more significant role in our society beyond traditional medicine and closer to the consumer. He argues that food, drink, nutrition, and beauty companies are prime for growth when they use clean label and sustainable ingredients. “I have much hope for synthetic biology, in our current product pipeline and the impact it could have,” he concludes.
