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Hydrogen Peroxide from Genetically Modified Enzymes

January 20. 2020. 5 mins read
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The lines between biology and computing are becoming increasingly blurred, something that was predicted by Saint Steve Jobs before his untimely demise. It’s now been more than 17 years since George Dubyah Bush created the 21st Century Nanotechnology Research and Development Act which brought nanotechnology into the limelight. Since then, the terminology has changed, but the underlying ideas haven’t. We’ve talked before about how synthetic biology is just nanotechnology under a different name. The notion of nanobots – tiny machines that are programmed to do things at a nanoscale – is now a reality. Just recently, scientists used a frog’s DNA to create the world’s first living, self-healing robots. From an article by CNN:

Named xenobots after the African clawed frog (Xenopus laevis) from which they take their stem cells, the machines are less than a millimeter (0.04 inches) wide — small enough to travel inside human bodies. They can walk and swim, survive for weeks without food, and work together in groups.

Incredibly, these are living programmable organisms, biological machines that can be programmed to do things like deliver medicines in the human body. These nanobots were designed using artificial intelligence, and the sky is the limit when it comes to what we might be able to do in the future.

TechCrunch recently interviewed a few venture capitalists about their thoughts on “deep tech” startups that are trying to solve big problems and consequently produce big returns. Seth Bannon from seed fund Fifty Years talked about how synthetic biology is “deep technology” that’s now becoming so broad that it needs to be subdivided into various categories. He spoke about “directed evolution, technology that allows biologists to use the power of evolution to get microbes or other biological machines to do what they want them to do that would have been impossible before.” And one startup in his portfolio that’s having some great commercial success in directed evolution is Solugen.

About Solugen

Click for company websiteFounded in 2016, Houston, Texas startup Solugen has taken in just over $55 million in funding to create “innovative, bio-based processes for the production of chemicals like hydrogen peroxide, chelating agents, surfactants and scale/corrosion inhibitors.” The company’s main product being produced is hydrogen peroxide, something that’s long been produced using hydrocarbons from oil. One of the co-founders, Gaurab Chakrabarti, was researching the role of chemicals in cancer progression while in medical school when he stumbled upon an enzyme that turned sugar into hydrogen peroxide. Using computational protein design methods, the co-founders worked together to genetically modify the enzyme so that it could produce hydrogen peroxide at room temperature when combined with cheap organic compounds such as sugar.

Update 07/10/2020: Solugen has raised $30 million in extended Series B funding for expansion. This brings the company’s total funding to $85 million to date.

The company’s first product, Bioperoxide®, was created using this patented enzymatic technology which converts plant sugars into hydrogen peroxide. Today, they’re manufacturing a comprehensive line of products such as their flagship BioSol™ and ScavSol™ solutions which “help treat, clean and oxidize water uses within the oil and gas, water treatment, cleaning, agriculture, soil and ground remediation, and food industries.”

Solugen's factory in Houston
Solugen’s factory in Houston – Credit: Solugen

A great article by MIT News talks about how the company progressed from selling their product to a Facebook group of float spa enthusiasts to selling their products to the oil and gas industry.

Selling to Big Oil

It’s ironic that Solugen sells their product to the very industry they’re attempting to disrupt. One byproduct of oil production is contaminated water, billions of gallons of which needs to be treated or disposed of. Historically, the process of treating the water with hydrogen peroxide wasn’t environmentally friendly because the traditional methods of producing hydrogen peroxide left such a large carbon footprint. With Solugen’s product, this isn’t an issue. In order to improve sustainability even more, the company plans to produce little “mini factories” that can produce the hydrogen peroxide right at the locations where it’s needed which reduces the impact of shipping as well and consequently reduces the carbon footprint even more.

Last year, Solugen was recognized by the industry standard that rewards excellence in the oil and gas industry for demonstrating best practices in water management through the use of innovative methods or technologies to improve conscientious water use and minimize environmental impact. That’s exactly the sort of PR that big oil could use right about now.

Green is Good

Larry Fink, CEO of Blackrock, is one of 180 CEOs who now thinks that maximizing shareholder value is no longer the raison d’etre for companies. It’s a slap in the face of fiduciary responsibility, and particularly concerning for those of us who rely on dividends for income. More recently, Mr. Fink talked about how he now wants his firm to decide what investments you ought to be making based on what his firm views as “sustainable.”

While not everyone agrees about what ESG criteria we ought to be using, or even if socially responsible investing generates alpha, nobody is arguing against making the world a better place to live in by reducing things that are harmful to the environment. We may not be able to do anything about Bangladeshi brick kilns, but we can start to look at ways in which technology can be used to reduce environmental impact. As the Larry Fink’s of the world start to decide what is good and what is bad, companies like Exxon (one of our core dividend growth investing stocks) will be scrambling to find bolt-on acquisitions like Solugen which can immediately provide some much needed green points to pacify the activists.

Barring interest from Exxon, there are any number of companies out there that might be interested in acquiring Solugen. One of these is Evonik, one of the world’s largest producers of hydrogen peroxide, which is on a mission “to futurize peroxide and to challenge the status quo of existing applications.” Their website is riddled with mentions of how environmentally friendly they are and what better way to become environmentally friendly than to stop using petroleum products entirely.

Conclusion

Technology has proven to be extremely effective in solving mankind’s problems. The platform that Solugen has developed could be used to produce a whole slew of industrial chemicals by performing additional modifications to enzymes. Expecting investors to subsidize environmental problems doesn’t scale, but when you can make production processes greener and cheaper, adoption becomes a no-brainer. Companies like Solugen are not only making the world a better place but they’re also – hopefully – going to show their investors outsized returns when they inevitably reach an exit. It’s truly a situation where everyone wins.

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