Verenium, Shorn of Biofuels Business, Returns to San Diego and its Diversa Roots

3/22/11Follow @bvbigelow

It felt like something was coming to an end last July, when energy giant BP said it was paying $98.3 million to acquire the cellulosic biofuels business of Cambridge, MA-based Verenium (NASDAQ: VRNM). But as Verenium consolidates its headquarters and remaining operations in San Diego, incoming CEO James Levine told me in so many words that what happened was not the end, but perhaps the end of the beginning for the industrial biotech.

Selling the cellulosic biofuels business and giving up Verenium’s goal of building an ethanol plant “surprised a lot of people,” Levine conceded when we met. “I think it was such a focus of our story that we knew it was going to take some time to let people understand the gem that we remain.”

Levine, who became Verenium’s chief executive after serving two years as its CFO, says the company is now “at a sort of inflection point—where we are an independent company and we’re kind of getting the word out about what we are.”

Verenium was created amid great expectations in 2007 with the merger of the ethanol biofuel expertise of Cambridge, MA-based Celunol and an enormous collection of enzyme samples and expertise amassed at San Diego-based Diversa. A year later, Verenium forged a crucial partnership with BP to develop cellulosic ethanol production facilities throughout the U.S. BP later provided an additional $45 million toward construction of a cellulosic ethanol plant near Tampa, FL.

But Verenium’s plans faltered during the Great Recession as the company sought to raise the roughly $400 million needed to build the Florida ethanol plant. Federal energy loan guarantees needed to finance the project failed to materialize, and Levine says, “We had great technology, and we had a great partner. But without funding we had to sell the business and let BP build the plant.”

Today Verenium has … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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