Verdezyne Gets $48M to Advance Industrial Biotechnology in Malaysia

4/29/14Follow @bvbigelow

President Obama and Malaysian Prime Minister Najib Razak applauded a business deal in Malaysia yesterday, as the Malaysian agricultural conglomerate Sime Darby Berhad agreed to lead a $48 million investment in Verdezyne, the Carlsbad, CA-based industrial biotech.

The deal is expected to make Sime Darby the single largest investor in Verdezyne, which has committed itself to building its first commercial plant in Malaysia. The company, founded in 2005, genetically engineers various strains of yeast to produce key industrial chemicals like adipic acid and dodecanedioic acid (DDDA) that are currently made from petroleum-based intermediates.

The engineered yeast consumes sustainable raw material, such as palm oil, in fermentation tanks, to produce the valuable chemicals, which are used to make nylon, resins, lubricants, and other products. Sime Darby said it has formed a new business unit, Sime Darby Renewables, to work with Verdezyne to convert palm oil waste and related palm-based commodities into higher-value products.

The size of Sime Darby’s investment in Verdezyne was not disclosed in statements issued yesterday from Verdezyne and Sime Darby. However, the Green Chemical Blog reported that Sime Darby would invest $30 million to acquire a 30 percent stake in Verdezyne.

Existing investors BP Alternative Energy, Royal DSM, OVP Venture Partners, and Monitor Ventures joined in the deal. Verdezyne has not disclosed the total amount of venture capital the company has raised.

Verdezyne CEO Bill Radany and Sime Darby Berhad president and group chief executive, Tan Sri Dato’ Seri Mohd Bakke Salleh formalized their agreement in a signing ceremony in the Malaysian capital Kuala Lumpur that was attended by President Obama and the Malaysian Prime Minister.

In an e-mail from Kuala Lumpur yesterday, Verdezyne investor Drew Senyei of San Diego’s Enterprise Partners Venture Capital, writes, “I am currently in Malaysia with Verdezyne (I am on the board) where President Obama and the Prime Minister witnessed the signing of a major deal for renewable chemicals [to] make nylon from palm oil. Really big breakthrough technologically.”

Verdezyne said the funds will be used to advance its technology in the United States and to support “various collaborative projects with Sime Darby Renewables.”

The Verdezyne statement quotes Radany as saying, “It is an honor and a true privilege that both President Barack Obama and Prime Minister Najib Razak chose to attend our signing ceremony today. It speaks to the significance of this agreement for the renewable chemicals space and to strengthening ties between the U.S. and Malaysia.”

Radany goes on to say, “Over the past year, with the invaluable assistance of the Malaysian Biotechnology Corporation, Verdezyne’s management team researched the oil palm industry extensively. We believe that Sime Darby, with its commitment to sustainability, is the perfect partner to help lead the revolution in renewable products in the U.S., Malaysia and beyond.”

President Obama was briefed about Verdezyne’s technology during a tour of the Michigan Biotechnology Institute (MBI) in Lansing on February 7. The President and Secretary of Agriculture Tom Vilsack toured the MBI facility and the Michigan State University campus before the President signed the Farm Bill.

Asked about the odds of a presidential appearance at Verdezyne’s contract testing facility in Michigan and at a signing ceremony in Kuala Lumpur two months later, Senyei writes: “It was a total co-incidence that the place we rented [and] where we did our first scaled run was a Michigan re-development effort that Obama was trying to feature. Believe it or not, the material in the fermenters was our material at the time he visited.”

Secretary Tom Vilsack (from left to right), President Obama,  MBI  engineer Tim Campbell and MSU professor Bruce Dale (AP Photo/Jacquelyn Martin)

Secretary Tom Vilsack (from left to right), President Obama, MBI engineer Tim Campbell and MSU professor Bruce Dale (AP Photo/Jacquelyn Martin)

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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