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Arzeda Gets Federal Grant to Make Renewable Enzyme for Tires, Sidesteps VC Funding Model

Arzeda is finding out what it wants to be when it grows up. The Seattle-based startup, which designs custom-made enzymes on computers, has pocketed a grant from the National Science Foundation to see if it can create an enzyme that can turn plant biomass into one of the key ingredients in synthetic rubber tires.

The Small Business Innovation Research grant isn’t really that big, at just $149,000 for six months of work on an enzyme to produce butadiene. But it’s a sign that Arzeda’s science can pass muster with the tough-minded peer reviewers for the NSF, that it has focused on two primary themes in its business strategy, and it is finding ways to operate much leaner than originally envisioned, says CEO Michael Martino.

Back in July, Arzeda clinched a two-year partnership with the Pioneer-Hi Bred International subsidiary of chemical giant DuPont that put it squarely in the business of agricultural biotech, by trying to create novel enzymes to help engineer better yielding corn, soybeans, rice, cotton, and canola. The new grant from the NSF will enable Arzeda to build up related capability in making specialty chemicals like butadiene, from renewable plant sources instead of from oil. Butadiene is one of the key ingredients in synthetic rubber tires, a specialty chemical that’s worth $5 billion to $6 billion a year worldwide, and it’s just one of three such chemicals that Arzeda thinks it can make from plant biomass, Martino says.

“The great news is that we can do a lot of things, and the bad news is that we can do so many things,” Martino says. “What we have now are two strategic paths that we think are related and highly leverageable.”

Arzeda has been on my watch list as one of the most intriguing startups in town, since I first profiled the company in September 2008. The company has its roots in the lab of University of Washington biochemist David Baker, who uses pooled computing power from around the world to help design brand new enzymes that don’t exist in nature. The list of opportunities for these things is practically endless, given how many processes enzymes perform in nature. The job of putting these ideas into practice has fallen to a few bright young Baker protégés—Eric Althoff, Daniela Grabs, and Alexandre Zanghellini.

Two things are clearly missing from the Arzeda business strategy. There are no immediate plans to develop either enzyme replacement therapies, like Cambridge, MA-based biopharmaceutical giant Genzyme (NASDAQ: GENZ), or enzyme catalysts that might hold the key to efficiently breaking down cornstalks or other biomass, for what is known as cellulosic ethanol biofuel. Those are … Next Page »

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