BioAmber has attracted $45 million in venture capital, a record for companies in the biotech chemical products niche.
At renewable chemistry business BioAmber Inc., chief technology officer Jim Millis keeps two objects on his bookshelf, which he deems metaphors for research and development. One is a crystal ball. The other is a flying pig made out of iron.
"Sometimes we're asked to make pigs fly,'' Millis said, "which we occasionally do."
Investors are hoping the company can make that a habit. Last quarter, Plymouth-based BioAmber broke a national record for the most venture capital raised for a U.S.-based biotech chemical products business, gaining $45 million, according to the MoneyTree Report, which started tracking this data in 1995.
The secret to BioAmber's success? It operates the world's first manufacturing plant dedicated to mass-producing a chemical called succinic acid by fermenting sugar from agricultural crops. Succinic acid (historically known as amber acid because of its amber color) can be used as a food additive and serve as an "intermediate" in chemicals and pharmaceuticals, the company said.
BioAmber said its product is cheaper than conventional succinic acid and, unlike petroleum-based chemicals, its process reduces greenhouse gas emissions.
The company's manufacturing plant in France has the capacity to produce 3,000 metric tons of succinic acid annually.
"We stand out amongst that crowd, by virtue of the fact that we have a small commercial-scale production facility in France," said Millis. "That gives us a much better risk profile than a lot of companies that are out there" because BioAmber is further along in selling its product, he said. BioAmber has 83 employees worldwide, including 10 in Minnesota.
Investors are bullish on BioAmber, which makes the company a rare bright spot in an otherwise challenged Minnesota entrepreneurial community.
"In the future, we really see it becoming a big company," said Denis Lucquin, managing partner of venture firm Sofinnova Partners, which invests in BioAmber. "We think the market will be booming in the next couple of years or so."
The market for manufactured organic chemicals is expected to reach $119.7 billion in 2011, and grow 4.7 percent in the next five years to reach $150.9 billion in 2016, according to IBISWorld. Industry profits in 2011 are expected to total $9.6 billion, the research firm said.
The technology behind BioAmber's succinic acid production dates back to 1995, when it was developed by Michigan-based Applied CarboChemicals through research funded by the Department of Energy. Applied CarboChemicals changed its name to Diversified Natural Products and spun off the technology into DNP Green Technology.
In 2008, Diversified Natural Products and a subsidiary of a French agricultural consortium established a joint venture called Bioamber to build the succinic acid manufacturing plant acid in France. Last year, DNP Green Technology bought out that partner and changed its name to BioAmber.
Millis said BioAmber chose to put its headquarters in Minnesota because of the expertise available here and it's in the grain belt. Millis once served as Cargill's technical director of the industrial bioproducts group.
"The western part of the Twin Cities just happens to be one of the hotbeds in the U.S. for bio-based chemical companies," Millis said. "There's just a lot of talent and a lot of people that are passionate about the subject in this area."
BioAmber has partnerships with large companies, including Cargill, DuPont Applied BioSciences and Mitsubishi Chemical. BioAmber said it has partnered with Cargill to develop a new-generation micro-organism to produce ''bio-based succinic acid."
Since 2007, there have been three Minnesota-based biotech products businesses that have raised venture capital: Segetis, Advanced BioEnergy and BioAmber, according to the MoneyTree Report from PwC and the National Venture Capital Association. The report uses data from Thomson Reuters.
Mark Scholtes, a partner with PwC (PricewaterhouseCoopers), said it's still too early to tell whether Minnesota has become an investment hub for such technologies. But he said it's a positive sign for BioAmber because it shows investors are pleased with its progress and its plans moving forward.
"I would consider it a vote of confidence," Scholtes said.
BioAmber plans to use the $45 million investment to open a large-scale plant in North America, continue research and development, and speed the commercialization of its products. The company plans to open that facility in 2013 and announce the location later this month.
In addition to producing succinic acid, BioAmber also has a contract manufacturing facility in Shanghai that modifies a type of biodegradable polymer called PBS. This product, called mPBS, is used to make coffee cup lids, straws and stirrers.
BioAmber plans to double the number of its Minnesota employees to at least 20 people by the end of the year, Millis said. The company plans to hire biotechnologists, chemists and engineers for its research and development team and other employees for its operations and manufacturing team, he said.
Millis said there's been a lot of enthusiasm from investors behind the renewable chemistry industry.
"I think that worked in our favor," he said.
Wendy Lee • 612-673-1712