“The crises, while tragic, created an opportunity to rethink security of supply in terms of where things are manufactured, and DMC is positioned to lead the change. It has taken time to get to this point. Nobody really saw the benefit of shortening supply chains until we had these recent crises. And all of a sudden, everyone is talking about logistics.” Kelly Smith, VP R&D at DMC Biotech talks with Il Bioeconomista.
Interview by Mario Bonaccorso
In March 2021 DMC Biotechnologies successfully demonstrated full commercial scale for its first product, the amino acid L-alanine. What is the state of the art of your business development plan today? And what are the next steps?
In March 2021, we demonstrated our fermentation technology at full commercial scale. We also raised our Series B round of funding in January 2022 raising $39 million. This brought strategic investors like Michelin and Solvay on board.
What’s happening currently is a dedicated focus on hiring the right people to move forward with us. This year, we have brought on new leadership positions, including my appointment as VP R&D in March, Ashley Jenkins as CFO in January and Kenny Erdoes as COO in May.
Today, we have a number of open positions for chemists and engineers so I would encourage any readers who are interested in joining DMC to check out our Careers page. We’d love to hear from them.
You may know that DMC’s technology is applicable to a wide range of bio-based chemicals and that it allows chemical production to be scaled rapidly and predictably. Still, we see that a lack of available manufacturing capacity is a serious barrier to the rapid commercialization of the biomaterials sector. It still takes time to bring products to market.
For example, we have been working with our manufacturing partner to get their manufacturing facility ready to produce our product at commercial scale. We will start manufacturing our lead product L-alanine with a partner in Europe in early 2023.
We have several other products in the pipeline, not only amino acids but also a number of fine chemicals. The next step is to demonstrate some of those other compounds at commercial scale and find manufacturing partners to bring them to the market at scale.
Why did a US company decide to invest in Europe? Is the Old Continent really the best place to grow the bioeconomy business today?
The US recently launched its National Biotechnology and Biomanufacturing Initiative which may change the global landscape in the future, but from our perspective today, Europe is still the most interesting location for demonstration and scale-up of bio-based chemicals.
And there’s a couple of major reasons for that. One of our main value propositions is bringing manufacturing into the regions where the products will be used, and also close to the source of the raw materials, which are agricultural products.
So if, for example, you use sugar as your raw material in a biological manufacturing process, which many companies do, it makes sense for the manufacturing of the chemical to be close to where the sugar is produced. Also, regional manufacturing is such an advantage for security of supply and for the resilience of a number of logistical networks and supply chains.
At DMC, we also have European investors who are naturally interested in promoting the economies where they are based. Another interesting thing about working in Europe is that European governments have been directly supportive of building manufacturing capacity. We don’t see that as much in the US where support tends to come indirectly or in the form of mechanisms like tax credits.
Direct capital support for building manufacturing capacity is easier to come by in Europe and there are pilot plants and other facilities which are much more available. It’s just much easier to find both existing facilities and support for putting new steel in the ground in Europe than it is currently in the US.
Research is at the basis of the bioeconomy. How can institutions further encourage investments in the direction of sustainable development?
I may have a slightly different take on this to many people. I believe that institutions should evaluate new technologies based on their impact, rather than on projects which seem ‘shiny’ but which have less systemic impact.
Technologies like DMC’s are going to have a much bigger impact in helping us move to an economy that’s less based on fossil fuels by producing both commodity and specialty chemicals from renewable resources. This will have a much bigger impact on environmental sustainability and a shift to a more sustainable economy than some of the more well-known technologies out there.
The products we make are used across a huge variety of industries. And they are produced at a scale which is actually going to move the needle on carbon emissions. So if you think about the scale at which chemicals are produced, and the number of different things they are used for, and the number of different customers that purchase them, shifting that manufacturing to a biological basis from a fossil fuel basis is going to have a major impact on the overall emissions of carbon dioxide, on water use and other measures of environmental sustainability.
I believe when public institutions support technologies, they should share the metrics that are being used to measure the impact these technologies are expected to have. They should support technologies that are going to have a bigger impact in a shorter period of time, rather than things that are only going to benefit a few well-connected people in a distant future.
The energy crisis and raw materials crises have exposed how seriously the production system lacks resilience. How can a company like yours, active in the biochemicals sector, benefit from this?
This lack of resilience has really come into public awareness during the pandemic and in the US especially, we are seeing an increasing narrative around onshoring manufacturing from China and bringing it back domestically. As I mentioned earlier, we are well-positioned to support manufacturing regionally and shorten supply chains.
In our case at DMC, we can produce the amino acid L-alanine regionally to go into any number of markets. All of those things are then manufactured close to where the chemical is coming from. So you shorten your supply chain, you shorten the amount of transport that is needed and its associated carbon footprint and you bring all of the manufacturing closer to where the raw materials are sourced and where the customer uses them.
The crises, while tragic, created an opportunity to rethink security of supply in terms of where things are manufactured, and DMC is positioned to lead the change.
It has taken time to get to this point. Nobody really saw the benefit of shortening supply chains until we had these recent crises. And all of a sudden, everyone is talking about logistics. We’re seeing the US government and the Chinese government as well as the Europeans who have invested in it for a long time all getting serious about investing and strengthening infrastructure and strengthening their manufacturing capabilities locally.
Hopefully this is a kind of a reordering or a rationalisation of how our economy is run and how the convenience of off-shored manufacturing is offset by the cost to the environment, and the security of supply of vital goods.
How do you see the chemical industry over the next ten years?
I think in the next ten years, the chemical industry is going to move away from fossil fuels as a feedstock in fits and starts. There will be some industries that will readily adopt the use of biological processes to produce and there will be others where there might not be a readily-available biological route or where the fossil fuel feedstock remains cheap for a long enough period that it will take them longer to convert. For materials, for example for certain commodity plastics, recycling may still take precedence over bio-based routes.
But I believe the shift is happening and it’s going to begin ramping up. At some point in the next ten years, there will be a tipping point of critical mass where suddenly it makes more sense to develop new biological processes, because we have enough history with chemicals being produced biologically, and because the fossil fuel feedstock won’t make as much sense anymore.
I don’t think it’s going to happen overnight. It will take a while for that critical mass of knowledge to be accumulated. I believe the initial drivers will be better regional manufacturing, more resilient supply chains, better ways to improve local economies and support agricultural economies.