LAWRENCE SMITH/Fairfax NZ
BIG POTENTIAL: BioDiscovery co-founder Peter Wigley, front, in the laboratory with the new global company chief executive Marcus Meadows-Smith.
Biodiscovery, a New Zealand biotech company that has spent most of its existence flying under the radar, is about to make a big noise globally.
The company founded by Peter Wigley and Andy Broadwell attracted seed capital from Silicon Valley venture capital firm Khosla Ventures in 2011 after it first made the breakthrough on its microbe biotechnology that can significantly enhance plant productivity. The process uses naturally occurring micro-organisms to improve crops, including higher yields, improved nutrient utilisation, tolerance to pests or diseases and resistance to drought.
Following successful field trials last year on maize crops in Pukekohe, just south of Auckland, the company and its US backers have created a new model to take the microbes to global markets. It has formed a parent company, BioConsortia, and appointed a new chief executive, Marcus Meadows-Smith, to help the company grow bigger, faster.
Meadows-Smith has already been there, done that as chief executive of biopesticide company AgraQuest which sold to Bayer Crop Science in mid-2012 for US$425 million.
"The greatest challenge we face in agriculture is how to sustainably produce more food per acre," said Meadows-Smith. "I believe BioConsortia has all the right tools and technology to make a significant contribution to mainstream agriculture."
Headhunted for the role, Meadows-Smith said despite his 30 years in the industry, he hadn't heard of BioDiscovery's work before as it had flown under the radar.
"It wasn't important to me where the technology company was from; it was important that the technology had created something unique," he said. "There are a lot of people doing research in this microbial area but I believe this has the edge.
"I couldn't find a company as good as this anywhere else in the world."
BioConsortia's headquarters, including a research and development facility that initially will match the 13 R&D staff in New Zealand, will be in California. Meadows-Smith has a farm there, growing grapes and olives, after owning a livestock farm, stocked with kunekune (a domestic New Zealand pig), in his native UK. He said it made sense to base the global company in the United States, which is one of the world's largest agricultural markets, and further field trials will be held there and in New Zealand.
BioDiscovery has had $4 million in funding from Khosla Ventures but its latest annual report to the year ending March 31, 2013, shows it made a $1.8 million loss. Auditor Grant Thornton flagged the company as dependent on capital fundraising and future revenue to continue as a going concern. Details of a new round of fundraising, which will involve Khosla and other investors, is due to be announced in a few weeks. Wigley said he and Broadwell will retain a small stake in the group, after holding 12.79 per cent each in the Kiwi company.
It's been a long journey to commercialisation for the scientists who work out of a no-frills basement laboratory in Parnell and Wigley admitted they have deliberately kept out of the limelight to date.
They originally housed Kiwi clean technology star LanzaTech (now operating further down the corridor) which also attracted funding from Khosla. The US fund invests internationally in what it calls "black swan ideas" - high impact innovations that are beyond the realm of normal expectations. Wigley and LanzaTech co-founder Sean Simpson have small stakes in each other's companies.
Wigley will continue to head the New Zealand R&D team and he's confident in the new chief executive's ability to lead the next stage of expansion and commercialisation because he "understands the potential of the technology".
Meadows-Smith is already talking with prospective collaborators including some big international players in the seed, crop protection and fertiliser markets.
The initial field trials at Pukekohe produced a 6 to 8 per cent improvement in the yield of the maize crop despite a once-in-50-year drought and similar wet. In the laboratory the patented technology has shown an even higher percentage improvement in a range of crops - tomatoes, wheat, maize, rice, and rye grass. The technology has also proven effective in boosting other plant traits such as sugar content.
Meadows-Smith said a range of collaborations would be used to take the technology to market, which meant the backers needed to put up "tens of millions of dollars rather than hundreds of millions" to commercialise it.
BioConsortia develops products from microbes that are selected as consortia, rather than single or a mix/stack of microbes discovered through individual assays. That means the group of different species of microbes act together as a community rather than alone. The technology uses the latest genomic techniques and can be applied to a range of plants – either conventional or genetically modified crops. But BioConsortia's technology has nothing to do with genetic modification. Microbes and microbial products are used for biofertilisers, biopesticides and probiotics with the healthcare sector accounting for around 60 per cent of their use.