Russ: Hi I’m Russ Capper and this is BusinessMakers USA, brought to you by Insperity, inspiring business performance. Coming to you today from Indianapolis, Indiana and my guest is the Founder and CEO of Xylogenics Josh Heyen. Josh welcome to the show.
Josh: Nice to be here, thanks for having me.
Russ: You bet, tell us about Xylogenics.
Josh: Xylogenics is a biotech company. We engineer organisms to make renewable chemicals.
Russ: Sounds like magic, tell us more.
Josh: We use genetic engineering techniques to introduce genes from different organisms to make a similar compound in yeast through fermentation; same process that you use to make beer.
Russ: Okay, and so yeast is important in beer.
Josh: It’s what we call the chasse. In beer it’s the chasse to make ethanol; it’s what converts your bodily sugars to Ethanol.
Russ: Does everything thing you do at Xylogenics involve yeast?
Josh: If course. We’re yeast experts; I have my PhD in yeast, our founders are all yeast guys as we call them.
Russ: All right, we’ve already been talking about magic in general so tell us what’s so magic about yeast. What does it enable your company to do?
Josh: What makes it interesting is that yeast is the simplest eukaryotic organism, meaning it has an enclosed nucleus, which makes it a lot like our cells. So we have used it traditionally in biotech to make proteins that humans have in other molecules and what we’re doing is engineering it to convert sugars to renewable chemicals like natural ingredients to foods. Vanilla flavoring would be an example to that and there’s many, many other examples.
Russ: Okay, well in preparing for my interview with you there was a lot of focus on food and essentially saying that since GMOs have sort of become unpopular with some people there’s this focus – almost too much – on natural foods. And with your company you can really create, manufacture, natural foods. Would that be right?
Josh: We create a fermentation system that allows us to supply the ingredients of natural foods through a process that’s sustainable, that’s the way I would explain it.
Russ: Would the people that are not crazy about GMOs think that no, this is manufactured too, it’s not going to be good for you.
Josh: You could but at the basic level every product that‘s being made is not the organism, it’s the chemical that the organism is secreting. And that chemical structure is exactly like the chemical structure that you’d find in vanilla, so you’re not selling the organism itself.
Russ: So you’re actually fermenting it with yeast.
Josh: The name of the game is converting sugars to something of higher value in a natural way.
Russ: I know it was an old article but there was an article I think in Fortune Magazine about your company like 5 or 6 years ago about producing food in the future is going to be a lot like brewing beer and that’s because it is, right?
Russ: Is that happening today?
Josh: It is. I have some friends that work in companies that are synthesizing meat. And the way that they do that is there’s certain compounds that give you meat flavoring and through fermentation we can produce those compounds for making synthetic meat, so that’s one way it impacts food. We specifically are more interested in converting sugar to ingredients that may go into food, but then there’s other things like cosmetics.
A good example of that is squalene. So squalene is a huge emollient, it’s in a lot of cosmetics. It’s naturally produced by your cells, it sucks into your skin very well, it doesn’t leave a greasy texture; women love it. The problem with squalene is it comes from shark livers and so the sharks became endangered. So through a synthetic way about making an organism that can then secrete squalene, like yeast, we can supply that market in a way that’s not endangering sharks.
Russ: So more specific to your company, you don’t make the cosmetic stuff do you?
Josh: We have a JV starting now with another company, a leader in the terpene space, to make squalene using our platform. So the platform we have now we focused on which sugars can our yeast utilize to make these things. And we’ve enabled it to use different sugars which gives us flexibility from the feedstock we feed it to make the chemical we’re looking at.
Russ: When you say platform is that how your company makes money?
Josh: The way that we make money is we develop what we call fermentation systems that are designed around the organism we’ve engineered. And we patent around that the organism and the fermentation systems and then we license those to bigger chemical players who service our industries.
Russ: Are the systems themselves considered hardware? Is it actual hardware?
Josh: I would say it’s actually software.
Russ: Okay, wow.
Josh: Well there’s some hardware in the organism right? You have to have the organism, but the system around it would be the software involved. How do you get this to make the 05:00 ???? you need to make it profitable?
Russ: And once you come up with that formula and you have it patented and you license it to big manufacturers?
Josh: Yes. There’s a big gap in startup biotech where you can get a technology so far and then you require a huge amount of investment to get commercialized. We take the upfront risk out. We develop the organism and get it to a certain stage where a large company would say this is far enough, it’s reached what we call a technology readiness level that’s high enough for us to take the risk on it.
Russ: Okay, and so who are your big customers then?
Josh: Huge chemical companies like DuPont would be one, Monsanto of course would be one if they were in fermentation, BASF; Syngenta is a seed corn company that was in the fuel ethanol space for a while. Large seed corn companies have taken interest in us and chemical companies.
Russ: So I would think being in Indiana is ideal, that’s why you got interested in this category to begin with perhaps?
Josh: Well this is where I went to school and then it was just serendipity. We ran across a certain technology while I was working on my PhD that we thought hey, this might be a product so we started Xylogenics. We’ve gone through many, many different evolutions since then but all in all it’s been to enable yeast to make product.
Russ: Josh I really appreciate you sharing your story, it’s fascinating.
Josh: It’s great to talk to you.
Russ: You bet, you bet. And that wraps up my discussion with Josh Heyen, Founder and CEO of Xylogenics and this is BusinessMakers USA.
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