Article from the Annual Report: Bioindustruals

Article from the Annual Report: Bioindustruals

March 19, 2020

Since its inception, Novo Holdings has been a major bioindustrials investors with a controlling shareholding in Novozymes, the world’s leading enzymes suppliers. In addition, Novo Holdings is the largest shareholder in Chr. Hansen, a world leader in microbial industrial solutions.

Important scientific advances are broadening the application of bioindustrial solutions into many new exciting areas. This development, combined with the increasing desire and need to use more natural solutions in industry, make the bioindustrial segment a very attractive investment proposition.

Enzymes are proteins, and in nature they initiate biochemical reactions in all living organisms. It is enzymes that convert the food in our stomachs to energy and turn the falling leaves in the forest to compost. In industry, enzymes replace chemicals and accelerate production processes. They help customers make more from less, while saving energy and generating less waste. Enzymes are widely used in laundry and dishwashing detergents where they remove stains and enable low-temperature washing and concentrated detergents. Other enzymes improve the quality of bread, beer and wine, or increase the nutritional value of animal feed. Enzymes are also used in the production of biofuels where they turn starch or cellulose from biomass into sugars which can be fermented to ethanol. These are just a few examples of enzymatic applications.

Like enzymes, microorganisms have natural properties that can be put to use in a variety of processes. Microorganisms are, among other things, used in agriculture, animal health and nutrition, industrial cleaning and wastewater treatment.

Case 1
LanzaTech, founded in 2005, is a Chicago-based pioneer of carbon recycling technology based on developed a biological process that turns pollution into products.

Raw greenhouse emissions which are generated by industrial processes and would otherwise be combusted and released into the atmosphere are used to feed a fermentation process
which produces ethanol and other valuable chemicals, which can then be used in fuels and other products. Examples of the uses of the technology include taking steel mill emissions and even unsorted, unrecyclable household waste and converting these wastes to ethanol.

This next generation sustainable fuel was used in a commercial flight for the first time in 2018. As such, LanzaTech is turning the global carbon crisis into a feedstock opportunity with the potential to displace 30% of crude oil use today and reduce global CO2 emissions by 10%.

Year of investment: 2019
Investment team: Novo Growth

Case 2
Vestaron, founded in 2005, is an AgTech company based in North Carolina, which develops environmentally friendly pesticides.

The company develops biopesticides from naturally occurring peptides, discovers natural peptides that are insecticidal before taking the genes of that peptide and putting them in a yeast strain which can be fermented into the final product. Their products have proven to be as effective as chemical neonicotinoids insects as well as birds or mammels without being toxic to beneficial insects, birds or mammals. This approach represents a novel new mode-of-action to control pests, making these products a new way to effectively address the growing problem of insect resistance to existing traditional synthetic insecticides.

Vestaron was in research and product development for more than 14 years, before efforts to bring the company’s first products to full commercialization in the United States began.

Year of investment: 2019
Investment team: Novo Growth

Case 3
bioMASON, founded in 2012, is a start-up in North Carolina that uses bacteria to produce sustainable masonry for the construction industry, as an alternative to traditional concrete, bricks and mortar.

bioMASON manufactures concrete masonry products (e.g. tiles, pavers) without using traditional cement, which as an industry accounts for an estimated 8% of global CO2 emissions. Instead, the company uses sand, bacteria and nutrient-rich water. When mixed together, this combination ferments, and billions of bacteria create calcium carbonate crystals that bind the grains of sand together, similar to using cement, producing high- quality biocement® construction materials through a carbon dioxide neutral process.

The concrete stone industry has an annual revenue of about USD 300 billion, and even a niche market of a few percent could thus comprise an interesting business case for this new production method.

Year of investment: 2019
Investment team: Novo Growth