+ Drop-in Biofuel:

Bisabolane

November 30th, 2012

Scientist: Taek-Soon Lee Director, Metabolic Engineering Joint BioEnergy Institute

C2M team: Tuyet Vu Marcus Carr Sandra Lagrue Marius Rus Susanne Kassube

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2010 2015 2020 2025 2030 2035

Biofuels are a high-potential market

biodiesel

Natural gas liquids

Biofuels

Million barrels/day

ethanol

cellulosic

non-cellulosic

ethanol cellulosic

biodiesel

non-cellulosic

Source: U.S. Energy Information Administration; U.S. Environmental Protection Agency

2012 2022

Oil

Fuel production in the US

+ … but existing biofuels have problems

Not a drop-in biofuel: Ethanol can only be used in limited amounts in gasoline engines

Current biofuel is corrosive and incompatible with existing infrastructure

Current biodiesel can’t be used in cold environment

Current biofuel has low energy density

+ … which bisabolane resolves

Energy density comparable to fossil fuel

Drop-in fuel, no blend wall

Cold environment performance: low freezing point (<-78 °C)

Non-corrosive

+ Bisabolane’s technology overview

Sugar (mainly food-based)

Fermentation

Bisabolane biofuel

α-bisabolene

Hydrogenation

Bacteria

Yeast

Further research

Fragrances Cellulose (not food-based)

Established industrial process

+ To succeed, it must address challenges…

Feedstock Production Market

Feedstock selection

Investment capital Production cost Scaling up

Premium market entrance

+ … by focusing on non-food feedstocks

>100

50

35

20

15

10

5

0

900

800

450 400 350 300 250 200 150 100 50 0

Palm oil

Wheat straw

Sugar cane

Sugar beets

Molasses

Yie

ld (t

onn

es/h

a)

Cost ($/tonne)

Miscanthus

Timber

Corn stover

Corn

Rice straw

Cassava

Willow

Switchgrass

Bagasse

Alfalfa

food non-food

Source: Biomass Research and Development Board, October 2008; ICS-UNIDO, November 2007; APEC Energy Working Group, May 2011

+ …by targeting corporate investors for equity

Work with big corporations for equity investment to support

Production scale up

Feedstock access

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High capital investment

= ~$150M for 20M gallons/year

VC’s funding for later stage

Source: Matthew Nordan (Dec 2011), Venrock, The State of Cleantech Venture Capital 2011

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2 L 300 L

…when scaling up is addressed...

Source: Dr. Eric D. Larson (2008), United Nations Conference on Trade and Development, Biofuel production technologies

Un

it p

rod

uct

ion

cos

t

Production capacity

100,000+ L

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3.70

3.26 3.39 3.22

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Biomass-to-liquid(thermochemical)

Biodiesel (Jatropha) Corn ethanol Cellulosic ethanol(Miscanthus)

Bisabolane diesel

Pro

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ctio

n c

ost (

$/g

allo

n)

Type of biofuel

… and production cost is driven down

Source: Angus McCrone (13Feb2012), Bloomberg New Energy Finance, “Some aviation biofuels could be competitive by 2020”; PP Peralta-Yahya, et.al. Identification and microbial production of a terpene-based advanced biofuel. Nature Communications 2 (2011), 483; America’s Energy Future: Technology and Transformation. National Academies of Science and Engineering, National Research Council (2009).

Projected production cost in 2020 at industrial scale

Aviation jet fuel 2012: $3.22/gallon

+ … and by targeting potential markets

High

Low

Short Long

Time to Market

Mar

ket C

omp

lexi

ty

Commercial jet fuel Flavors & Fragrances

Industrial paint $80M

$1.34B

Military jet fuel

$87.4B

$5.4B

+ … with initial entrance in military jet fuel and flavor & fragrances

Flavor & Fragrances

Military Jet Fuel

Commercial Jet Fuel

Market size

Value proposition

Premium pricing

Competition

Value chain complexity

High value proposition, small market

Large market, good value proposition

Huge market, low value proposition

Negative Positive Short-term focus Long-term goal

+ To realize bisabolane’s future potential…

Feedstock Production Market

Use non-food cellulosic feedstock

Address scale up issue and drive down production cost

Target flavor & fragrances and military jet fuel as short term markets

Form partnership across the value chain

Conduct R&D on using non-food cellulosic feedstock

Leverage established production capacity, distribution network and relationship with buyers

Test molecule and secure demand

+

THANK YOU

+

APPENDIX

+ Properties of bisabolane compared with commercial fossil fuels

Property D2 diesel Biodiesel Jet fuel Bisabolane

density (g/ml) 0.85 0.88 0.80 0.82

freezing point (°C) -35 to 5 -3 to 15 -47 <-78

cetane number 40 to 55 48-65 N/A 41.9

+ Overview of bisabolane production process

+ 1st generation feedstocks and biofuels

+ Current bisabolane yields

Theoretical yield based on mevalonate pathway: 0.25 g sesquiterpene / g of glucose

Using a rich media with 1% glucose, 36% of apparent theoretical yield have been reached in E. coli

In minimal medium with 2% glucose, 4% of theoretical yield have been reached in E. coli

Source: Peralta-Yahya et al., Nature Communications, 2011

+ High capital investment cost

Source: http://www.fas.org/sgp/crs/misc/R41106.pdf

+ Biofuel production cost is heavily influenced by feedstock

Biggest part of biofuel production cost And injecting high costs variability

Source: The Economies of Biomass Feedstocks in the United States, Biomass Research and Development Board, October 2008, stock market data

68.13%

6.88%

17.50%

7.50%

Feedstock Enzymes and chemicalsEnergy Labor

London Sugar

US Corn

+ Flavoring & Fragrances Small market

Source: (1) Interview with Steve Hahn, Dow Technology Transfer (2012); (2) BCC Research (May 2012), Global Markets for Flavors and Fragrances

Market sizing for bisabolane: Bisabolane share Sesquiterpene market in 2012 Projected growth rate into 2015 20% $80M (1+0.05)3

x x

$23M annual market

Assumptions: Sesquiterpene market is divided equally by 4 different types of sesquiterpenes Current market size = $80M in the US only (1) Market grows steadily at 5% per annum into the future (2)

+ Flavors & Fragrances

High-value market: 3–1600x price of fuel Waste orange peels: $16/gallon (limonene)

Synthesis from petroleum: $12–53/gallon (benzaldehyde, vanillin)

Biosynthesis from sugar: $1600–6500/gallon (valencene, nootkatone)

Immediate entry with long-term potential Similar compounds already in use: projected $23M in 2015

Consumer demand for novel scents

Diverse customers Cleaning & hygiene: Clorox, Procter & Gamble, Unilever

Manufactured foods: General Mills, Campbell Soup, Hershey

Beauty & personal care: Estee Lauder, Revlon, Avon

With just the right chemical …

+ Flavoring & Fragrances

Healthier consumption: Natural flavor Bisabolane: natural identical

Adventurous consumers: Exotic flavor Zingiberene: zinger flavor

Geographical barrier: Small players in niche market Example: Allylix

Premium pricing

Market trend favorable to bisabolane

Flavor $/gallon Compared to fuel price

Cherry $ 12.41 3x Cinnamon $ 13.96 3x Oranges $ 21.81 5x Vanilla $ 52.75 13x Raspberry ionones $ 89.21 22x Valencene $ 1,629.02 407x Nootkatone $ 6,516.10 1629x

Premium pricing: 3x to 1,629x more expensive than fuel price

+ Flavoring & Fragrances

Crowded market Four biggest players:

54% of total market

Geographical barrier: Specialized companies in niche markets

Incumbent biosynthetic producer: Allylix

Trend: Adventurous consumers

demand for new & exotic flavors

Fragmented market – Unique customer needs

Source: Leffingwell & Associates (2012), http://www.leffingwell.com/top_10.htm

Givaudan 19%

Firmenich 13%

IFF 13%

Symrise 9%

Takasago 7%

Mane SA 3%

Sensient Flavors

3%

T. Hasegawa 3%

Frutarom 2%

Robertet SA 2%

Other 26%

2011 Market Share

+ Military jet fuel market High potential

Source: US Department of Defense (July 2011), Opportunities for DOD use of alternative and renewable fuels

DOD’s demand - production gap for renewable drop-in jet fuel

High estimate for production of HRJ-5/ HRJ-8

DOD Demand for JP-5/ JP-8 equivalent in 2020

+ Military jet fuel market Air Force biggest consumer; Navy early purchaser

Test flight 3 tests 4 tests

Premium purchase

11K gallons @ $59/gallon

100K gallons @ $27/gallon

Source: Schwartz, M., Blakeley, K., O’Rourke, R. (August 10, 2012), DOD Energy Initiatives: Background and Issues for Congress

+ Military jet fuel market

Competitive landscape: Few established biofuel suppliers:

Four major petroleum fuel suppliers :

Few competition - unique needs – centralized procurement

Unique needs: Fit with existing platforms

Ensure mobility and fuel stability

Centralized procurement: Defense Logistics Agency

+ Aviation jet fuel Big market

Market sizing for bisabolane: Bisabolane share Jet fuel market in 2025 Projected jet fuel price in 2025 40% 100B gallons $5.95/gallon

x x

$238B annual market

Assumptions: Biofuel : conventional fuel mixture is 40:60

+ Aviation jet fuel

Compliance with IATA: 10% jet fuel from biofuel in 2017

Airlines actively testing out biofuel: 20+

ASTM approval for bisabolane will take ~1 month

Good window of opportunity

+ Aviation jet fuel

Competitive landscape: Petroleum fuel suppliers: major refiners

Few biofuel companies partner with airlines in fuel testing

Challenges: Demonstrated safety record Competitive pricing

Competitive landscape and challenges

+ Partnerships Most of successful biofuel companies have developed strong partnership with big and/or specialised corporation to strengthen their value chain

Why

a p

artn

er? • Access to large feedstock

quantity • Collaborate on feedstock

development and supply, to reduce cost and increase yield

• Access to equity investment for development, production support and

• Joint development with chemical partners

• Optimize production yield with innovative enzymes

• Access to large distribution channel

• Testing of end use products • Gain first customers (most often at

agreed price)

Exa

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Feedstock Production Biofuels Production Biofuels End Use

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