*First published July 27, 2017. Updated November 30 to reflect final close on $15.2 million
Seattle-based Arzeda has raised a $15.2 million Series A round to expand the capacity of its synthetic protein and enzyme development operation. The nine-year-old company designs proteins for Fortune 500 companies in fields including but not limited to agriculture.
This round was led by OS Fund, which, according to its website, “finances and supports inventors and scientists who are working on audacious breakthroughs to solve the greatest issues and opportunities facing humanity today.”
Arzeda initially announced the round with $12 million raised in July and new investors Japanese materials and chemicals-focused VC Universal Materials Incubator Co. and New York-based life sciences VC Casdin Capital joined the round for the close on $15.2 million, announced November 28.
Cofounder and CEO Alex Zanghellini told AgFunderNews that his protein design technology could potentially take the place of the petroleum-based materials present in common materials and chemicals from plexiglass to herbicides to sweeteners.
“Instead of taking oil and doing synthetic chemistry, we start from plants and use synthetic biology,” he said.
Arzeda has created a software platform that enables the custom design of proteins and enzymes by coding the genetic material that instructs a cell on what to build. The directions are passed on to yeast that produces the proteins from common sugars derived from beet, sugar cane, and corn through fermentation. This feedstock will eventually come from agricultural waste streams, says Zanghellini.
Zanghellini says that his “computer-assisted protein design technology and synthetic biology approaches can create and improve an industrial fermentation pathway for virtually any chemical.”
The company raised an undisclosed seed round in 2009 and has sustained its growth through revenue since then — an intentional strategy, according to the founder, who wanted to prove the expansive nature of the technology’s applications before raising more funding.
With the new funding, Arzeda will ramp up its capacity to produce custom proteins, including doubling its staff.
“A lot of the chemicals made by the industry so far are made from oil, and they are relatively simple in their properties and their chemistry. The whole world around us — including some of the food ingredients we eat, the paints, the coatings, the carpets — is overwhelmingly made from oil. We can make vastly improved materials and food ingredients that are highly complicated, that it would be impossible to make from chemistry, and we can make them sustainably with our technology.”
For agriculture, this means feed additives that make animal feed easier to digest, herbicide-resistant products, better biopesticides, and more — a few of which Arzeda has already developed for major agribusiness DuPont Pioneer. To date, 20% of the firm’s products are for use in agriculture.
The production method for the proteins is essentially commercial fermentation (on the website the company compares the production of new proteins to beer brewing), for which Arzeda currently relies on carefully chosen outside partners. “It’s one field where you need to be very careful with who you work with. It’s a critical aspect of what we do and I think we have a very good handle on it,” he said. Bringing production in-house is not in the cards for the near-term but acquiring large-scale fermentation capabilities may be in future plans.
Since the company develops IP exclusively for its customers and partners, Arzeda is generally not responsible for regulatory hurdles; the customers eventually own the IP with a value-share mechanism and are thus responsible for regulatory approval. But Zanghellini says that his products would fit into existing regulations, although currently no Arzeda-enabled products are on the market and so far none have been developed for human consumption.
“It’s not different from any other biotech product. We create amino acid sequences that may or may not be occurring in nature, and so we have to go through – or our partners have to go through – a path that is the same as if you found a protein and introduced it in another organism.”
“Many of the things we use every day will be made more efficiently, less toxic, and better performing with Arzeda’s protein design approach,” said Jeff Klunzinger, co-founder at OS Fund in a statement. “Perhaps most exciting is the prospect of using the technology to design molecules that have never been seen before. This will redefine what is possible for a large variety of industries.”
Zanghellini said that he was glad to have an investor that understood that disruptive technologies take time. “We have a disciplined, get-there-in-increments approach, but we also know what the large, transformational quality of our technology can be, and we are fortunate to have people who understand that and will help us get there, knowing it will take some time.” He added that the product development timeline for major partnerships will be around three to four more years.
Arzeda started at the University of Washington’s Institute for Protein Design, which cofounder David Baker directs. Jeff Klunzinger, cofounder at OS Fund, will join Arzeda’s board.