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“If you can’t beat ’em, join ’em” – how crop tech startups like Lavie Bio chart the market

September 10, 2019

When you’re a startup joining a space where five companies control 70% of the market, how do you compete? You don’t.

Joining — rather than beating — the agrochemical giants seems to be the strategy of choice for several agbiotech startups, whether they’re making new crop treatments themselves or building discovery platforms to support new products. That’s a break from the typical startup playbook where entrepreneurs promise to disrupt and put out of business the existing incumbents to attract venture capital.

Dutch biotech startup Ceradis is partnering with Syngenta to sell its grapevine biofungicide to farmers. PivotBio is teaming up with Bayer on microbe-based soybean products that mitigate the environmental impact of chemical fertilizers. Belgium’s Agrosavfe has it on the record that its line of biocontrols are meant to “reduce rather than completely replace synthetic chemically-based products.” Discovery startup MoA Technology says it plans to partner with major industry players to address a growing “herbicide resistance crisis”.

And many, like US-based biologicals companies Sound Agriculture and NewLeaf Symbiotics, and Danish bio-pest control startup BioPhero, have raised funding from the agri-giants’ venture funds.

(Interacting with corporates isn’t always easy and can be a distracting and therefore expensive endeavor for cash-poor startups. Check out these tips for working with corporate venture capital investors.)

Why partner?

Partnering with established players makes sense for startups trying to raise their valuations and commercialize products, says Ido Dor, CEO of Tel Aviv-based biologicals startup Lavie Bio. Dor’s company, a spin-out of biotech company Evogene, is the latest example.

Lavie Bio is working on the next generation of biological crop treatments, hoping to introduce a new range of stable and effective products to a field that has been slow to gain widespread traction. It recently got a $10 million equity injection from Corteva, DowDuPont’s now-independent, publicly-listed agricultural unit. As part of the deal, Corteva got a 30% stake of Lavie Bio while Lavie Bio absorbed Corteva’s subsidiary, Taxon Biosciences and Taxon’s large microbial collection. That exchange of resources and expertise will allow Lavie Bio to accelerate its pipeline, says Dor.

(Improving the performance of biologicals is attracting big bucks; Terramera just raised $45m to develop its Actigate technology, which it also plans to roll out with existing product manufacturers.)

Predictive biology

Lavie Bio is currently developing biostimulants and biopesticides for row crops, including corn, wheat and soy, and several specialty crops, like grapes.

“Our focus is on the microbiome, and being able to harness microbes that can create stable and efficacious biological products that enhance plants’ yields or protect them from pests,” Dor tells AFN. “We do this through harnessing and understanding genomics. We are able to decipher genes and genetic elements, and then drive the design of new products based on the relevant genetic elements for a targeted [application].” 

The company’s technology is based on Evogene’s “Computational Predictive Biology platform, which was originally used for plant breeding and genetic modifications. Lavie Bio’s iteration focuses on the discovery of microbes for potential use in new biological formulas and then simulating how those microbes interact with both the plant and its surrounding environment. 

“Five years ago, the trend in agriculture was all about the farmer and productivity: how to save money and achieve better margins. Now, it’s about consumer needs: healthier foods, sustainability.”

Dor explains that simulating the plant-microbiome-environment interaction is the key to the discovery process because it allows the company to understand how to “amplify positive interactions, eliminate negative interactions and retrieve lost interactions” as the basis for formulating new crop treatments. “You have to be able to see the full picture because it’s so complex,” he says.

Since Lavie Bio was established in 2015, it has built up a repository of 15,000 complete plant genomes, stocked 100,000 microbes “in the fridge”, and run roughly 1,800 experiments in greenhouses and in the field.

Dor stresses that Lavie Bio isn’t just about the discovery process. The company is using that process to develop and commercialize products. “Our focus is on optimization,” he explains. “Finding the right microbe is important, but the real challenge is about how to optimize it to fulfill its potential.” 

Competitive edge?

Of course, Lavie Bio isn’t the first to chart the agricultural biologicals terrain and isn’t the first to believe it has the solution to helping them succeed at scale. Dor observes that the field of biologicals is benefitting from advanced technology and science that simply wasn’t possible with products that appeared decades ago. Moreover, it is being driven by consumer and regulatory pressure to minimize and phase out chemical products.

“Five years ago, the trend in agriculture was all about the farmer and productivity: how to save money and achieve better margins. Now, it’s about consumer needs: healthier foods, sustainability,” he says. “We believe that in the future, biologicals will address efficacy and stability challenges much better, and as a result will be a major segment in addressing agriculture need for improved productivity, sustainability and food quality.”

He believes Lavie Bio’s discovery and environmental simulation process will accelerate this because it allows the company to efficiently and cost-effectively tailor its formulas for different regional, environmental and climate conditions.

Dor doesn’t necessarily believe global biological products are possible, but developing a new biostimulant that works for corn in the US, for example, and adapting it for the Latin American market is. He notes that once genetic elements and functions are understood, as well as the “limitations of stability” for a specific geography, it is a “reasonable delta” to adjust the product from one place to another.

Partnership perks

Lavie Bio expects to launch its first product in 2022. Its engagement with Corteva will direct the company’s early pipeline, with an initial focus omn soy and corn applications. Dor says Lavie Bio eventually intends to build a pipeline of products for “crops that are close to the consumer,” too.

For now, Lavie Bio will benefit from Corteva’s soy and corn market channels, and in exchange, Corteva will claim “certain rights with respect to Lavie’s corn and soy pipelines,” according to the companies’ joint statement.

“We are pleased to collaborate with Lavie Bio–a leader in the field of  agriculture biologicals–as we continue to focus on accelerating commercialization of customer-centered innovation in this high-growth sector,” Corteva’s crop protection business president Susanne Wasson said.

Commercially and financially, the collaboration makes sense for Lavie Bio’s traction and growth. Asked whether the company’s early emphasis on industrial row crops will also have the positive impact Lavie Bio hopes to, Dor says it will.

“If you think about the acreage these plants cover, and the impact of chemical treatments, the potential for environmental repair is significant,” he explains. “It is a challenge that has not been solved yet.”

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