A new player is plotting a move into the lactoferrin market with plans to construct a precision fermentation facility in the Midwest producing the high-value ingredient using genetically engineered microbes.
The company—PFerrinX26—is backed by VC firm Earth First Food Ventures Ltd (EFFV), which is putting together a consortium of players spanning “big dairy, dextrose providers, offtakers, CPG and ingredient players together with innovative financing solutions” to fund a facility capable of producing 200 tons of bovine lactoferrin in the coming years.
An iron-binding anti-microbial protein found in mammalian milk, lactoferrin has benefits for humans around immunity, iron regulation, digestive health, endurance, and muscle strength, but has historically only been available in small quantities owing to the costs and challenges of isolating it from milk (thousands of liters are required to make a single kilo).
As a result, prices can range from $600- $1,500/kilo, making lactoferrin an attractive candidate for firms in the precision fermentation space such as All G, TurtleTree, and Helaina (human lactoferrin), who are seeking to unlock new markets for lactoferrin in adult nutrition and performance nutrition.
Consortium building
Unlike the firms above, EFFV plans to “build and operate its own American facilities rather than rely on co-manufacturing agreements,” allowing for greater control over production quality and cost efficiency, cofounder and CFO Ricardo Radwanski told AgFunderNews.
“Our first facility will be located in the Midwest where we have an abundance of dextrose–a large input and crucial feedstock. So we will be getting offtake agreement as we architect the consortium, and then once the facility is up and running we’ll be employing a b2b model.”
Asked how much it would cost to build a commercial-scale lactoferrin facility he said: “Compared to [a facility to produce large amounts of] BLG [beta lactoglobulin whey protein], it’s a much more reasonable number. And then when you look at new technologies such as continuous fermentation, you really have a potential to bring down the COGS [cost of goods sold] and increase productivity.”
There are several market segments to target with lactoferrin, he says. “We’ll start with cosmetics and adult nutrition and then further down the road we’ll look at the infant formula market [which has a longer and more complex regulatory pathway].”
With an initial focus on land-based recirculating aquaculture systems, EFFV is “used to large scale, industrial scale ups with novel technologies, with over $850 million raised to scale globally,” said Radwanski.
“Today, we’re solely focused on the scaling of precision fermentation in dairy,” said Radwanski, who has brought in two precision fermentation specialists from the industry as strategic advisors.
“But this cannot be done in isolation. It needs to be done in consortium with global industrial players, which we are now architecting; we have a pretty robust group of interested parties.”
Market drivers for dairy without cows
While EFFV is looking at other dairy proteins such as beta lactoglobulin (the most prevalent whey protein) down the road, it is initially focused on lactoferrin given its high market value and relatively low inclusion rates in key applications.
“What we are looking at right now is what makes the most sense from a unit economics perspective. We also know that the demand is there. Were there more available, the market would grow.”
While there are now several other companies producing lactoferrin via precision fermentation, he said, “We do believe there’s room for several players out there.”
Asked what is driving interest from large dairy and CPG companies in dairy proteins made without cows, Radwanski explained that aside from pressure to reduce carbon emissions, large food companies recognize that dairy supplies will not be able to keep up with demand: “We’re facing a deficit of dairy by 2030, which can be addressed via dairy alternatives and dairy from precision fermentation. We’re also at the lowest dairy inventory herd in the US since 1978.
“The aging population is increasing, and so is demand for nutritional supplements [featuring ingredients such as lactoferrin] and on the whey protein side we see growing demand for protein enriched foods and beverages. You can then overlay on top of all of this the GLP-1 revolution [which is driving further interest in protein supplementation as users typically lose lean muscle mass when they take these drugs].”
