Report card from California: Lack of education around biologicals still problem #1 for the industry, says Dr. Pam Marrone

“It’s still a great time to run a company,” Dr. Pam Marrone announced from the stage at the opening of this week’s Salinas Biological Summit in California, a two-day event aimed at the ag biologicals sector.

But she followed up with some words of caution for the industry.

A startup founder herself as well as founder and chair of the Invasive Species Corporation, Marrone was onstage to present a progress report for the biologicals industry since Salinas Biologicals Summit held its inaugural event around the same time last year.

One of her biggest takeaways for ag biologicals companies: “Market need and differentiation are still the most critical.” There’s also a continued need to educate growers on what biologicals are, why they exist, and how to use them.

“There are a lot of startups that have a new way or a new idea that results in the same kind of biological product,” said Marrone. “If it [produces] the same yield or the same ROI to the grower as what’s out there, you’re not going to get anywhere.”

“I’d probably give it a B,” she said when asked what overall grade the biologicals industry should receive in 2024.

Challenges in 2024: mistakes are ‘still being made’

Challenges for the ag biologicals sector right now include dispelling a number of myths still prevalent in the industry. Or as Marrone titled her slide, these are “mistakes made and still being made.”

Two of them are the belief that deep tech such as AI will transform biologicals, and players in the space misjudging the complexity of the commercial development process.

“I see a lot of investors and companies focus on the technology rather than what value they’re offering to the grower customer,” she said. “Anybody can discover a microbe that has a biological activity. But what is underestimated is how hard it is to go through the commercial development process, scale up, get the efficacy, get the shelf life, get the field life, [determine] what kind of formulation out there doesn’t work as well as chemicals, what is the cost of goods etc, etc.”

Another ‘mistake’ is going after the technically easiest products.

“It’s an extremely crowded space,” said Marrone. “There are opportunities, but often the ones that come in first are the easiest technically and [don’t] necessarily target what the growers really need.”

For those developing biologicals products, the goal posts have also changed when it comes to measuring efficacy, she said.

“If you are wanting to get a product that enhances yield, it’s not [a] 3% to 7% [increase] anymore,” said Marrone, who made a similar point in conversation with AgFunderNews earlier this year. “You have to up the game and you have to be above that number on average to really stand out.” These days, a 10%-plus yield increase is the absolute minimum.”

More than ever, there’s a need for capital efficiency, something certain companies (Marrone did not use names) appeared to have lost sight of before going belly-up. “You never know what’s going to happen,” she said before rattling off a litany of twenty-first-century events including 9/11, the 2008 recession, Covid-19 and geopolitical conflict.

“As an entrepreneur, as a company, you really have to be be efficient with your capital because you never know what’s going to happen.”

Success stories: a ‘nice cohort of companies’ reaching $100m in revenues

The success factors for biologicals as a category in 2024 are the same as they were last year, said Marrone.

“There is a nice cohort of companies reaching $100 million and another startup group with rapid sales growth. Among those Marrone name-checked (from both groups) were Meristem, Elicit Plant and Pivot Bio, among others.

The last 12 months have also seen “continued good progress” on two major new categories: peptides and RNAi-based solutions.

“These are two very important categories because you can find RNA interference to basically control any pest or pathogen, and there’s hundreds and hundreds of academics working on their favorite pest or pathogen,” said Marrone. She added that delivery issues and formulation stability problems “will be solved.”

As for peptides, it’s now possible to find a peptide and improve upon it using AI and machine learning tools, she said.

What about AI?

“It’s not there yet,” Marrone said flatly of the technology in a biologicals context.

“I can prospect and find a microbe that has bioactivity that we want much faster than doing it with AI and ML, because AI doesn’t know how to find new species yet.”

We’ll get there, she continued, but not before we have more data. The more datasets we have from the work going on in universities and with some startups, the more we can mine the data to find better microbes, she said.

There’s also potential for AI to speed up the aforementioned route to market and “all the different things that happen when you develop a biological product.”

“Can we use artificial intelligence and machine learning to accelerate that part?” she asked. “We’re going to try.”

What about the big elephant in the room?

Towards the end of her talk, Marrone showed a slide detailing the division between users and non users of biologicals. It remains close to half and half — the same ratio it’s been for the last five years.

“Lack of knowledge, that is the big elephant in the room here,” she said. “We have not gotten past this half of growers who don’t know about biologicals despite all the things we’re doing in education.”

For that challenge, there were no immediate answers. Marrone voiced her hope that the event this week, and indeed the industry, can work to change this.

“[Growers] need more education in order for them to get over the hump and start using biologicals and better learn how to use them.”