Nitrogen is essential for plant growth and photosynthesis, but plants can’t pull it directly from air. They rely on bacteria on their roots to convert the gas into a usable form. Many major food crops don’t have these bacteria but Bayer wants to change that. The multinational company is teaming up with Boston startup Ginkgo Bioworks to form a new company, placing a big bet on technology to engineer new microorganisms that could bring nitrogen fixation to more crops, and reduce the amount of nitrogen fertilizer farmers need.
The Bayer/Ginkgo joint venture does not yet have a name, but it does have financing. The partners, joined by Viking Global Investors, have committed $100 million to the new company. Bayer already has a biologics business that sells agricultural microbes used to improve plant health. But Mike Miille, vice president of strategy and business management for Bayer’s biologics division, and interim CEO of the new company, says Bayer has been looking for ways to bring agricultural microbials further, taking on problems such as nitrogen fixation.
“Taking the technology that Ginkgo has, and using it with the beneficial microbes that we have at Bayer, we are essentially able to come up with a new line of microbes that address some of these issues,” he says.
At least, that’s the goal. In Ginkgo, Leverkusen, Germany-based Bayer has a partner with experience developing microbes now found in a wide range of uses. Consumers can taste and smell Ginkgo’s work in beverages and perfumes. The company figures out the compounds that produce a particular flavor or odor, then designs microorganisms that produce those compounds, says Ginkgo CEO Jason Kelly. The work combines information technology and biology. Software designs the DNA that gives a microbe the instructions to make something, such as a flavor compound. Once Ginkgo has designed the DNA and developed the new microbe, Ginkgo has the capability to produce the microbes at scale.
Companies that use compounds made from Ginkgo-engineered microbes include food giants Cargill and Archer Daniels Midland (NYSE: ADM). Last year, Ginkgo raised $100 million to expand. Kelly says that though Ginkgo has been looking for new partners, the company was not actively pursuing ways to apply its technology to agriculture. Late last year, he received an inquiry from Bayer.
Bayer’s investment in the new joint venture comes from its Lifescience Center, an innovation unit within the company that searches for potential breakthrough technologies that complement Bayer’s own offerings. For example, last year the center joined with Versant Ventures to launch stem cell therapeutics company BlueRock Therapeutics. The center also teamed up with CRISPR Therapeutics in 2015 to form a joint venture called Casebia Therapeutics that is using the CRISPR gene-editing technology to develop treatments for blood disorders, blindness, and congenital heart disease.
Talks on forming a joint venture with Ginkgo began in earnest in May, Miille says. The new company is the Bayer center’s fifth investment and its first in agriculture. Miille says the center chose nitrogen fixation because it’s a big enough challenge that if solved, could fundamentally change agriculture. Each year, billions of dollars are spent on fertilizing plants that can’t fix their own nitrogen. Furthermore, fertilizer runoff affects the environment. Synthetic biology could address these problems, Miille says.
The idea of applying beneficial microbes to crops is not new, but it’s an approach that has attracted more research and investment interest in recent years. Boston startup Indigo raised $100 million in financing last year and went on to launch microbial products to improve yields in crops such as cotton, corn, soybean, and wheat. An alliance between Novozymes (NASDAQ OMX: NZYM) and Monsanto (NYSE: MON) has … Next Page »