Verenium and Novus Collaborate to Develop New Enzymes for Animal Markets

San Diego-based Verenium, which retained a library of industrial enzymes following last year’s buyout of its cellulosic biofuels business, is announcing a strategic collaboration today with Novus International, a St. Louis, MO-based maker of animal nutrition and health products.

The partners plan to jointly develop and commercialize a series of enzymes from Verenium’s late-stage product pipeline for use in global livestock, poultry, aquaculture, and companion (pet) markets. The deal represents one piece of the strategy that Verenium CEO James Levine outlined for me in March.

Enzymes help animals more readily digest and absorb naturally occurring nutrients in grains and protein-based feed. Novus will pay Verenium $2.5 million in license payments on signing, and $2.5 million following what the companies call “regulatory filings or commercial activity.” While that might not seem like a big deal, Levine says Verenium and Novus will partner equally to fund development and commercialization, and they plan to share 50-50 in the profits.

It’s also just one part of a bigger picture for Verenium. In its previous incarnation as Diversa, the company amassed billions of enzymes collected from organisms thriving in extreme climates and places, from deep sea thermal vents to Arctic tundra. Enzymes are typically used as catalysts to accelerate certain biochemical reactions.

“Our strategy at its heart is about being a broad-based enzyme company,” Levine told me this morning. “We look on animal nutrition as an important market, but it’s only about 10 to 15 percent of the overall industrial enzymes market.”

In addition to animal health and nutrition, Verenium has focused on developing enzymes for grain processing (into biofuels or beverage alcohols) and oil seed processing for edible oils. In the oil seed market, Levine says Verenium has the only enzyme product used to make soybean crushing more efficient, which he describes as a $300 million market opportunity.

The company, which officially relocated its headquarters from Cambridge, MA, to San Diego on June 1, generates nearly all of its current revenue from three market segments: animal health and nutrition, grain processing, and oil seed processing. In 2010, Verenium’s sales in those three markets amounted to slightly over $50 million, but Levine says he sees tremendous opportunity for Verenium in the $3.3 billion overall global market for industrial enzymes.

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