Synthetic Biology – enabling the nascent bioeconomy
THE INDUSTRIAL REVOLUTION
The industrial revolutions of the 19th and 20th century were powered by engineering. During this period our standard of living sharply increased, driven by our gained ability to build facilities and processes to scale the production of chemicals, fuels, foods, materials and pharmaceuticals. With our industries, we aimed for scale, but we forgot to consider the impact on ecology and on the finite resources of earth.
The modern industry and its output has come at a cost – we are no longer staying within the boundaries of what is sustainable. And yet, due to a growing population with access to a globalized market, we cannot afford to stop scaling. The way forward is not obvious, but the answer is certainly not a repeat of the past.
SYNTHETIC BIOLOGY – A NEW PARADIGM
We have written a series of theses where we lay out our take on specific industries and sectors. This one is different because synthetic biology spans across them all – in essence, it is all about a new paradigm in manufacturing. A paradigm that McKinsey believe could have a direct economic impact of up to USD 4 trillion over the next decade or two, affecting as much as 60 percent of goods produced.
Synthetic biology – SynBio – is a field of science that involves the design and creation of new biological entities, e.g. organisms and enzymes, with novel capabilities. Again powered by engineering, but this time with the goal of constructing highly productive biological factories. Great examples in various industries are emerging: Impossible Foods with their plant-based meat; Ginkgo Bioworks, the platform company for creating productive organisms; Zymergen that is on a mission to transform the production of materials.
This new paradigm is all about going back to the roots: to the way nature has produced for billions of years. Not only can the biological approach improve efficiency in manufacturing, it also allows us to scale with a great reduction in impact on ecology and resources.
We strongly believe SynBio will be the basis of the next great industrial boom – a boom that takes us away from consuming our habitat to a bioeconomy where symbiosis with nature is top-of-mind. If in the 2010s, ‘software was eating the world’, we expect in the coming years that ‘living organisms will re-engineer our economy’.
To understand where we are headed, let us dig deeper into the current state of SynBio.
ENABLED BY TOOLS
Sequencing: Four decades ago, in a pursuit to uncover the central dogma of life, machines to read nucleotides were invented. Such sequencing technologies enabled us to translate DNA and RNA into digital information that can be massively analysed. In the past 20 years, owing to the rapid technological development of sequencing instrumentation, the cost of sequencing a human genome has dropped from USD 100M to below USD 1K. This reduction in sequencing cost has effectively torn down a huge cost-barrier and thus enabled the viability of many SynBio applications.
For long the sequencing market has been dominated by one player: Illumina. While their focus is on high-throughput analysis of short chains of nucleotides (i.e. “short-reads”), incumbents with technologies that enable analysis of long nucleotide chains (i.e. “long-reads”) are emerging. This new wave of next-generation sequencing (NGS)-tools are foreseen to further push costs of sequencing down while improving process and results. We anticipate such development to fuel another boost to the SynBio community. Furthermore, another area where we see great potential for innovation is in the development of systems for high-throughput reading of proteins, their localization and their yield.
Synthesis & editing: To convert reading- and analysis-capabilities into novel applications, one needs the ability to write and assemble too. DNA and protein biosynthesis are advancing on many fronts. Additionally, we have mastered biological (e.g. CRISPR-Cas9) and computational tools to selectively delete, insert and substitute parts of genetic information. Academic projects, equipped with some of these tools, have demonstrated the ability to create living organisms with fully artificial genomes. However, the price of synthesis is still too high and the production capacity yet too low to allow expanding beyond research and high-value applications.
Systems for production: If tech taught biology something, it is how to engineer systems and decrease costs in a lean fashion. SynBio’s design-build-test-learn cycle, akin to the Agile software development methodology, is still missing one important enabler: the standardization of the underlying infrastructure. Analog to cloud infrastructure for hosting of software and data, we expect that easily deployed and scaled bioreactor technologies, well-characterized “chassis” for enzyme cascades, and general bioprocess protocols will be important to take modified biological entities from the lab bench to commodity applications at scale.
THE IMPORTANCE OF ECOSYSTEMS
Silicon Valley and its surrounding area is known for its world-leading tech industry, but less known for being a SynBio powerhouse. The origin (and essence) of the US ecosystem is well captured by the following anecdote:
In the early ’70s, at a conference on Hawaii, Herbert Boyer, a University of California San Francisco biochemist working on restriction enzymes, met Stanley Cohen, a Stanford professor working on plasmids. The two began a collaboration that eventually led to the creation of the first recombinant DNA. Backed by the visionary venture capitalist Robert Swanson, the first global SynBio-company was formed: Genentech. Their goal was to solve one of the pharma industry’s then biggest scaling challenges, namely, the production of human insulin for the treatment of diabetes. In 1978, it took some 3.630kg of pancreas glands from approximately 23.500 pigs and cattle to produce less than half a kg of insulin. Eli Lilly, a leading insulin supplier, needed a total of 56 million animals to meet the US demand alone. Clearly unsustainable for business and planet. And clearly an opportunity for innovation. The vision for Genentech came from an insight that we cannot continue down the same path – the same insight that today fuels the growth of an entire SynBio industry.
Today, west coast US is producing SynBio companies that are growing “too big to acquire”, which has driven flagship IPOs like Twist Biosciences, 10x Genomics, Adaptive Biotechnologies, Berkeley Lights and Beyond Meat. These (and other) behemoths are forming the foundation of a budding SynBio industry – much like Facebook, Apple, Amazon, Netflix and Google did for tech in the decades past.
At the core of the US SynBio ecosystem are four main components: assets, competence, capital and culture. Leading academic institutions like Stanford contribute with assets and scientific competence; veterans within the tech industry provide capital and that much needed entrepreneurial-tech-builder culture. Furthermore, joining ecosystem with enabling tech has made it possible for SynBio companies to iterate fast, find product-market-fit and scale. Gone are the times where ventures built on biology stood for long development cycles that stretches beyond the typical VC-timeframe.
EUROPE AND THE NORDICS
Measured by capitalization and entrepreneurial activity, we estimate the European SynBio ecosystem to be 5-10 years behind the US. According to Synbiobeta, in the second quarter of 2019 alone, SynBio investments in the US were at a staggering $1.1b whereas for that same period, the rest of the world accounted for a mere $147m. Given the importance of SynBio for the nascent bioeconomy, it is time for Europe to gear up.
With its strong academic environment, Nordic countries have a proven track-record of building value across science-heavy areas. Although the Nordics have lagged behind in the establishment of a SynBio ecosystem, Sweden in particular has a strong past within NGS. As it turns out, a small Swedish startup, Pyrosequencing, laid much of the foundation to what would later become two prominent NGS companies in the US: 454 and IonTorrent. And just like Genentech was the seed for the Silicon Valley SynBio ecosystem, Pyrosequencing was the seed for a Swedish competence cluster within (and adjacent to) the NGS-field. In fact, during the past years, a number of NGS-related Swedish research projects has matured from the lab into commercially viable products, to then be acquired at an early stage by the US SynBio cluster. Yet, there is an under-representation of commercial initiatives within the larger SynBio sector (e.g. applied SynBio firms) in Sweden and the Nordics. While assets and scientific competence is not lacking, we believe that the lack of capital and entrepreneurial culture is holding back the Nordic SynBio ecosystem.
Recently, SynBio- (and deep tech)-dedicated funds have started to emerge in Europe, however these are still few. But just like opportunities tend to follow capital, capital follows opportunities. Therefore, for capital to continue flow in, the opportunity pipeline must grow.
So lastly, that brings us to culture: while rich in scientific assets, Nordic academia falls short on the entrepreneurial culture side. Consequently, not enough science is spun out, and startup founders are often first time founders with little to no experience in how to scale a business venture to success. Culture can grow organically, although requiring one or two generations of successful championing entrepreneurs and startups. To bypass this hurdle, we believe it is high time SynBio scientists and entrepreneurs starts cross-pollinating with the already strong Nordic tech sector. After all, we do live in one of the most unicorn-dense regions on earth.
INDUSTRIFONDEN’S APPROACH AND THESIS
We believe synthetic biology will be one of the more impactful investment verticals within deep tech over the coming decade and thus look forward to driving the agenda proactively in order to foster a fertile ground for young innovative companies in the space.
Ultimately, to secure Europe’s competitive position in the nascent bioeconomy, investments into the European SynBio-ecosystem must urgently increase. Enablers are necessary to drive development, thus forming an important area of focus for Industrifonden. We will be looking for novel sequencing and synthesis technologies, as well as systems for production. And to propel Europe into a productive bioeconomy, we will also actively search for cornerstone SynBio platforms with the goal to biologically produce chemicals, materials, drugs and more. Tech that allows scaling at competitive cost, well differentiated assets and an avid venture-building culture are essential for success – thus forming our guiding principles.
And last but not least: because advances in synthesis and editing breaks the dichotomy that living things and machines are separate entities, the ethics of SynBio becomes an important aspect to consider. Thus we pledge to employ an aware mindset and act responsibly on this matter – and we require the innovators, investors and other stakeholders we work with to do the same.