California-based Checkerspot has developed what it claims is a world first: an algal oil closely matching the fatty acid profile and performance of high-oleic palm oil, without genetic engineering.
While regular palm oil has a high percentage of saturated fat, high-oleic palm oil—currently produced in Ecuador, Colombia and Brazil, and in high demand—is a more premium product with less saturated fat.
Checkerspot’s product—produced by a strain of the microalga Prototheca moriformis—has 55-57% oleic acid, exceeding that of high-oleic palm oil (which has around 49%), while maintaining a comparable level of palmitic acid (30-32%).
Notably, it has “nearly identical” levels of saturated fats to high oleic palm oil, says Checkerspot, which will target applications from infant formula to cosmetics and nutraceuticals, where formulators are looking for palm-oil-free options.
As detailed in a study just published in the journal Fermentation, Checkerspot employed classical strain improvement techniques (chemical mutagenesis) to optimize the composition and enhance oil yield to almost 70% oil by dry cell weight.
Similar results could have been achieved through genetic engineering. However, using a non-GMO strain eases the regulatory path and broadens the potential market for the oil, says Checkerspot, which has developed multiple products from Prototheca moriformis including structuring fats, high-oleic frying oils, and functional lipids found in human breastmilk.
The unit economics of fats from fermentation
The unit economics of microbial fermentation may not (yet) stack up to make “drop-in” replacements for highly commoditized oils and fats, Checkerspot CEO John Krzywicki told AgFunderNews.
But they do make sense for select ingredients and applications where companies are willing to pay a premium for fats that deliver specific functionality and do not come with the ethical and environmental baggage of tropical and animal fats, he claimed.
“We’re looking at applications where there’s a high value placed on the things we can uniquely provide. As an example, if you’re making a product in a fermentation environment, you can get pharmaceutical grade purity and a lack of contaminants, plus you can also dial in a very specific process to ensure consistency batch after batch. So that’s valuable in infant formula, nutraceuticals, pharmaceutical products, and supplements, where people have potentially more willingness to pay.”
He added: “Anybody who promises they’re going to replace a conventional commodity and wipe it from the face of the earth is deluding themselves, so we would never make that claim. But we’re tackling several high value niches, for example, one of our projects is with AAK on tropical fat replacements and structuring fats for areas such as premium confectionery and another partnership is with Mara Renewables in the omega-3 space.
“Likewise, our OPO oil [a functional lipid found in human breast milk that Checkerspot is producing in microalgae] offers advantages over palm-based products currently used in infant formula.”
The business model
Rather than doing everything in-house, Checkerspot has a partnership and licensing-based model, said Krzywicki, who joined as CEO just over two years ago.
“We’ll do joint development agreements or other similar partnership arrangements and we’re actively looking for partners who want to go through the scale up and commercialization journey with us. It’s not a ‘Field of Dreams’ scenario—if we build it, they will come—the demand has to be there.”
Stepping back to look at the microalgae industry more broadly, it’s been on a bit of a rollercoaster ride in recent years, acknowledged Krzywicki. This is in part due to the huge sums of money lost on algae biofuels, which looked promising when oil prices peaked at $147/barrel in mid-2008 but rapidly lost viability when they dropped to just $30/barrel a year later.
“The same lessons in microalgae apply to fermentation in general: we need to focus on high value applications, and we have to have a business that is evergreen. If your business only makes sense in the commodity boom times and not the bust, you’re going to go out of out of business in the bust cycle.”
As to when oils produced via Checkerspot’s tech might hit the market, he said, “We’re working on self-affirmed GRAS [Generally Recognized as Safe] on everything we do with the goal of getting full GRAS [through submissions to the FDA] as soon as possible. But we could have stuff that could be in market [with self-GRAS] as soon as later this year.”
In the meantime, Checkerspot is generating revenue through joint development agreements whereby it gets “paid to do the development work with a partner,” he said.
Domestic supply chains
High-oleic palm oil is currently cultivated in Latin America, where reliance on hybrid pollination systems poses challenges due to high costs, labor intensity, and environmental impact, said Jim Kim of Checkerspot investor Builders VC.
Checkerspot’s microalgae-based platform offers a consistent and scalable alternative, he claimed. “This technology answers a critical market demand for domestically produced and reliable alternatives to unreliable existing global supply chains.”
Further reading:
Algenie emerges from stealth with next-gen bioreactor it claims can unlock algae’s potential in feed, bioplastics, and fuel
Brevel teams up with Israel’s leading beverage co to develop microalgae-fueled products
MiAlgae nets $18.5m to scale production of omega-3s from microalgae
Algae’s second bloom? ‘Resiliency and productivity are key,’ say second generation startups
Provectus Algae seeks to disrupt livestock methane reduction space with tech delivering ‘a step-change in the cost of goods’
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