World Food Shortages Aren’t Inevitable, and Preventing Them Can Be Very Profitable

Energy, Food, and Water

We’re all familiar with the so-called “energy/water/food nexus,” i.e., the interdependence of these three elements.  For example, energy is required to purify water, as well as to pump it to where it’s needed to irrigate land to grow food.  Plants require nitrogen, potassium and phosphorous (as well as 50+ trace minerals), and the process of creating this fertilizer requires energy.  There are actually dozens of different ways these items play off against one another.

We’re also familiar with the issues associated with providing food to a growing population, one that is in the process of quintupling in 100 years (1950-2050); this means that overall crop yields must increase by at least 70% to feed the world’s population expected in 2050. Yet this whole situation is increasingly exacerbated each year as more arable land disappears due to climate change. (The rate of increase in average temperature of the Earth in the temperate latitudes is changing such that one must move north 10 meters per day to maintain a constant warmness.)

 Many People Are Taking This Seriously

Of course, there are plenty of people, wealthy and otherwise, who really don’t care about any of this; we commonly refer to them as “people with profound moral deficiencies,” or often, more simply, “selfish pigs.”  Fortunately, however, there are hundreds of millions of people, including many of our brightest and wealthiest individuals, who are committed to the alleviation of human suffering around the world.  Even more interestingly, many of these business heavyweights see myriad investment opportunities arising as the situation becomes more acute and whole markets are established to stem the tide of this growing misery; this is referred to variously as “conscious capitalism,” “doing well by doing good,” and the “triple bottom line,” i.e., profits, planet, and people.

A good example of this is all the resources pouring into the developing world to provide renewable energy to regions that previously had no access to electricity at all. Every kilowatt-hour of renewable electricity generated and consumed in this setting provides more than 10 times the environmental benefit of that same KWh received by the developed world to offset fossil fuels.  This is true for several reasons, including the cessation of deforestation and the use of kerosene lamps for lighting.  But it’s also true that electricity is the gateway to education, and education is the gateway toward prosperity and stronger, smaller families.  Educated women have 75% fewer children than those who have been denied this gift. It is clear that the provision of greater access to renewable, green energy will have a profoundly positive impact by reducing suffering and over population in the developing world while minimizing the environmental devastation that has traditionally accompanied rapid economic growth.

In any case, it is clear that great opportunities exist associated with addressing humanitarian issues.

Food Shortages and Crop Yields

Now let’s look at the technological issues associated with combating the depth, frequency and duration of food shortages—and the economics that need to be in place in order to drive the deployment of the technology.  Though there different ways to look at this, the single most important gating factor is crop yields, i.e., extracting more food calories out of a given area of land.

As suggested here, the highest value crop trait to farmers is yield. Conventional breeding (including hybrids) of many commercial crops is reaching the limits of increasing yields, particularly in forage crops such as alfalfa.  Enormous crop losses are caused by:

o Disease (bacterial and fungal pathogens)

o Stress (drought, low nutrients, salt, cold, heat)

o Post-harvest senescence

Farmers and their seed company suppliers must prepare for these profound dangers by substantially increasing the efficiency of food production and storage under normal and stressed conditions.

Genetic Modification (GM) and Genome Editing (GE)

Laboratory modification of the genomes of various crop plants are essential methodologies to meeting these needs. In particular, the patented technology of Agribody Technologies, Inc. (ATI) is a very promising approach to help solve many of these problems in crop plants; in fact, it provides a unique approach and capability in this critical area.

About ATI

Agribody is an emerging agricultural biotech company that will license and co-develop fundamental Intellectual Property covering a key genetic switch with broad applications in multiple crop plant species. Crop plants are improved through modifying the expression of one or two key genes, which determine whether a plant cell will either grow and divide, or enter apoptosis and die.

ATI intends to globally form joint ventures, licensing and strategic partnerships with innovative seed companies having the technical sophistication, market reach and financial capabilities to bring yield-enhanced GM or GE products into the marketplace at large scale.

A 50,000-foot Look at the Biochemistry

The eIF-5A protein is highly conserved in all plants and animals, and is the only protein in any organism “decorated” by a specific biochemical modification called hypusine. The unmodified to hypusinated ratio of these two eIF-5A forms determines the fate of the cell.

These stable genetic changes significantly enhance crop traits by:

o Delaying senescence/fruit ripening/spoilage leading to extended shelf life of perishable produce;

o Enhancing tolerance to diseases and stress (drought, heat, cold, salt, low nutrients); and

o Most importantly, increasing biomass and seed yields.

GM traits for increasing yields have almost always been indirect: resistance to insect pests and herbicide tolerance. It is extremely rare that any single transgene or gene knockout can boost yields of an elite variety by more than 10%, even under the controlled conditions in a greenhouse.

Background

Prof. John Thomson, prior to co-founding ATI, had raised more than $6 million in direct funding from the Canadian government and private sources since 1998 to develop and patent the eIF-5A/DHS technology applied to crop plants and algae. Prof. Thompson’s lab extensively published positive results and patented claims for use of these genes to enhance shelf life, augment disease tolerance and significantly increase biomass and seed yields.

These impressive findings are widely applicable to many important crop plants, including greenhouse data on banana, tomato, canola and carnation, and field trial data on alfalfa. Delayed leaf and flower senescence, fruit softening and spoilage were significantly delayed in tomato and banana by downregulating eIF-5A1 or DHS. Plant tolerance to pathogenic fungi and bacterial disease was also increased in tomato in the lab, and banana in the field, by downregulating eIF-5A2 or DHS. Though revenues are not yet forecasted from these traits, they provide considerable upside.

Intellectual Property: Company’s Products and Services / Competitive Advantages

Agribody will acquire sole ownership of the eIF-5A and DHS technologies and will be well positioned to license GM or GE plants with altered expression of these two genes. The IP portfolio to be purchased includes 16 issued US patents, 5 published US patent applications, and foreign counterparts in 10 countries. This extensive patent portfolio includes Composition of Matter claims at several levels and Methods claims that provide Freedom to Operate.

A Series A Preferred round will be initiated after the Seed funding  milestones have been achieved. Currently ATI estimates that it will need to raise between $3 to $4 million dollars in the Series A Preferred Round. The final capital required for a Series A Preferred financing will be determined after generating complete and robust five-year financial projections as part of developing a full business plan.

Purchasers of ATI’s Convertible Notes must be “accredited investors” within the meaning of Regulation D promulgated under the SEC 1933 Act.  Interested parties must confirm that they have reviewed the partial definition of an “accredited investor” and that one of such categories applies to the Purchaser.

 

As mentioned, eIF-5A and DHS are both physiologically critical genes that work together in all plant species, and comprise an early critical switch for cell growth or death. No foreign genetic material is added; rather, well characterized eIF-5A and/or DHS genes from other plant species are transferred into the target crop plant.

A very important technical alternative is the use of recently developed genome editing (GE) technologies: CRISPR-cas9  (Clustered, Regularly Interspaced, Short Palindromic Repeats), RTDS™ (Rapid Trait Development System) or ARCUS to “surgically” delete a small portion of the DHS gene with no other changes to the genome.  ATI understands that these highly targeted genetic changes will not require the resulting modified seed products to undergo the USDA-APHIS deregulation process because the government determined that these modifications do not fall under existing regulatory statutes, similar to chemical or radiation induced mutagenesis, protoplast fusion, polyploidy or many other unregulated non-biotechnological methods. These unlabeled seeds could be sold in the marketplace much faster with lower costs, resulting in increased and accelerated revenues compared to GM crops.

Strong evidence published in 5 peer-reviewed publications from Prof. Thompson’s lab has shown important phenotypes from down-regulation of DHS, including delay of senescence, increased seed yield, higher leaf and root biomass, and enhanced survival due to drought & nutrient stress. Similarly, eIF-5A overexpression has conferred very similar phenotypes and broad applications in multiple crop plants. Secondary benefits of manipulating expression of these two patented genes also demonstrated increased disease resistance and improved shelf life of seeds and fruit.

Business Model and Total Available Market

Joint Ventures provide the opportunity to file new patent applications to generate additional IP which can build the company’s value beyond the existing patent portfolio.

Farmers have widely adopted genetically engineered crop plants, with more than 432 million acres (~10%) of all croplands planted to GM varieties. In the US, 94% of soy, 96% of cotton and 93% of corn are genetically modified, with >18 Mil farmers growing 54% of worldwide GM crops in developing countries. More than 20 major crop plants have been genetically engineered with improved traits, having more than $15.7 Billion in worldwide commercial sales in 2014.

It’s extremely difficult to assess the commercial extent of post-harvest losses of fresh produce due to a complex variety of factors. However, it is clear that climacteric fruit (those that can be harvested when mature but before ripening has begun), such as banana, melon, papaya, and tomato, can substantially benefit from genetically encoded delayed senescence.

The commercial value of tolerance to plant pathogens is also extremely large, since crop losses were estimated in 1988-1990 to range between 10-16%, corresponding to US $44 billion.

Investment Opportunity, Capital Requirements and Use of Proceeds

ATI is raising its initial Seed capital of up to $950,000, in exchange for optionally convertible promissory notes.  After the initial $500,000 in Seed capital has been raised, these funds will be released from escrow and distributed to the Company which will enable it to complete the acquisition of its IP portfolio.  Proceeds of the Seed round will also be used for initial start-up costs and to maintain and prosecute the IP portfolio, externally fund alfalfa research at UC-Davis, and for working capital. To date, $250,000 has been raised from The Yield Lab, Dr. Jerry Feitelson, ATI’s co-founder and CEO, and two others and these funds have been deposited in escrow.

The ATI business model will leverage low operating costs and maintain tight control over expenses. The Company does not intend to lease laboratory space, hire staff scientists, nor procure scientific equipment or supplies. Employee headcount will be kept to a bare minimum. Work will primarily be done in a “specialty pharma” mode through domain experts and external contracts with academic and industrial laboratories. Thus, revenues will largely fall to the bottom line.

A Series A Preferred round will be initiated after the Seed funding  milestones have been achieved. Currently ATI estimates that it will need to raise between $3 to $4 million dollars in the Series A Preferred Round. The final capital required for a Series A Preferred financing will be determined after generating complete and robust five-year financial projections as part of developing a full business plan.

Purchasers of ATI’s Convertible Notes must be “accredited investors” within the meaning of Regulation D promulgated under the SEC 1933 Act.  Interested parties must confirm that they have reviewed the partial definition of an “accredited investor” and that one of such categories applies to the Purchaser.

Exit Strategy

An acquisition is expected in 4 – 5 years by one of the Company’s licensees or joint venture partners through a strategic trade sale, or alternatively by a Private Equity/Family Office consolidator who wants to control the eIF-5A/DHS technologies or merge these with other yield traits. As described, the higher reward strategy is to develop JVs in one or more crops, with direct reach-through to product sales instead of relying on royalties from product sales under the control of a licensee.

This JV approach will require more capital to have the financial capability to partner on an equal basis with leading seed companies in the targeted crops to jointly bring transgenic or genome edited ultra-high yield seeds into the marketplace. Every license or JV collaboration with a forage, row or specialty seed company could generate a buyer.

Next Step

Anyone interested in pursuing this opportunity should write or call Craig Shields, editor of the website 2GreenEnergy.com; full information is available on the “Contact” page.  Craig will happily make the necessary introductions.