Green Chemistry by Design Renewables – the Future of the Chemical Industry? Ray W. Miller, GT BChE ‘72 Chief Business Officer RBI Conference Georgia Tech March 10, 2015

Agenda • • • •

Global drivers for industrial biotechnology Market analysis and opportunities for renewables The case for partnering Examples of successful partnering: - Bio-PDO™/Sorona® - Other Platform Bio-based Molecules - PEF for bottles

• Verdezyne’s Diacid Platform • Concluding remarks

2

Price Volatility of Oil has Dramatically Increased World Crude Oil Prices

Source: Chemtech Group

Last 5 Years Show an Upward Cost Trend Recent supply/demand imbalance is not sustainable.

If current consumption trends continue: 50% of the oil the world needs in 2030 is not yet found or developed

The Real Cost of Oil Is Actually Higher

This does not include the costs from defending world oil supplies.

Global Warming Consequence: Rising Sea Levels

Some models predict a rise of 6 feet by 2100

Key Questions: How do we?

Sustain a planet approaching 9 billion people? Engineer and implement solutions that are affordable?

Enter Industrial Biotechnology

Major Drivers for Industrial Biotechnology • Growing cost and environmental advantage vs. petrochemical routes - Renewable feed stocks provide a hedge against rising and volatile oil prices - Lower fossil carbon footprints provide regulatory advantages • Need to satisfy a growing consumer preference for “sustainable” products • Biological tools are rapidly evolving • Growing recognition that many existing petro-based products can be made using bio-based processes

Market Force Analysis Opportunities Cost Reduction Market Growth Supply Control

Supply Drivers Policy Regulation R&D Investment Applications

Partnerships To Create Bio-based Products

Constraints Development Time Cost to implement Starting Scale

Demand Drivers LCA Cost Stability Availability Preferences

Market Opportunity for Renewables

New Feedstock Technologies And Sources

~$200B by 2014

Applications Chemicals From Renewable Resources*

Enabling Technologies: Fermentation Biocatalysts Thermal Conversions

*Milken study: $720B opportunity in the next decade or 20% of the Chemicals markets

11

Bio-Refineries for Chemicals Oil refiners have shown the way.

PetroleumOnline.com

Value created by chemicals is up to 20X higher per ton of carbon vs. fuels

Source: CBiRC

Bio-based Platform Chemical Opportunities Alcohols R

Rings

Diols

Diacids

Olefins Glucose

Acids

R

Dienes

R

Multifunctionals Source: CBiRC

Reasons for Partnering

• • • • •

Secure feedstock supplies Access scale up capabilities Prove technology readiness Finance commercial facilities Provide channels to markets

Secret to Success: Connecting the Value Chain R&D in this area is the focus for most new entrants

Biomass

Processing

Biomass

Refining Sugars

Catalysis Bioproducts

Intermediates Primary Intermediates

Biomass Processors

Applications

Uses

Secondary Intermediates

Uses

Partnerships are Key! (no single player has it all)

Technology Developers Integrated Biological and Chemical Companies

Chemical Companies End Users Source: CBiRC

DuPont™ Sorona® was Commercialized thru Partnerships Application Partnerships: • Fibers for:

1,3-propanediol (PDO) +

– Floor Coverings

DMT / TPA

– Apparel – Auto Interior

Catalyst

• Resins for: – Molding Applications – Packaging

O C

O • C OCH2CH2CH2O

Sorona® polymer

PDO Direct uses n

DuPont Tate & Lyle JV for Bio-PDO™ Production Co-located at a corn wet mill

The dawn of industrial biotech at Loudon, TN

Partnerships Enable Bio-based Value Chains Butanediol (BDO)

Acrylic Acid

Source: Chemtech Group

FDCA: PTA “Equivalent” from Renewable Sources

Avantium converts C5/C6 to HMF to 2,5 furandicarboxcylic acid (FDCA) FDCA can be polymerized with bio-sourced EG to Polyethylenefuran (PEF)

Coca-Cola® / Advantium Polyethylenefuran (PEF): A promising alternative to PET bottles

Building a Bio-based Chemical Intermediates Platform

End Use Markets For Major Dicarboxylic Acids Home • • •

carpets upholstery furniture

Automotive/Transportation • • • •

Paints/Coatings Foams

Thermoplastic polyurethane

seats and dashboards tire cord lubricants belts and hoses

Elastic parts Adhesives

Adipic acid

Plasticizers

Resins Fibers

Sebacic acid

Polyamide N6,6 N6,10 N6,12 others

Dodecanedioic acid

Resins

Parts Films

Biodegradable plastic

Industrial • • • •

commercial carpet paints coatings adhesives

Ag Covering Packaging

Polyester polyols

Spray coatings

Personal Thermo-set articles

Recreation • footwear • apparel • camping gear

• packaging • cosmetics • flavorings

Current Feedstocks Used for Dicarboxylic acids

Benzene Butadiene Crude Oil

Alkanes

Ricinoleic Acid Castor Bean oil

Adipic Acid 3,000 KTA 3% CAGR

Dodecanedioic Acid 40 KTA 8% CAGR

Sebacic Acid 70 KTA 10% CAGR

About Verdezyne • Privately-held industrial biotech company • Formed in 2008 to develop renewable fuels and chemicals • Current product portfolio includes materials used in the nylon and thermoplastic polyurethane markets • Headquartered in Carlsbad, California • 70 full-time employees • Venture backed by strategic and financial investors

The Verdezyne Business Platform Engineering Organisms & Processes for Cost-effective Renewable Chemicals Feedstock Strategy

Proprietary Technology

End-Products

Chemical Intermediates

Bio-Sebacic Acid

• Non-food plant oils • Organisms engineered • Soap stocks and for yield and selectivity • Fermentation-based distillates • Other oil co-products (i.e. production • Highest quality products PKO, PFAD)

Using fatty acids from any source to produce chemicals

Robust yeast platform using industrial fermentation methods

• Diacids used in fibers, polymers and coatings • Other organic diacids • Diamines and diols from diacids • Acrylic intermediates

Total $70B+ Market

• • • • • • • • • •

Nylon and polyesters Fibers Polyurethanes Engineered plastics Resins Lubricants Coatings Adhesives Corrosion inhibitors Transparent Thermoplastics Total $1.5T+ Market

Verdezyne Uses a Proprietary Yeast A Superior Host for Production of Renewable Chemicals • Robust under industrial processing conditions  Uses inexpensive feedstocks  Produces multiple products  Fermentation at acidic pH  Phage resistant • Tolerant to saturating product concentrations • Host genome sequence and advanced genetic toolbox allows rapid development for new products with no heterologous genes

Metabolic Engineering of a Production Strain Parental strain utilizes alkanes or fatty acids as sole carbon source for growth via β-oxidation ω-oxidation

Alkanes

Fatty acids

CoA, ATP AMP, PPi Ac-CoA β-ketoacyl thiolase CoA

ω-oxidation

Acyl-CoA ligase

FA-CoA FA n-2-CoA

O2

Acyl-CoA oxidase H2O2

β-oxidation H2O

NADH,

H+

3-L-hydroxyacyl -CoA dehydrogenase

Enoyl-CoA hydratase NAD+

Dicarboxylic acids

Gen 1 strain is β-blocked and converts alkanes or fatty acids to the corresponding dicarboxylic acids at high yield and selectivity Gen 2 strain is partially β-blocked and converts a mixture of alkanes or fatty acids with different carbon lengths to a single chain length dicarboxylic acid

Gen 3 strain in development

Plant Oils are Worldwide Commodities Production in Million MTA as of 2012 3 3 1

2

9 1

2 4

9 1

2 1

1

1 12 2

1

1

1

Cottonseed China India Pakistan

3

7

1

5 2

2 19

1

Coconut Philippines Indonesia

12

28

7

Palm Oil

Peanut Olive Colombia China EU Ecuador India Indonesia Malaysia Nigeria Papua New Guinea Thailand

Rapeseed

Soybean

Canada China EU India Japan Mexico US

Argentina Brazil China EU India Mexico US

Sunflower Argentina EU Russia Turkey Ukraine

1

1

Verdezyne Uses Non-food Feedstocks

Crude Plant Oil Degumming

Degumming

Neutralization

Soapstock

Bleaching

Splitting

Deodorization

Free Fatty Acids

Bleaching

Steam RefiningDeodorization

Refined Oil

Feedstocks for Verdezyne Process 30

Cost Advantaged Non-food Feedstock Strategy • “Feedstock” is that raw material used by the organism to reproduce, for energy and to produce target chemicals • Cost of feedstock can be from 50% to 80% of total cash cost to manufacture • Fatty acid based production is advantaged over incumbent petrochemical production and sugars in both cost and volatility Worldwide major plant oil production (billions of pounds) in 2012 Oil Type Asia Europe Americas Other Palm 104.1 N/A 2.0 9.2 Soybean 28.9 4.5 52.2 9.9 Rapeseed/Canola 19.7 19.8 6.3 6.9 Coconut 7.0 N/A 0.8 N/A Total 159.6 24.3 61.2 26.1

Est. By-products World Total Distillates PKO 115.2 5.8 13.1 95.5 3.8 52.7 1.1 7.8 0.3 271.3 10.9 13.1

By-products/co-products Verdezyne’s preferred feedstocks are the distillates and fatty acids produced in the plant oil refining and fractionation process

Process Development With Rapid Scale-Up July’11: Pilot Plant project launched

Current DDDA scale

Sep’11: 400 liter pilot fermentor commissioned

Current AA scale

Oct’11: Successful testing of first adipic acid fermentations Jan’12: Polymer-grade adipic acid samples produced for customers

June’13: Polymer-grade dodecanedioic acid produced for customers

25,000 L

March’15: Running Demonstration at 25K L scale 4,000 L

400 L 10 L

1L 10x Scale Up

9x Scale Up

40x Scale Up

Pounds of annual production capacity

4,000

6x Scale Up

30,000

0.5 million

Proof of Concept

Lab Validation

Pilot

• Functional pathway for production of target

• Design fermentation process

• Process optimization

• Confirm process

• Demo process at scale

• Scale up samples

• Data to construct commercial facility

• Measureable outputs

• Commercially relevant yield (50% of maximum)

• Proof of concept

• Reduce scale-up risk

• Establish offtake

• Produce market samples

Demonstration

Small Commercial

Flexible Feedstocks Tested for Adipic Acid

FAME

Canola SS

PFAD

PKO FAD

Trap Grease

Yellow Grease

• Laboratory scale • Oleic Acid • Crude Palm Oil • C16:C18 FAME • Tall Oil • Corn Oil • Canola Soapstock • Soy Soapstock • Peanut Oil Distillates • Tallow • PFAD • PKO FAD • Trap Grease • Yellow Grease • Pilot scale • CPO • Oleic Acid • Canola Soapstock • C16:18 FAME • PFAD

Bio-based Adipic Acid for Renewable Nylon 6,6 •

Demonstrated process scalability

•

Producing kilogram quantities of purified bio-based adipic acid for market development

•

Demonstrated synthesis of renewable Nylon 6,6 polymer and fibers

•

Working on lower cost Gen 3 for scale up Adipic acid

Consistent Performance at 300L Scale

HMDA

Biolon™ Nylon 6,6

Dodecanedioic Acid • Generation 1 Technology (Gen 2 to be implemented later) • Aerobic fed batch process • Final Titer over 120 g/l of DDDA • Fermentation demonstrated at 4K l and 25K l scale • Downstream purification proven at similar scale

Bio-DDDA Process Demonstration Timeline Process Successfully Piloted (beyond 400 L at Verdezyne) • Completed at BEI/MBI in Q1-2014 Property Minimum Maximum 1,12 Dodecanedioic Acid (wt %) 98.6 NA • Process demonstrated at 4,000 L scale Total Nitrogen (ppm) NA 34 • Over 1 metric ton of Bio-DDDA produced Ash (ppm) NA 2 Monobasic Acids (wt %) NA 0.08 Demonstration campaign underway Iron (ppm) NA 1 Water (wt %) NA 0.4 • In progress now at ICM/ChemDesign Other Dicarboxylic Acids (wt %) NA 1 • Scheduled to be completed by Q2-2015 • Process now demonstrated at 25k L scale • ~50MT DDDA available for seeding the markets

BEI Facility Bio-DDDA

Measured > 99.4 < 21