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Sunday, 01 February 2015 22:00

Seeding hardier seeds: Investments help Kzoo biotech firm develop tougher strains of corn

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A Kalamazoo-based firm has developed new technology that it says could bring back some favorable cold weather- and drought-resistant qualities to modern corn crops without resorting to genetic engineering.

Given that Native Traits LLC’s technology promises to help increase yields and guard against seasonal uncertainties for farmers of the key grain crop, investors have started to take notice. The company completed its Series A round of fundraising in December and plans to spend the next three years further developing the technology, which could have a significant impact on the market, said Dr. James Friedrich, president and CEO of Native Traits.

The company’s process takes cold- and drought-tolerant traits found in historical varieties of corn used generations ago and transfers them to modern strains of high-yield corn without any sort of genetic alteration.

“A lot of these older varieties were used by farmers and before that by Native Americans, and they’re tough-as-nails in terms of drought and cold tolerance,” Friedrich said.

As part of its research, Native Traits tapped into the large repository of seeds, known as a germplasm, maintained by the U.S. Department of Agriculture Agricultural Research Service. The so-called seed bank contains more than 500,000 distinct varieties of plants from more than 10,000 different species, according to the Research Service’s website.

Native Traits sought out varieties of ancestral corn, including different heirloom and Indian corn varieties that were particularly hardy but did not yield well under modern high-production agriculture, Friedrich said.

After isolating the species of corn that contained the desired qualities, the company transfers the genes into modern variations of high-yield corn. Native Traits uses a trademarked process called NT Recovery to complete the gene transfer. The process relies on similar methods of plant hybridization that occur in the natural world and those used by traditional plant breeders — all without any cloning or genetic engineering.

“The key is that these are naturally occurring traits,” Friedrich said. “That needs to come across very clear because this is not genetic engineering.”

FIELD OF OPPORTUNITY

The technology has piqued the interest of investors who see a growing market for non-genetically modified (GMO) crops, particularly in markets outside of the United States.

“We’ve been following them for a couple of years and checking out the market and determined that it would make sense,” said Stephen Haakenson, executive director at Western Michigan University’s Biosciences Research and Commercialization Center (BRCC), one of the two primary investors in Native Traits. “There’s a huge opportunity for large seed companies to acquire this.”

Bloomfield Hills-based private investment firm D.J. Dorman and Co. Inc. also invested in Native Traits.

The company’s Series A round of fundraising included offering preferred stock to existing investors, Friedrich said, declining to disclose the total amount the company raised in the round. 

According to a federal filing with securities regulators, Native Traits has raised $250,000 in equity toward a goal of $750,000 as of Dec. 30.

The initial round of funding should allow the company to continue to develop its technology, which Friedrich estimates will take three years. After the technology is developed and proven, the process could become attractive for a seed producer to acquire outright, he said, noting Native Traits has partnered with several such companies for its research.

MARKET POTENTIAL

Native Traits’ technology will be used primarily for field corn, which accounts for the majority of corn produced in the country, according to USDA data. Field corn is used primarily for livestock feed and is processed into industrial products such as high-fructose corn syrup and fuel ethanol.  

The U.S. harvested approximately 398 million tons of field corn in 2014, according to the USDA. Approximately 80 million acres of land across the country are dedicated to field corn production.

Friedrich said he hopes to expand the company’s presence internationally, including to Europe and South America.

“Our biggest market is the U.S. followed by Europe,” Friedrich said. “For us, the European market is very attractive because most of Europe is off limits to GMO-type traits.”

Native Traits was incorporated in 2012 and currently employs two full-time workers, including Friedrich. The company relies on a cadre of part-time employees and consultants to assist with research.

Friedrich said he chose to locate Native Traits in Kalamazoo in part because the area’s climate – with predictable and extended cool temperatures during May caused by lake effect from Lake Michigan – is ideal for researching and testing crops for the qualities it hoped to isolate.

“We expect to be here in Michigan long term,” Friedrich said. “It’s an ideal place to screen for cold and drought tolerance.”

SUPPORTING INNOVATION

For the BRCC, the investment in Native Traits fits with the organization’s focus on the life sciences. The center typically invests in sectors such as drug discovery, medical devices and health care I.T., but in the past, it has branched out to other sectors like agriculture that could potentially impact life sciences, Haakenson said.

The BRCC also invested in Kalamazoo-based Vestaron Corp., an insecticide company that had developed a natural and environmentally friendly insecticide from spider venom. Vestaron recently closed on $14 million in Series C financing in October 2014, according to the company’s website. The investors included Netherlands-based Anterra Capital, Chicago-based venture capital firm Cultivation Sandbox Venture Partners, Southwest Michigan First Life Science Venture Fund, the Michigan Accelerator Fund and others.

Southwest Michigan has also proven attractive to other biotech firms. For example, California-based Marrone Bio Innovations Inc. (Nasdaq: MBII), a manufacturer of biopesticides, operates an 11,400-square-foot production facility in Bangor, about 30 miles west of Kalamazoo.

Southwest Michigan’s proximity to freshwater and its historical ties to agriculture make the region an ideal place for biotech firms such as Native Traits and Vestaron to start up, said Rob DeWit, president and CEO of the Southwest Michigan Innovation Center. DeWit hopes that having a strong biotech industry presence will encourage similar companies to move to the state, adding diversification to Michigan’s economy.

“It’s a burgeoning area,” DeWit said. “We certainly have not approached the industry’s final potential by any estimation.”

Read 5462 times Last modified on Sunday, 01 February 2015 22:51

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