Venture deal opens global probiotics market

Venture capital deal opens global probiotics market

25 July, 2007

BioPacificVentures today announced its ninth investment in the life sciences – $6.3 million into EnCoate Ltd, the biopolymer company owned 50/50 by AgResearch and Ballance Agri-Nutrients.

The $100 million BioPacificVentures fund, managed by Auckland firm Direct Capital in collaboration with the global Inventages group fund, manages $1.5 billion in the life sciences area. The group, which invests globally (inclusive of Australasia), will bring much muscle to EnCoate, says BioPacificVentures Executive Director Dr Andrew Kelly.

EnCoate is developing a unique family of biopolymers, discovered by AgResearch at Lincoln in the late 1990s. These biopolymers stabilise microbes so that they can survive for long periods at room temperature. EnCoate has a first product already on the market, BioShieldTM, commercialised by co-owner Ballance Agri-Nutrients. BioShieldTM allows beneficial microbes to survive when used in field applications to control grass grub.

However, the EnCoate biopolymer has much wider application. Microbes are used in many products currently, including foods and seed-coatings as well as in laboratories. Initially the capital injection will finance the development of a revolutionary line of probiotic formulations that will enhance food products. Probiotics are microbes that have beneficial health effects on humans and animals. However, current technology limits their application to yoghurt and other milk products as they must be refrigerated.

Dr Kelly said EnCoate fitted the fund’s investment profile perfectly.

“We are focused on helping promising life science companies – especially those that operate in the area where food and health converge. EnCoate is a great example.”

Dr Kelly said that while EnCoate’s initial focus had been on developing its technology for the agricultural sector, BioPacificVentures had suggested a wider emphasis toward more global markets.

“Probiotics, the ‘healthy’ bacteria, is one such market,” he said. “Offering much more than capital, we believe our multinational food industry experience will be very beneficial to the company. We will nominate two Directors to the Board of EnCoate, one local and one European, to add to the strong expertise at Board level.”

BioPacificVentures is funded by local and international investors with Nestlé, the world’s biggest food company, the largest investor and the largest local investor being leading agribusiness firm PGG Wrightson.

EnCoate’s goal in probiotics development is, with special formulations, to extend the shelf-life of probiotics to two years at room temperature and humidity. Current technology does not allow probiotics to be mixed with moist or non-chilled ingredients, which considerably limits the scope of their application. EnCoate has developed a technology that can stabilise these microbes so they can be used to enhance foods such as breakfast cereals, infant milk-powders and dog-biscuits.

Bridgit Hawkins, Acting EnCoate CEO, said this opens a potentially huge global market for probiotic ingredients.

“The market for EnCoate’s probiotic ingredients will be global manufacturers and marketers of non-chilled foods that are seeking to differentiate their products in the perceptions of health-conscious consumers.”

The probiotic ingredient market is worth over US$600m annually, and is growing at a rate of 10 – 20% per annum, she said.

AgResearch General Manager of Commercial Services Dr Ian Boddy said EnCoate’s technology, when applied to probiotic ingredients, has the ability to double that market by enabling food manufacturers to extend the probiotics category from refrigerated foods to non-refrigerated products.

“What’s more, EnCoate has potential beyond extending the shelf life of probiotics, with the core technology behind EnCoate being the biopolymer, which has applications in agricultural biology, food, seed coatings, and vaccines,” he said.

The technology was developed by a team of scientists at AgResearch’s Lincoln campus near Christchurch and led by Dr Trevor Jackson of the Crown Research Institute’s Biocontrol, Biosecurity & Bioprocessing Section.

About BioPacificVentures

BioPacificVentures, one of Australasia’s largest life science venture capital funds, was launched in March 2005. The $100 million fund brings together two leading venture capital managers - New Zealand’s premier VC firm Direct Capital and Inventages Venture Capital Inc, one of the biggest life science investors world-wide with over €1 billion under management. PGG-Wrightson, one of Australasia’s premier agribusinesses, and Nestlé, the world’s biggest food company, are the major investors. BioPacificVentures invests exclusively in life sciences across Australia and New Zealand, with a principal focus on areas where the food and health sectors converge.

www.biopacificventures.com
www.inventages.com

About EnCoate

EnCoate is a joint venture company between New Zealand’s leading fertiliser company, Ballance Agri-Nutrients Limited and AgResearch Limited, New Zealand’s primary sector Crown Research Institute. EnCoate specialises in the development of proprietary food-grade biopolymer technologies. These simple biopolymers have broad application in extending the shelf-life of food and microbe-based agricultural and health products at up to ambient temperatures. Additional technologies include fungal and bacterial products and delivery systems.

www.encoate.com

About Ballance Agri-Nutrients

Ballance Agri-Nutrients is New Zealand’s leading fertiliser specialist, with manufacturing plants located in Whangarei, Mount Maunganui and Invercargill. In addition, the company owns the ammonia-urea manufacturing plant at Kapuni in Taranaki, and Super Air, one of the country’s largest agricultural aviation companies.

Ballance is a 100-percent farmer-owned co-operative, with some 18,000 shareholders throughout New Zealand. It was officially launched in 2001, bringing together a number of regional fertiliser co-operatives to become a truly national company. The company places a strong emphasis on delivering value to its shareholders and on the use of a scientific approach to plant nutrient management.

www.ballance.co.nz

About AgResearch Ltd

New Zealand’s largest Crown Research Institute, AgResearch comprises a number of renowned research centres but most importantly it is made up of hundreds of individual scientists, technicians, their teams and support staff. Their work targets the key issues faced by the pastoral and biotechnology sectors, and leads to innovative products and knowledge that benefit all New Zealanders.

Through its mission, 2020 Science, AgResearch endeavours to keep the country prosperous to 2020 and beyond. The strategy is underpinned by its five big ideas : to double the value of dairy production while halving the costs and impacts on the environment; to double the value of meat and textile production while halving the costs and impacts on the environment; reducing the risk of pests and diseases gaining a foot-hold in New Zealand and helping to manage those already here; working with rural communities and agribusinesses to ensure they both remain sustainable for future generations in a global environment; and making the most of opportunities beyond food and fibre.

www.agresearch.co.nz

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