Jim Boyd and Pam Marrone, Editors • 09-01-24 • Issue 004

Key Takeaway: We are Hitting Our Milestones

Sell Gen 1 Zequanox: Gen 1 already commercial
Develop Zequanox Gen 2: Achieved major increase in manufacturing yield; new formulation prototypes in hand
Piscamycin Testing With Customers 4Q 2025: On track, with successful small-scale manufacturing complete; EPA-required 5-batch in progress
Herbicide Candidates Into Development: Several have been identified, on track to choose development candidates by year end

In This Issue:

Update: Summary of Our Mid-Year 2024 R&D Meeting
Discovery: Our R&D Milestone Achievements on Candidate Herbicides, Algaecides and Burrowing Shrimp
Development: Update on Next Generation Zequanox® and Piscamycin™
Deployment: Ramp-up of Business Development for Zequanox with Public and Private End-Users
Facilities: New ISC Labs & Office
Communications: Pam Marrone Keynote Speeches
Direction: ISC Strategic Plan Objectives

Our Mid-Year 2024 R&D Meeting

The ISC R&D team held a six-month R&D review, presenting the details of the results and progress to date. The science team is currently engaged in the isolation, archiving, identification and testing of microorganisms, with over 2000 already isolated to date.

**The Process of Microbial Discovery:** We collect samples from natural habitats for isolation of the microbes that live there and could be active against target pests. Our goals are to collect for maximum microbial diversity from the native habitats of target species, to search for natural antagonists, and to find sites and sample types that have produced active microbes in the past. To date, we have 67 unique sampling locations with six unique sample types. Some samples are processed in multiple ways to partition and capture diversity. The isolation media are selected for diversity, for example, different media are specialized to marine microbes, freshwater microbes, bacteria, fungi, etc. Once the microbes are isolated, they are cryopreserved for storage and we identify them using bioinformatics tools & AI-Based interfaces.

This color map shows the diversity of the taxonomy of the microorganisms we have isolated. It is an impressive mix of microbes, and for proprietary reasons, names are not shown. The team then does a deep dive into the literature using all available AI-driven data mining tools to understand the characteristics of each microbe and possible functions, such as biocontrol, antimicrobial, plant growth promotion and the types of natural product compounds they may be producing. We also eliminate any suspected of being human pathogens.

Testing (Bioassay) Against the Target Pest/Invasive Species: Bioassays are designed with these factors in mind: 1) facilitate high-throughput testing; 2) clear “hit condition” where activity can be easily observed; 3) minimize confounding variables with highly standardized conditions (media, incubation times, etc.); 4) reproducible to ensure that the hundreds of assay runs can be reliably compared. Negative controls (untreated or water) ensure activity is due to the microbial natural product. Positive controls allow comparison of our early-stage candidates to an established chemical standard. The bioassays must yield reproducibility of results; each microbe is tested in duplicate/triplicate within each assay.

Discovery Results: Rapid Screening of New Microbial Product Candidates

Amazing “Hit-Rate” Results from Testing: In less than six months our screening found herbicide, algaecide and invasive shrimp control candidates. The first rounds of bioassay testing have resulted in an extremely high “hit-rate” using our genomics-led microbe selection for highest biodiversity & novelty and AI for mining genomics data to select the microbes for testing. A “hit” is a microbe with activity against our target pest. We compare below the ISC hit-rate and the previous hit-rate in our screen at Marrone Bio Innovations (public information). The use of all the information-driven and genomics tools available today has resulted in a more productive and efficient discovery rate. The left photo below shows microorganism A569 (the 569th microbe isolated) herbicidal activity compared to Roundup®. Very impressive and exciting!

In addition, for our Washington State-funded project to find bio-solutions to control problematic shrimp in oyster beds, we have also found good candidates against a surrogate brine shrimp. The team is now purchasing the actual ghost shrimp (from bait shops) to test efficacy.

The next steps after finding activity against the target pest is to determine the nature of the activity. Is the activity in the cells or excreted into the media as it is growing? Is it heat sensitive? Can the pesticidal compounds be extracted in water or another solvent? What do the genes tell us about the pesticidal compounds? The pesticidal compounds will then be purified from the broth and their chemical structures determined.

AI Institute for Next Generation Food Systems - UC Davis: Austin Kuo, Intern

Austin Kuo, our intern from UCDAIFS wrapped up his 8-week internship in ISC’s R&D group. He is a computer science major in his junior year and has worked in biology and chemistry labs before ISC. He conducted software-aided searches and algorithms to expand our knowledge base on data generated from an AI/ML project to identify herbicidal microorganisms, genes and compounds. This program pays him to work in the industry for a mutual benefit, at no cost to ISC.

Development: ISC Product Pipeline

Update on Next Generation Zequanox® to Control Invasive Mussels

We have been actively working internally and with our contracted partners and the USGS to complete strategic refinements for the next generation Zequanox. These improvements will deliver greater ease of deployment and longer shelf life at a lower price through enhacement of our fermentation yield process, downstream processing, and formulation. These improvements reflect input we have received from major end-users concerning desired features that would drive adoption. We expect samples of our next generation Zequanox by year end and we are seeking major public and private end-users as test sites to demonstrate the effectiveness and efficiency of this exciting ISC product. We are receiving inquiries from potential customers on a weekly basis.

Update on Piscamycin™ to Control Invasive Carp

Our proven product for controlling invasive carp is moving through steps to re-register it with EPA. This is an important new product, as the infestations of rivers and lakes by invasive carp is rapidly expanding not only across North America but internationally as well from the EU to Australia.

We have contracted with Evologics to produce the five batches of Piscamycin required for resubmission of the product’s registration with the EPA. They have successfully produced the active ingredient, Antimycin A at high levels in fermentation and extracted it from the broth. Next, they will produce the required additional batches for efficacy and purity analysis at the USGS lab in Wisconsin.

Confirming our excitement for this important new product, the USGS recently published a paper on the development of a bait formulation that can be used to control invasive carp: “Toxicity of a management bait for grass carp (Ctenopharyngodon idella) incorporated with Antimycin A.” Ecotoxicology. This paper shows that Antimycin can be selectively used for different fish species, making it a valuable fish management tool. Controlling invasive carp is now gaining recognition as having a devastating impact on the biodiversity of rivers and lakes.

Deployment: Delivering ISC Products to Market

Reaching Out to Past & New Zequanox® Customers

As we complete development of our next generation Zequanox we are actively reintroducing Zequanox to past private enclosed pipe and open water customers.

We are in ongoing discussions and preparing new pricing plans for large government agency enclosed pipe customers such as the US Bureau of Reclamation (USBR), the Army Corps of Engineers as well as the Electric Power Research Institute (EPRI) that represent over 900 power utilities. Again, this year we have shipped Zequanox for commercial treatment to Oklahoma Gas & Electric and golf courses customers, including a new one in Fargo, ND for irrigation pipe clean out.

We are also engaged in providing briefings and bid pricing for treatment to agencies and districts managing open water—rivers and lakes, irrigation districts and golf courses, all facing new or accelerating infestations. We are offering briefings and pricing tailored to the Colorado River and its six irrigation districts, and expect to speak with other agencies downstream. We are in discussions with Lake Tahoe on the possibility of Zequanox for control of the New Zealand Mud Snail and Asian Clam. Through our Cooperative Research & Development Agreement (CRADA) with the US Geological Survey (USGS) we are lined up to provide our next generation Zequanox in a major treatment initiative for the Great Lakes Commission.

Infestations of Zebra and Quagga Mussels are rapidly spreading to rivers and lakes across North America and are being reported as occurring in the Colorado River, Missouri River, Longview Lake and Minnesota Union Lake, Polk County, Fort Supply Lake, OK and in aquarium moss balls in WA, Amistad Reservoir TX, Lake Geneva, WI, Marion Lake, MN, St. Malo Provincial Park and southeastern Manitoba, Canada.

When our team discovers a news article of a new infestation, we contact, speak with and send information to the appropriate decision makers at the key state and federal agencies, management bodies, and user associations to educate them on how Zequanox can help. Our SEO work to get Zequanox higher up on google search is having effect, for example, the Sioux Tribe asked us for a bid to treat Lake Sharpe, SD. We anticipate hiring a sales manager in the near future as we get closer to the launch of the next generation of Zequanox and first generation of Piscamycin.

Facilities: ISC Signs Lease for Lab & Office on Second Street in Davis

ISC’s lab operations are currently at the HM Clause-UC Davis Life Sciences Incubator. We are outgrowing this space as we have found microbial product candidates that need to go to the next steps in the discovery and development process. In addition, the incubator is time-limited for startup companies. Our new 3000 sq ft lab/office space was actually one of Marrone Bio’s labs in MBI’s early days and thus is a very cost-effective way for us to grow. Move in date will be in October after the landlord finished the remodeling and cleaning.

Communications: Pam Marrone Keynote Speaker at The Salinas Biologicals Summit and Biocontrol Biostimulant LATAM

For year two of the Salinas Biological Summit, Pam again keynoted on the state of the biologicals industry, “The Landscape for Ag Biologicals: What Has Happened in the Last Year?” With 400 people attending, it was a continuation of the conversation from 2023 about how to increase adoption. The Mixing Bowl unveiled their 2024 map of biologicals. This year the focus was on biopesticides/biocontrol companies while last year was the full map of all companies in biocontrol, biostimulants and biofertilizers. Even slimming down to only one segment, the map of companies is crowded.

In her keynote speech, Pam touched on what companies need to do to stand out and gave examples of pitfalls young companies could try to avoid. Her conclusion was, it is still a great time to start and build a biologicals business or company. Why? The world wants and needs biological products! New innovations in science and technology are affecting all aspects of microbial discovery & development. There is exciting potential for use of AI/ML to accelerate the development of better products faster. But Pam had a word of caution. There are many startups with a new way or new idea that results in the same type of biological end product. Market need and product differentiation are STILL a critical component to consider when starting a company.

Pam also keynoted at the Biocontrol & Biostimulants LATAM held in Campinas, Brazil in July. Her keynote was titled “The Potential for Biological Solutions for Management of Invasive Species.” She also served on a panel with other executives discussing strategies for successful scaling of a biological business. The meeting was an excellent venue to get caught up on the regulatory environment and market in Brazil. According to Mark Trimmer of Dunham Trimmer, Brazil alone is responsible for 23% of global growth in value of the biocontrol market from 2021 – 2030. Global market reached US $8 billion in 2023. US/Canada is the leading region in size with US $2.6 billion. LATAM surpassed EU, reaching US $1.9 billion (Brazil is half), with EU growth slowing due to regulatory challenges. Asia is growing faster than EU reaching $1.5 billion. Regulators gave updates on processes and approval times for biologicals in Brazil, Argentina, Peru, Bolivia, and Chile. Brazilian biocontrol approval times are now much faster than the US, only 12-13 months. Pam met with all the regulatory consultants, Staphyt, Syntech, Eurofins and Vigna as we anticipate a Brazilian registration of at least one of our products.

Directions: ISC Strategic Plan Objectives

The ISC team is committed to managing our integrated nature-friendly microbial innovation pipeline to achieve solid revenue growth and a sustainable product portfolio.

ISC’s priority target market is bioherbicides. ISC is tackling invasive weeds, grasses, pests and disease where our products can cost-effectively compete with and replace traditional chemical treatments. Traditional chemical products are becoming ineffective due to pest resistance, are less acceptable due to negative impacts on humans and the environment, including production with its high carbon footprint. A cost effective, efficacious bioherbicide product has blockbuster potential, which can then be used to finance highly needed regenerative, sustainable products to protect and preserve our biodiversity and environment and help reverse the impact of climate change.

Our bioherbicide priority is being balanced by a portfolio of licensed-in, existing invasive species control products. From the numerous incoming inquiries for collaboration, we explore other new products that have a large unmet need and fit with our strategy. However we are very focused on delivering our first three products, a bioherbicide, Generation 2 Zequanox and Generation 1 Piscamycin.

Operationally we execute our strategy in three ways:

Discovery—Accelerate Generation of Candidate Solutions: As described above, ISC uses its proprietary process to identify, screen and confirm naturally occurring microbes that produce pesticidal natural products as candidates for control of target invasive species impacting end-user markets with high demand and revenue potential. We have an excellent track record yielding valuable candidates and prospective intellectual property that demonstrates the value of our method. This discovery effort is already yielding interesting candidates across all targets as described earlier.
Development—Efficient Commercializing of Microbes and Their Natural Products: The ISC team has decades of prior experience developing bio-based products in agriculture and water. Our strategy is to minimize internal capital and labor costs by outsourcing compartmentalized tasks to known vendors with proven and reliable capabilities. ISC actively engages prospective end-users to help define product features and pricing. This enhances speed, precision and standardization of product offerings as well as minimizing development expense.
Deployment—Individual Contacts & Engaging End-Users as Groups with Shared Pain: ISC builds on pre-existing markets to build visibility and direct sales to governmental agencies, including expected growth in RFPs for bio-based solutions. ISC is working with end-users to form collaborative initiatives to aggregate demand and minimize our inventory of finished product. We will also work with established distributors when appropriate. The ISC team has extensive experience in understanding how to achieve scale in penetrating markets. This includes working through federal agencies on the technological side as well as on production and distribution. Our work with the USGS is one area where ISC has served these roles, and we are pursuing collaborative initiatives with several other prospective collaborators and clients.

ISC Newsletter 004 - September 2024