NEW YORK — Over lunch in the Princeton Club’s midtown Manhattan lounge, Ray Chandra of Dyadic International Inc. explained how the company’s fungus works as a protein research tool and production plant.
Chandra, Dyadic’s vice president of marketing, was in town from Jupiter, Fla., for The Wall Street Transcript’s second annual Biotechnology Industry Conference last week.
Founded in 1979 by Mark Emalfarb, Dyadic has employed fungi since the mid-1980s to make industrial enzymes (a category of proteins) that convert sugar into alcohol, make animal feeds more digestible or give new jeans “stonewashed” softness.
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Today, the 22-person company is marketing its genetically engineered fungi as a system to rapidly discover and mass produce proteins. Proteins are the chains of molecules that the genes in a cell’s DNA instruct it to make. They are key building blocks in making drugs, plastics and many other materials.
According to Chandra, the company has historically been profitable and operated out of existing cash flow. To accelerate its biotech aspirations, Dyadic raised $13.5 million in 2001 from venture capital investors that included George Soros’ Quantum Industrial Partners LDC, Cooper Hill Partners, Pequot Healthcare Funds and Origen Capital. It is now looking to raise $10 million more.
“Our breakthrough could help pharmaceutical companies identify and manufacture therapeutic proteins or enable chemical companies to produce new kinds of polymers or plastics,” Chandra said. He added that the fungi, which the company calls C1, may also be useful for making biopesticides.
Bacteria have been used for years to produce small quantities of proteins and other biomolecules. Biotech companies such Genzyme Inc. makes enzymes with fungi. Protein Sciences Corp. in Meriden, Conn., produces proteins from insect cells.
Chandra said that unlike other techniques that produce proteins from fungi, bacteria, mammal or insect cells, Dyadic’s fungi process can churn out proteins in commercially significant quantities, “hundreds of liters, not picoliters,” he said.
More important, Chandra said, genes from other organisms — such as humans, animals or plants — can be introduced into Dyadic’s fungi to produce a wider range of proteins.
While the intersection of biotech and small tech has mostly been about devices such as microfluidic lab-on-a-chip products or micromachined grids for gene screening and drug discovery, microorganisms precisely tuned to control biochemical processes are functioning more and more like small tech biofactories.
The C1 fungi’s form has been radically changed from the original. Fungi normally look like a lot of stringy filaments that grow together. The C1 has been modified in shape and structure to be more like an individual bacterium.
“The organism has the morphology of a bacterium, while retaining the cellular machinery of the higher organisms known as eukaryotes that can express proteins,” Chandra said. Those shape changes also enable it to thrive in a culture and grow in a controlled way.
In terms of function, C1 serves two purposes. First, as a research tool, it helps identify which section of gene code will make a specific protein.
To find a specific protein, the company attaches different pieces of genetic code in hundreds of separate fungi samples. The ultimate goal is to evaluate libraries of genetic information against the proteins each gene creates. Eventually, Chandra believes, the system can be integrated with bioMEMS or microarrays for even faster and wider gene assessment, perhaps tens of thousands of genes at a time.
Once a target protein has been identified, the C1’s other function is to act as the cellular factory to make the protein in commercial quantities. Billions of copies of the fungi with the right snippet of gene would be grown in fermentation tanks, with the protein product siphoned off.
The fungus is a based on a wild strain of chrysosporium lucknowense found in a Siberian lake and catalogued by the company’s research partners at the Russian Academy of Sciences.
One of millions of species of fungi, the original strain had a special set of genetic properties that made it a good starting candidate.
Dyadic turned to a team of fungal genetic specialists at TNO Nutrition and Food Research Institute in the Netherlands. That team spent nearly four years refining the fungi’s characteristics to grow in moderate temperatures (about 37 degrees Celsius) and have a neutral pH.
The organism was also bred to flourish in a watery, or low viscosity, fluid environment. As Chandra describes it, “We took a colt and turned it into a thoroughbred for the biotechnology race.”
One of the genetic attributes Dyadic embued the organism with was strong ‘promoters.’ “Promoters are the part of the cellular machinery that start the protein creation process,” explained Chandra. “That is definitely one of our products strongest points, and what makes its able to produce such large quantities of a protein.”
Chandra said the business model is to work with large chemical companies to find out exactly what kinds of proteins they would like to make and apply the process to discover what gene will express the target molecule.
The company expects to outsource production to manufacturing partners such as FermPro Manufacturing in Kingstree, S.C. and Polfa Tarchomin in Poland.
Paul Zorner, former scientist with BASF, Mycogen and Dow Chemical and adjunct professor at North Carolina State University, is on Dyadic’s science advisory board and a consultant to the company.
“There’s still work to be done, but what’s intriguing about the company’s promise is being able to produce large quantities of proteins from a variety of genetic sources,” said Zorner, now executive vice president of Telanetix Inc., in San Diego, an immersive videoconferencing company.
“Dyadic’s technology allows them to explore genetic diversity that just isn’t possible with current bacterial systems,” he said. “This fungal system also has additional advantages over bacterial systems in proper processing of the protein to improve its biological activity and stability.”
Also unique, Zorner said, is that Dyadic uses the same organism to both screen for and produce the target protein. That should translate into higher success rates and more cost-effective production.
Trained in biology, Zorner points out that many living things transform natural resources into materials we need, from the milk a cow makes from grass to the wood trees make from sun, water and nutrients.
“Biological organisms are tomorrow’s factories for a variety of useful products. The vision for biologists today is to learn to further understand and control how small organisms transform simple materials such as carbon and nitrogen to produce things that have real commercial value in an efficient and environmentally responsible way.”