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Fish-oil alternative business development

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Manuel Santana
Manuel Santana

This document discusses sustainable algal-based alternatives to long-chain omega-3 fatty acids used in aquaculture feed. Currently, most aquaculture feed relies on fish oil, but supplies are limited. The document proposes that Nivalis' algal cultivation system and extraction process can produce omega-3 rich algal oils more sustainably and at lower cost than other alternatives by eliminating energy-intensive applications. Next steps include validating the technology at larger scales and isolating algal strains with high levels of DHA to fully replace fish oil in aquaculture feeds.

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SUSTAINABLE ALGAL-BASED ALTERNATIVES FOR LONG CHAIN OMEGA-3 FATTY ACIDS IN AQUACULTURE CONFIDENTIALITY NOTICE: The information in this document contains confidential and/or privileged material. Any review, retransmission, dissemination or other use of or taking of any action in reliance upon this information by persons or entities other than the intended recipient is prohibited.
Key Definitions Aquaculture: Aquaculture, also known as aquafarming, is the farming of aquatic organisms such as fish, crustaceans, molluscs and aquatic plants. Aquaculture involves cultivating freshwater and saltwater populations under controlled conditions, and can be contrasted with commercial fishing, which is the harvesting of wild fish. Fish Oil: Fish oil is oil derived from the tissues of oily fish (sardines, anchovies, herring, etc.). Fish oils contain the omega-3 fatty acids eicosapentaenoic acid (EPA), and docosahexaenoic acid (DHA). Fish do not actually produce omega-3 fatty acids, but instead accumulate them by consuming either microalgae or prey fish that have accumulated them. Fish oil is used as a component in aquaculture feed. More than 50 percent of the world's fish oil used in aquaculture feed is fed to farmed salmon Fatty Acid: Important component of lipids in plants, animals, and microorganisms. Many animals cannot synthesize one or more of the fatty acids and must ingest them in foods. Long Chain: HUFAs In aquaculture, highly unsaturated fatty acids (HUFA) have been found to be critical for maintaining high growth, survival rates and high food conversion efficiencies for a wide variety of marine and freshwater organisms. Plant based oils contain HUFAs of lower carbon length, and typically dont include EPA or DHA, which are commonly knows as omega-3 oil, and are considered essential fatty acids in humans. GMO: Genetically Modified Organism (GMO). An organism whose genetic material has been altered using genetic engineering techniques. Organisms that have been genetically modified include micro- organisms such as bacteria and yeast, insects, plants, fish, and mammals.
- 10 20 30 40 50 60 1950 1960 1970 1980 1990 2000 2010 Millions capture forage fish aquaculture fish oil Aquaculture is expected to carry seafood industrys growth Global Aquaculture Production (metric tons) Sources: FAO, Fishstat, IFFO. (*)IFFO stats, 2011. Notes: capture: Mostly for human consumption: freshwater, diadromous & marine fishes, crustaceans and molluscs. forage fish: Mostly for fish meal & fish oil production: miscellaneous pelagic fishes, herrings, sardines, anchovies, krill and planktonic crustaceans. Aquaculture and capture figures exclude aquatic plants. Global Aquaculture Stats ($ USD) Aquaculture achieved 60million MT in 2010 for a total value of $119 billion. At current trends, aquaculture will need to provide additional 23million MT by 2030 to maintain per-capital consumption. Fish-oil market, a key feed ingredient in aquaculture, has been flat at about 1million MT; current value $2.5 billion. It is estimated that by 2009, 81% of global fish oil production went to aquaculture. (*) (1) (2)
Fish oil used in aquaculture has reached production limits Fish Oil Inclusion (percentage) 25 16 2 2 15 7 1995 2007 806 1,9231,392 5,603 498 2,311 1995 2007 201.5 307.7 27.8 112.1 74.7 161.8 1995 2007 Total Feeds Used (thousand tons) Total Fish Oil Used (thousand tons) Salmon Marine Fish Shrimp Source: Adapted from PNAS. Feeding aquaculture in an era of finite resources. Naylor, et. al., 2009 Despite marked improvements in fish oil inclusion rates, demand for fish inputs by the aquaculture sector continues to increase. Salmon, Marine Fish and Shrimp along represent the bulk of fish oil usage, about 60% of total global production.
Real fish oil alternatives are not yet readily available Single Cell Oils, including algae have many advantages if adequate productions costs can be achieved. Terrestrial Plants GMO Terrestrial Plants Lower prices. Sufficient quantities. Lack of LC omega-3s (EPA, DHA) Limited to certain growth stages Might contain LC omega-3s, sufficiently high concentrations expected within a decade. Customer acceptance of GMOs Not yet available Rendered Terrestrial Animal Products Inexpensive Can be blended with fish oil Low digestibility at cold temperatures High in saturated fats Customer acceptance/perception Seafood By-products 20% of available by-products currently in use. Complex scale/logistics issues Mostly used as protein source Potential risks of PCBs and dioxins Highly variable source of feed Single Cell Oils (microalgae) Can be rich in LC omega-3s Have successfully been used in trials Potential for non-GMO strains Potentially more sustainable High costs constrains current use DrawbacksAlternative to Forage Fish Advantages
Nivalis algal based technologies offer a near-term solution Nivalis solid-state algal production system, enables existing harvesting and extraction technologies to mass produce algal oils at prices affordable by the aquaculture industry. DrawbacksAlternative to Forage Fish Advantages Single Cell Oils Can be rich in LC omega-3s Has successfully been used in trials Potential for non-GMO strains Potentially more sustainable High costs constrains current use NivalisTM Cold adapted EPA rich algal strain Low cost solid algal growth technology Non-GMO production Geographic Flexibility (close to use) Simplified harvesting and extraction(*) Reduced water and energy usage. Low-tech greenhouse structure serves as main production infrastructure. Off-site biomass extraction plant. DHA strain needs to be isolated. Feasibility of large scale production and feed trials yet to be conducted. Notes: (*) when compared to alternative algal growth systems using ponds and photo bioreactors.
Nivalis Technology Advantages Technology benefits enable a low-cost system by eliminating energy and resource intense applications commonly related to photo-bioreactors and pond cultivation systems. Cold adapted strains open the possibility to new geographies for algal cultivation For the production of the omega-3 rich oils, Nivalis is using a proprietary solid- state algal cultivation system combined with a low-energy fatty acid recovery technology. Integrated system minimizes energy input requirements and water consumption, while recycling nutrients, resulting in drastically lower environmental impact when compared to alternative methods (photo-bioreactors and pond cultivation systems). At the same time, preference of Nivalis production strains for temperate climates opens new geographies to algal cultivation. Energy reduction leads to overall cost elimination. Re-utilization of resources and nutrients leads to higher sustainability. Cold weather strain leads to improved market logistics. DESCRIPTIONBENEFITS
Market Segmentation Marketing efforts will be concentrated on large multinational feed and feed additives companies for integration into their product offerings. Also, selected aquaculture producers with vertically integrated business models for direct purchase and formulation. Feed Companies Potential Customer BioMar Cargill(*) Chareon Pokphand Ewos Nutreco Skretting Notes: (*) preliminary indications of purchasing interests once product claims has been demonstrated. Geographic Location Canada Chile China Norway Scotland Feed Additive & Supplement Companies Bentoli(*) Alltech DSM Nutritional Elanco Animal Health Taplow Feeds(*) The Scoular Group(*) Canada Netherlands USA Thailand Large Aquaculture Producers Marine Harvest Open Ocean Systems(*) Cooke Aquaculture AquaChile Canada Chile Norway Asia
Alternatives to fish oil in aquaculture. Competitive map(*) Nivalis primary competition is derived from alternative ingredients already in the market. We have not identified a current market player in the industry with the ability to provide a 1:1 replacement to fish oil at a commercial level. Fish Oil Vegetable Oils Other algae oils Ocean Harvest BioProcess Algae Solazyme Canola oil Heliae DSM Alltech Soybean oil Palm oil GMO plant oils Nivalis oils DuPont Solvarvest Note: (*) Illustrative, not meant to be exhaustive of industry players. Not all potential markets and competitive products represented.
Isolate and test marine strains for different oil compositions, e.g., high DHA. Validate productivity when deployed in outdoor growth conditions. Select optimal parameters for oil extraction technology and determine refining expected costs. Demonstrated Capabilities and Immediate Next Steps Immediate Next Steps Tests have been completed in high density small growth system to characterize biomass accumulation with different medium compositions. Oil composition already known for cells with high (67%) and low (12%) oil content 20 m2 growth surface reactor operated under an artificial 12-hour light:dark illumination cycle. Highly correlated fatty-acid profile to previous tests. Crude oil successfully separated from solids using common solvent-extraction after hydro-thermal processing. Processing parameters defined at lab scale. Demonstrated Capabilities In order to finalize the Concept Development, feasibility studies most be performed in outdoor growth conditions. Extraction characterization can be conducted based on biomass availability. Marine strain selection is independent of Concept Development, but a priority for Deployment
0 6 12 18 24 30 36 Pilot Greenhouse Construction 2nd Generation Strain Selection Team Recruiting Full Greenhouse Trials Oil Production Process Optimization Product Registration Fish Trials Finalize IP Package Critical Path from Concept Development to Deployment A set of clearly defined milestones have been established to align derisking of the investment with the application of funds. Months 1 2 3Prototype Scale Up Deployment
Application of Funds - Overview Pilot Greenhouse and Extraction Plant: The technology is currently available for other commercial processes, it has not been fully validated for our cultivation system and for algae in general. Data obtained with this investment is expected to highly derisk technology in the overall business opportunity. Isolation of organisms: Required to enhance the portfolio and flexibility of the product offerings. In particular the characterization of an organism with high level of DHA is required to fully enable a 1:1 replacement of fish oil on most aquaculture diets. Human Resources: Based on the Milestone Process, additional staff will be required to lead specific technology and business development activities. Feed Trials: The most critical part of the demonstration phase involves validation on commercial settings and rigorous controlled-environment analysis of product performance and multi-variable analysis on animal response. Specific monetary funding amounts are available to interested investors. Proformas and a detailed business plan for the Commercial Stage are also available. These incorporate multiple scenarios based on a Critical Path and therefore are linked with expected scenarios at the end of each milestone. Regulatory & IP: Required expenses for product registration and additional filing of patents on specific markets and for integrated processes.

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Fish-oil alternative business development

  • 1. SUSTAINABLE ALGAL-BASED ALTERNATIVES FOR LONG CHAIN OMEGA-3 FATTY ACIDS IN AQUACULTURE CONFIDENTIALITY NOTICE: The information in this document contains confidential and/or privileged material. Any review, retransmission, dissemination or other use of or taking of any action in reliance upon this information by persons or entities other than the intended recipient is prohibited.
  • 2. Key Definitions Aquaculture: Aquaculture, also known as aquafarming, is the farming of aquatic organisms such as fish, crustaceans, molluscs and aquatic plants. Aquaculture involves cultivating freshwater and saltwater populations under controlled conditions, and can be contrasted with commercial fishing, which is the harvesting of wild fish. Fish Oil: Fish oil is oil derived from the tissues of oily fish (sardines, anchovies, herring, etc.). Fish oils contain the omega-3 fatty acids eicosapentaenoic acid (EPA), and docosahexaenoic acid (DHA). Fish do not actually produce omega-3 fatty acids, but instead accumulate them by consuming either microalgae or prey fish that have accumulated them. Fish oil is used as a component in aquaculture feed. More than 50 percent of the world's fish oil used in aquaculture feed is fed to farmed salmon Fatty Acid: Important component of lipids in plants, animals, and microorganisms. Many animals cannot synthesize one or more of the fatty acids and must ingest them in foods. Long Chain: HUFAs In aquaculture, highly unsaturated fatty acids (HUFA) have been found to be critical for maintaining high growth, survival rates and high food conversion efficiencies for a wide variety of marine and freshwater organisms. Plant based oils contain HUFAs of lower carbon length, and typically dont include EPA or DHA, which are commonly knows as omega-3 oil, and are considered essential fatty acids in humans. GMO: Genetically Modified Organism (GMO). An organism whose genetic material has been altered using genetic engineering techniques. Organisms that have been genetically modified include micro- organisms such as bacteria and yeast, insects, plants, fish, and mammals.
  • 3. - 10 20 30 40 50 60 1950 1960 1970 1980 1990 2000 2010 Millions capture forage fish aquaculture fish oil Aquaculture is expected to carry seafood industrys growth Global Aquaculture Production (metric tons) Sources: FAO, Fishstat, IFFO. (*)IFFO stats, 2011. Notes: capture: Mostly for human consumption: freshwater, diadromous & marine fishes, crustaceans and molluscs. forage fish: Mostly for fish meal & fish oil production: miscellaneous pelagic fishes, herrings, sardines, anchovies, krill and planktonic crustaceans. Aquaculture and capture figures exclude aquatic plants. Global Aquaculture Stats ($ USD) Aquaculture achieved 60million MT in 2010 for a total value of $119 billion. At current trends, aquaculture will need to provide additional 23million MT by 2030 to maintain per-capital consumption. Fish-oil market, a key feed ingredient in aquaculture, has been flat at about 1million MT; current value $2.5 billion. It is estimated that by 2009, 81% of global fish oil production went to aquaculture. (*) (1) (2)
  • 4. Fish oil used in aquaculture has reached production limits Fish Oil Inclusion (percentage) 25 16 2 2 15 7 1995 2007 806 1,9231,392 5,603 498 2,311 1995 2007 201.5 307.7 27.8 112.1 74.7 161.8 1995 2007 Total Feeds Used (thousand tons) Total Fish Oil Used (thousand tons) Salmon Marine Fish Shrimp Source: Adapted from PNAS. Feeding aquaculture in an era of finite resources. Naylor, et. al., 2009 Despite marked improvements in fish oil inclusion rates, demand for fish inputs by the aquaculture sector continues to increase. Salmon, Marine Fish and Shrimp along represent the bulk of fish oil usage, about 60% of total global production.
  • 5. Real fish oil alternatives are not yet readily available Single Cell Oils, including algae have many advantages if adequate productions costs can be achieved. Terrestrial Plants GMO Terrestrial Plants Lower prices. Sufficient quantities. Lack of LC omega-3s (EPA, DHA) Limited to certain growth stages Might contain LC omega-3s, sufficiently high concentrations expected within a decade. Customer acceptance of GMOs Not yet available Rendered Terrestrial Animal Products Inexpensive Can be blended with fish oil Low digestibility at cold temperatures High in saturated fats Customer acceptance/perception Seafood By-products 20% of available by-products currently in use. Complex scale/logistics issues Mostly used as protein source Potential risks of PCBs and dioxins Highly variable source of feed Single Cell Oils (microalgae) Can be rich in LC omega-3s Have successfully been used in trials Potential for non-GMO strains Potentially more sustainable High costs constrains current use DrawbacksAlternative to Forage Fish Advantages
  • 6. Nivalis algal based technologies offer a near-term solution Nivalis solid-state algal production system, enables existing harvesting and extraction technologies to mass produce algal oils at prices affordable by the aquaculture industry. DrawbacksAlternative to Forage Fish Advantages Single Cell Oils Can be rich in LC omega-3s Has successfully been used in trials Potential for non-GMO strains Potentially more sustainable High costs constrains current use NivalisTM Cold adapted EPA rich algal strain Low cost solid algal growth technology Non-GMO production Geographic Flexibility (close to use) Simplified harvesting and extraction(*) Reduced water and energy usage. Low-tech greenhouse structure serves as main production infrastructure. Off-site biomass extraction plant. DHA strain needs to be isolated. Feasibility of large scale production and feed trials yet to be conducted. Notes: (*) when compared to alternative algal growth systems using ponds and photo bioreactors.
  • 7. Nivalis Technology Advantages Technology benefits enable a low-cost system by eliminating energy and resource intense applications commonly related to photo-bioreactors and pond cultivation systems. Cold adapted strains open the possibility to new geographies for algal cultivation For the production of the omega-3 rich oils, Nivalis is using a proprietary solid- state algal cultivation system combined with a low-energy fatty acid recovery technology. Integrated system minimizes energy input requirements and water consumption, while recycling nutrients, resulting in drastically lower environmental impact when compared to alternative methods (photo-bioreactors and pond cultivation systems). At the same time, preference of Nivalis production strains for temperate climates opens new geographies to algal cultivation. Energy reduction leads to overall cost elimination. Re-utilization of resources and nutrients leads to higher sustainability. Cold weather strain leads to improved market logistics. DESCRIPTIONBENEFITS
  • 8. Market Segmentation Marketing efforts will be concentrated on large multinational feed and feed additives companies for integration into their product offerings. Also, selected aquaculture producers with vertically integrated business models for direct purchase and formulation. Feed Companies Potential Customer BioMar Cargill(*) Chareon Pokphand Ewos Nutreco Skretting Notes: (*) preliminary indications of purchasing interests once product claims has been demonstrated. Geographic Location Canada Chile China Norway Scotland Feed Additive & Supplement Companies Bentoli(*) Alltech DSM Nutritional Elanco Animal Health Taplow Feeds(*) The Scoular Group(*) Canada Netherlands USA Thailand Large Aquaculture Producers Marine Harvest Open Ocean Systems(*) Cooke Aquaculture AquaChile Canada Chile Norway Asia
  • 9. Alternatives to fish oil in aquaculture. Competitive map(*) Nivalis primary competition is derived from alternative ingredients already in the market. We have not identified a current market player in the industry with the ability to provide a 1:1 replacement to fish oil at a commercial level. Fish Oil Vegetable Oils Other algae oils Ocean Harvest BioProcess Algae Solazyme Canola oil Heliae DSM Alltech Soybean oil Palm oil GMO plant oils Nivalis oils DuPont Solvarvest Note: (*) Illustrative, not meant to be exhaustive of industry players. Not all potential markets and competitive products represented.
  • 10. Isolate and test marine strains for different oil compositions, e.g., high DHA. Validate productivity when deployed in outdoor growth conditions. Select optimal parameters for oil extraction technology and determine refining expected costs. Demonstrated Capabilities and Immediate Next Steps Immediate Next Steps Tests have been completed in high density small growth system to characterize biomass accumulation with different medium compositions. Oil composition already known for cells with high (67%) and low (12%) oil content 20 m2 growth surface reactor operated under an artificial 12-hour light:dark illumination cycle. Highly correlated fatty-acid profile to previous tests. Crude oil successfully separated from solids using common solvent-extraction after hydro-thermal processing. Processing parameters defined at lab scale. Demonstrated Capabilities In order to finalize the Concept Development, feasibility studies most be performed in outdoor growth conditions. Extraction characterization can be conducted based on biomass availability. Marine strain selection is independent of Concept Development, but a priority for Deployment
  • 11. 0 6 12 18 24 30 36 Pilot Greenhouse Construction 2nd Generation Strain Selection Team Recruiting Full Greenhouse Trials Oil Production Process Optimization Product Registration Fish Trials Finalize IP Package Critical Path from Concept Development to Deployment A set of clearly defined milestones have been established to align derisking of the investment with the application of funds. Months 1 2 3Prototype Scale Up Deployment
  • 12. Application of Funds - Overview Pilot Greenhouse and Extraction Plant: The technology is currently available for other commercial processes, it has not been fully validated for our cultivation system and for algae in general. Data obtained with this investment is expected to highly derisk technology in the overall business opportunity. Isolation of organisms: Required to enhance the portfolio and flexibility of the product offerings. In particular the characterization of an organism with high level of DHA is required to fully enable a 1:1 replacement of fish oil on most aquaculture diets. Human Resources: Based on the Milestone Process, additional staff will be required to lead specific technology and business development activities. Feed Trials: The most critical part of the demonstration phase involves validation on commercial settings and rigorous controlled-environment analysis of product performance and multi-variable analysis on animal response. Specific monetary funding amounts are available to interested investors. Proformas and a detailed business plan for the Commercial Stage are also available. These incorporate multiple scenarios based on a Critical Path and therefore are linked with expected scenarios at the end of each milestone. Regulatory & IP: Required expenses for product registration and additional filing of patents on specific markets and for integrated processes.