If you go hiking in nature and see a group of serious people intently examining a small, ordinary-looking organism and gathering it carefully and gently, it might be the management of NextFerm gathering its next intellectual property.
"Yeast is everywhere," says NextFerm CEO Boaz Noy, "even in the café we're sitting in now. The question is whether there are conditions for the growth of yeast with special characteristics. We know where to find special yeasts, but it's a secret."
NextFerm was founded by several senior executives from Enzymotec, a food ingredients company sold to flavor extracts company Frutarom in 2017 for $290 million. Noy, who managed the bioactive ingredients division at Enzymotec, leads NextFerm, together with Dr. Tzafra Cohen, a specialist in food engineering and biotechnology who served in several senior R&D positions at Enzymotec, and chairman Yossi Peled, former CEO of food ingredients company Galam and former Enzymotec chairman.
NextFerm, which was founded in 2013, recruited additional managers and employees from Enzymotec. "It's not as if I raided Enzymotec for employees," Noy emphasizes. "It just so happened that they simply left exactly when I needed them." Some of NextFerm's investors also knew Noy from Enzymotec, for example Mexican company Arancia International and Chinese company Yitong.
Like Enzymotec, NextFerm develops specialist ingredients for the food industry. Enzymotec was based on unique fatty acid processing technology developed in the laboratory of Dr. Sobhi Basheer, and developed ingredients for food compounds for babies and essential fatty acids for lowering cholesterol, improving memory, and treating attention deficiency disorders. NextFerm is also based on unique technology developed by the company: controlled evolution of yeast.
Antioxidant from yeast
"In 2014, after I left Enzymotec, I asked Ariel Katz (CEO of Enzymotec, who did not leave the company) to connect me with the next interesting technology," Noy says. "He set me up with Dr. Moran Gendelman, the inventor of the technology." Gendelman, who holds a PhD from Technion - Israel Institute of Technology, is now a senior researcher in the company.
The technology is based on a natural method of genetically improving yeast. Through specific changes in the environment in which the yeast grows, the company's researchers control a process of natural selection so that the resulting yeast produces a large quantity of a certain protein. For example, using genetic engineering, global leaders in the meat substitute sector have developed yeast that expresses large quantities of heme protein, the protein in blood that makes meat taste like meat. This protein is put into vegetable products in order to give them a meat taste.
"We want to make yeast different from what it originally was, but without genetic engineering - not by genetic editing, but by affecting the environment," Cohen says.
NextFerm did not invent environmental selection of yeast, but the company says that several secret elements have been added to the technology that improve its performance. For example, the company has developed an antioxidant from improved yeast - its first product. "We began the development with yeasts isolated from nature that produce the material in small quantities. Through controlled evolution, we succeeded in producing 60 times as much material," Cohen says. "If I compare genetic improvement methods using a mechanism of modifying the environment with genetic engineering, our mechanism is not only likely to be safer, because it preserves the connection to natural yeast, but it can also be more effective. The environment causes simultaneous change in dozens of genes in the direction we want, compared with two-three that can be modified through genetic editing."
Biological food and frozen food
Another of NextFerm's products is yeast that is resistant to freezing. "This is excellent for frozen dough. In tests that we conducted on it, it outperforms 100 year-old companies in resistance to freezing," Cohen says.
The combination of Gendelman's technology with the know-how of senior Enzymotec executives in designing and constructing industrial processes for food is probably what made it possible to achieve good results and progress within a fairly short time. A company that simply grew out of academic research would find it hard to do this without many years of work and many failures.
The know-how accumulated in marketing and in close cooperation with customers in the food sector in order to understand what they really need and what they will consider an industrially feasible final product also proved itself. . The company has already signed a cooperation agreement with Lallemand, an international company based in Canada and the second largest yeast company in the world.
"Lallemand proposed cooperation with us in the production of biological fuel," Noy says. "When biological fuel is produced, yeast is used to turn the corn into alcohol. This alcohol is the fuel. Our product, which will be launched two months from now, is a yeast that decomposes the corn more efficiently." He says that a law was recently passed in the US requiring that 10% of the fuel in the country should be based on corn, "because in addition to the question of sustainability, they have an important corn-growing industry, and this regulation strengthens it."
"Globes": Does a yeast company like this develop yeast for all industries? Both food and fuel?
Noy: "Yes, yeast is a specialty, and the application of the technology is multidisciplinary. Lallemand is a global leader in baking yeast, and also the biggest player in biological fuel. We are cooperating with them on both a biodiesel product and frozen yeast.
"Our third product is the antioxidant that we mentioned earlier, which can be added to tablets, and to jellybeans and other food products, because it has no taste or odor. This is its uniqueness, in addition to its effectiveness. We're launching this product independently, and the first market that we're entering is the US. We have set up a subcontracting production network. The equipment required for production costs very little, thanks to our unique technology. We can already produce in large quantities."
NextFerm will not establish its own brand of food supplements in the US, as Enzymotec did with some of its products; it will market its ingredients to other food companies. NextFerm VP marketing and NextFerm USA CEO Elzaphan Hotam, who served in marketing positions in Enzymotec, will manage this activity.
The meatless protein dream
In addition to these three products, which NextFerm believes will achieve substantial sales and bring the company to break-even, its leaders have another dream: protein from plants. This is one of the most fascinating sectors today, especially following the amazing IPO of Beyond Meat, a manufacturer of meat substitutes from plants, which has a market cap of almost $10 billion.
NextFerm is now embarking on a financing round to raise $10 million more in order to support the launch of its first three products, and in order to support development of muscle-building protein.
Noy and Cohen believe that yeasts, which are not exactly a plant but not an animal either, can provide protein substitutes very similar to animal protein in taste and nutritional value. "We have demonstrated the feasibility of building protein with our technology that is just like meat. There is an enormous need for this," Noy says.
Cohen: "Today, nutrition science is beginning to realize that not all proteins can be substituted. There are amino acids that have a direct and indirect effect on building of muscle mass, sugar metabolism and insulin in the body, etc. We plan to begin with lifestyle, with athletes building muscle, and also to expand to treatment of elderly people suffering from muscle loss. Today, you can't talk about muscle without also taking about the rest of the body. It affects the entire metabolism. We want to take this product and prove it clinically."
Noy: "We're not Beyond Meat, for the moral but hungry consumer. What distinguishes us is the effectiveness of the protein. It isn't a figment of our overactive imaginations; it comes from Elzaphan's knowledge of overseas customers, who are crying out for vegetarian solutions that provide functionality."
Later, NextFerm may return to its Enzymotec roots by also enriching with protein vegetarian food compounds for babies. "There are already nutrition companies asking us for samples," Noy says.
Will people be willing to pay for protein with special functionality?
Noy: "In the food industry, you have to bridge between the benefit of an ingredient and its price. The trend today, however, is that people are better informed and ask more questions about what they put into their mouths."
Published by Globes, Israel business news - en.globes.co.il - on August 19, 2019
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