Algal biofuel icon Sapphire Energy moves to diversify product line

[USA] After James Levine stepped in last summer as CEO at Sapphire Energy, he told Xconomy he would be looking for ways to broaden and diversify Sapphire’s core expertise in algae-based biofuels by developing new businesses in related fields. Now that strategy is beginning to take form.

The San Diego company said Jim Astwood has joined Sapphire as a senior vice president of product management. As a food scientist and specialist in agricultural biotechnology, Astwood was previously at Hayward, CA-based Aurora Algae, where he was responsible for developing and marketing algae-based ingredients like omega-3 and omega-7 fatty acids, and protein for the dietary supplement, food and beverage, and pharmaceutical industries.

At Sapphire, Astwood will oversee the expansion of business development, focusing initially on applying the company’s algae biomass processing technology to develop new products in such markets as “nutraceuticals” (a food said to have health-giving additives and medicinal benefits), and animal and aquaculture feed.

Astwood’s arrival more or less coincides with the departure of Tim Zenk, who was Sapphire’s senior vice president of corporate development, and who had extensive experience in government and politics. Last month Zenk joined Algenol, an industrial biotech in Fort Myer, FL, that remains focused on producing ethanol, gasoline, jet fuel and diesel from algae.

Of course, producing “the world’s first renewable gasoline” was Sapphire’s primary focus in 2008 when the startup triggered a minor media frenzy by disclosing it had raised more than $100 million in a Series B funding round that included Arch Venture Partners, the Wellcome Trust, Venrock, and Cascade Investment, Bill Gates’ investment arm in Kirkland, WA.

A few months later, Continental Airlines made the first commercial test flight using algae-based jet fuel (produced by Sapphire and others). At a time when gasoline was over $4 a gallon at the fuel pump, Sapphire was a great green hope—the venture-backed icon of a promising foray in industrial biotechnology. Founding CEO Jason Pyle said the company’s mission was nothing less than changing the world by developing a renewable source of energy that would benefit the environment and hasten America’s energy independence.

But just a few months ago, Levine told Algae Industry magazine, “I think the world has changed since Jason’s days of running Sapphire. Part of the job of the management of a company is thinking about the current environment in which we operate and saying, “We have our set of tools. Are we putting them to the best use?”

Nor is Sapphire alone in its diversification strategy, as other biofuel companies like Solazyme, Heliae, and Cellana also have moved to broaden their line of products to address additional markets in food, cosmetics, and industrial chemicals.

When I talked last week with Levine, who was at Sapphire’s research and development facility in Las Cruces, NM, he maintained that Sapphire’s technology for producing algae-based “Green Crude” remains an important part of the company’s future.

The company still plans to operate its biofuel refinery in nearby Columbus, NM. But it’s clear that producing algal biofuels can no longer serve as the prime directive at Sapphire Energy.

Levine said the company’s early focus on producing algal biomass at extremely low cost has given Sapphire a tremendous advantage, and is helping to make its diversification strategy possible today. “As we sit here today, I see more options for algae biomass production,” he said.

Sapphire’s new CEO also says the company has adequate capital, with strong financial backers who recognize the value of Sapphire’s technology. Many of the startup’s key players have changed, but Levine says overall staffing levels have not changed.

As for the prospects of algae-based biofuels, Winston Churchill may have said it best: “Now this is not the end. It is not even the beginning of the end. but it is, perhaps, the end of the beginning.”


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