Synthase Biotech raises $800,000 to develop plant-based enzyme that stops fats going rancid

Synthase Biotech, set up last year to commercialise a plant-based enzyme that stops fats going rancid, has raised $800,000 in its first external capital raising.

The Waikato-based company is initially targeting artificial insemination for the global dairy industry. Its trademarked enzyme Aloxsyn has been shown to extend the life of fresh and frozen sperm, improving the ability of cows to conceive.

Aloxsyn is a platform technology and the startup also plans to apply it to beef cattle, pigs, and horses and, eventually, humans. Feasibility studies have also begun on extending the shelf-life of high-value export foods and other uses include longer storage of human organs and tissues before transplants.

The new investors include Enterprise Angels in Tauranga and Hamilton, Ice Angels in Auckland, the New Zealand Venture Investment Fund, and other high net worth individuals and they're about to appoint a director to the board. Existing investors Pacific Brands, which includes chairman Mark Backhaus and his brother Andrew and holds just over 60%, and Numodern, owned by chief scientific officer Steve Hodgkinson and executive director and former AgResearch head Andy West, also participated in the round.

Chairman Mark Backhaus said the money raised equates to about 18%  of the company which was valued at $3.8 million, with a hefty discount applied to shares offered in this initial fundraiser. The capital injection allows the startup to accelerate its scientific and intellectual development programmes, with commercialisation likely a year ahead of schedule in early 2018 following progress made this year.

The startup is in the process of setting up field trials, most likely in the Netherlands, with two multinational artificial inseminations companies it won't name, and potentially trials in New Zealand with Waikato-based Dairy Solutions. Its initial collaboration with LIC has ended.

Mr Hodgkinson, formerly with the Liggins Institute, said the company has targeted animal health first because it has a "lower barrier to entry" but will turn to human health within the next two years.

The biosynthetic enzyme was developed from the guayule plant, a rubber tree native to the southwestern US and northern Mexico, which tire manufacturers are investigating as an alternative source to southeast Asian rubber plantations.

The enzyme's properties of having a long-lasting impact on damage from oxidation of fat cells were discovered by Arizona-based Andrew Backhaus, who brought the idea to his brother in New Zealand after struggling to raise money for its development in the US.

Mark Backhaus was one of the early founders of Burger King in New Zealand and was also formerly involved in Hell's Pizza. He had a five-year restraint of trade after selling his Burger King interests in 2009 and turned from the fast-moving consumer goods sector to investing in tourism resorts and biotech companies. His other investments include Ubiquitome, which is awaiting FDA approval of a mobile diagnostic tool for the Zika virus, and Caldera Health which is developing prostate cancer diagnostic tools using next-generation gene sequencing technology.

Mr Backhaus said the investment in Synthase gives them a "very big run rate" until they hit breakeven which is expected at the end of next year.

"We might look to do another fundraising round but that's in the future and will depend on how fast we want to grow," he said. "We can bring in more funding to speed it up but we'll see how it goes and have another look again in another six months or so."

It has also had a three-year $950,000 research and development grant from Callaghan Innovation.

(BusinessDesk receives some assistance from Callaghan Innovation to cover commercialisation of innovation)

(BusinessDesk)

(BusinessDesk)