Leaps by Bayer, an impact investment arm of Bayer AG, is investing in teams to achieve fundamental breakthroughs in biologicals and other life sciences sectors. Over the past eight years, the company has invested more than $1.7 billion in over 55 ventures.
PJ Amini, Senior Director at Leaps by Bayer since 2019, shares his views on the company’s investments in biologicals technologies and trends in the biologicals industry.
PJ Amini, Senior Director at Leaps by Bayer
Leaps by Bayer has invested in several sustainable crop production companies over the past few years. What benefits are these investments bringing to Bayer?
One of the reasons why we do these investments is to look at where we can find breakthrough technologies that are working in research areas we do not otherwise touch within our walls. Bayer’s Crop Science R&D group spends $2.9B annually internally on its own world-leading R&D capabilities, but there is still plenty that happens outside of its walls.
An example of one of our investments is CoverCress, which is involved in gene editing and creating a new crop, PennyCress, that is harvested for a new low-carbon index oil production system, allowing farmers to grow a crop in their winter cycle between corn and soy. Therefore, it is economically advantageous for farmers, creates a sustainable fuel source, helps improve soil health, and also provides something that complements farmer practices, and the other agricultural products that we offered within Bayer. Thinking about how these sustainable products work within our broader system is important.
If you look at some of our other investments in the precision sprays space, we have companies, such as Guardian Agriculture and Rantizo, which are looking at more precise applications of crop protection technologies. This complements Bayer’s own crop protection portfolio and further provides the ability to develop new types of crop protection formulations aimed at even lower volume use for the future as well.
When we want to better understand products and how they interact with the soil, having companies that we have invested in, such as ChrysaLabs, which is based in Canada, is giving us better soil characterization and understanding. Therefore, we can learn about how our products, whether a seed, chemistry, or biological, functions in relationship with the soil ecosystem. You must be able to measure the soil, both its organic and inorganic components.
Other companies, such as Sound Agriculture or Andes, are looking at reducing synthetic fertilizers and sequestering carbon, complementing the broader Bayer portfolio today.
When investing in bio-ag companies, what aspects of these companies are most important to evaluate? What criteria are used to assess a company's potential? Or what data is most critical?
For us, the first principle is a great team and great technology.
For many early-stage ag-tech companies working in the bio space, it is very hard to prove the efficacy of their products early on. But that is the area where we advise most startups to focus on and make considerable efforts. If this is a biological, when you look at how it is going to perform in the field, it is going to be working in a very complex and dynamic environmental setting. Therefore, it is important to conduct the appropriate tests with the right positive control set up in a lab or a growth chamber early on. These tests can tell you how the product performs in the most optimal conditions, which is important data to generate early before taking that expensive step of progressing to broad acre field trials without knowing the best version of your product.
If you look at biological products today, for startups who want to partner with Bayer, our Open Innovation Strategic Partnership team has actually very specific data result packages we look for if we want to engage.
But from an investment lens specifically, looking for those efficacy proof points and having good positive controls, as well as appropriate checks against commercial best practices, are what we absolutely look for.
How long does it take from R&D to commercialization for a biological agri-input? How can this period be shortened?
I wish I could say that there is an exact period of time that it takes. For context, I have been looking at biologicals since back in the day when Monsanto and Novozymes partnered on one of the world's largest microbial discovery pipelines for a number of years. And during that time, there were companies, such as Agradis and AgriQuest, which were all trying to be pioneers in following that regulatory pathway, stating, ″It takes us four years. It takes us six. It takes eight.″ In all reality, I would rather give you a range than a specific number. Therefore, you have products ranging from five to eight years to get to market.
And for your comparison point, to develop a new trait, it can take around ten years and will likely cost well over $100 million. Or you can think about a crop protection synthetic chemistry product that takes closer to ten to twelve years and more than $250 million. So today, biologicals are a product class that can more quickly reach the market.
However, the regulatory framework is continuing to evolve in this space. I compared it to crop protection synthetic chemistry before. There are very specific testing mandates around the ecology and toxicology testing and standards, and the measurement of long-term residue effects.
If we think about a biological, it is a more complex organism, and measuring their long-term impacts are a little bit harder to work through, because they go through life and death cycles versus a synthetic chemistry product, which is an inorganic form that can more easily be measured in its degradation timing cycle. So, we will need to conduct population studies over a few years to really understand how these systems work.
The best metaphor I can give is that if you think about when we are going to introduce a new organism into an ecosystem, there are always near-term benefits and effects, but there are always possible long-term risks or benefits that you have to measure over time. It wasn’t so long ago we introduced Kudzu (Pueraria montana) to the US (1870’s) then touted it in the early 1900’s as a great plant to use for soil erosion control due to its rapid growth rate. Now Kudzu dominants a major piece of the Southeastern United States and covers a lot of the naturally inhabitant plant species, robbing them of both light and nutrient access. When we find a ‘resilient’ or ‘symbiotic’ microbe and introduce it, we need to have solid understanding of its symbiosis with the existing ecosystem.
We are still in the early days of doing those measurements, but there are startup companies out there that are not our investments, but I would happily call them out. Solena Ag, Pattern Ag and Trace Genomics are conducting metagenomic soil analysis to understand all species that occur in the soil. And now that we can measure these populations more consistently, we can better understand the long-term effects of introducing biologicals into that existing microbiome.
A diversity of products is needed for farmers, and biologicals provide a useful tool to be added to the broader farmer input toolset. There is always the hope to shorten the period from R&D to commercialization, my hope for the Ag startup and established larger players engagement with the regulatory environment is that it not only continues to stimulate and motivate the accelerated entry of these products in the industry, but also continuously raises testing standards. I think our priority for agricultural products is that they are safe and work well. I think we will see the product pathway for biologicals continue to evolve.
What are the key trends in the R&D and application of biological agri-inputs?
There might be two key trends that we generally see. One is in genetics, and the other is in application technology.
On the genetics side, what have historically seen a lot of sequencing and the selection of naturally occurring microbes that are to be reintroduced to other systems. I think the trend we are witnessing today is more about microbe optimization and editing these microbes so that they will be as effective as possible in certain conditions.
The second trend is a movement away from foliar or in-furrow applications of biologicals towards seed treatments. If you can treat seeds, it is easier to reach a broader market, and you can partner with more seed companies to do that. We have seen that trend with Pivot Bio, and we continue to see this with other companies both inside and outside our portfolio.
Many startups focus on microbes for their product pipeline. What synergistic effects do they have with other agricultural technologies, such as precision agriculture, gene editing, artificial intelligence (AI) and so on?
I enjoyed this question. I think the most fair answer that we can give is that we do not fully know yet. I will say this with regards to some analyses we looked at that aimed to measure synergies between different agricultural input products. This was more than six years ago, so it is a little bit dated. But what we tried to look at were all these interactions, such as microbes by germplasm, germplasm by fungicides and weather effects on germplasm, and attempted to understand all these multifactorial elements and how they affected field performance. And an outcome of that analysis was that well over 60% of the variability in field performance was driven by weather, which is something we cannot control.
For the rest of that variability, understanding those product interactions is where we are still optimistic, as there are some levers where companies developing technology can still make a large impact. And an example is actually in our portfolio. If you look at Sound Agriculture, what they make is a biochemistry product, and that chemistry works on nitrogen fixing microbes that naturally occur in the soil. There are other companies today that are developing or enhancing novel strains of nitrogen fixing microbes. These products can become synergistic over time, further helping sequester more and reducing the amount of synthetic fertilizers required in the field. We have not seen one product on the market able to replace 100% of CAN fertilizer use today or even 50% for that matter. It will be a combination of these breakthrough technologies that will lead us down this potential future path.
Therefore, I think we are just at the beginning, and this is a point to make as well, and this is why I like the question.
I mentioned it before, but I will reiterate that the other challenge we often see is that startups need to look more towards testing within the current best ag practices and ecosystems. If I have a biological and I go out in the field, but I am not testing on the best seeds farmer would buy, or I am not testing it in partnership with a fungicide that a farmer would spray to prevent diseases, then I really do not know how this product might perform because the fungicide might have an antagonistic relationship with that biological component. We have seen that in the past.
We are at the early days of testing all this, but I think we are seeing some areas of synergy and antagonism between products. We are learning over time, which is the great part about this!