Working with Downstream Processors and Brand wners to Advance a New BioBased Materials Atul Thakrar January 28, 2013 1
Who is Segetis Green & Rapidly Growing VC-funded Chemistry Company Founded in late 2006 in Minnesota, USA on the notion of combining Levulinic Acid (LA) and Glycerol into ketals Delivering new to the world materials, not green routes to existing molecules Series C: Funded by SABIC/PNB/KV/MLSF/DSM in 2012 H H succinic acid H NH 2 aspartic acid H H H itaconic acid H H 3-hydroxypropionic acid H H H glycerol H levulinic acid H H NH 2 glutamic acid H 4-hydroxybutyrolactone H H 2,5-furandicacboxylic acid H L-Ketals R H H H H H H H H H H H H H H H H H xylitol sorbitol glucaric acid Top 12 US DE renewable chemicals 2
3 Segetis Platform Robust pportunity Pipeline Current Future Consumer: ~$1Bn Household Cleaners Consumer: ~$23Bn Surfactants Superabsorbent Polymers Personal Care/Bedding Levulinic Ketal Platform Materials >1,000 Compositions Auto/Industrial: ~$2Bn Solvents Cleaners Auto/Industrial: ~$25Bn Interior Foams Coatings/Adhesives Plastics Plastics: ~$11Bn Construction Toys Medical Construction/Plastic: ~$15Bn Paints/Coatings Insulation Wire & Cable Water Treatment: ~$3Bn Flocculants Reverse smosis Membranes
Segetis Converts Renewable LA Feedstock to New, High-Value Chemicals Cellulosic Biomass Levulinic Acid (LA) From lab scale to commercial sales in 4 years R 1 Sugar R 2 Family of Products Renewable feedstocks Diverse feedstocks Thermochemical conversion uses known processes Materials that compete on performance, not just green Markets open to change 4
Starting Checklist for Commercialization of New Chemicals Does the new chemical do anything useful? Who needs that benefit? How does the performance compare to other alternatives? Buyer Ability to supply Practical Economics Ability to sell 5
Powerful and effective non-toxic solvents with low odor Broad Solvency Excellent grease-cutting and polymer solvency Low, Tunable Volatility Efficient Coupling Non-VC, non-flammable, CARB LVP-exempt Stabilizes multi-component formulations Promotes wetting and cleaning 6
Method & Segetis Teamwork method - an innovative producer of home cleaning products on shelves across the US This technology is a breakthrough that takes Method s performance and sustainability to the next level, said Adam Lowry, Method Co-Founder and Chief Greenskeeper. We re incredibly proud of this innovation because it solves one of the traditional problems in green cleaning how do you clean effectively without dirty solvents? Instead of formulating around the problem as others must, Method delivers powerful solvency in our products through renewable alternatives. 7
High Volume Plasticizers: Drive to Replace Phthalates Health concerns with phthalates Consumers are demanding change Toxic Moms: 12 Scary Chemicals in Women's Bodies "plasticizer" compounds found in pregnant women's bodies.phthalates have been linked to liver cancer and reduced sperm counts. CBS News 1/21/11 Regulatory agencies have restricted use of phthalates US & Canada Restricted use And the pressure is mounting European Union US on a path to a Restricted ban: These use [phthalate] assessments will inform EPA s decision potential control measures may include a ban. Former -US EPA, workhorse FDA, & CPSC phthalates joint program essentially banned EU taking steps to expand the phthalate ban Japan Restricted use 8
Georgia Gulf (Axiall Corporation) & Segetis Teamwork This is an exciting collaboration that combines Segetis' proprietary technology with Georgia Gulf s vinyl compounding expertise to customize formulations that deliver unique performance profiles, said William H. Doherty, vice president vinyl compounds at Georgia Gulf. In Inpro s Wall and Door Protection Products 9
Starting Checklist for Commercialization of New Chemicals Does the new chemical do anything useful? Who needs that benefit? How does the performance compare to other alternatives? Buyer How do you make the chemical at large scale? Supply chain Ability to supply Practical Economics Ability to sell 10
Building Production Experience & Capacity Segetis (Pilot Scale) - 2009 Demonstration Plant - 2012 0.25 Million lbs/yr bjectives: 1. Process development 2. Support market validation 3+ Million lbs/yr bjectives: 1. Demonstrate scale-up utilizing existing assets 2. Supply strategic customers Next Stage Commercial Plant 11
Securing Cost-Effective Levulinic Acid Feedstock Existing production in China uses corn cobs Conversion from sugar being validated by Segetis Process for wood conversion piloted Wide Range of Feedstock ptions Corn Cobs Sugar Wood Municipal Waste Feedstock collection/handling Large Scale Inefficient Needs development Small Needs development Validated conversion technology Underway Documented Concept 12
Starting Checklist for Commercialization of New Chemicals Does the new chemical do anything useful? Who needs that benefit? How does the performance compare to other alternatives? Buyer How do you make the chemical at large scale? Supply chain Ability to supply Practical Economics Ability to sell IP landscape Regulatory clearance 13
Product Clearance: Registration & Toxicology Segetis solvents are US TSCA, listed with Canadian NDSL and REACH registered No Segetis materials were modeled to be persistent, bioaccumulative or toxic First round of toxicology shows Segetis products are Non-toxic Non-mutagenic Not a skin sensitizer Low ecological risk Second round of toxicology testing underway 14
Segetis Materials Enhancing Sustainability Profile In comparison to petro-based alternatives: 1. Save 2 gallons of gasoline per gallon of Segetis product 2. Save 7 tons of C 2 -equivalents per ton of Segetis product 3 rd Party LCA modeled field to product by Boustead Consulting Ltd 15
Solid Patent Protection 7 non-us patents allowed/issued: 15 active PCT cases that will all be nationalized in the next 2 years: >15 patent families in the portfolio : > 35 total active patents : > 200 US patents allowed/ issued US 8,053,468; US 8,026,378; US 8,084,635; US 8,178,701; US 8,188,030; US 8,318,814 16
Starting Checklist for Commercialization of New Chemicals Does the new chemical do anything useful? Who needs that benefit? How does the performance compare to other alternatives? Buyer How do you make the chemical at large scale? Supply chain Economies of scale to drive cost to produce Competitive market dynamics Ability to supply Practical Economics Ability to sell IP landscape Regulatory clearance 17
Building from a Solid Foundation Translated market engagement to commercial successes Scaled products to commercial production facilities Gained regulatory clearance for products Created line of sight options for large-scale LA supply Broad IP protection New technologies in the pipeline Practical Economics in progress: Time to grow through improvements in scale 18
Key Lessons New Materials Introduction Focus development in areas that require wholesale change Get early validation - choose strategic partner that can provide feedback and turn into a purchase order. Appropriate balance in resources between technology and market development Establish a customer pipeline to have big customers ready for economies of scale Focus technology pipeline efforts on building IP, not commercialization, and be prepared to rapidly advance once the company gains momentum Creative business models Prepare to change/adjust rapidly. but have focus! 19