Kiwi biotech firm targets maiden revenue with Asian deal

Jennifer Holmgren, chief executive of LanzaTech. Photo / Supplied

The first revenue is about to start trickling into LanzaTech, the pioneering New Zealand biotech outfit whose microbe technology converts industrial waste gases into ethanol, used in the production of biofuel and other valuable chemicals.

Jennifer Holmgren, the company's Chicago-based chief executive, said its technology had been licensed to a firm in Asia.

LanzaTech has earlier indicated it would not commercialise its processes until 2013.

"We'll get a revenue stream from that [licence] and the revenues will start quite soon," she said.

Holmgren did not want to give any further details ahead of making an official announcement on the development, but said the licensee was a company the biotech firm had not worked with before.

In the past 15 months, LanzaTech - which has its scientific base in Parnell - has entered partnerships with industrial corporations across Asia, including Chinese steelmaker Baosteel, with which it is working to commercialise its technology, IndianOil, China's Henan Coal and Chemical Industrial Corporation and Mitsui & Co, part of Japan's Mitsui conglomerate.

Holmgren said LanzaTech, which was founded in 2005, would still not break even until the end of 2013.

"We're starting to see revenues this year, but [they are] not substantial compared to our expenses."

LanzaTech - whose backers include Sir Stephen Tindall's K1W1 fund, United States venture capital firm Khosla Ventures and Shanghai-based Qiming Ventures - was conducting what it hoped would be its last funding round with new venture capital and "strategic" investors, she said.

If all went well, Holmgren said, the firm would be ready to make an initial public offering during the second half of next year, provided capital markets had calmed down from their current volatility.

Holmgren is not giving any clues around where a listing may take place, but it has been suggested a float on the Shanghai exchange in China could make sense.

Last week the US Department of Energy announced it would award LanzaTech up to US$4 million ($4.8 million) to develop cost- effective technology for converting ethanol into a "drop in" jet fuel, which could replace conventional fuel without requiring changes to existing distribution networks or engines.

LanzaTech has also used its technology to produce 2,3-Butanediol - used in the production of polymers, plastics and hydrocarbon fuels.