Verenium, Shorn of Biofuels Business, Returns to San Diego and its Diversa Roots

part of the deal, and they still are. Levine says BP got rights to the cellulosic enzymes—along with a copy of the entire Verenium enzyme library as part of its $98.3 million buyout of Verenium’s biofuels business.

So what’s the difference between Verenium in 2011 and Diversa in 2006?

“Diversa had a business model that aspired to be a products business,” Levine said. “But when you look at their revenue streams, it was largely from contract research.”

Today, Levine says Verenium is generating 90 to 95 percent of its revenue from nine products, industrial enzymes developed for target markets in animal health and nutrition, grain processing (into biofuels or beverage alcohols), and oil seed processing for edible oils. Such sales amounted to $50.3 million in 2010—double the $25 million that Verenium generated from product sales in 2007.

Levine, a former Goldman Sachs banker, is taking a pragmatic approach that recognizes Verenium’s technology and vast enzyme library has enormous potential value—but it can only be realized by building a commercial operating business that targets existing markets for industrial enzymes. Though last year’s deal with BP did not preclude Verenium from moving back into the cellulosic biofuels business, “I’d rather come up with the next big thing in animal health and nutrition, where it’s a $400 million or $500 million market,” Levine says. “I can double, triple, quadruple our revenue without having to touch markets [such as cellulosic ethanol] that don’t exist today a whole lot faster and with a whole lot more certainty.”

So it’s back to the future for Verenium, which has returned to its original focus on developing industrial enzymes. When we talk about our technology, we still say it’s very much about enzyme discovery in nature,” Levine said. “It’s very much about using the libraries that Diversa went out and created, and we continue to create libraries. But we no longer have the luxury of talking about ourselves as a platform technology developer, even though we are. We cannot move backwards. We have to move forward to being a profitable and sustainable enzyme seller.”

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.