Taste-Maker Allylix Prepares to Make “Nootkatone” a Household Word, as San Diego Gains Momentum in Industrial Biotechnology

In the six years since Allylix was founded, the San Diego startup has been developing ways of getting yeast to produce complex hydrocarbon molecules called terpenes for use initially as flavor and fragrance enhancers. In April, Allylix raised $9 million in a C Series round of venture capital to fund its commercialization plans, which call for launching the first eight of its terpene products through 2012.

The company already has launched its first product, a terpene with a keen grapefruit taste and smell called nootkatone, which was previously extracted from grapefruit peels through a costly process. In fact, Allylix says the market for nootkatone has been limited due to its high price. Now the startup intends to put the squeeze on the existing nootkatone market, and use its proprietary yeast-based fermentation technology to open new markets in food and beverage industries by making the grapefruit-scented molecule in bulk quantities at low cost.

Allylix is an example of a new kind of startup in San Diego that is using the tools of biotechnology to make hydrocarbon-based molecules as “renewable chemicals.” The company’s strategy, in a nutshell, is to repeat what it’s doing with nookatone with related terpene compounds—next in the lineup is a juicy orange flavor and fragrance called valentene— focusing initially on the $1.9 billion “aroma chemical” segment of the flavor and fragrance market.  Allylix is targeting perfumers with other terpenes.

It turns out plants produce