201. Out of Cell Experience: Michael Heltzen Drives Pure Chemistry at eXoZymes

Michael [00:00:00] you can argue we have taken bio out of biomanufacturing because there's actually nothing alive.

Michael . it is a chemical reaction, just happens to be very precise chemical reactions happening by enzymes.

Erum Hello, and welcome to the Grow Everything Biotech podcast, where we talk about how biology is transforming every industry. And today we have a very special episode where we are recording in front of a live audience. Actually, we're not. I'm saying that because it just rolled off my tongue. But we're recording at a studio here in the heart of New York City during the H.C.

Erum Wainwright Conference. And Carl,

Karl hello. How are you? What's up, Hirah? I just saw you a little while ago, and it's good to see you again in person.

Karl So today, we have our guest, Michael Heltzen, CEO of Exozyme. Hi, Michael. Hey.

Michael Thank you for having me again. Yeah.

Karl Yay.

Karl We're super excited to have you on. As I was saying before, this is the third time for Exozyme. It's your second time on Grow Everything. Yeah. You're one of the few people who's been on [00:01:00] twice, so congratulations. I'm

Michael honored.

Karl as Hirum mentioned, you're in New York City for the AC Wainwright Conference.

Karl Give us a sense in terms of, like, what the conference was like, what was exciting, you know, what got you excited about being there?

Michael There's no place like New York City when it comes to kind of gathering up from around the world on specific topics and industries, and in this case, the

Michael financial and investment side of,healthcare and biotech.

Michael So, that was a kid in a candy store kind of, uh, opportunity for us, of course, to come out and introduce ourself to a lot of new people and meet with all the people we know already, and it's just difficult to have, so many meetings in one week in any other way. So at, at a conference like that, you can literally have a meeting every 30 minutes.

Michael Wow. so it is, professional speed dating, from that perspective. but it's enough to check in with people and, it's both people from New York, of course, but also people that have traveled to be here. So it, it creates this flagpole kind of, uh, opportunity. And, and AC Wainwright is really well, run [00:02:00] and just fun and interesting.

Michael They have, uh, one of the wildest gala, parties and, things like that.

Karl Yeah. What was the highlight of the gala party? I'd been to one a few years ago where the lead singer of The Who sang. who was the headliner this year?

Michael So, you pronounce it better than I do.

Michael we just talked about it,

Erum Doobie Brothers?

Michael Yes, exactly. a well

Michael seasoned band that have been around since basically I think I was a kid, and, it was, my first time to see them live and in, in a very, very interesting venue, and at the same time being amongst hundreds and hundreds of people with the same,interests and focuses.

Michael So a great evening.

Karl So we're excited to have you come on and talk to us because, Exozyme's is the only publicly traded cell-free- synthetic biology company,And for many years, the synthetic biology industry was focused on turning cells into factories.

Karl But what you guys have done is you're working with exozymes instead.in using the [00:03:00] insides or the enzymes from cells as the factory, not the cells themselves, can you let us know what that looks like? What does cell-free exozyme manufacturing look like, particularly at the industrial scale?

Michael No, that's, it was a wonderful pitch, right? Cells as chemical factories. What turned out to be, a challenge in, in a lot of cases, not in all cases. There, there are good examples of things that have been built with cell-based, systems and, both respect and glory to those because that is amazing.

Michael The challenge though is that working with a cell, the cell has its own purpose in life, and it is not to produce that one thing you want it to produce. It doesn't want to produce it at, the quantities because it doesn't need it. And frankly, if the quantities gets too high, it gets toxic for the cells, so you're kind of killing your own platform at that point.

Michael And then the last, thing that the industry had to learn the hard way was that after many, many years of genetic engineering on a cell line, get a cell that is manufacturing [00:04:00] this at a volume that is maybe enough, then the isolation cost, getting all the thousands of other things that is in your mix at that point, getting that out of it so you get to the right purity became a limitation because you couldn't make it pure enough or if the isolation cost is higher than the value of the compound, then you will never have a business on it.

Michael So, so that was, where, the cell-free thought started from. Would it be able to take the best of the cells from a, chemical engineering point of view, the, the enzymes, and just have that and not have all the other things? And, that's obviously a little bit of a, journey because there's first the, like, can the enzymes even survive outside of the cell?

Michael and what kind of genetic engineering do you need to do to kind of ripen them up to these Superman versions of the enzymes that we call exozymes? So basically uh, enzyme that can live outside of the cell and can still participate as if it was inside of a cell, which is, not necessarily an easy task.

Michael And then having all of these [00:05:00] support systems that the cell typically provides for a, manufacturing solution where you don't have to think about, like, co-factors and balances and all of that because the cell just kind of takes care of that. But it came with all of those other, challenges. So, taking the full responsibility for every single thing that happens in our reactors is something we decide, we own, and we therefore can, either, uh, work on if it's not good enough, or when it is good enough, we can start even building things that wasn't possible before.

Michael So we are a company that makes very valuable natural inspired products, and, supplements could be an example of that. Someone or many people have already figured out something out in nature is very valuable because it has a huge benefit of some sort, but it's been inaccessible.

Michael It's been impossible from a perspective of, getting hold of it in, in quantities and at cost points that, that make sense to bring [00:06:00] something to market. Mm-hmm. Those, hundreds of small molecules that are known and some of it all, the way back to things like Chinese medicine and Indian medicine, where it's been known for a really long time that this is beneficial.

Michael But the reality is that you can't really get access to it. That's where Cellfree really starts shining because we can sit down and rebuild, those products to be very concrete. Like, the first, uh, product where we have showcased that we can do this is, NCT, the small molecule, that helps boost, metabolism.

Michael This great value proposition of turning fat into energy that has been known for a long time and shown by a lot of other people to be valuable, But then the inaccessibility problem kind of arose from, like, how do I get it at purities? How do I get it at scales that allows for an, for business?

Michael And, what we basically do is we sit down and we look at the genetic code. NCT you can find in, for example, black pepper But if you were to eat black pepper to get enough NCT, you would have to eat a [00:07:00] room full worth of black pepper to get one dose of NCT. Again, inaccessible, but we know that it's a possibility.

Michael We look at the genetic code in, for example, black pepper. How is black pepper able to make NCT? And then genetically you can look at that and say, "Okay, that's a really good blueprint." And then we put our, AI, algorithms to basically guess on which mutations would take those enzymes up to Exozymes status in, the different cases, whatever they're supposed to do, those, enzymes.

Michael and that's basically where, where we're a little bit unique because we can, sit down and guess hundreds if not a thousand mutations per enzyme. And then because we're cell-free experts, we can order the DNA, and then we can express it over to enzyme without putting it into a living cell. So, we can run cell-free processes that basically expresses from DNA into these, mutant versions of the enzymes, and we can do that in the hundreds and in the thousands, and we can then take that data back to the algorithm and say, "Algorithm, you are right about this one.

Michael Let's build with that [00:08:00] mutation in the end product. But you were wrong about this one. Learn from that. You were so sure about this would be an improvement, and it wasn't. so go back and basically train." And that's how we have a competitive advantage in being cell-free experts that allows us to optimize on the enzymes.

Michael It allows us with the enzymes to build product that was inaccessible.

Erum Wow. Michael, every time I speak with you, I get a clear picture of how Exozymes the company works, and Exozymes the actual molecule works, and the process works. So thank you for that

Erum I would love to go to actually your laboratory and your manufacturing plant to see it, 'cause that will... That's when it all clicks, so maybe we'll bring cameras one time.

Michael you're welcome. Just, just let us know when you come.

Erum All right. We'll, we'll plan that. Yes. You can see Lesa over there.

Erum We'll plan it. Yes. Okay.

Erum So want to know a little more about the Michael behind the Exozymes. and you've been sitting across the table from many roles. You were an investor, you were ecosystem builder, CEO of other companies.

Michael What made Cellfree the one that you bet your career on?Because it's one-to-one [00:09:00] aligned with my personal mission in life. and the kind of technology and work that intrigues me. so maybe to unpack that a little bit, early on in my life I started realizing that I had two areas that I was, like, super fascinated by and, it, sparked my curiosity, was nature.

Michael How does life work? Mom, I can cut myself and it grows back together. How is that possible? Everything else that breaks, you gotta glue it back together. we don't. It, it just grows back together. How fantastic is that? And then there was when my, dad, early on in, in my childhood brought a PC back, a computer back because he was running simulations for his engineering job, and I was like, "There's a whole universe in the computer world."

Michael And I didn't think those two worlds had anything to do with each other because it was literally as north-south as, as you could get. and then I'm lucky in my early 20s to run in to a couple of guys that wanna start a... And then they say the one word, bioinformatics company. [00:10:00] Mm-hmm. I was just like, that was one word that encapsuled those two things that I thought was not connected, and I was literally just like, "I'm in.

Michael I need to be a part of this." Yeah. that was how I started, being in the, in the startup world and startup circles, and that became my profession and my passion. how do I, find, scientists that have made big scientific breakthroughs, technology breakthroughs, and then help translate that into commercial business, AKA real impact on the world?

Michael Because that's my driver. Mm-hmm. So when you ask me the question, what, how, this fits together, that's basically the same thing in all of the companies that I've been a part of, and yes, I've also taken some of that money and invested into, to other startups to give them a chance to have a shot on goal.

Michael But it's basically fundamentally molecular biology on the one side- Mm-hmm ... computational power on the other side, and those two worlds are much easier for people to realize why they actually belong together because it's using computational power in AI to, for example, optimize enzymes to a way [00:11:00] where if we just used the human brain to sit down and think about what the mutations could be, it would take way too long.

Michael and AI, in this specific case, allows us to brute force evolution, literally think a billion years out in the future what would happen out in nature if the evolutionary pressure was to make it do this one thing. we can do that computationally, and, that's where it gets, like, super intriguing for me to see, not just from a curiosity point of view, but also what can we unlock?

Michael What can we now start building? We humankind be able to do things that otherwise wasn't possible.

Erum Right, right. Oh, wow. That's amazing.

Michael I remember when we started talking to each other, it was relatively early on in your journey of making podcasts, and I, believe you're coming up on, 200?

Karl Yeah. Yeah. Is that- 200 is our next, uh... next week's episode is gonna drop.

Michael Yeah. That's amazing. give me the chance to ask you- ... a similar question. From a motivational point of view and from, from a journey point of view, how's that been?

Karl Yeah, I mean, I think it's been amazing. We started the [00:12:00] podcast because we would have conversations like this with you, but no one else got to hear them. And I know my mission has always been I want more people to be exposed to nature and to what biotech enables, us to do with nature, which is like this incredible technology that we've been lucky to be blessed with.

Karl And so we felt like we have all these conversations, but no one hears them, let's start recording the conversations and that way we can get more people to understand what we're doing, and if we can get more people to understand, then less people will be afraid, and then more money will come into the sector.

Karl And when we started it almost four years ago, I mean, we were going through biotech winter. Yeah. And even right now, you know, the bulk of investment is going into AI, and yet the progress that we're making as an industry just continues to be amazing. So we love just showcasing it and getting people like you to come on and have these conversations with us, because normally we'd have these conversations anyway, but no one would know.

Michael Thank you very much for opening that window. I am one of the ones that peeks in in all of those conversations- ... and get [00:13:00] to have, like, a broader, uh, conversation and different viewpoints on how things are going.

Michael Yeah.

Erum Yeah. I'm excited for the next 200 episodes. Yes. And see what, how, when you're on for, like, the 10th time- ... maybe 50th time. Depending on how much is progressing.

Michael I'm in.

Erum Yeah. Yeah. Yeah.

Karl Well, let's talk about your momentum because, Exercise has had a lot of momentum even just since you went public last year. It feels like it was last year. It wasn't that long ago

Michael yeah, that's, sometimes it feels like yesterday, and sometimes it feels like 10 years, so it's, uh, that's the journey When you're building a company, things move really fast. You do get time distortion. it was,

Michael November of 2024 we IPO'd. So it is a little longer from that perspective, but it's been such an interesting journey going from having a platform where we could frankly point the laser at many, many different things- and figuring out that this, focus of, natural product-inspired nutraceuticals as a first, product,where you [00:14:00] get fast to market, but then the same programs can be flipped around and be pharmaceutical opportunities.

Michael that obviously has a much longer journey ahead of them, and- from that perspective much more binary in their success or non-success. But by being able to do the double dip,we can, we can make sure that we, uh, we invest our money and our time into something that does come to market, that does start making a difference, and that can frankly also help finance the journey on the pharmaceutical side, that everything equal is often where the biggest impact ends up happening because you can customize the molecules for specific indications, AKA diseases, and that way really make a difference in people's life.

Karl So as we are recording, you guys just came in, to a $6 million financing, I believe.

Karl What's been the biggest challenge of going from, you know, cell-free at the bench to industrial scale?

Karl So, we as a company have been, blessed by having a, [00:15:00] financial group, the MDB Capital Group, that from already before it was a company understood the size of that technology breakthrough.

Michael Mm-hmm. and basically doubled down and said, we, together with the, co-founders coming out of UCLA, this is a thing worthy of being built despite that there's a long journey going from a technology breakthrough at UCLA starting to prove that you could run the enzymatic pathways outside of the cells.

Michael That was, a big breakthrough and, showed a lot of potential, but then sitting down and actually building that company, actually building that platform, going from that you have showed something one time so you can publish it, to like, we need to be in control of the cell-free step-by-step process.

Michael What are all the things you need to know? And that's why I was recruited, what is that, like three years ago, when we got to the point now the platform is working, but we need to take some very difficult strategic choices- Mm ... about how do we point this, I call it a laser, but basically this, [00:16:00] opportunity generator, what space are we gonna go deep on?

Michael And, this double dip strategy came, because it was so clear that we were looking at nature first and taking the blueprint and getting to market fast with we call them nutraceuticals. Think of it as, as supplements, but it could also in principle be skincare and fragrances and other things.

Michael What is important to us is that we take something, unlock something that's very valuable, and get it out to people fast, and we get the very big upside of being able to turn it into, a pharmaceutical.

Erum Yeah. I mean, that's really amazing, and I love the laser focus. I mean, that's something that I see that is needed.

Erum So we talk to a lot of companies in the field, and there's a lot of companies that are like, "Oh, we do end-to-end solutions for everything." And you're like, "Well, if you do everything for everyone, you're doing nothing for no one." Yeah. Right? So, but when we had, Damian on, Damian, your business partner, who's chief commercial officer- Mm-hmm

Erum he was talking about the potential of NCT. Yeah. And now you have a commercial manufacturing partner. Yes. Kuria?

Michael basically, the, the, the journey is, of [00:17:00] course, as you're scaling up these things, you go from like very, very small amounts, and then you keep stepping up, and quite a while ago, we did our pilot production of NCT that together with a partner, in the US, Kemin Chemicals, that, we were very fond of working with and will be working with in the future as well, to basically show that it's not just us as a team that has magic fingers and therefore can make things happen, but we could basically give them a, a recipe, basically the, tech transfer packets.

Michael This is what you need to do, follow this recipe, and then When, you have set that up, you can put feedstock in, and the other end comes out NCT at a very high purity, so 99.6% purity, and the conversion rate from feedstock to, end product, was more than 99%. imagine giving sugar to a cell or another feedstock to a cell, how much of that sugar actually turns into feedstock?

Michael Mm. if you're in double digits, percentages of [00:18:00] that, then, then you are amongst the best people in the world to, to, do conversions, right? So, so this is just a different type of methodology, and, you can argue we have taken bio out of biomanufacturing because there's actually nothing alive.

Michael Yeah. it is a chemical reaction, just happens to be very precise chemical reactions happening by enzymes. Mm. And this inspiration of nature kind of showing us humankind how to do chemistry, there's so much more chemistry going on in nature than in any chemical laboratory, run by humans.

Michael So that's kind of the opportunity.

Erum So you have this manufacturing partner, and now you're looking for a commercial partner to take NCT to market. What are you looking for in a partner to help you with that?

Michael Yep, good point. Pilot production, and now Curia is, we basically engaged into tech transferring to them so they can do the actual manufacturing, so we can get, product to market.

Michael What we're looking for in that optimal other partner, that is the commercialization partner, think of it as, as marketing, distribution- all [00:19:00] of the things that comes with building an, a new product. we've been talking with different kinds of people.

Michael Let's start there. Some people would just like to buy the NCT off of us, and then go and build a product with it because they can see the purity and, the opportunity is great. And I can see, we've had people coming in and say, like, "Can I get NCT and put it in my chocolate so, uh, you can eat more chocolate?"

Michael I was like, that's a funny thought. That's not exactly how we see ourself go with the first partner. But we, we have had a number of conversations. Mm. we haven't, uh, negotiated which of the partners we're gonna go with. So it's still- Yeah ... very much something we will be doing, this year.

Michael But, we are leaning towards, basically making a partnership with someone that knows how to take these things to market already, have an existing infrastructure and, and knowledge that we don't need to also become experts in that. We must rather find a, a partner where we, for example, in a joint venture or in other business structure setup, can join forces and bring NCT [00:20:00] forward because we have a platform that can do this again.

Michael We already have the next round of products coming up, and we already have a tail of R&D projects actually later this year, will most likely,an- announce yet another product coming out of that. Mm-hmm. so this ability to move super fast, like I didn't know what NCT was two years ago.

Michael so from that perspective- Yeah ... the ability to not fall into the trap of other people that basically needed to raise 50 to $100 million and spend five years, and then see if something would work, this is a platform where we, within the first month, knows if it's gonna work at scale.

Michael Mm-hmm. Mm-hmm. At least have a very strong indication on that, which is very unique of the platform. But then also the development stages are so much faster than typically. And again, the production parameters then ends up being in a scale of their own. So it, it really unlocks a lot of, opportunity for our partners.

Michael And that, is what we as a company are becoming really good at, building these tech transfer packages- Mm-hmm ... that enables [00:21:00] a completely new product or product category. with time we can probably also branch into other things. We're still getting a lot of requests, "Could you come and produce this thing, but just cheaper?"

Michael And that's not,to dismiss that, but it's not what we're doing here to start with. We really wanna show that we can break into new territory of, natural product inspired products that is available at all, and then also the pharmaceutical, space that we're unlocking. So to we, we're talking about a new generation of medicinal chemistry.

Michael Letting the medicinal chemists that are typically working with, petrol chemistry, oil and gas derived chemistries- Mm-hmm ... giving them access to all the power of nature via the enzymes. that is something that,is super exciting because it's gonna enable so many, treatments in the future.

Erum Yeah, me- medicinal chemistry and possibly food chemistry. 'Cause I asked a partner question because your future partner might be listening to this episode right now. Correct. We do know that, a lot of R&D teams from big CPG companies do listen to our podcast. Shout [00:22:00] out to those people, but wanted to point out that you're open for business.

Michael we are always open for conversations about partnerships. exactly right. And, and actually we're not even done with the search space of people that knows something from nature that if they only had it. that is just more and more and more of those conversation keeps coming to us.

Michael and we have a pretty effective, search system ourself where we are, we are kind of, mapping all of the opportunities out that is the pool we're picking from. So we basically have a Claude agentic setup that sits and finds all of these and tries to score it up against our technology platform.

Michael Where will this unleash a big thing? From an IP perspective, is this already a highly patented area? Then it's probably not that interesting as if it's, like, completely white space for us. And then what is the market opportunity and the impact opportunity. And,you can get those AI helpers to do hundreds of years of work- Yeah

Michael in- instead of just kind picking it at what is coming to [00:23:00] you,from the top. So it's an interesting time where, where we're definitely mapping out the opportunity. But, it's a very large opportunity space. So, so getting back to the focus, as you were pointing out, that if you're trying to boil the sea, you will, you'll, it'll never happen.

Michael Right.

Karl So speaking of opportunity space, Exozymes was chosen by the Department of Energy to work on their Genesis Mission Project, to build AI twins. Can you tell us what that project is, how does this idea of digital twins accelerate what Exozymes is doing, particularly when it comes to discovery and scale?

Michael Yeah. So, we're immensely proud that, we were,chosen for the Genesis Mission project. Just for the few that doesn't, uh, know, that it's basically the US have said, "We cannot just be leaders in AI. We need to be leaders in AI applications." Mm. and therefore, they made a large, grant available, both in regards to money, but also in regards to, computational infrastructure.[00:24:00]

Michael And saying if there are areas where the US should be the leader of the future, let's pick someone and let's fund a collaborationship often between, more than one party to bring something forward that becomes that next generation, of it. and we signed up with that, and we ended up, pairing up with, Lawrence Berkeley National Laboratories.

Michael very smart, very, uh, competent people, from the modeling side. And then basically saying because we are doing cell-free and there's not a lot of living systems that have all kind of other things going on, we're probably easier to model and therefore get the benefits of AI.

Michael the way to describe it, what is it? The way you build an airplane today is that you sit down on computer and you model it all the way through. You do not put even two things together before you have the full model and the full stress test of is this the right thing from a design perspective.

Michael That's what a digital twin of the cell-free biomanufacturing system is. [00:25:00] We are basically building the tools. We're already doing it in components. But this is just a full-fledged let's sit down and model through all the way, including when it's up and running in production, that you can model your, way through that.

Erum Yeah. And you were also awarded a $2 million grant from the NIH to convert cannabinoids into novel drugs, which is a very challenging world. A lot of people have been trying to convert cannabinoids into pharmaceutical-grade therapies. Why is ExoZymes positioned to be able to bring that to market and bring it to this world?

Michael you can argue we're just solving the same inaccessibility problem where in, NCT it's a little bit, different because it's small volumes.

Michael Where in cannabinoids you have,the largest cannabinoid from the plant is THC- Mm-hmm ... that is intoxicating. Mm-hmm. And if you want to do,pharmaceutical applications of all the other cannabinoids- Mm-hmm ... that come from the plant, there's like at least 200 of them, then you need to [00:26:00] have, non-intoxicating cannabinoids.

Michael You need to have pristine purity- Yeah ... to be able to do that. So our ability to, instead of either in the plant or in the synthetic biology, cell where, where you would engineer it, you will still get all the, the different things that you'll have to isolate out of. What we uniquely can do is we can build a system that only builds one cannabinoid at a time.

Michael And because we have already shown by another NIH, partnership that we can basically build the mother cannabinoid, that is, the scaffold, that is kind of built different things on that, that makes the different cannabinoids. as we have already shown, we have a cell-free biomanufacturing to make that.

Michael and because we can then on, on top of that go after the, the rare cannabinoid and the ultra rare cannabinoids, and we can customize them, uh, for pharmaceutical use cases. That was basically why they picked us and said, like, that ability to basically make it a high purity and select the cannabinoids and customize them for the specific indications, that, that's a thing that have [00:27:00] not been available to humankind before.

Michael Mm-hmm. And therefore, they basically wanted us to speed up that work, and they have given us a grant to go and prepare a number of those, candidates for the clinic.

Erum Yeah. And the therapeutic effects are very interesting because we do have an endocannabinoid system in our body, and there's still a lot of research happening on the what's actually happening in our body on that front.

Erum So to be able to laser focus on different cannabinoids and see how they affect- endocannabinoid system is going to be very interesting, and I'm excited to see what comes of it.

Michael Yeah. it is a super fascinating system, and, it brings it back to that core fascination of, like, we humankind grew up together with all the plants and so on, and, with cannabinoids specifically, it is probably, I'm not, the scientist to guarantee that it's true, but it's probably because we have grown up together with that over generations and generations.

Michael what is factual is that we have the C1, uh, CD1 and CD2 receptor that is, is the cannabinoid receptors in the human body, and in so many of our cell types. Mm-hmm. So, so it is, a very large [00:28:00] application space we're talking about. it's basically, neuro, diseases and, applications, but it's also a, a number of other things.

Michael So it's a very intriguing space. And as a platform, the reason why we are very intrigued about cannabinoids other than we obviously when we get financed by the government to take the lead in it, it's also because this is really our ability to show the medicinal chemistry world the wealth of new tools that this platform is opening up.

Michael So this is not just like one new trick we have, it's literally a new tool case for medicinal chemistry. And when we can do it to the mother cannabinoid- Mm ... then we can also do it to a lot of other types of small molecules. So people, when they follow us here over the next, time when we start,putting this work out, if they see that we have done a medicinal chemistry trick or a reaction that they would like to see on their small molecule, then that's exactly where they should give us a call and say, "Okay, this is now possible.

Michael I thought that was impossible before. It's now [00:29:00] possible." So the cannabinoid space for us is also very much a, a proving ground for all of these things.

Erum Mother cannabinoid, that's a cool name. Save that

Erum Yeah. Masa, that's your brand, Mother Cannabinoid.

Karl And as you said, there's so many of these molecules across nature that are completely untapped. One of the things that we wanted to ask you was,

Karl kind of a- about the business model. Like, traditional biotech business models is, discover, get investors to scale up, build a facility, and then the company ends up kind of becoming a bank and a real estate company at the same time. You guys are taking a little bit of a different model. You're focused on licensing out, and it's even, like, an asset light model.

Karl You could say it's analogous to what, some of the chip makers are doing, like Nvidia or Micron or AMD. Talk about that business model and why you guys chose to do that as opposed to building a big facility.

Michael it's, an interesting conversation that have come because the world have started realizing that you can be, Qualcomm or Nvidia and so on, and you don't have to build your own fabs- Mm-hmm to [00:30:00] manufacture what you have actually built. and that realization that the world have had is then much easier for me when I showed up from the beginning and said like, "We have to be capital light," because it's been an industry that have been very capital heavy.

Michael And for that reason, it's harder to take a shot on goal if it's gonna cost you a big check. So if you can stay nimble and focus on exactly where we're unlocking value, and, and that's basically what we have done. So you're right,we can make these bio solutions faster, cheaper, better, in these verticals where we specialize better than anyone.

Michael And then why should we just build one and then spend our life- Basically manufacturing there. so this ability to set it up and have other people manufacture it and have partners take it to market is a way of making sure we do more where we, release the most value. and you're right. With, with time, it's probably gonna be most licensing.

Michael Here in the beginning, we wanna make sure we take our own medicine, as we are kidding [00:31:00] around with. it's obviously not medicine, first of all. and second of all, it's set to point out that we wanna know what the user experience, what the partnership experience is of our biosolutions. So we will participate, much deeper in, for example, NCT than we'll probably do with product number 10 in, in the pipeline.

Michael At some point, it does turn into, more of a licensing game. But, we also, for example,with NCT, when we look at the pharmaceutical, analogs of NCT, the new molecules that only we can make that can really make a difference, it would also be, not smart of us to just license it out and just have a, a 5% royalty of such a potential when that is literally us and only us that can unlock that.

Michael the business model should always be your guideline, so you get consistency in things, but you have to take smart decisions on a daily basis and finding the best partners. and the best partner here in the beginning is probably, As an example, a smaller partner that can move [00:32:00] fast than a larger partner despite that they're interested, but it takes them six to 12 months to take the initial steps, where it maybe takes a couple of month for a smaller partner.

Michael Then it's, then it's better to just get going because we, we have a lot of things to learn and a lot of opportunity to capture.

Erum Yeah, yeah. I mean, You proved acceleration, like two years you didn't know NCT, and here you are looking for your commercial partner is amazing. And you been talking about this continuous innovation flywheel, this licensing model. How do you set up your operations, your internal operations, in such a way that one breakthrough in enzyme engineering can provide those multiple shots on goal across pharmaceuticals, nutraceuticals, and more?

Michael it's a relatively simple filtering mechanism.

Michael We know all the parameters, and then we just have to compare them. If we do that by hand, that would take so much time. So, this is the blessing of the large language models that have been, made available. Of course, we still have, a lot of human involvement in the decision-making and taking [00:33:00] responsibility for what it is.

Michael even a sprinkle of passion, I can tell you some of our team members love, love, love this thing over here, and other people love, love, love this thing over here. And, we have a limited budget, so we need to pick one of the which child gets to go to school- ... kind of like, uh, so, uh, at, least first.

Michael Uh, ho- hopefully with time we, we can send them all. But, Yeah ... that, that ability to get the engine going.

Erum Yeah. I hear you. Yeah. And so, taking a new class of molecules like these rare cannabinoids and NCT for pharmaceuticals from the lab to highly regulated markets is notoriously complex.

Erum So what is the biggest barrier with convincing traditional pharma executives to trust a cell-free enzymatic production route?

Michael That's a good question. The biggest barrier, So,at its core, it sounded too good to be true. I totally recognize that. I had the same reaction the first time I heard about it.

Michael So, imagine if, you are a pharma executive or a biotech executive and your team that might be a medicinal [00:34:00] chemist comes and tells you, "Those chemical reactions are not possible." Mm-hmm. And you have your biology side of the table saying like, "What are they talking about running enzymes outside of the cell?

Michael You have to have the cell. that's the known fact." Mm-hmm. then it takes a little time to kind of like with education and, frankly time where we prove that it's possible. It takes a little time to, convince people that there is a next generation coming up. Mm-hmm. it's much easier now than it was just a year and three years ago because we have so much to show.

Michael And, the only thing that, that will like really, really stop that conversation about can it really be true is when people can pick a product on their pharmacy shelf and buy it for themself. At that point, I think the conversation will be finally for the most conservative segments be over that this is a new way of doing biomanufacturing, without cells, and it enables products that otherwise would be impossible or very difficult.

Michael and also that there is [00:35:00] an opportunity to start building, things that, that has more than one application. So this whole nutraceutical and pharmaceutical, otherwise we would end up being a biotech company where we could pick one or two candidates, and we could take that shot, and we could spend five years on either succeeding or failing at that. And, I'm not good at sitting around and waiting for things to happen. Well,

Erum clearly. So You make things happen.

Michael Cheers. so this setup is great for that as well.

Karl And just to follow up on that question, how does,downstream processing fit into that? Because we know that downstream processing can eat up up to 50% of your costs. And, I ran a panel where one of the guys said that they had a facility where it took them two years to figure out what the challenges were with downstream processing.

Karl I would imagine that the way you guys optimize with Cell-free, it's much less of an issue.

Michael This is where we started the conversation that imagine you have product that is now sitting inside of a cell that you got to make something, but your isolation cost, your downstream processing is gonna be [00:36:00] 50% or more than 100% of the value of that thing. Yeah. Then it just,

Michael that project should never have been started.

Michael And, and that, at least from a financial point of view, that is where CellFree is different. we don't have a lot of cost in isolating because we frankly have the feedstock, we have the exosomes, and we have the end product.

Michael And depending on if we let it run completely to end,we can get very close to all of it converted, and then we just have to take the exosomes out and the different building blocks we have left in there for the solution, to work. So, NCT came out with 99.6% purity without us spending money on making it pure.

Michael Yeah. And that's pharma grade purity that people would typically pay an arm for-and you're right, it's not just cost. It's often like, okay, now you finally build your solution. Oh, by the way, we have this, isolation or downstream processing challenge.

Michael Give us another couple of years. I, do understand why some investors takes a very deep breath when [00:37:00] I say Syn Bio. Yeah. They go like, "Oh, my God,I already burned my fingers so much, on that."

Karl Right. So then the question, like What do you say to the investor who says, "Oh, Synbio, I've looked at it. Cell-free, I've heard this story for 15 years." You're telling me that it works. What do you say to them,

Michael depending on how doubtful they are, if they're too doubtful, I basically just said like, "Just watch me.

Michael like, let's have this conversation in, in, a year from now because I... literally... I will give you a product in your hand, and we can have that conversation then." people that are still intrigued, basically have a similar conversation to what we have had here today. Like, wow, it's actually moving really fast, proving an opportunity, starting to scale it up, getting it into a pilot, getting it into production, Getting it to market, getting all of that down below two years Yeah Is amazing

Michael And, and not having to talk about tens of millions of dollars. Yeah. Like, that's gonna change things fundamentally.

Michael That is changing. It is changing things. Yeah. It's happening right now. [00:38:00] Yeah. Yeah. Yes. but it will be for everybody. I recognize here in the beginning we have to be an icebreaker-

Michael and have to kind of like secure this opportunity step by step, but, give this 10, 20, and 30 years, this is a new generation of resources that humankind have not had access to. we humans can start benefiting from the raw power of nature- Yeah ... at a scale we never had had before because we had to build the whole plant to get a little trace amount of something out of it.

Michael and we can now just start building that. that is,the, the company builder, the entrepreneur, the tech nerd, the scientist in me gets, like, very, very excited about. it can actually lead to a very positive future where there's enough for everybody.

Erum Yeah. Amazing. I mean, give us a little bit more resolution on that future.

Erum You are the CEO of the company. Your job is to be a visionary, to guide the team. Tell us as everything goes according to plan, so you have your cell-free, this licensing [00:39:00] model, how does it drastically change the cost, speed, and safety to change the global chemical manufacturing world?

Michael So, there will be a range of different kind of solutions for different problems.

Michael I'm not saying this is the one bullet that is optimal for all. even for an optimistic mind like me too much. But there is a, very,

Michael very powerful sustainable element of using the raw power of nature instead of using a chemical process that basically uses forces to take things apart or force them together, where enzymes are basically like they're very elegant in the way they cut out what they need to cut out and how they put things together.

Michael And,we hope and believe in that exo-zymes and cell-free will be something that will be applied in all relevant industries. And yes, I think that will actually, from a pollution point of view, be a really big deal. I think it will from a cost perspective be a really big deal.

Michael I think it's from an [00:40:00] accessibility be a really big deal. And,we will focus on nutraceutical, pharmaceuticals because that's big enough universe to, to really make a big, impact. But we are already now via Biome It and other, places and some of the, the grants we have been given by the National Science Foundation and so on, we are actually helping to form the standards for cell-free biomanufacturing for other spaces.

Michael and we will, everything from just give it away as a standard to having partners that will come in and, and license specific areas where we will frankly let them work on those, other spaces. so we do have those conversations.

Karl All right.

Karl Well, we've reached the point of the conversation where we're gonna do some quick-fire questions. I'll kick it off, Birom will follow, and we'll do five of these.

Karl so are you ready? Go it. Okay.

Karl so if the enzymes you guys are working on were professional athletes, Would you guys be training sprinters, heavyweight boxers, or marathoners?

Michael We're training a team of different [00:41:00] kinds of elite athletes.

Michael So yes, some of them are sprinters, some of them are very four wheel driven, like you can't kill them, just let them run in the background. so I would say, I can answer that question per enzyme, but as a group, it's the whole orchestra.

Erum Amazing.

Karl what is the most over-hyped myth about synthetic biology startup businesses today?

Michael it's surprisingly often that you hear someone that have invented something that can do everything. . and just kind advice to anyone that starts a startup is that there's enough potential even in niches.

Michael Stop trying to claim the world because, like, it's, it's not gonna happen.

Michael It's not believable, and it just signals that you haven't been willing to take the hard choices yet. so get to that hard choice of, there's only going to be so many of the potential things that survives your analysis of where you should focus and spend your time and energy and become an expert.[00:42:00]

Michael Do that early on. I do understand that sometimes it's cool that you can kind of rattle off, like, some really big markets that has billion-dollar potential, and it sounds like you can go and conquer that. But we have figured out that our tech breakthrough, our idea, our science can make a huge difference in this space, and then go deep in that.

Michael Yeah.

Erum Yeah. That's really great advice. We have to make that into a clip and put- Yeah ... that on social media. Absolutely. 'Cause that's really, really good advice. Just focus, laser, niche. Yeah. That's a big takeaway. Okay. All right, so rank these three in order of chaos: pitching traditional pharma execs, managing AI models trained on noisy lab data, and explaining synbio at a Thanksgiving dinner.

Erum What's the most chaotic to least chaotic?

Michael Well, it, it must be the dinner because of my dear family. Those, the setting is just chaos. So, uh, positive though. So there's so many good things going on. so that, that would rank first. Then, there's [00:43:00] probably the most pushback amongst, executives that have often grown up in a world where they have built very, very impressive things with existing technologies.

Michael . And,I'm sure the first guy that showed up with, with a PC also was told that it couldn't do anything the fax machine couldn't do. so that's definitely... It's a chaotic, people do show us a lot of interest, so, I really truly appreciate that. So chaos is maybe a strong word.

Michael and then, the least is,it's actually surprising to me, maybe my team shields me from it- how well our AI platform is, very advanced stuff we're doing. It's very advanced the way we generate the data that is fed back and so on. and that they can keep, just hammering at it and make progress so fast makes my job much easier, and therefore the least chaotic of the three.

Erum Amazing. Well, that's wonderful. Thank you, Michael, for coming back on

Erum the Gravitate podcast. Thank you so much. we have to have you back on after the cannabinoids hit [00:44:00] the market, when NCT, when we can buy some and try some. Yeah. You know? GLP-1s, thank you, you had your moment.

Erum Maybe these in combination with NCT. We can all be fitter, slimmer, happier. But thank you so much, Michael.

Karl Thank you. Thank you so much.

Karl Irom, what'd you think of that interview?

Erum It is so great to have Michael come back on and learn more about Exozymes. Friend of the pod.

Karl Yeah, for sure.

Erum And when our friends come to New York, we roll out the red carpet [00:45:00] and we do all of this. I mean, this is lovely to be here. I wish we had a setup where we can have more people come in and see them face to face. It's different, but it was wonderful.

Karl Yeah, I mean, I love hearing the kind of progress that, Exozymes has made over just, like, a short period of time.

Karl I mean, Michael came on, I think, a year or 18 months ago. Mm-hmm. And then we had Damian on. And just hearing, like, the amount of progress that they've made from a product point of view, from a funding point of view, I'm really so happy that, they're showing what cell-free biotech can do and the possibilities of it.

Karl I'm super excited about that.

Erum Yeah. A big key takeaway was the laser focus. Pointing a laser. So they have that innovation map. I think Damian also mentioned that they have this, spreadsheet or this system of putting all the ideas in one place and ranking them- Yeah ... to see what's actually marketable, where can they actually make money.

Erum And I think that's a big key takeaway for a lot of people that we've met in the industry, and not just for [00:46:00] biotech, for other people that are creating AI native applications. I've been going to startup events where people are making those applications and they're like, "Yeah, we're a B2B SaaS platform," to do what?

Erum For what? You know? It's what are you doing? So we know that they're making NCT. We know that they ... and not just One molecule. I also want to take back it's, in saying that you can have laser focus and have a platform. So Exozymes is a platform to make exozymes.

Karl Yeah.

Erum And they have a platform to make platform molecules- Yep

Erum because they have, you know, a core scaffolding of a molecule like NCT, and it could be used for nutraceuticals and then pharmaceuticals who target certain areas. And then the cannabinoid, I mean, that is just like-

Karl There's so many molecules in that

Erum space ... there's so many molecules in that space. Yeah.

Karl Yeah, I always imagined that the cannabis industry would evolve into this space where you would have access to all those molecules and be able to

Karl pull them off the shelf and formulate based on the kind of effect that you would [00:47:00] want. But having so many of those molecules, not just from the cannabis plant, but other plants- Mm ... and be able to understand them and scale them up, I think just increases the possibilities for what's possible when it comes to medicine and from a cannabis or, you know, recreational cannabis use point of view I think is an amazing thing.

Karl I'm glad we were able to talk about DSP or downstream processing. I think that's been on my mind just because of Omaha and Houston, and there's been a lot of talk about how expensive that is. I mean, we also went into it in the, molecule manifesto for advanced biotech for sustainability. DSP is very expensive, and when you hear someone like Michael talk about the fact that they can do this synthesis without that much DSP with 95% purity on NCT- Mm

Karl it makes you go, "Well, why isn't everybody doing this?"

Erum Yeah, absolutely. I mean, fermentation, you just have the cell, right? And that comes with all the other things that are involved in the cell, so it requires a lot of downstream processing. But when you don't have the [00:48:00] cell and you create that pure enzymatic pathway, you don't have to really worry about all the other, I don't want to say junk, but material.

Erum 'Cause fermentation has its place, so let's not knock it.

Karl Yeah.

Erum You know? We're not

Karl knocking

Erum it, people. We're not, we love it. We love it. We love all the cheese and drinks and everything that's comes with fermentation, and all the products. We love our bacterial cellulose people making materials, and that is absolutely necessary.

Erum For these very specific molecules for nutraceuticals and pharmaceuticals, it is probably the best pathway. And we talk to a lot of people in the pharma world. We should, bring them. You should connect everyone, you know? Yeah. Exozymes, we're here for you. We love them, and let's do this.

Karl Yeah, and I guess my big takeaway at the end of it is where will this go to next? It just seems like there's infinite possibilities, but Michael seems like he's very, very much focused. And, you know, congratulations to Michael and the team and the, to the progress they're making and the progress that they will continue to make.

Karl I'm excited to hear where they go to next.

Erum Yeah. And I just, one other thing to point out is that Exozymes is not building this in isolation. They [00:49:00] have a huge network of partners, and they continue to talk about their partnerships. Which I love to hear, you know? Talk, not just, other commercial partners, which talk about the Korea partnership for manufacturing, but also partnerships with national laboratories, with government, with different academia, different universities.

Erum Yeah. And so that is great. I think something we talk about a lot. You know, we talk about how do you get partners, create this value chain, building everything without actually physically putting things together. the plane analogy was a great one.

Karl Right. Yeah. well, I think that's the wrap for this episode with Michael of Exozymes.

Erum Yes, absolutely. Thank you for tuning into the Grow Everything podcast. Please reach out. All of our information is in the show notes. Contact us, ask us questions. We are happy to have this conversation with you, and don't forget to follow and like our Substack. Let's grow.

Karl Let's grow.