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insights LIFESCIENCELEADER.COM MARCH 2014 72 BIOPHARM DEVELOPMENT & MANUFACTURING to change it. So we built our arguments based on financial markets and technical analysis. Because we had already negoti- ated deals in the space, we were able to reassure skeptics that there was genuine interest in the specialized nutritionals marketplace. The fact that companies such as Nestlé were making moves in this direction helped to show that very large corporations were comfortable with this concept. Other companies, including DSM and Unilever, are moving in that direction, but as a Swiss-based company, it is fair to say that Nestlé had the most impact on our thinking." Another problem that Goldsmith had to confront was the mindset of many ven- ture capital investors and some members of his board. "Because it's conventional wisdom that the money for biotech is in therapeutics, and that was the space most of them knew, they were pretty uncomfortable with the change. Their argument was, 'Why plunge off into an unknown area which would appear on the face of it to have much less block- buster potential?' Fortunately we had people who knew and understood this commercial landscape. Convincing the staff to adopt the concept was the easy part, because we didn't have to develop new technology." "During the interim, we inevitably looked a bit muddled. So we talked to a cross section of people, including cus- tomers and industry consultants over an extended time frame to stress-test our ideas. We accomplished this by con- structing best case/worst case scenarios for various outcomes on both our current and new strategies and looked at what it took for one to beat out the other." Goldsmith believes that while the newly designed game plan won't yield multi- billion dollar drugs, the company will achieve a high level of consistent success and return on investment. EVOLVA CONSIDERS A RANGE OF POSSIBLE MOLECULES One of Evolva's major projects is Stevia, a plant that produces a popular sugar substitute. Although economic consid- erations are fundamental for any prof- it-based enterprise, Goldsmith said the company is also committed to generat- ing products that have direct benefit to humanity. "One of the most important conversations we had in the midst of this transition was explaining to our employ- ees that getting Stevia to market would have a major impact on world health, affecting millions of people through improved nutrition." In addition to Stevia, the company is pursuing a number of food components including saffron, vanilla, resveratrol, and pomecin. When asked how the com- pany decided what products to go after, Goldsmith replied, "We built a standard- ized assessment plan to match the prod- ucts to the demands of the marketplace. An internal team contributed to building the criteria. With this accomplished, we implemented it by prioritizing all poten- tial projects against these criteria using the usual market and technical analyses. Some of these, however, are proprietary, and I'm not able to provide additional details at this time." IMPLEMENTING A NEW STRATEGY Goldsmith stated that the pivotal point in deciding to move the company away from pharma products occurred when Evolva acquired Abunda, a San Francisco-based company funded through venture capi- tal. Abunda developed food ingredients, taking advantage of biochemical analy- sis of their nutritional components. The company's long-term aim was to push forward unmet global needs in dietary management. Evolva and Abunda had collaborated since 2009. One part of this partnership, using Evolva's proprietary technology, succeeded in making the key compo- nents of Stevia via fermentation in yeast. This process bypasses the complex needs associated with the traditional cultiva- tion, processing, and refining of Stevia plants and allows the Stevia glycosides (the chemical substances responsible for the plant's sweetness) to be produced directly. The value of the global sweetener mar- ket is currently estimated at $78 billion, with sugar far and away the dominant component, commanding approximately 85 percent of sales. Within this commer- cial space, Stevia-based sweeteners are the fastest-growing segment, reflecting increasing consumer demand for health food products that are low-carbohydrate and low-sugar. By enabling the introduc- tion of new sweetener products with compelling benefits for consumers, pure fermentation-derived Stevia components can dominate an important part of the overall sweetener market. The original Stevia products had a bit- ter, licorice-like aftertaste which can be eliminated by selecting the appropriate glycosides. So by producing the individ- ual components, Evolva can generate a much better-tasting sugar substitute that will fulfill the needs of the consumer. While it is clear that the public will not accept veggie burgers or other poorly made, ersatz food substitutes, Evolva may be on the wave of a revolution in food production. In recent months PayPal co- founder Peter Thiel's company, Hampton Creek Foods, has developed plant-based substitutes for meat and eggs that are realistic enough to attract funding from Bill Gates, among others. Much of Evolva's future will depend upon existential considerations, such as the public's willingness to accept innova- tive approaches to nutrition, over which the company has no control. Goldsmith considered the long-range implications of his company's transition. The value of Evolva shares suffered during 2011 and 2012, possibly a reflection of the market's apprehension of a unique business model applied to a distinctive market. But he is sanguine: "During 2013 they have recovered to the point where we are back above the price at which we went public. And I think this is in large part because investors eventually have come to understand the change we have made. We'll see what the future holds." L N E I L G O L D S M I T H CEO of Evolva EVOLVA TURNS AROUND ITS BUSINESS MODEL By K. J. Morrow Jr., Ph.D. 0 3 1 4 _ I n s i g h t s _ B i o P h a r m . i n d d 2 0314_Insights_BioPharm.indd 2 2 / 1 9 / 2 0 1 4 2 : 4 7 : 3 4 P M 2/19/2014 2:47:34 PM