BioExx Specialty Proteins plans to close its Saskatoon canola protein plant but says it is in advanced negotiations with potential joint venture partners about employing the technology used there at a brand new facility in Europe.
Toronto-based BioExx, which has developed a proprietary solvent-free extraction process claimed to significantly improve the solubility, functionality, flavor and odor of canola proteins, has been showcasing the technology at its facility in Saskatoon.
However, rather than burning through more capital to increase capacity at the site, bosses at the loss making firm recently scaled back production to conserve cash and resolved instead to seek “a major strategic partner or partners” to help it take its canola proteins to the mass market.
Joint venture deal should be finalized around April 30
In an call with analysts this morning, CEO Chris Schnarr said BioExx has identified two potential partners in Europe - a private equity firm and a rapeseed (canola) processing company - and is in “advanced negotiations” about setting up a joint venture.
Under the proposed JV, a 75,000t rapeseed processing plant would be built adjacent to the business partner’s existing operation in Europe, financed by the private equity firm. Preliminary engineering of the protein plant section has already been completed, said Schnarr.
"The unique process our business partner uses to make its oil produces a meal byproduct that is ideal input for our protein process."
Preliminary engineering of new protein plant in Europe has already been completed.
Under the deal BioExx would likely receive cash via staged payments. However, the parties are still working on the terms of the deal, which is likely to be completed around April 30. Until then, the names of JV partners will remain confidential, said Schnarr.
“Over the past several months we have extensively analyzed the integration of these two technologies. Our proposed business partner has a patented and globally unique oil production technology that would be transformative to BioExx.
“By providing high-quality feedstock, it would amplify our proprietary protein process, providing enhanced profitability and two high-value products for sale into this expanding market.”
We have made the difficult but responsible decision to close the Saskatoon plant
In the meantime, BioExx will close its facility in Saskatoon, said Schnarr, who said BioExx remained on course to fulfill its dream of bringing “an entirely new source of protein to the world”.
However, it was not financially viable to keep Saskatoon going, he said, chiefly because to make an oil processing plant viable, you need to operate on a large scale, and BioExx was focused on extracting protein, which is a much smaller scale endeavor.
It just did not make sense to produce protein but be "weighed down by an unprofitable oil business", he said.
“We have made the difficult but responsible decision to close the Saskatchewan plant in order to improve our cost structure, and monetize the value of those assets to address outstanding debts."
The European plant, which was on a far larger scale, would build on an "established and profitable oil business combined with an enhanced protein operation", he said.
There remains a compelling rationale for protein production here in Canada
While much of the media coverage on BioExx has focused on its financial woes, bosses had no doubt canola protein would hit the big time, said executive VP Samah Garringer in an interview with FoodNavigator-USA last year.
“Canola is the second largest oilseed crop in the world with an amino acid profile and functionality that make it the best vegetable protein on the market.”
BioExx’s proprietary process for extracting protein from canola, which involves enzyme-assisted mechanical separation and filtration, was clean, sustainable, robust and scalable, claimed Garringer. “There is no hexane.”
Customers want a complete protein
So what are potential customers looking for from a new protein?
“The first thing they look at is the nutritional and functional profile of your protein,” said Garringer. “In sports nutrition, for example, they look at the amino acid profile and want a PDCAAS (protein digestibility–corrected amino acid score) of at least 1.
“In bakery, they look more at functional aspects such as foaming and emulsifying capacity. And only after that they will look at price.”
Meanwhile, other factors such as allergenicity (canola is not a ‘big-eight’ allergen, unlike dairy and soy); genetic modification (canola is non-GM); sustainability (veggie protein has a lower carbon footprint than dairy); and hormones (canola doesn’t have soy’s baggage over estrogen); were also playing an increasingly important role in decision making, said Garringer.
Flavor, odor and functionality
BioExx’s low-temperature extraction process means it can avoid the denaturing process that usually kicks in when proteins are exposed to high temperatures, which makes it harder to separate them from the meal and can reduce their solubility and functionality, claims the firm.
BioExx also says it has been able to improve the flavor and odor of canola proteins and decrease the ‘anti-nutrients’ that had historically hindered its use as a food grade material.
$63m net loss in 2012
In the year ended December 31, 2012, BioExx’s revenues were $648,255, versus $5,348,230 in the prior year as a result of its decision to scale back plant operations to conserve cash.
As a result of this decision, BioExx ran its crush operations only as required to support its piloting and R&D activities.
Its net loss for the year was $63.3m.
