Pharma

Biotech company that makes omega-3 oils from algae raises $2.5M

A biotechnology startup that’s developed a manufacturing process for producing omega-3 fatty acids from algae has closed $2.5 million of an anticipated $5 million series A round. Two AlgiSys executives — CEO Michael LoPresti and chief technology officer Charles Roe — confirmed the funding but were hesitant to reveal much more because the round is […]

A biotechnology startup that’s developed a manufacturing process for producing omega-3 fatty acids from algae has closed $2.5 million of an anticipated $5 million series A round.

Two AlgiSys executives — CEO Michael LoPresti and chief technology officer Charles Roe — confirmed the funding but were hesitant to reveal much more because the round is still open. The Cleveland-area company’s funding was revealed in a regulatory document filed with the U.S. Securities and Exchange Commission.

AlgiSys plans to sell its omega-3 oils to many markets: nutritional supplements, food and beverage, animal feed and pharmaceuticals.

Currently, the company is working to perfect its pilot plant and expects to begin commercializing its omega-3s in the first half of 2013, LoPresti said. Roe likened the technique AlgiSys has developed to manufacture omega-3s from algae to the fermentation process used to make products like pharmaceuticals and even beer.

The omega-3 market looks like a good one to be in. A report by research group Packaged Facts valued the global omega-3 market at $13 billion in 2011. More impressively, the market’s growth rate is estimated at between 15 percent and 20 percent annually through 2015.

Growth in the European and Asian markets is expected to be particularly high because of a higher concentration of heart disease, according to a report from research firm MarketsAndMarkets.com.

Fish oil accounts for about 85 percent of the global omega-3 market. Flax seed is the major source of omega-3s in the vegetarian market, which is what AlgiSys is targeting.

As for algae omega-3 like what AlgiSys is producing, market dynamics are expected to change in the near future with the entrance of new players, NutraIngredients-USA.com reported. Martek Bioscience is the leader and other players include Aurora Algae and Algae BioScience.

AlgiSys was started in 2009 to commercialize research from Virginia Tech. The company has received funding from suburban Cleveland financial firm Tower Wealth Management, as well as a Small Business Innovation Research (SBIR) grant from the federal government.

 

[Photo from flickr user Sunnyswede]