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For This Local Startup, It Is all About The Bugs

It is a classic San Diego story, one that plays out often in this city, each time with new players, new dreams, new ideas and innovations in the starring roles.

This version has research coming out of UCSD, a CEO with an impressive resume of biotech and pharma work, including a deep background in oncology and immunology, not to mention he grew up on a farm.

Call it “A Startup Is Born.” We even get a new villain in this version: fruit flies.

San Diego based sustainable ag-tech startup Agragene is hoping to disrupt the insecticide industry as it disrupts the sex lives of fruit flies and, of course, cleans up the world, a bit.

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Agragene recently announced $1.2 million seed round financing from Ospraie Ag Science (OAS), the venture arm of New York based Ospraie Management LLC a commodities and basic industries firm.

The funding will be used for field trials to further move Agragene toward commercialization with its Precision-Guided Sterile Insect Technology (pgSIT), said Gordon Alton CEO of Agragene. “If we play our cards right here, we can mostly displace the insecticides on the planet with this kind of approach.”

The DNA Role

Agragene gives CRISPR technology a starring role. According to the company, it uses CRISPR based genome engineering to create the sterile flies. “In terms of CRISPR, nothing is more sophisticated and at the same time easy to use,” Alton said.

“Female bugs can’t seem to tell the difference between our sterile male and a wild male, Alton said. Females mate with the sterile males and the females’ eggs do not hatch.

The company said it is a targeted approach with a solution needed for each insect species.

$19 Billion Market

The startup is taking on a huge industry. “Agragene pgSIT platform has enormous potential to disrupt the $19 billion insecticide market,” said Ospraie Ag Science (OAS) Senior Partner Carl Casale. “We see strong demand for targeted biological pest control to reduce costly chemical inputs for growers. It fits perfectly with our objective to invest in innovations that help farmers do more with less environmental impact…”

Casale is one of those valuable supporters every startup could use. The former CFO of Monsanto has extensive industry background. Casale bring lots of credibility and lots of business knowledge, Alton said.

Bug Bomb

Every day since 1996, planes have been dropping sterile fruit flies near the Port of Los Angeles to deal with its insect problem. Sterile insect technology has been used since the ’50s; it is effective, but a radiation source is used in most versions greatly increasing the costs.

The costs of standard insecticides are also expensive. The chemicals are made cheaply, but the labor costs are high for chemical insecticides.

“Someone has to buy a tractor; someone has to fill the tractor with gas; someone has to drive the tractor through the fields,” Alton said. “When applying insecticide two things factor into cost, material and labor to apply it.”

The bio-pesticides offer an alternative, but they are expensive, three times the cost of conventional pesticides which explains the high cost of organic crops.

The bio-pesticides are safer but they are still toxic. “They are better for the ladybugs, but they can still kill them,” Alton said. “Our solution is targeted to one species, one specific insect. We make the male insect sterile and when it mates with a female there are no fertile eggs,”

The Fly

Agragene is starting out targeting the spotted wing drosophila with the company’s solution.

The costs for Agragene are from sexing the female flies (removing them from the process) and sterilizing the males. You don’t want to mix sterile males and sterile females. You want the sterile males to mate with the wild females; it defeats the purpose.

“Once we create a fly line, we achieve both sexing (removing the females), and the sterilization of the male,” Alton said.

With the big costs gone, all that is left is the feeding of the flies which is not an expensive endeavor.

“Bottom line is we believe our product will be similar cost structure to conventional insecticides when you factor in labor costs, Alton said. “Biologicals, bio-pesticides are safer but still toxic and still have to be applied. We believe we would be a half to one third the cost of bio-pesticides.”

The sustainable factor is likely also to be a selling point for Agragene.

“Climate change and the way ag is done today is not a sustainable future,” Alton said. “Spraying chemicals all the time leads to chemical resistance.” Alton said that climate change has led to more bugs showing up earlier. They live longer; they are more active. Agragene is working on an eco-friendly solution.

Drone Delivery

Agragene plans to use drones to deliver its sterile insects.

According to Alton, drones can cover an acre in one to two minutes. They are currently being used in a couple states. The company says it would partner with a drone service rather than operate its own UAVs.

When asked about potential competitors or possible alternatives being developed, Alton said there is nothing supplanting the technical ability at this time.

Agragene was founded in a UC San Diego lab by three founders, Valentino Gantz, assistant research scientist UC San Diego; Omar Akbari, associate professor UC San Diego; and Ethan Bier, professor UC San Diego.

Alton joined the team in the first year, 2017, and was made CEO and president in 2018. He said he had the “Venn Diagram of skills and attributes the company was looking for.

“I’ve been in the life sciences and pharmaceuticals for more than 20 years,” Alton said. “My background is in biochemistry. I’ve started my own biotech companies and have a deep background in oncology and immunology.”

He even grew up on a farm.

Alton said he had experience with CRISPR, is comfortable in a startup and a can manage a lean situation. He said he was also comfortable with that key element of a startup fundraising.

That last one will be important as the company will need to raise money for a factory. Alton said the factory likely would not be in San Diego, but he expects the lab and corporate headquarters to remain here.

The company plans to add two or three employees every year.

Marketing

As for marketing the sterile insect approach when the time comes, the company said it is looking at TV ads, social media and grower shows and industry conferences. Agragene hopes to tap distributors who are already out on the farms selling products.

Agragene’s exit strategy is straightforward. Alton said it hopes to attract the attention of big players – such as BASF, Bayer and Corteva SU.

Once Agragene is on the market and starts taking little bites out of the big players’ sales, one of the big companies will decide to buy Agragene and bring the company’s tech in to its sales.

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