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Big interview: Andrew Dahl, CEO Health Enhancement Products Inc

HEPI: There’s no money in algal biofuels - yet. But nutraceuticals are a different story…

By Elaine WATSON , 16-May-2013
Last updated on 16-May-2013 at 14:37 GMT2013-05-16T14:37:16Z

Right now, a gallon of gas costs $4 or less. Produce it from algae, and you can expect to pay $18 or more, says the boss of one firm convinced that cutting edge nutraceuticals - not biofuels - is where algae’s true potential lies, in the near term at least. 

Until relatively recently, says Health Enhancement Products Inc (HEPI) CEO Andrew Dahl, private investors - and federal agencies - have been literally throwing money at algae-based alternative energy projects.

The problem, however, is that no one - as yet - has made any money out of them.

And while some investors are very patient, he says, others are actively seeking out other more commercially viable applications for their shiny new bioreactors, and looking to convert facilities to produce higher value nutritional products until the math on algal biofuels adds up.

We’ve got no intention of building our own facilities

And this is creating new opportunities for HEPI, which wants to take novel algae-based nutraceuticals to the human and animal nutrition markets, but has no interest in manufacturing them on a commercial scale itself, says Dahl.

“We’ve got no intention of building our own facilities.”

Instead, HEPI is working with the Arizona Center for Algae Technology and Innovation (AzCATI) to develop pilot-sized feedstock production and identify the most efficient harvesting, dewatering and extraction technology for its proprietary strains at a commercial scale.

It will then approach potential partners - particularly those that have already invested in production capacity to make biofuel from algae - to produce its ingredients to its specifications.

“We’d give them a contract to grow our strains, follow our process and install the equipment we require. Not all facilities could convert, but some could adapt. It’s a much quicker way to scale up.”

Totally new molecules

An aerial view of some of the facilities at the Arizona Center for Algae Technology and Innovation (AzCATI), at the Arizona State University Polytechnic campus in Mesa, Arizona

While the best-known nutraceuticals produced on a commercial scale from algae are omega-3 fatty acids, spirulina and astaxanthin, HEPI is exploring a completely new breed of algae-based bioactives offering novel approaches to achieving healthy cholesterol, boosting immunity and addressing chronic inflammation.

Dahl, who took the helm at Michigan-based HEPI in 2012 after working for the company on a consultancy basis, says HEPI’s products will be “totally new small molecules with amino acid or amine-type structures” that could be marketed as they are (cleaned, sterilized, dewatered biomass) or as high-purity extracts.  

While HEPI’s initial focus is on animal nutrition (studies show its ingredients can tackle bovine mastitis, an inflammatory condition that impacts dairy cow milk production and quality), the medium-to long term focus will be human nutrition, he says.

We’re looking at two areas for human nutrition: Anti-inflammation and immune response; and cholesterol/blood lipid balance

While it is still completing final safety tests to ensure GRAS status for its ingredients; it has already completed a series of human, animal and in vitro studies on human cells, which show that they can significantly improve blood lipid profiles  (reduce LDL, raise HDL) and positively impact inflammatory biomarkers such as C-reactive protein, he adds. 

Meanwhile, research on dogs with rheumatoid arthritis showed that one of HEPI's bioactive compounds could also help relieve joint and muscle stiffness.  

“We’re looking at two areas for human nutrition: anti-inflammation and immune response; and cholesterol/blood lipid balance", he says. "But they are both connected, as new research suggests that inflammation of the lining of blood vessels and arteries is in part responsible for high cholesterol levels.”

The exciting thing about HEPI’s ingredients is that they don’t work like statins, and do not induce the unwanted side effects of statins, he points out.

We’ve been able to defy gravity for quite some time

Asked about how much longer the company could go on without generating any revenue, he said: “We’ve been able to defy gravity for quite some time because we have a fairly substantial shareholder base of long-time investors that have signed off on our capital plan.

“The model is much like a biotech one. There are also temporary lending facilities that have been very supportive of what we’re doing. If you look at this space, there really hasn’t been anything new for 10 years when it comes to anti-inflammatory and auto-immune modulating ingredients.

“We are offering something completely new. We’ve got two optimal strains that are yielding our active ingredients consistently.”

Algae partnerships

HEPI, which has been developing proprietary algae-derived substances in Scottsdale, Arizona, for several years, closed the Scottsdale facility at the end of April after striking a deal with AzCATI, which is now handling its cultures.

Samples have also been sent to the University of Texas at Austin for cryogenic preservation and to the National Center for Marine Algae and Microbiota (NCMA) in Maine for metabolic studies, said Dahl.

“Moving the cultures to the AzCATI/Algae Testbed Public-Private Partnership site and to the NCMA labs opens up a vastly broader range of  scientific  capabilities and expertise and provides access to a  tremendous network of development and production partners all while realizing substantial cost savings.”