AgBiome eyes big growth as it introduces 2 new fungicides

RESEARCH TRIANGLE PARK

Just as bacteria has grown increasingly resistant to antibiotics in humans, the pesticides that protect crops across the world are also losing their effectiveness.

In the U.S., pesticide resistance costs the agriculture industry $10 billion annually, according to a study from N.C. State University.

AgBiome, an upstart agricultural technology company in Research Triangle Park, could be on the verge of big growth thanks to its tools to fight that resistance.

Unlike most fungicide products on the market, which rely on synthetic chemicals, AgBiome has made a name for itself by employing a more natural remedy to the problem of pests. The company is currently preparing to introduce several new fungicide products to the market.

Instead of chemicals, AgBiome, founded in 2012, uses microbes to create its products, employing proteins, bacteria and fungi that can fight off pests and weeds. The result is a spray that has a “softer environmental footprint,” and less chemical residue on the produce, company co-CEO Eric Ward said.

Already, the AgBiome’s approach is catching the eyes of investors and consumers, as it competes with some of the largest agriculture companies in the world, such as Bayer and Syngenta.

Last year, AgBiome raised $116 million from investors — one of the largest funding rounds in the state, according to a News & Observer analysis. And its flagship product, a fungicide called Howler, has become popular with strawberry growers on the East Coast.

“Farmers are among the most discerning consumers,” Ward said in an interview from the company’s campus in Research Triangle Park, where it has dozens of scientists working in laboratories. “They wouldn’t buy our product if it didn’t work.”

On top of that, Ward added, natural fungicides are much less carbon intensive than their chemical-based competitors. “People are rightfully concerned about the amount of CO2 we are dumping into the atmosphere,” he said, noting consumer preferences are changing the behavior of growers.

One of its largest investors, Blue Horizon, said it invested in the company because of its fungicides’ softer impact on the environment.

Two new products coming soon

AgBiome’s first product, Howler, received registration from the Environmental Protection Agency in 2017. The company could have two more products — one called Theia and another called Esendo — win EPA approvals this year, said Scott Uknes, co-CEO of AgBiome.

The company’s fungicides focus on specialty crops, such as fruits and vegetables, rather than grains. Because of their lack of synthetic chemicals, farmers don’t have to wait as long to harvest and sell their crops as they would with some synthetic pesticides.

“If you treat with Howler, four hours later (farmers) can harvest,” Ward said. “Some of the synthetics you have to wait a week to harvest.”

AgBiome has declined to share revenue numbers, though it told The N&O last year that it had “double-digit millions in revenue for the last several years.”

Ward and Uknes expect Theia to meaningfully contribute to its bottom line this year, and Esendo could do the same in 2023.

That could lead to some serious growth for the company, which has around 100 employees. Uknes forecasts that within five years headcount at the company could triple.

“We will have another eight products in the next four and half years that we are working on in the lab and in the field,” he noted.

Avoiding a one-hit wonder

Uknes said its pipeline has shown that AgBiome will not be a one-hit wonder with Howler, but will evolve its product line to meet the needs of farmers.

It is able to do that, he said, because of a discovery platform it has created in its labs at RTP, where it is attempting to genome sequence hundreds of thousands of microbes. From thousands of crop samples taken around the world, AgBiome scientists are able to isolate the microbes that live on them.

From there, it can test how those microbes interact with pests, judging each one by its performance against insects, fungal diseases and nematodes. Uknes said just a sliver of effective microbes have been discovered so far, creating a huge opportunity for AgBiome’s work.

It’s also able to share its discoveries with other companies, leading to several partnerships that could create royalty streams for AgBiome in the future. The company recently signed an agreement with an Illinois company called Genective to create insect-resistant crop traits.

Uknes, who worked at Bayer before founding AgBiome, said AgBiome has thrived because big agriculture companies haven’t focused enough on creating new modes of pesticides. Rather, he said, they have leaned heavily on their existing products.

“Big companies have to support their current product portfolio,” he said. “It is hard for big companies to truly innovate. A lot of the technology that has been developed … was discovered by smaller companies,” like AgBiome.

But larger firms have come knocking, AgBiome’s co-founders said.

Uknes said AgBiome is built for the long haul, though, and its $116 million raise from last year provides it plenty of flexibility going forward.

“We think it will take a company like AgBiome to develop this market and disrupt the big companies,” Uknes said. “But there are examples of where a big company buys a company like ours and it works.”

“Can we stay independent? Yes. We are built that way,” Uknes added. “If we were to get bought by someone it would have to be the right circumstances.”

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate.

This story was originally published February 24, 2022 8:00 AM.