Allen Barbieri - CEO - Biotechnology Innovation Organization Barbieri.pdf · ·...

Allen Barbieri - CEO

0900961585518f1a_31May13_Greenlube_Teaser_5.31.2013_v2.pptx

1

.

Biosynthetic Oils

Large variety natural oils

Continuous flow, catalyst chemical

reaction process using standard

equipment & low cost catalyst

Used in large high-value

markets

Exclusive license from USDA to patent portfolio, covering revolutionary new molecule class

BioSynthetic

oilsHigh oleic

soybean

High oleic

canola

Palm oil, Coco oil,

animal fats, algae oil…

Industrial lubricants

Gear oils

Hydraulic Fluid

Greases

Compressor

Marine

Dielectric

Metalworking

Personal care

applications

FEEDSTOCK MANUFACTURING COMMERCIAL OPPORTUNITY

Motor Oils

“


2

Key Equity Investors Manufacturing Partners

U.S. Government Partner

Commercial plant engineering & construction

US manufacturing partner

Investment Banking & Banking Partners

Key Partners

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Upstream

Downstream

Oleic-based Estolide

molecules

Non-oleic based

Estolide molecules

Catalysts for Estolide

synthesis

Continuous and semi-

continuous Estolide

production process

By-products from

Estolide synthesis

Varying Estolide

viscosity grades

Estolide end product

formulations

Estolide end product

applications

Intellectual Property —Global IP Strategy Maximizes Protection

22 U.S. issued U.S. patents, 9 international patents, 20+

pending U.S. patents, and 40 pending PCT and Foreign

applications

Original molecule patents Assigned from the USDA create

a broad barrier to entry

Aggressive strategy to cover downstream products to

maintain freedom-to-operate for customers and end-users

International IP strategy designed to control costs and

maximize protection in commercially significant regions

Over 90% of portfolio will not expire until after 2031


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Customers

Working with the vast majority of all national and global brands of automotive &

industrial lubricants, and most additive manufactures.

Over 80 NDA’s signed with samples sent to each of these potential customers

Almost all performing bench testing

Most have formulated finished products

Many are in field trials

Some ready to launch commercial products

Major automakers and industrial machinery OEMs are testing and evaluating

lubricant products made from these biosynthetic base oils


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415 415

800

1,650

50

415

1,000

1,725

I II III IV(PAO)

Superior performance attributes enabling broad applications…

Biosynthetic Oils outperform competing products in several key categories

Excellent Viscosity Index High Oxidative & Thermal StabilityIncreased longevity

Excellent Hydrolytic StabilityASTM 2916 @ 144 hrs.

Flash Point

Tim

e (

Min

ute

s)

14

10

5

4

25

6

3

2

I

II

III

IV (PAO)

V

PAG

Di-Ester

BT

Polyol Ester

Low Volatility / Evaporative Loss–

Safe for high temp applications

Canola oil

PAG PolyolEster

BTAPI

Group

Base oil

Viscosity Index

(6-8 cSt @ 100c)

Groups I & II 80 to 119

Group III 120 to 130

Group IV (PAO) 130 to 145

Group V (PAG) 145 to 165

BT Estolides 170 to 175

1.71 1.59 1.261.79

11.59

2.81

9.74

1.42

205

230

256264

216

243

282 280


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Fully Saturated EstolideTriglyceride (Veg oil) Fatty Acids high acid intermediate Acid Free Intermediate

Continuous flow process creating high performing renewable synthetic esters

o

oo

oo

o

Chemistry

Biosynthetic Technologies’ Continuous Flow Process ― Designed to Minimizes Operating Costs and By-products

Continuous flow, moderate temp., low pressure, short residence time and recycle of

unreacted material, creates efficient, low-cost process with no by-products other

than high grade glycerin & water.

Uses inexpensive, widely available catalyst and alcohol.

Uses common chemistry equipment and processes.

Contract manufacturing to be outsourced to existing chemical plants.

Long-term supply agreement with Monsanto and Sime Darby for vegetable oil feed

stocks.

Production Process Benefits


7

Albemarle Chemical Has Built Both a Pilot Plant and a Demonstration Plant in Validating Both the Manufacturing Process and Cost of Goods


8

Engine Cleanliness Rating

.

.

CAM SHAFT WEAR (in microns)

.

.

2 3 4 5 6 7 8 9

Minimum requirement to pass test is 4.0 rating

Conventional

Motor Oils

BioSynthetic

Motor Oil

Leading Synthetic

Motor Oils

8.5

6 - 7.5

4 - 5.5

0 20 40 60 80 100

BioSynthetic

Motor Oil

Typical Synthetic

Motor Oil

Conventional

Motor Oil

1.06

40 - 90

10 - 40

Working with Infineum Biosynthetic has certified one of the highest quality motor oil ever tested.

API Certification – Engine Test Results


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API Motor Oil Certification Motor Oil Field Trial

Working with Infineum (Exxon/Shell), BT

received Automaker Certification* on 5W-

20 and 5W-30 grade motor oils. These

viscosity grades represent 79% of all

motor oil sold in the U.S. No other bio-

based motor oil has met these standards.

Infineum also completed a very successful

150,000-mile field trial on taxis in Vegas.

As seen on the following page, BT’s

biosynthetic oil reduces sludge and

varnish keeping engines cleaner.

American Petroleum Institute – Motor Oil Certification

* CERTIFICATIONS:

• American Petroleum Institute: API-SN

• International Lubricant Specification

Advisory Committee: ILSAC GF-5


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Actual taxi engine

After 150,000

miles using all

petroleum motor

oil

Actual taxi engine

After 150,000

miles using

Biosynthetic blend

motor oil

Engine Cleanliness after 150,000 Miles

.


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The API certified motor oils show very high fuel economy gains:

• Mercedes 111 Fuel Economy test (M111FE) – passed showing fuel economy savings of 3.05%

• ILSAC Sequence VI-D Fuel Economy Test - passed showing 2.4% fuel economy savings, allowing

for a “Resource Conserving” label on the bottle.

Fuel Economy Testing Performed by Infineum

API CERTIFICATION MARKS: “DONUT” ''STARBURST''

Fuel Economy Savings


13

.

Environment, Regulations and Legislation

It’s all about Water Pollution


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40% of U.S. water pollution comes from used motor oil

Used motor oil entering the world’s oceans equals one oil tanker

sized spill every week

1 gallon of used oil contaminates over 1 million gallons of fresh water

Petroleum oils foul water treatment plants – costing $$$$

State and Federal Clean Water Acts give regulators authority to act

Water Pollution

Of the 11 billion gallons of lubricants consumed each yr.

38% are “lost in use” – released into environment

16% are improperly / illegally disposed

34% are burned as a fuel

12% used in asphalt, other products or re-refined

Helping reduce pollution

Environmental Discussion


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High bio-content – Percent Renewable carbon

Base Oil Group I - III 0

PAO & PAG 0

Diester 0-30%

POE 0-50%

BT Estolides 82% - 90%

California Senate Bill 916 (not passed)

EPA Vessel General Permit

Vessels must use Environmentally Acceptable

Lubricants (EALs): biodegradable, minimally

toxic, not bio-accumulative.

Addresses 16mm gallons/yr.

US Government BioPreferred Program requires

government agencies and contractors to use

motor oil that has at least 25% bio content

EU, EPA & three States are progressing toward

regulations that will require EALs and/or bio

content in other targeted areas include:

Hydraulic fluid (70+% lost into environment)

Motor oil (60% lost into the environment)

Other government regulations & mandates

Renewable

Biodegradable

Non-toxic

Not Bio-accumulative

Environmental Attributes

Life Cycle Analysis (LCA)

Biosynthetic Technologies’ Life Cycle Analysis

shows an 67% to 79% reduction in Greenhouse

Gases (GHGs)

…and Addressing the Changing Environmental Requirements of Customers and Regulators


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Synthetic base oil $/kg $/gal

Refined mineral oil 1.4 - 1.9 4.00 - 5.00

PAO (low viscosity) 3.0 - 4.0 9.00 - 13.00

PAO (high viscosity) 7.0 - 8.0 24.00 - 27.00

PAG 7.5 - 9.0 16.00 - 30.00

Alkylated naphthalene 6.0 - 8.0 20.00 - 27.00

Phosphate esters 15.0 -20.0 51.00 - 68.00

Diester 6.0 - 8.0 20.00 - 27.00

Polyol ester 8.0 - 12.0 21.00 - 41.00

Source: Kline 2011

Group

I - III

Group

IV

Group

V

BT’s product will be price positioned well below Group V esters and PAGs and

comparably to Group IV PAOs

BT’s oils generally meet or exceed Group IV and V base oil technical performance, at a lower cost

OEM’s and High performance equipment increasing require premium synthetic based lubricants

Desire/mandates for environmentally friendly lubes creates opportunities to penetrate Groups I, II and III

Using BT’s oils as a co-blend component to improve performance of Groups I – III has also created

opportunities

Market Positioning


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PRO FORMA INCOME STATEMENTS Years 1 - 5

(in 000s)

(est. 2015)

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Sales volume - - 10,000 20,000 20,000

Revenues -$ -$ 130,000$ 100% 260,000$ 100% 260,000$ 100%

Cost of Goods Sold - 1,324 73,673 130,094 130,047

Gross profit - (1,324) 56,327 43% 129,906 50% 129,953 50%

Operating Expense

External R&D 795 1,200 1,440 1,440 1,680

Product certification 420 600 720 720 720

Selling, general & administrative

Personnel 2,565 3,024 3,300 3,630 3,993

External legal & accounting 310 720 960 1,100 1,300

Chemical registration 240 500 600 600 600

Marketing & consulting 480 960 1,056 1,056 1,056

Office overhead 143 192 204 204 204

Rent 158 186 240 240 240

USDA royalty 750 1,000 1,000 1,000 -

Insurance 48 71 150 156 150

Travel & conferences 300 620 720 720 720

High-Oleic Soybean Oil - - - - -

Research & development 1,215 1,800 2,160 2,160 2,400

Total operating expense 6,209 9,073 10,390 10,866 10,663

EBITDA (6,209) (10,397) 45,937 35% 119,040 46% 119,290 46%

Other Income

Interest income 223 216 86 165 428

Other Expenses

Taxes - - 5,344 38,411 38,796

Interest expense - - - - -

Depreciation expense - - 5,500 5,500 5,500

NET INCOME (5,985)$ (10,181)$ 35,179$ 27% 75,294$ 29% 75,422$ 29%

Single plant with 20MGPY production capacity

BT’s initial commercial plant:

CapEx Cost Approx. $ 90mm

Revenues Approx. $ 260mm

EBITDA Once Sold-Out Approx. $ 120mm … per year!

Market share of lubricants mkt. 0.20% (two tenths of one percent)

Pro-forma Financials

Initial Plant with 20M GPY capacity


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60+ major national and international lubricant

companies are evaluating BT’s biosynthetic oils.

Most are formulating/certifying finished products

they expect to sell under their brand names

Majority of the global top 12 lubricant manufacturers

are engaged with BT

Numerous equipment/machinery and automaker

OEMs evaluating & testing BT based lubricants for

factory fill or for private label distribution

3 of the top global additive companies engaged in

numerous product categories

Fleet testing being performed by multiple PCMO

majors.

Automotive oils

56%Process oils

10%

Industrial oils

26%

Global lubricant demand

by product type, 2011

Metalworking fluids &

corrosion prevention 5%

Greases

3%

Biosynthetic Technologies Customers:

With limited marketing, BT currently has…

Biosynthetic Technologies is Working with Many of the Largest Global Manufacturers of Automotive and Industrial Lubricants


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CocoEstolide is a Biosynthetic ester used in

skin care, decorative cosmetics and hair care

Benefits include:

Superior shelf life (up to 10x)

Outstanding hydration

Long lasting moisturization

Pleasant “silky” feel

Improves skin barrier function

Fast absorption and increased shine

Multiple major brands testing CocoEstolide in

skincare, hair care and decorative cosmetics

applications

Exceeds performance of competing materials

in clinical & sensory tests

Personal Care

Plastics

Other Green Chemistries

BT co-funds other green chemistry projects at the

USDA-ARS (where Estolides where invented)

BT has first rights to license IP that comes from

these projects

BT is also working with four research labs on

additional green chemistries

Products will be complementary to the lubricants

and chemicals sectors

A modified estolide molecule shows promise as a

non-toxic, high-value plasticizer

Under an MOU, BT is working with a top five

global plastics co. to develop this opportunity.

Opportunities in Personal Care, Home Care, Plasticizer Other Chemical Applications


20

Conclusion

1. Game-changing technology with broad and deep intellectual property position

2. Industry leading strategic corporate investors/partners

3. Proven low cost manufacturing process using common equipment multiple low cost

feed stocks and inexpensive catalyst (Commercial demonstration facility is online)

4. Versatile molecule class ready for immediately use in the $120 billion lubricants

sector, and other large industries thereafter

5. Extensive industry validation and interest

Increasing OEM requirements for higher performance oils and government

regulation are driving strong demand for these products

Allen Barbieri - CEO - Biotechnology Innovation Organization Barbieri.pdf · ·...

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