One startup's healthy alternative to animal antibiotics

One startup's healthy alternative to animal antibiotics

Algal Scientific
View inside a commercial scale poultry barn showing chickens growing on Algamune, Algal Scientific’s beta glucan product. Algamune is added to the feed along with other vitamins and minerals at the feed mill and is handled in the same way as traditional feeds.

For biotech startup Algal Scientific, McDonald’s declaration in early March about new standards for antibiotics use in chickens comes at an opportune time. 

Algal on Tuesday disclosed $7 million in venture financing for an alternative approach to building disease resistance linked to a chemical, beta glucan, that can be produced from algae. The Series B round, led by Formation 8 Partners with participation from return backers Evonik Venture Capital and Independence Equity, brings total funding to more than $10 million.

“Frankly, the news is one of the best things that could have happened to us. It is creating a ripple effect throughout the industry,” said Geoff Horst, co-founder and CEO of Algal Scientific, based in Plymouth, Mich.

While Horst categorized McDonald’s as a relatively modest buyer of poultry, the declaration has prompted suppliers across the food supply chain — particularly those selling to school districts and quick-serve restaurants — to consider reducing their own dependence on animals raised using the “crutch” of antibiotics. 

Its specific pledge is to sell only chicken “raised without antibiotics that are important to human medicine.”

Other restaurants, such as Chipotle, have committed to antibiotics-free meat, while producers including Cargill, Perdue and Tyson are examining animal husbandry practices far more closely.

As of 2011, almost 80 percent of all antibiotics sold in the United States went into meat and poultry production — drugs fed to chickens, pigs and cattle prophylactically, to keep them from becoming sick. There are many downsides for human and animal health, including the rise of bacteria that is resistant to commonly prescribed treatments.

“There is no question that antibiotic resistance is a problem that is only going to get worse unless significant changes are made to the way we utilize antibiotics in our food sources,” Horst said.

Algal Scientific thinks it can address antibiotics overuse through a product called Algamune, a feed supplement produced from algae that stimulates the immune systems of animals. “When they do get exposed, they are more prepared to fight off the infection,” Horst said.

The company’s roots come from the doctoral research of its chief science officer, who wrote his Ph.D thesis about algae blooms in the Great Lakes. By controlling the algae’s growth, he realized it was possible to create a highly concentrated source of beta glucan, typically found in yeast, mushrooms and other fungi.

Algal Scientific began testing its concept in 2009. Horst said it is working with farmers all around the world — from shrimp farmers in Vietnam and Ecuador to agriculture operations raising pigs and chickens. So far, it has produced 20 tons of Algamune. About 100 grams is added to each ton of feed, at a cost of about 1.4 cents per bird. (The company is also developing a nutritional product for humans, AlgaGlucan, and technologies for wastewater treatment.)

The new financing will be used to boost Algal Scientific’s monthly production to perhaps 25 tons per month, compared with its current rate of five tons, Horst said. The company recently expanded into a 30,000-square-foot facility to support his.

The funds also will be used to double down on research and development; so far, it has spent close to $1 million on efficacy trials intended to help boost its credibility.

“If we’re successful, we will able to have a significant impact on the use of antibiotics,” Horst said.