Marrone Bio Innovations Inc. has been making lots of headlines lately, so The Enterprise decided to check in with the company’s founder, longtime Davis resident Pam Marrone, to discuss where the local biotech firm has been, and where it’s going.
First, a successful initial public offering raised $56 million in net proceeds in August. Then, last Thursday, the company reported it had collected $4.5 million in revenue during the second quarter of 2013, doubling last year’s earnings for the same period.
MBI — which discovers and develops environmentally safe bio-based pest management and plant health products worldwide — also announced that it will move its headquarters to a larger facility in Davis, at 1530 and 1540 Drew Ave. That space was once occupied by AgraQuest, another Davis biotech company that Marrone founded, before it was purchased by Bayer CropScience.
New staff members also have been hired at MBI to fill key positions.
Q: So, what else is changing around MBI?
Marrone: There have been some significant milestones, especially in terms of validation of the pipeline products coming. When you get something in the field, and it shows activity, that’s exciting because it verifies that you have an effective product. Four of our pipeline products had shown good field efficacy. What was amazing is that they were all the same or better than the chemical standard used for comparison in the trials.
We also got our first patents awarded, of the more than 200 we have pending. They were on two bio-herbicides. That’s an area where we’re leading the pack. There’s no one else who has developed a patent portfolio of biological herbicides, so it’s a big area for us.
Q: You’re moving headquarters into a space that you once worked in, but with AgraQuest; how have you changed your perspective on leadership since then?
There’s a lot of learning that came from starting up again. A lot has been different; much of that is in the type of person that we’re hiring now. We hired a lot of experienced people from the agri-chemical industry at AgraQuest, and they were good.
I have a different model here, though. Having the whole ecosystem with UC Davis here is important in that. We’ve hired a lot of young people, straight out of school, and trained them. I’ve done it before, so I have the knowledge of how to train them to discover and develop a biological pesticide.
It’s given us a big advantage, because they’re energetic. They also don’t know what they don’t know, so they’re not going to argue with me with stuff like, “Gosh, I think chemicals are better.” It was amazing how many people in my past came to work for me and would spend all their time saying that chemicals were better than biologicals. I’d just wonder why they’re here, if they didn’t believe in our solution. These young people have been taught sustainability, and believe in companies with a sustainable mission.
So that’s a fundamental difference, and I believe that’s reflected in our leadership selections, too. Another thing is how we chose our investors — making sure that all our investors are ones that will also invest in me. If you’re not investing in Pam Marrone, then you don’t want to invest in the company.
My name’s on the company’s name, and that’s not accidental. We’re ensuring that they — and the board — remain aligned with our vision and mission as time goes on.
Q: How has the experience of launching the initial public offering at MBI differed from your attempt to do so at AgraQuest?
At AgraQuest, we had gotten to a stage of launching the IPO, but were — as most know — thwarted by Sept. 11. It was interrupted following my flight to (New York). The lawyers for our deal were actually in the South Tower (of the World Trade Center), and our lead banker was right nearby. The hotel I was staying in was demolished. I was traveling there to practice the road show. We were short of actually launching the IPO.
The IPO at MBI successfully went through, so it was the first time Don Glidewell (who served as chief financial officer at AgraQuest and now does at MBI) and I were able to take it all the way through to the market. And we timed it right when there was a window where the market was open to small biotech companies. Those windows had been closed pretty much since Sept. 11 (2001).
It’s been really good for us, because the reason we wanted to go public was credibility. As soon as we filed the S-1 document publicly, we had big companies contacting us and saying that maybe they could partner with us. There were accelerated requests for jobs. There were entrepreneurs interested in us taking their products to market. That was all due to the credibility we got just for filing.
It also helps us create a new category on Wall Street. There’s no category for a company like ours. We’re not clean tech, because we’re not bio-fuels. We’re not Syngenta or Monsanto. We’re creating a new category of high-growth agriculture, bio-based technology. We hope to set the standards for companies to come behind us. It was important for us to be the first.
Q: Now that the IPO has been completed, what are some of the challenges your company will face in the future?
I think it comes down to execution. We’re now under a microscope, being a public company. The analysts have specific things that they’ve written about what they anticipate we’ll meet and when, and we need to reach those goals. All of us are focused on execution, and having the processes in place that ensures that we meet our goals.
Q: MBI recently reported a loss of $1.6 million in the second quarter of 2013. When is profit expected by stockholders?
We reported on the road show that we were going to be profitable in 2015. We’re still investing heavily in our pipeline and R&D, because the model of the company is not one of a blockbuster drug company, or such as that we can come out with a new iPhone and sell zillions of units. It doesn’t work like that in agriculture, and certainly not for the bio-based.
The strategy here is to have multiple products that in total reach significant revenue, hence that means continuing to invest in our pipeline. In 2017, 40 percent of our revenues will come from new — not existing — products. The investors who bought into the IPO understand that it’s a long-term play.
Q: How much competition is there in the market you’re intending to reach?
It depends on the product, but from the agri-chemical pesticide market, there’s competition all along the spectrum; from multibillion-dollar companies to much smaller ones. The way we see ourselves is that we can be more competitive by being speedy, faster to market. That’s a huge advantage over big companies. Also, in our innovation. The more we do that, the more we stay ahead.
Q: Do you have resources in place already that are required to develop and release products at a rate of one or two a year?
We do. We’ve built the R&D up pretty substantially since early last year, and hired a lot of people. Enough to where we’ve reached the stage we need to be at.
Q: And will your team be looking for the discovery of product candidates to come from your Davis lab, or those licensed from elsewhere?
We’ll continue to do both. We’re always looking for new things, and it doesn’t matter whether it comes from — our own discovery or from outside. We see opportunities for both. We’ve got some exciting candidates that our R&D has delivered on. The advantage of having our own in-house discovery is that most of the stuff from outside tends to be from academic labs; where they worked in a particular area for a long time, and didn’t necessarily target it for a particular market.
Q: Do you believe that you’re setting a precedent for biotech startups in the Davis area to follow?
Absolutely. And it’s a good model, actually. I’d like to see more serial entrepreneurs — people who start up, do an IPO, sell and start up again — because, you know, it really is thrilling doing it again. It allows you to look at all the things you know from the past, and use that to build on.
This region has a real potential to be a center for agriculture technology. Hopefully, with us paving the way, it will make it even more a possibility.
At a glance
Who: Pam Marrone, Ph.D., CEO and founder, in 2006, of Marrone Bio Innovations, a company that discovers and develops effective and environmentally responsible natural products for pest, weed and plant disease management
Products: MBI’s award-winning Regalia biofungicide is rapidly growing in fruit, nut and vegetable markets; its Zequanox targets invasive zebra and quagga mussels; and Grandevo protects citrus crops from the Asian citrus psyllid
Awards: MBI received the Governor’s Environmental and Economic Leadership Award in 2008, a California Department of Pesticide Regulation IPM Innovator award in 2009, the Natural Resources Defense Council’s Growing Green Award and the Presidential Green Chemistry Award for small business
Service: Marrone is founding chairwoman and a board member of the Biopesticide Industry Alliance, serves on the University of California President’s Board of Science and Innovation and on the UC Davis College of Agriculture and Environmental Sciences Dean’s Advisory Board, is treasurer of the Organic Farming Research Foundation and has served on the boards of Sutter Health’s Sacramento-Sierra Region and Sutter Davis Hospital Foundation.
Education: Marrone has a bachelor’s degree in entomology with honors and distinction from Cornell University and a Ph.D. in entomology from North Carolina State University
— Reach Brett Johnson at firstname.lastname@example.org or 530-747-8052. Follow him on Twitter at @ReporterBrett