Codexis-Shell Oil Announcement A Bellwether For Cross-Disciplinary Investments Says CMEA Ventures

Biotech Meets Big Energy as DNA Shuffling Technology Aids Quest for Renewable, Green Transportation Fuels

SAN FRANCISCO, CA – NOVEMBER 6, 2007. Today's announcement that Royal Dutch Shell plc has extended its research collaboration with privately-held biotech company Codexis by 5 years, accompanied by an undisclosed equity investment in Codexis, is a strong indication that cross-disciplinary venture investments show increasing promise, says CMEA Ventures founder Tom Baruch. (See "Shell and Codexis Expand Collaboration to Explore New Super Enzymes for Next Generation Biofuels", November 6, 2007).

Cross- or multi-disciplinary ventures are those that apply novel ideas or cutting-edge science and technology from one discipline to new products, processes or procedures in another unrelated, or distantly-related field. In the case of Codexis, the company's business plan is based upon the idea that custom-designed biocatalysts could replace traditional chemical catalysts or naturally-occurring enzymes in chemical processes such as the manufacture of pharmaceuticals, industrial chemicals, or fuels — an example of a multidisciplinary integration of life-sciences and material sciences.

Codexis's unique technology — a DNA shuffling process that allows a wide number of potential biocatalysts to be designed and evaluated quickly — has proven extremely effective in practice. One custom biocatalyst created by Codexis was 4000-fold more productive than the natural enzyme used in the manufacture of a key building block of atorvastatin, the active ingredient in the world's largest selling drug to lower cholesterol. Codexis recently won the U.S. EPA (Environmental Protection Agency) Presidential Green Chemistry Challenge Award for that work. The company additionally has customers or strategic alliances that include Merck, Pfizer, Schering-Plough, and Teva, for work on other enzymes for pharmaceutical applications.

The Shell-Codexis alliance, by contrast, is centered around the creation of next-generation, "green" bio-fuels from non-food biomass, with the aid of "optimized" or "super" enzymes evolved using Codexis's biocatalyst technology.

According to Baruch, founder and managing director at San Francisco's CMEA Ventures, the original pitch by Codexis's founder and CEO Dr. Alan Shaw was as controversial as it was cutting edge. "Alan was intending to enter a world dominated by chemists, to take on time-honored chemical manufacturing processes — some dating back decades or more — with biology. At the time, 2002, the human genome project was just getting its momentum, and the potential contribution of biotechnology to chemistry was barely understood."

But Baruch and his partners at CMEA, a heavily science-and-technology-oriented venture practice that has had a major focus on such multidisciplinary ideas for some time, saw the technology as disruptive and transformational — particularly in terms of the cost, manufacturing economies, or end-product performance. "If Codexis were to be successful, the implications would be vast, extending well beyond the obvious pharmaceutical applications, into industrial chemicals, environmental protection, and clean energy," Baruch said. CMEA opted in, and today Baruch serves as Chairman of Codexis.

But the real story, say the partners at CMEA, is the venture investment confidence that is gained for cutting-edge, multidisciplinary ventures. "In 2002, we felt we were swimming against the tide," said Baruch. "But successes like Codexis are changing the mood in the investment community." Baruch and his partners expect to see increased attention paid outside of their firm to novel, cutting-edge technologies applied in unexpected ways. "In an era of exponential change, it's the only way to really move the needle," he concluded.

From his perspective, Codexis's Shaw agrees: "The application of our technology beyond its obvious use in pharmaceutical manufacture is extremely encouraging. But outside our doors, we are seeing a rapid rise in inter-disciplinary thinking throughout the entire biotechnology industry." Shaw notes that in the industry's principal trade association, the Biotechnology Industry Organization (BIO), membership in its Industrial and Environmental section doubled between early 2006 and September 2007, from 23 companies to 50. "This is a remarkable trend," he says, "and one that is certain to catch the attention of the venture community." Shaw is currently a member of the BIO board of directors, and past chair of the Industrial and Environmental Section.

In addition to Codexis, CMEA portfolio companies include other examples of cross- or multidisciplinary technologies including Alexza (ALXA), Alien Technology, Ambrx, Arcadia, Biomimetic (BMTI), cNano, Ensemble Discovery, Epix Pharmaceuticals (EPIX), Ilypsa (sold to Amgen), Intermolecular, Kalypsys, Perlegen, Superprotonic, Symyx Technologies (SMMX), and Xenoport (XNPT).

Codexis (www.codexis.com) is located in Redwood City, California.

About CMEA Ventures

CMEA Ventures (www.cmeaventures.com) is a venture capital firm focused on life sciences, high technology, and energy and materials investments. CMEA believes that the most successful venture backed companies are science focused, with experienced teams intent on winning. As a result, CMEA's portfolio companies typically have cutting edge, highly differentiated, and often multidisciplinary technology at their core, with founding teams of the highest caliber.

CMEA invests in both early and late stage ventures, and has a strong network of corporate, investment, and entrepreneurial relationships that it leverages on behalf of its portfolio companies. The firm currently manages six funds representing investments in excess of $1 billion. CMEA has been an early stage investor in many leading high technology companies, including Arcadia, Bayhill Therapeutics, Codexis, Entropic, Flextronics (FLEX), Ilypsa (sold to Amgen), Intermolecular, LiveOps, Perlegen, Silicon Spice (BRCM), Superprotonic, Symyx (SMMX), Syrrx (purchased by Takeda), and Xenoport (XNPT).

CMEA Ventures was founded in 1989 and maintains offices in San Francisco and Menlo Park. CMEA's partners and associates have extensive science, engineering, and operational backgrounds that particularly suit CMEA's focus on technology and teams — an effective differentiator for entrepreneurs and venture investment partners who dare to change the world, one great company at a time.

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Editors, note: All trademarks and registered trademarks are those of their respective companies.

Additional background information on CMEA Ventures is available at www.roeder-johnson.com.