1. Executive Summary
Xylitol is a sugar polyol that has been used in the food industry as a low-caloric sweetener. It has been reported to have multiple beneficial health effects such as the prevention of dental caries, osteoporosis, and acute otitis media. Currently, xylitol is commonly produced by the chemical reduction of xylose presented in xylans. However, this process represents substantial costs for the industry. We have designed a genetic circuit for the expression of the necessary enzymes for the biological production of xylitol from lignocellulose hydrolysates for expression in E. coli for fermentation and subsequent processing.
We have also created a comprehensive first iteration of a business plan for the production of Xweet, a key ingredient in tooth-decay defying sweets. We have filed a provisional patent and trademarked our more environmentally friendly method for the production of Xweet. Adopting a lean method, we have engaged extensively with the confectionary industry, prototyping Xweet confectionery and setting out a pathway for commercial success.
2. The problem explored
Through our engagement with our local elderly community we identified a demand for tea-time treats that did not cause tooth-decay or imbalances in sugar levels. Adopting a lean method, we have engaged extensively with the confectionary industry to explore London’s sugar-substituted sweet landscape to confirm this as a wider demand. Our extensive literature search drew our attention to xylitol, a sugar substitute with widely-reported health benefits but an environmentally unfavorable and expensive production process. Xylitol is a key ingredient in tooth-decay defying sweets. Speaking to the UK’s confectionary manufacturers, we confirmed demand for xylitol produced in a less expensive and more environmentally friendly way.
Demand for tooth-decay defying treats from end users
London’s ageing population have a sweet tooth. Reports show that this is due to the impact that ageing has on our taste buds. Over time our taste buds decrease in number and become less sensitive. This is compounded by the effect of age-related diseases such as Alzheimer’s and Parkinson’s Disease, with the loss of taste and smell actually becoming increasingly important in the diagnosis of these disease. This drives the increasingly sweet tooth of the ageing population which in turn drives a negative impact on the oral health of this population. The oral disease burden, of which a big part is attributable our ageing population, is causing the total oral health expenditure within the EU to rise to an enormous €93 billion in 2020. There is therefore a push in public health policy towards preventative solutions that minimize bad oral health manifested in large parts as dental caries. This demand for tooth-decay defying sweets was therefore flagged up to us through our engagement with the elderly community. They described their need for sweet treats and oral health as a constant pain throughout their ageing process.
Demand for tooth-decay defying treats from confectionery retailers
We confirmed this demand for tooth-decay defying treats through interviews with London’s sweet landscape. We identified that these outlets were experiencing a shift in their customer demands such that there is an increasingly underserved proportion of health-conscious sweet lovers. Some of the sweet shops that we interviewed made their own sweets, while most bought their sweets from confectionary manufacturers. While the total EU and US confectionary market it worth €66.75 billion, the healthy confectionary market has been increasing its share of this overall market in recent years, putting the latest market share estimate within the UK at 11%. The growth of the healthy confectionary market is 16% higher than the total average growth of the entire confectionary market. These confectionary outlets provided us with a list of sugar-substitutes that customers ask for and that are used in the production of these sweets. We partnered with staff to identify xylitol through this market research and an extensive literature search as a candidate for meeting this demand. D-Xylitol is a sugar polyol that has been used in the food industry as a low-caloric sweetener. It also has been reported as having multiple beneficial health effects such as the prevention of dental caries, osteoporosis, and acute otitis media.
Demand for tooth-decay defying ingredients from confectionery manufacturing industry
Our literature research highlighted the potential of xylitol for use in tooth-decay defying sweets. It’s health benefits and positive impact on dental caries have been widely reported. We explored how xylitol is used in confectionary manufacturing to understand how more confectionary manufacturers can be enabled to use xylitol in their production processes. By visiting a chocolate manufacturing company, discussing their production process with the Operation Manager and observing their production process, we were able understand the decision making process in raw material procurement and the parameters for consideration of the material in the process. Most notably, we discovered that manufacturers prefer to use xylitol over other sugar substitutes such as coconut sugar as xylitol’s high melting temperatures makes it a manufacturer’s dream when making chocolate treats as machinery is not clogged up with caramel. However, the manufacturers hold back from using xylitol because of its associated costs and environmental impact.
3. Our Solution
We have therefore identified trapped value where in the value chain from feedstock to production of tooth-decay defying treats. We are best placed to solve this problem and have devised a plan for the production of xylitol, using synthetic biology and biochemical engineering processes, that reduces the impact on the environment and decreases associated costs. Our solution aims to supply a big proportion of the global market demand for more than 125,000 tonnes of xylitol per annum.
Our solution for the production of xylitol for supply to confectionery manufacturer involves a synthetic gene circuit in E. coli for extracellular secretion of xylitol following processing of xylan from agricultural waste in the upstream process. The downstream process involves a series of biochemical extraction and purification steps, using drastically less energy than the chemical process for xylitol production. Our xylitol product, Xweet, can be used to produce tooth-decay defying confectionery treats that utilise xylitol, at a lower price and incredibly similar taste to conventionally sugared treats.
We prototyped a potential treat that could be made with our xylitol product. We cooked up fudge using conventional brown sugar and xylitol. We asked UCL students to compare the tastes of our two batches, two identify the better tasting batch and the one that they thought contained xylitol. 100% of all participants guessed incorrectly, failing to identify the xylitol batch correctly. This lends support to the potential for xylitol to replace sugar in a vast number of confectionery products.
Using our upstream technology in a novel method for the production of xylitol from agricultural waste reduces the cost of the final product and the environmental impact. This therefore means that we are able to sell xylitol to confectionary manufacturers and the pharmaceutical industry for who the value proposition of reduced cost of raw materials and the reduced carbon footprint of their final product lifecycle contributes to the increase in profit margins. By making xylitol purchasing cheaper, moreover, we are empowering confectionary manufacturers to meet the demands of an ageing population for tooth-decay defying treats. We therefore have a unique and defendable business case.
4. Intellectual Property
Because of its technological relevance and its disclosure in this event, having an intellectual property strategy was crucial for the commercial aspects of the project. This approach has been confirmed after several discussions with numerous potential investors and advisers. Two important intellectual property figures were considered for this project, a patent and a trademark.
Initially, we performed a search in the database (Espacenet) from the European Patent Office. The results were encouraging because no result was similar to our invention after using (in different combinations) the keywords: xylitol, cell, surface, display. However, considering the possibility of not complying with the novelty feature, we searched for scientific articles that could describe a similar technology. From the results, we found that Guirimand et al. published in 2015 a similar system. The researchers reported the surface display of four enzymes (Xylose reductase, ß-glucosidase, xylosidase and xylanase) on yeast for the conversion of xylans into xylitol. Despite its likeness, our proposed project differs in (1) the displayed enzymes, (2) the host organism, (3) the oscillating phenotype of the enzymatic expression. Following this, we found that our invention could fulfill the three patent features and therefore our invention was fully patentable. This intellectual property search allowed us to define the claims for our patent application. We filed a provisional patent application with the UK Intellectual Property Office using the presented form with the application number 1616500.3. The relevant documents for this application are presented below:
This intellectual property search allowed us to define the claims for our patent application. We filed a provisional patent application with the UK Intellectual Property Office using the presented form with the application number 1616500.3. The relevant documents for this application are presented below:
1. Filed Form
We are currently working on an international patent application (PCT) for our invention. This strategy grants us additional time for starting patent applications simultaneously in 140 countries.
Continuing with our intellectual property strategy, we have been working on filing a trademark application with the UK Intellectual Property Office for the brand and the logo of our final product, Xweet. This allows us to distribute an early version of the product to different stakeholders while building a product identity.
5. Manufacturing operations
One challenge in the production of Xylitol is to find an adequate source. As mentioned before, purified D-Xylose is used for the chemical and enzymatic production. However, the use of agricultural waste for the manufacture of Xylitol has become a milestone in this field.
Most of the agricultural waste can be divided in cellulose, hemicellulose, and lignocellulose. Lignocellulosic biomasses (LBs) are widespread, abundant, renewable, cost-effective, and economical sources of polysaccharides, which can be used for xylitol production. These sources include agricultural, agro-industrial, and forestry These residues contain lignocellulose, organic matter that is mainly composed of cellulose (34–50%), hemicellulose (19–34%), lignin (11–30%), and smaller amounts of pectin, protein, extractive, and ashes. The composition of these components differs with the source of plant species, age, and growth conditions. The most abundant heterogeneous polymer of LBs is hemicellulose, which comprises of pentoses (xylose and arabinose), hexoses (mannose, glucose, and galactose), and residues. Sugar acids. We are considering the use of the LB hydrolysates as Xylan source and fundamental part of the proposed system.
Upstream: Inoculum strain for bioconversion during fermentation
Currently, D-Xylitol is commonly produced by the chemical reduction of D-Xylose presented in xylans in the presence of a nickel catalyst at elevated temperature and pressure. However, this process represents substantial costs for the industry. A proposed alternative for the chemical hydrolysis is the conversion of this pentose by the use of enzymes or microorganisms. Nonetheless, the biological fermentation presents some issues such as accumulation of the metabolite at toxic levels or challenges with the purification process. Additionally, the use of enzymes may represent a higher cost because of the production and purification of such proteins.
The bioprocess for xylitol production that we are presenting is based on the expression of cell surface displayed enzymes. The enzymes in this system are described in the next table:
In this case, the enzymes involved in the degradation of xylan and the subsequent xylitol transformation are fused to the ß-domain of the autotransporter EspP. The fusion proteins would be expressed in E. coli and be able to anchor to the outer membrane. The advantage of this system is the avoidance of purification steps. However, some issues should be taken on account such as required cofactors or the presence of disulphide bonds.
Because of possible membrane instability, the expression of these enzymes is controlled by a genetic circuit. The proposed genetic circuit would function as an oscillator by expressing constitutively on the surface the enzymes XynA, Aes and Ruxyn1. The expression of these enzymes would trigger the degradation of Xylans into monomers from the lignocellulosic hydrolysates by XynA. The next step is the degradation of branch oligosaccharides by Aes and Ruxyn1; the latter would release D-arabinose to the media. The release of arabinose will start the second circuit. This circuit is regulated by an pBAD/ara promoter and would promote the expression of GRE3 and an inhibitor for the first circuit promoter. The gradual inhibition of the first circuit would allow the display of GRE3 without compromising membrane stability. Once the arabinose is consumed, the expression and the inhibition of the first and second circuit respectively will return to their original state.
The downstream processing of xylitol production method will use a series of purification steps to ensure that all viable cells used during the fermentation stage are removed. Furthermore, this bioprocess will be carried out under the conditions set out by the FDA’s good manufacturing practice guidelines. Stringent validation, quality assurance and quality control steps will ensure that the bio-products are responsibly contained and disposed and that the final product is safe for consumption.
6. Market Analysis
Although our proposed process is innovative, the product itself has strong competition from other xylitol manufacturers and even other commercially available sweeteners. Because of this, we have undertaken an analysis of the market as it is necessary to establish and develop a competitive marketing campaign. In order to design an efficient marketing strategy, we identified the market opportunities in the two biggest industries for the commercialization of xylitol: Food and Pharma.
Alternative Sweeteners Market
According to Transparency Market Research, the global alternative sweeteners market has an estimated Compound Annual Growth Rate (CAGR) of 4.2% between 2015 and 2021. In 2014, this market was valued in USD 11.5 billion and it is expected to reach USD 15.4 bn by 2021. These numbers are driven by an increasing awareness of calorie consumption along with a growing number of diabetic patients. However, the market is restrained by regulations over the use of certain chemicals and ingredients.
For this group of products, the North America region was the leading market in 2014 and is poised to sustain its dominance with a CAGR of 3.6% between 2015 and 2021. Despite the lead of the North American market, the Asia Pacific region would be the major contributors to the global alternative sweeteners market; in China and India alone, the expected CAGR are set to be 3.4% and 6.0% respectively.
As an alternative sweetener, xylitol has been proven to be very useful because of its low-caloric and tooth-decaying prevention properties. These advantages are expected to increase the demand of xylitol in the next years. As reported by PRNewswire, the xylitol global market was estimated at 161.5 metric tons and a valuation of USD 670 million in 2013. Moreover, this market is expected to reach around 242 metric tons valued above USD 1 billion by 2020, driven by a CAGR of 6.0% in both metrics.
From all the food industry, it is estimated confectionery and chewing gum manufacturers consumed nearly 80% of xylitol production at 2010. Based on this trend, the chewing gum industry is projected to be largest consumer of xylitol by 2020, using around 163 metric tons or 67% of the global xylitol production.
In addition to the food industry, it is important to mention the relevance of xylitol for the healthcare industry, as it is used in numerous products such as syrups, tonics and vitamin supplements. According to Technavio, the pharmaceutical industry represented a market share of 10.86% in 2010. Even though this percentage is minimal compared to the 15.01% and 67.24% of the confectionery and chewing gum industry in the same year respectively, the unique properties of xylitol compared to other similar molecules makes it an interesting bet for the pharmaceutical industry.
If divided by regions, Europe is currently the largest market for xylitol according to Technavio. One of the reasons for its high-adoption rate is the rise of sugar prices. However, just as other alternative sweeteners, the Asia region is promising for the marketing of xylitol.
Because of the current demand for xylitol and the positive market trend, many chemical companies around the world have become manufacturers of this sugar polyol. This market has been consolidated by rapid technological innovations and fluctuations in the consumer preferences, factors leading to increasing competition.
As reported by Technavio, the leading vendors of xylitol are Dupont, Cargill, CSPC Shengxue Glucose, Ingredion, and Mitsubishi Shoji Foodtech; other relevant vendors in this market are Zuchem, Hangzhou Shouxin Biological Technology, Novagreen, Tata Chemicals, Roquette Frères, and Thomson Biotech.
Having considered the present status of the xylitol market and its growth prospects, we consider two marketing strategies for the food and pharmaceutical industries respectively. After discussing with stakeholders in the food industry, specifically the confectionery industry, we found one of the most limiting feature of xylitol is its particular flavour. According to confectionery manufacturers, they show preference for xylitol in their products with citrus or mint flavours, whilst they mainly avoid its use in other products such as dark chocolate alone. However, they mention that this decision is mainly subjective and some people might find the xylitol-sweetened products likeable. This challenge could be overcome by developing a mixture of xylitol with other low-caloric sweeteners that can disguise its distinctive flavour without diminishing its properties.
Another possible way to market our product in the food industry is to emphasise that it is environmental friendlier than other artificial sweeteners. The perception of natural over artificial for this type of products has increased in the last years, and has become a steady trend. Furthermore, its tooth-decay defying qualities are not found in other sweeteners and so this can be used to our advantage as part of our marketing strategy.
For the pharmaceutical sector, the commercialisation of xylitol has to be different. The regulations in this industry demand a product of higher purity. Because our isolation process excludes any remnants of cell debris and uses several filtration steps, we can commercialise our product as GMP compliant. This feature would help the pharmaceutical companies to fulfil most of the regulatory bodies (e.g. FDA, CE, etc.) requirements.
8. Business Environment
A consideration of the long-term, external and internal, issues that may arise during Xweet’s progression to a functioning production company is undertaken here to evaluate Xweet’s longer-term business environment. A STEEPLE framework which in its augmented form encompasses a PEST (political, economic, social and environmental) and SWOT (strengths, opportunities, weaknesses, threats) analysis, is used her evaluate external and internal points of possible concern for Xweet.
Our xylitol product will be classified as a food additive and would most likely be regulated by the EU based on the agreements decided by member states outlined by Regulation (EC) No 258/97 of the European Parliament and of the Council of 27 January 1997.
The competency of our management team is vital to the success of our product. We have identified the team members that will be required to set up Xweet as a xylitol production company. Our management organogram below shows the vital functional departments we need to drive the success of our venture.
10. Financial Data
Our following financial estimates are based on the assumption that we will make sales to 5% of the total addressable xylitol market of $670 million each year following an initial 3-year time period in which we set up our facility and obtain regulatory approval. This cost estimation will elucidate the amount of investment that this venture will require. For the purposes of this exercise cost estimates of raw materials, as well as the selling price, are taken estimates from comparative products in the biochemical manufacturing industry. As we know the cost of our raw materials and selling price will be lower, this provides us with a worst case scenario, contributing to a risk mitigation strategy. Although revenues would start in the 4th year, due to the high cost of facility set up and equipment cost and installation, we are likely to break even in the 10th year of this venture. Our annual profit will then steadily climb.