Originally published by Il Bioeconomista
An interview with Tony Duncan, CEO Circa Group
“Within the bioeconomy we have a massive range of new tools and opportunities to exploit this chaotic time.” To say it – in this long exclusive interview with Il Bioeconomista – is Tony Duncan, CEO of Circa Group, the Australia-based biochemical company, which is revolutionizing the traditional chemical sector. With him we talk about his company and the bioeconomy in the COVID-19 age.
Interview by Mario Bonaccorso
The world has been going through the worst crisis since the second post-war period. What role can the bioeconomy play to set up a new model of sustainable development capable of creating wealth and jobs?
Firstly, let me pass on our thoughts and sympathies for all your readers who have directly been impacted by the terrible toll the COVID-19 pandemic has brought. While some of us may complain of the boredom of being locked down and the inconvenience of social distancing, the cost for many others, their families and communities, is immeasurably worse.
I certainly don’t have a clear view – the signposts are not in place yet – and many announcements prophesied as trends are really uncertainties. We need to wait and see how governments transition from keeping their people safe to getting their people back to work and re-energising their economies. Circa has a view that business (and countries) move forward at the speed of trust. The failure of systems and leaders to protect their people will result in a mix of greater activism and increased nationalism in the short term. Countries that quickly rebuild trust between leadership and communities are likely to be the most successful coming out of this crisis.
It’s obvious some industries are undergoing massive structural change very quickly – some of these are seeing five-year “planned” market declines happen within five weeks. Large numbers of factories and businesses will not re-open and millions of people will be without the jobs they had only a month ago. However, this provides a real opportunity to build a legitimate bioeconomy brand. In marketing terms a brand is a promise that can be trusted by consumers.
Unlike many traditional multinational competitors, the bio-based industry is often a local, regional industry, controlled by local regulation. We should exploit the opportunity this provides. A strong decentralised bioeconomy can play a greater role in regional development while developing safer, more effective and trusted products – as it has been doing in communities across Europe and the world. When the asteroid hit, it was not the dinosaurs that survived, but the smaller, more agile and novel life forms that adapted to the new climate.
What consequences does this crisis have on the business of Circa Group?
The impact on our business has been twofold. The challenge to work remotely has been an interesting development. It is generally working out OK – however it’s only been a month, and social distancing rules are not great for a growing business, even in the medium term.
Although this crisis will end in the medium term, like many companies Circa has an uncertain customer and investor market over the next 6-9 months. This is forcing us to take aggressive steps to minimise cash burn without sacrificing the core business. We don’t know when the current lockdowns will end or when investors start to take a more positive view of opportunities, but we want to be there when it does.
Most Circa investors have taken substantial hits to their own portfolios and are understandably focussed on short-term tactics. We believe the medium-term outlook for Circa is very positive – it just means we need to look a little wider for new investment. The second major (positive) development has been product opportunity. For the past three years, we have been focussed on getting Cyrene™ production scaled up and building our Cyrene™ brand. Now, the crisis has thrown up a new opportunity to re-assess our core molecule, levoglucosenone (LGO), a highly functional platform chemical made from non-food, sustainable biomass – and one of the stars of the bioeconomy. LGO is an excellent starting material for the synthesis of biologically active compounds, including those that have anti-cancer, anti-microbial or anti-inflammatory activity. As a chiral molecule, it provides opportunities to access previously difficult-to-synthesize medicinal chemistry building blocks such as enantiopure dihydropyrans, deoxy-sugars and ribonolactone, the latter is a component in several drugs currently under investigation for the treatment of COVID-19.
Some of these products (e.g. ribonolactone) are likely to be required in significant tonne volumes in the coming years, and we currently have scale – and with our planned ReSolute Horizon 2020 Flagship Project plant there is a real opportunity for Circa to participate.
This will not mean we leave behind our Cyrene™ developments – we are in discussions with our primary distributor Merck KGaA Darmstadt about both opportunities going forward.
What are your plans for the next two years?
Our primary focus is definitely the plant planned which is set to be built in France as part of the EU Horizon 2020 ReSolute programme. We are in the final phase of Agreement discussions with the BBI-JU and although COVID-19 is impacting the process we are managing to mostly stick to initially-agreed timelines.
The opportunity currently provided to expand the LGO product range is real, happening in real time, and considerably enhances Circa’s business case for the scaled-up plant. This is not a pivot, but brings forward our plans to get new products to market.
What measures has Australia implemented to support industrial activity in this time of crisis?
Australia has had a reasonably co-ordinated approach across various state and federal governments. Initial lockdown stages generally went smoothly. High-profile incidents – like the Bondi Beach closure and cruise ship contagions – likely helped focus people very quickly on the need for compliance. The majority of businesses have supported the government’s approach – the sooner we can get it under control, the sooner we can get back to work.
On top of this, there has been considerable cash made available for business through tax rebates, government-backed loans and rebates to allow smaller business a better chance to hibernate their way through – along with increases in support for people laid off or furloughed due to COVID-19. Overall, the government spend has been considerable, but generally considered appropriate.
How will business change in the post-coronavirus era, in your opinion?
The quest for a normal life remains a key human driver, but it is always relative – and the new post-COVID normality will be different. I see more instability over the next 2-3 years as trust re-builds and a “new normal” exists. Until a reliable vaccine is found, countries are not going to open borders completely to tourism and trade, so we will see uneven “playing fields” and adjustments to the pre-COVID world order.
Will governments that have had to (finally) rely on science to assess and address this crisis maintain their opposition to science in other areas?
With discussions on how people will react to governments that have failed to protect them increasing, I think the saying that we “overestimate the short term, while under-estimating the long term” remains true and will play out in very interesting ways over the next 5-10 years. The new normal will not be the old normal. Within the bioeconomy we have a massive range of new tools and opportunities to exploit this chaotic time. Finally, we sincerely hope all our Circa “galaxy” remain safe – our own people, our investors, our joint venture partners, our research partners, consultants and of course your readers. The bioeconomy promise needs you all – we need you all!