Aquanautics: From Briny Dream To Yeasty Reality

EMERYVILLE, CALIF.—Six-packs of Budweiser and individual bottles of Coors, Michelob, and Miller line a laboratory shelf in the Aquanautics corporate headquarters. But they’re for work, not play. Scientists at the young firm hope that the beers will prove to be Aquanautics’ savior—transforming a company founded on a pipedream to a company thriving on innovation. If they have their way, Aquanautics’ 14 scientists will guarantee us fresher-tasting beers. Why do we care? Not because we’re bored with our brew but because the lesson of Aquanautics’ survival is one that many entrepreneurial scientists never learn. Like many a startup, this San Francisco-based firm was born out of a narrow-cast vision: to engage in nautical research. In fact, the original scientific dream for Aquanautics was to develop an artificial gill for undersea exploration. But shortly after establishing this goal, the real world of dollars and cents threatened to drown the venture. First came the research snags—the seemingly endless search for a synthetic molecule that would draw oxygen out of seawater. Then the ultimate pitfall— the lack of a marketable product— and the resulting depletion of cash reserves. Novice navigators of fledgling science firms often founder in such straits because they cling to their predetermined course. Not Aquanautics’ scientists. Faced with bankruptcy, they put their initial dream on hold while they pursued a better idea—or, at least, an idea that would make the company enough quick money to get it through the startup stage. The story of the transformation begins in San Francisco in 1983, when Aquanautics was two years old and had succeeded only in acquiring two wetsuit companies. The firm heard about intriguing work at the Duke University Marine Laboratory. There, marine biologists Joseph and Celia Bonaventura had shown that if hemoglobin were added to the liquid solution used to make artificial sponges, the resulting sponge would retain hemoglobin’s binding properties. That is, since hemoglobin attracts oxygen molecules, the Bonaventuras’ hemoglobin-laced sponge soaked up oxygen the way normal sponges drink liquids. The Bonaventuras’ realized that their technology, if it could be adapted into a viable system, could provide man with an alternative source of oxygen underwater. Since their sponge could capture oxygen from the water itself, neither submarine nor individual diver, so equipped, would need to carry tanks of the life-sustaining gas. Freed of their tanks, submarines would be cheaper to build and more compact—and their ability to remain submerged, the Bonaventuras figured, would be greatly enhanced as the oxygen supply would turn out to be virtually limitless. Aquanautics was sold on what it saw as the marketable potential of the “Hemosponge” technology. In the fall of 1983, the company licensed the marine applications for two patents relating to the Bonaventuras’ discoveries. And, buoyed by its seemingly brilliant prospects, the company hired its first full-time scientist, biochemist Bruce Zenner. But when Zenner arrived in North Carolina to study the Bonaventuras’ research, he uncovered problems. The scientist calculated that to sustain its crew a submarine would need a sponge the size of a football field. Also, there seemed to be no practical way of releasing the oxygen from its hemoglobin embrace without incurring a prohibitively high energy cost. “Things were starting to go south,” says Aquanautics president N. Ross Buckenham. “Bruce was sitting there going, ‘Oh my God, I’ve just joined this company, I’m the chief scientist . . Hope arrived early in 1984 in the form of another Duke professor, C. William Anderson. Working as an Aquanautics consultant, he found a way around the oxygen unloading problem—by oxidizing the hemoglobin electrochemically—a relatively inexpensive process. Building on Anderson’s work, the Bonaventuras and Aquanautics nautics’ Zenner constructed a prototype for an artificial gill. Consisting of tubes made of a polymer membrane that are placed inside a seawater chamber, this gill works when a synthetic, hemoglobin-like compound is passed through the tubes, luring oxygen from the water through the porous membrane. The synthetic oxygen-carrier is fed into an anode compartment, which uses a low-voltage electric field to pull electrons from the carrier molecules. When this occurs, the carrier loses its affinity for oxygen, freeing it to bubble off in a highly concentrated form—to be collected and breathed. What happens next is, from Aquanautics’ standpoint, especially elegant. The hemoglobin substitute is recirculated to the cathode side of what now becomes a complete electrochemical cell. Under a similar electric field, the carrier is reduced—meaning it gains an electron and is then free to bind oxygen again. And the entire process can start anew. With a prototype m hand, Aquanautics extended the licensing agreement with Duke to include nonmarine applications of Hemosponge. But some basic problems remained. On the scientific front, there was no economic way to produce hemoglobin. So the Aquanautics scientists searched for a synthetic carrier molecule. But there were financial difficulties, as well. Relief from these came late in the year, when Aquanautics received a $1.5 million, two-year Navy contract to pursue its research. The Navy was interested in the possibility of capturing oxygen from seawater not to sustain a crew, but to mix with fuel to power its underwater vehicles. An unlimited supply of oxygen would enable Naval underwater exploration and surveillance craft to perform longer missions. “It was a big milestone for the company,” says Buckenham. The company had new credibility and new capital—both of which helped attract two additional scientists and several technicians into the Aquanautics lab. But the search for a synthetic analog for hemoglobin would not be a quick one and, by the spring 1986, Aquanautics was forced to economize by closing its Duke research lab and moving all operations to new company headquarters in Emeryville, Calif. For analytical chemist Emory De Castro, who had left the University of Cincinnati a year earlier to become Aquanautics’ second scientist, the experience typified the realities of entrepreneurism. “People who are not scientists won’t believe scientific results,” he relates. “They want to see oxygen bubbles coming out.” DeCastro knew at the time that the firm only had enough cash for three months—the extent of the Naval contract—but says that didn’t dissuade him from moving with the lab. “This is not a job for money, that is for sure,” he quips. “As scientists, you rarely get a chance to make a difference, to contribute to society. Here, I clearly saw a chance to make a dif- ference—to let man go underwater, so to speak.” The new year— 1987—saw things starting to coalesce for the company. The Navy signed a one-year, $1 million renewal of its contract. For the first time in more than a year Buckenham hired additional scientists—and Aquanautics built its staff close to its current total of 22 employees—14 of whom are in the lab. There was just one problem: Aquanautics still needed a product. “We had a sort of a faith in each other that somehow if we focused on being the best in this oxygen chemistry area that the opportunities would come out of it,” says Buckenham But where were the opportunities? In the search for some way to capitalize on its technology, Aquanautics’ scientists began to turn their attention away from the water and toward the air. After all, they reasoned, their system could just as easily separate oxygen from nitrogen and other gases as it could from water. And in April 1987, the commercial light began to dawn. The company signed an agreement with L’Air Liquide of Jouy en Josas, France, to study ways to produce highly concentrated oxygen for industrial applications. Other potential markets also emerged. Thousands of people with lung ailments, for example, hunger for a portable oxygen supply, so Aquanautics initiated discussions with medical equipment firms. And, because Aquanautics had heard vague reports that the food packaging industry had problems with oxygen, the company submitted a small article on its artificial gill technology to Food Processing magazine, which was published in August 1986. The response was astounding— within a few months Aquanautics received hundreds of phone calls and letters from people in the beverage industry—and breweries headed the list. Oxygen, it seems, is a brewer’s nemesis. Although glass and aluminum containers make good oxygen barriers, the little bits of the gas that are trapped at the time of packaging are thought to destroy flavor. With a potential market in sight, Zenner and his team set to work. Among the fruits of the previous year’s research were silica particles dubbed “Longlife.” These granules contain synthetic carriers that absorb oxygen, and the scientists figured that if a method could be devised to imbed the particles within the containers, the result would be oxygen-free beer—and a financial tidal wave for their young company. When Aquanautics revealed Longlife at a food industry conference in San Francisco last March, its tiny, out-of-the-way booth was swamped. And when Buckenham hired Tom Myers, president of the Cleveland-based consulting firm Myers & Company, to survey the top U.S. breweries, things looked even more promising. “People [in the beer industry] have viewed [oxygen] as the most serious problem,” Myers says. “If Aquanautics really does have the solution, then they are very excited about it—because it will allow them to package perfect beer.” Today, while pursuing R&D agreements in all its potential markets, the company is focusing on perfecting ways to incorporate Longlife in bottle caps and beverage cans. Buckenham expects a prototype to be complete by the end of next year—and can hardly conceal his excitement at the prospects of tapping the beer market, which he says is a 57-billion-bottle industry in North America alone. “If the brewers were prepared to pay just a penny a bottle, that’s $570 million,” he calculates. Inside the firm, the mood also seems optimistic about finally delivering a commercial product. Some of that feeling has leaked out to the public—the company’s stock has inched up from its nadir of 40 cents a share to about $1.50 today. But while the potential benefits from brew may smell sweet, the startup still has its sights set on its original nautical dream. “Beer is definitely just a short-term salvation,” says De Castro. “It’s just to keep us going on the artificial gill work. In the long run, that will be the most challenging—and the most satisfying.” Robert Buderi is a contributing editor of The Scientist.

Aquanautics: From Briny Dream To Yeasty Reality

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