Jim Boyd and Pam Marrone, Editors • 01-07-25 • Issue 005

Key Takeaway: We Met Our 2024 Milestones and more…

1. Sell Gen 1 Zequanox: We sold to legacy customers (utility and golf courses).

2. Develop Zequanox Gen 2: We achieved a major increase in manufacturing yield resulting in lower production cost; new tablet and granule formulations made and undergoing testing.

3. Re-develop Piscamycin: Fermentation and extraction processes developed and product samples delivered to USGS for validation. EPA package submission for experimental use applications is underway.

4. Herbicide Candidates into Development: Several candidates have been discovered and we are narrowing pool down to the best candidates to advance.

5. Shrimp Grant Goals Met: We have candidates that kill the problematic shrimp and we are also testing against sea lice for a new large market product.

6. Facilities: We relocated into a larger independent facility in anticipation of rapid development phase of our discoveries.

In This Issue:

1. Mission, Vision and Values: Summary from our December meeting

2. 2024 Accomplishments:

   a. Discovery: Our R&D milestone achievements on candidate herbicides, algaecides and burrowing shrimp; sea lice testing

   b. Facilities: New ISC labs & office move

   c. Development: Updates on next generation Zequanox® and Piscamycin™

3. News: Invasive Golden Mussels Found in North America (California) for the first time

4. 2025 Goals

5. Meetings/Conferences Attended

Mission, Vision and Values

It has been about 12 months since hiring our R&D team and it was a good time to convene for an all-hands meeting to codify our culture and values to guide us as we grow. Here are our consensus results:

Discovery: Current Status

After the visioning exercise, the R&D team presented their results and progress since the mid-year update.

The team has continued to find active candidates across all targets: weeds, algae and shrimp. Kara has added blue-green “algae”, which are actually cyanobacteria and not algae at all. Aquatic cyanobacteria are known for their extensive and highly visible blooms that can form in both freshwater and marine environments. The blooms can have the appearance of blue-green paint or scum. These blooms can be toxic, and frequently lead to the closure of recreational and drinking waters.

Namrata has inititated testing on the key weed species, starting with pigweeds. Burgundy amaranth is a good surrogate for palmer amaranth, rated one of the worst weeds globally due to its development of resistance to all classes of herbicides. The good news is that some of our candidates kill amaranth. The testing is continuing to determine the weed activity spectrum to rank the candidates for development.

For our Washington state-funded project to find microbials against burrowing shrimp destroying oyster farms, Brady built a burrowing (ghost) shrimp habitat for testing candidates active against brine shrimp. The burrowing shrimp are available at bait shops as they are used as fishing bait, but they are not easy to keep alive in the lab. The good news is that some of the brine shrimp candidates are active on the burrowing shrimp, fulfilling our goals for this project. We are in discussions with the oyster Industry Association and the state of WA for follow on funding to start product development.

Sea Lice Testing

Salmon farms across the world are suffering from infestations of a crustacean, Lepeophtheirus salmonis, a sea louse that targets salmonids. Fish farms experience outbreaks of sea lice that make their products unmarketable. Once sea lice from wild sources become established in a farmed salmon population the only way to control them is through the use of parasiticides. In the Atlantic Ocean, sea lice are becoming increasingly resistant to certain parasiticides, forcing farmers to resort to chemicals that are more toxic to nontarget organisms. The lice can cause catastrophic damage commercially. Infected fish cannot be sold due to the lesions and the health of the fish is at risk. More than $1 billion of direct treatments to control sea lice are used on just salmon; other farmed fish also get lice. Given that we have discovered microorganisms that produce natural products that kill shrimp, which are also crustaceans, we are engaging the Marine Environmental Research Laboratory, Institute of Aquaculture, University of Stirling, Scotland, experts in this field, to test our candidates against sea lice.

New ISC Labs & Office Move

The R&D team did an amazing job acquiring the equipment needed to furnish the lab and office space on Second Street. Buying used equipment available from other labs locally and also online, they furnished the entire lab for $86,000, which is approximately 50% of the cost if purchased new and we got much more and much better quality equipment than we originally thought we could afford at this juncture. This will save us in years to come. For the opening of the office/lab, co-founders Jim and Pam thought it time to open a vintage bottle of wine that they received from our attorney Morrison & Foerster for the IPO of our previous company.

Development: Production of Next Generation Zequanox® to Control Invasive Mussels

Amit and Pam visited our Zequanox contract manufacturing and Gen 2 development partner e-nema in Germany. They have a massive, impressive facility with several 100,000 liter fermentation tanks and downstream processing for spray drying, freeze drying and granulation formulations. e-nema is an expert in fermentation and formulation of beneficial nematodes that control pest insects, selling more than $12 million around the globe.

e-nema has achieved a large improvement in Zequanox fermentation yield, which substantially lowers product cost. Using the product made at e-nema, our 3rd party formulation development partner has developed a Zequanox slow dissolving tablets (see photo), one of our goals to expand Zequanox’s open water market. These tablets are now being tested by the US Geoloogical Survey (USGS) Aquatic Lab. The tablet size can be tailored to particular lake and river’s characteristics. The development of Gen 2 Zequanox is a critical 2024 goal for the company and we are excited to develop their application methodology further in 2025.

Market: ISC has engaged a UC Davis Graduate School of Management student team to quantify the market for Zequanox in North America for pipe and open water treatment, including size, pricing, customer universe and competitors.

Golden Mussel (Limnoperna fortunei): Another nasty invasive mussel was found for the first time in North America – in California’s Delta, a very environmentally sensitive habitat. Native to China and already having invaded Brazil’s freshwater and industrial/utilities infrastructure, Zequanox was previously tested against this mussel in Brazil and ISC has exclusive license to an issued patent on Zequanox for golden mussels. We already have several inquiries as to whether Zequanox can be used for treatment. Our plan is to re-test against golden mussel, to finalize the dosage needed, and to develop best use practices.

Development: Production of Piscamycin™ to Control Invasive Carp

Our proven product for controlling invasive carp is moving through steps to re-register it with EPA. We have contracted with Evologics Technologies to produce the required five-batches of Piscamycin required for resubmission of the product’s registration with the EPA. They have successfully produced the active ingredient, Antimycin A at high levels in fermentation and extracted it from the broth. It became necessary to modify the manufacturing process from the previous supplier, which had quality and consistency issues that would have prevented scaling the product to the quantities we anticipated will be required. Samples have arrived at the USGS’s lab in Wisconsin for immediate analysis and efficacy testing on fish. Pam and Amit visited Evologics in Vienna, Austria and were very impressed with the facility to ferment and formulate various microbes, including beneficial and biocontrol fungi.

The National Park Service has a goal to rehabilitate a river in North Carolina’s Great Smoky National Park by removing rainbow trout that are harming populations of brown trout. We are working with the USGS to make this happen for a September 2025 treatment. The USGS has indicated that all 50 states have a need for Piscamycin; the competing product Rotenone is not as effective as Piscamycin. This early action by NPS is validating that demand.

Our 2025 Goals

At the year-end update meeting (discussed above), the team solidified 2025 goals. Details of these goals will be sent separately to investors. The goals relate to the following areas:

1. Discovery: Strategic grants: new submissions and support for existing.

2. Development: Moving herbicide, algaecide and crustacean candidates ahead, with priority on herbicide. Develop Zequanox as a golden mussel control in the US and Brazil.

3. Deployment:

   a. Zequanox: Gen 2 testing and regulatory submission; golden mussel treatment

   b. Piscamycin: EPA submission and manufacturing for customers

Communications and Customer Outreach

Pam Marrone spoke at the Annual Biocontrol Industry Meeting (ABIM) in Basel, Switzerland. The conference was attended by 2500 people. She spoke in the startup arena and was a keynote panel speaker on “Pivotal Moments in Biocontrol.” Some key points from the panel as summed up by Mark Trimmer of DunhamTrimmer Consulting in his graphic below:

Jim and Brady attended the Upper Midwest Invasive Species Conference in Duluth, MN where ISC had a booth. Namrata presented a poster at the annual conference of the North American Invasive Species Management Association in Missoula, MT (shown here with the president of NAISMA). At these conferences, there was high interest in our products. We learned that Zequanox has wide awareness and a good reputation but as we know, is seen as too expensive (hence Gen 2 work). Zequanox was mentioned as part of the Great Lakes rehabilitation plan for invasive mussel management at both conferences. While there were many presentations on using predators to control invasive plants, there are no companies like ISC working on microbial natural products for invasive weeds. There is large potential!

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