April 15, 2019

AquaBounty's genetically modified salmon could hit U.S. shelves next year

Photo | Courtesy
AquaBounty grows fish from eggs to juveniles to fully grown in order to make them ready for the dinner plate.

AquaBounty Technologies has been fighting for regulatory approval for its main product for 20 years. At long last, the company can begin making money – as long as it finds a market for the controversial product.

The Maynard company will soon begin to produce its genetically modified salmon at its facility in Indiana after the U.S. Food & Drug Administration in March lifted an import alert enacted in a 2016 U.S. budget rider banning the product from the U.S., after initially approving it a year earlier until labeling guidelines on genetically modified animal food products were finalized.

The U.S. Department of Agriculture did that in late 2018, and the FDA is now allowing the company's salmon eggs into the U.S. so they can be grown at its facility in Indiana. The company expects U.S. sales to start in the latter half of 2020.

The move follows the regulatory approval for production at the firm's Prince Edward Island facility in Canada.

With regulatory concerns a thing of the past, sustainable revenues are on the horizon, said CEO Sylvia Wulf.

"This is the first bioengineered animal ever approved," Wulf said, citing the concerns of U.S. regulators wanting to ensure the salmon was safe for human consumption, the animals were taken care of and the environment protected.

"We had to prove all three of those," she said.

Ready for revenue

The fish – dubbed Frankenfish by critics, along with other GMO fish – looks and tastes like regular Atlantic salmon, but thanks to a gene from a Pacific Chinook salmon and another from ocean pout, maturation into a fully grown fish takes about 18 to 20 months, whereas their unmodified cousins can take up to 30 months.

AquaBounty has had virtually no sales, but operates a small farm in Panama. Limited quantities of the fish grown at that small facility are sold in Canada, leading to very modest revenues of $138,000 over the last two years.

The company has endured heavy financial losses since its inception, totaling $119 million as of December. As such, AquaBounty has looked to investors, raising $13.25 million from two different stock offerings this year alone to kickstart production operations and hire production staff. Those funds are being used to retrofit the Indiana facility the company purchased two years ago and to begin production in Canada.

Speed-to-market is the company's main selling point, but Wulf said the controlled environment in which the fish are raised protects them from parasites, disease and predators.

Since the fish won't be market ready for 18 months, the company is about two years away from turning a corner and giving shareholders a break with consistent revenues. The firm could break even in a couple years, Wulf said.

"Once you hit that mark, this becomes a very profitable business," Wulf said.

The firm's Canadian customers have been longing for a consistent supply of Atlantic salmon as suppliers struggle to keep up with demand, she said.

Finding the right market

Worldwide production of farmed Atlantic salmon was $14.4 billion in 2016, according to the Food & Agriculture Organization of the United Nations.

A fraction of that – $67.6 million – was in the U.S, and that American share is down from $104.1 million in 2011.

Photo | Courtesy
AquaBounty's salmon eggs

"That's one of the reasons our customers are so interested is to have a supply domestically," Wulf said.

With limited funds, the company doesn't quite know who those customers will be in the U.S., but some retailers have already said no. Wulf conceded organic-type chains like Whole Foods and Trader Joe's -- who were quick to say they wouldn't carry the product when the FDA approved it in 2015 -- were probably a lost cause. Other restaurants and grocery chains may need to wait and take the public's temperature.

According to the company's own website, Costco and Target have said they won't sell genetically engineered salmon, and Jennifer Brogan, director of external communications and community relations at Quincy grocery chain Stop & Shop, said the product isn't something its stores would consider selling at this time.

Since the fish is the first genetically modified animal product to be approved, it will take some time for the public to come on board, said Jon Springer, executive editor of the industry publication Winsight Grocery Business. Generally, supermarkets will carry a product as long as it meets regulatory requirements.

"This is certainly the case with other GMO products," Springer said.

A sustainable food source

The company's product comes as consumers are opting for more organic and natural foods, said Robb Ahlquist, owner of Worcester seafood restaurant Sole Proprietor, which would be a prime customer for AquaBounty.

Photo | Courtesy
Cooked salmon from AquaBounty

As such, Ahlquist won't serve the company's salmon until consumers indicate a willingness to purchase the salmon.

"We probably wouldn't consider doing it until there was a significant uptick in public acceptance of the products being in the marketplace," he said.

However, Ahlquist, citing overfishing and supply concerns, said the marketplace could make room for genetically modified foods like the AquaBounty fish as oceans become filled with more toxins.

Most of the restaurant's salmon is sourced from an ocean farm in Maine. Even that product was viewed as taboo 20 years ago, but seafood farming is now taking off, Ahlquist said.

Aquaculture, the farming of seafood under controlled conditions, is an industry poised to capitalize on that demand. According to Ireland market research firm Research and Markets, the global aquaculture market was valued at $176.5 billion in 2017.

There is very little wild salmon left to harvest, but Ahlquist does make a point to offer it when it rarely becomes available, usually around the spring, although it is a different species. Wild Atlantic salmon have all but disappeared from the eastern seaboard, he said.

"The farming industry saved it," he said.

Atlantic salmon are a protected species and catching them in the wild is prohibited, according to the National Oceanic & Atmospheric Administration.

The wild fish are also threatened when a farm-raised salmon escapes an ocean farm and breeds with wild fish.

AquaBounty's facilities are an upgrade over ocean farming because multiple safeguards make it virtually impossible for a fish in a land-based facility to find its way into a nearby river, Wulf said.

Wulf, who ran the seafood produce business for the $24-billion food distributor U.S. Foods and came to AquaBounty in November, said the combination of environmental protection and the ability to sustainably provide a popular product brought her to the company.

"I'm passionate about two things: Innovation and what it can do to help ensure that we can feed people; and sustainability, because we have to do it in an environmentally friendly way," she said. "When I did my research, AquaBounty checks both of those boxes."

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