MSU Chemists Create Renewable Resources Technology

Draths Corporation brings "green collar jobs", economic boost to Michigan

John and Karen Frost wear many hats. They are chemists as well as entrepreneurs, employers, and innovative leaders in a field that has captured the mood of investors in the United States, and perhaps the world, who are looking for alternatives to petroleum-based products.

In 2005 the Frosts founded the Draths Corporation, a company that combines chemistry, biology, and genetic engineering to develop chemical manufacturing processes that utilize renewable resources as feedstocks in place of petroleum-derived feedstocks. John Frost is a University Distinguished Professor currently on leave from the MSU Department of Chemistry. Karen Frost left her assistant professor position in the department to focus her efforts full time at Draths. Much of what was developed in the Frosts' MSU lab is intellectual property licensed by the university for commercial purposes.

MSU Graduates and Draths employees Sara Boles and Craig Banotai check processes in the Okemos laboratory.

Since founding the company, the Frosts have received $1 million in early stage financing from an angel investor. They also obtained a $5 million investment from Khosla Ventures in 2007, and $21 million in new venture funding from three private investment firms this year.

The Frosts caught the attention of the first investor with their work developing shikimic acid, a basic ingredient of Tamiflu.

Their current work with "green technology" involves preparing identical starter chemicals from sugar instead of petroleum. According to Karen Frost, "Other renewable companies have sought to use sugar to make new chemicals but many of those have less desirable physical properties." One Draths target is a starter chemical for nylon manufacture, which would supply consumer goods makers with cost-effective processes that create compounds without petroleum

"Our challenge is to produce a high enough yield that can be useful to larger corporations for product development. After several discussions, it was clear that we needed to expand our business model and take the next steps to scale up the chemical intermediaries for commercial technology use," said John Frost. "We conduct research, development, and deployment."

Advancing Michigan's Economy

In August, Governor Jennifer M. Granholm announced that the Draths Corporation would receive a state tax credit through the Michigan Economic Growth Authority (MEGA) to help the company expand by building a new $20 million pilot manufacturing plant in mid-Michigan, rather than at a competing site in Minnesota. The tax credit is valued at $5.2 million over 10 years, and it is estimated that the expansion will create 200 new jobs directly, with an additional 442 indirectly.

"We are proud to add Draths Corporation to the growing roster of innovative companies choosing to expand in Michigan," said Michigan Economic Development Corporation President and CEO Greg Main. "This is a high-tech company creating high-tech jobs, and we look forward to partnering with them as we work to diversify Michigan's economy."

In addition to their contributions in transitioning Michigan to a knowledge-based economy, John and Karen Frost are enthusiastic about the employees that have joined the company.

"Our commitment includes hiring employees that want to live and work here. We hire based on training, education, and knowledge in the field. We have found an excellent talent pool in Michigan, and many are Michigan State University graduates," said Karen Frost.

University Research Corridor

In the spring of 2009 MSU President Lou Anna K. Simon included the Draths Corporation in her comments before the Michigan Senate Appropriations Subcommittee on Higher Education, citing the role that the University Research Corridor universities play in advancing Michigan's economy. President Simon noted that "Private investors are validating us, even in this troubled economy...Draths raised $21 million in new venture funding in the first quarter of this year, despite the worst quarter for venture capital in 12 years."

Mike Poterala is executive director of MSU Technologies, which licensed the technologies developed at MSU by John and Karen Frost to Draths Corporation.

"Our role is to work with researchers to transfer impactful MSU technologies to companies capable of commercializing these innovations in the relevant marketplace. Draths Corporation is a solid example of the highest-caliber MSU research that offers solutions for real-world issues," said Poterala.