You can't hurry love, even silkworm love...
[This is a re-post with a small change in wording that does not alter the content in any way. I apologize for the use of the wrong term.]
Evidently some people believe that Kim Thompson is stringing shareholders along, potentially even lying about progress. Many others have lost patience. I even saw a call for a share buyback. Let's take a little more careful look at what is going on with the company.
First, we need to acknowledge that producing transgenetic silk proved to be harder than almost everyone imagined. This is a good thing, for reasons I'll review in a moment. Entogenetics has employed the silkworm route, while Spiber (Japan), Spiber (Europe), and Bolt Threads have created the proteins in yeast.
In 2012, a paper in the prestigious Proceedings of the National Academy of Science, whose authors include Malcolm Frasier, reported on a successful implantation of spider-silk genes into silkworms and successful expression of those genes. This work was done for Kraig Biolabs, who took possession of said silkworms. Let me assure all investors that if this report were fabricated and the deception uncovered, the paper would be revoked and Prof. Frasier would suffer considerable damage to his reputation. Faculty have lost their jobs over this sort of thing.
So why didn't commercialization begin shortly thereafter? Two reasons are likely. First, if the genes aren't put in the right place on the chromosomes, genetic recombination may break the genetic sequence. Second, the genes may have only been added to one chromosome, meaning the silkworm is heterozygous for this trait. A heterozygous silkworm will not 'breed true.' Note that Kim Thompson made a point of homozygosticity in his recent announcement. But he has also mentioned that 11 generations of DS silkworms have bred true to the trait.
Likely Entogenetics encountered the same problems, which is why Entogenetics appears to be struggling so much.
Spiber (Japan) recently announced they would be producing silk for the Moon Parka made by North Face. This suggests success in the second route, creating the proteins in yeast and then spinning the silk. But again, there seem to be significant hurdles to overcome. The yeast only make the proteins. I'm guessing the proteins are expressed inside the yeast. To isolate the proteins from the rest of the animal, you put the mixture into a centrifuge and spin it down. The silk proteins will have the same density and so will create a band in the mixture. Chemicals are added to the band to precipitate the proteins, which can then be dried into a powder. Mix it with a little water and shoot it through a needle, and out comes your silk.
Again, hidden complexities have arisen in what was thought to be a straightforward solution. The Moon Face Parka is about $300 more than the non-spider-silk version. Guessing at 2 yards/coat, that works out to be a cost of $150/yard for the spider silk. In one press release, it was hinted that they were selling the material at a loss in order to promote the product.
Why is the yeast/protein method so hard? Two possibilities. First, impurities in the parts-per-trillion range will lead to weak silk. Think of a steel chain with a link made out of chewing gum every inch or so. Purifying the protein to that level has got to be difficult, though silkworms have solved the problem. Next, silk production in spiders is highly regulated and harder than just squirting the stuff from a needle. Again, if we damage a link in our chain every inch or so, the silk won't be usable.
All of this is very good news for long-range investors in KBLB. Why? Well, it means that any competitors will have a lot of challenges to solve. We won't find some teenagers with access to CRISPR/CAS creating competitive silkworms or yeast and spinning great fibers out of their basement.
One thing that has given me confidence to invest in KBLB is the continuing release of significant news. KBLB is the only company that I know of who has measured and reported the strength of his fibers. You don't see that coming from Bolt Technologies or Spiber. If they had some great fibers, I'm guessing they might brag about it. KBLB has filed patents to cover new combinations of spider proteins with improved characteristics. KBLB has reported homozygosticity in their silkworms. All of this leads me to believe that commercial production is near-at-hand.
Skeptics may fear that Kim Thompson is fabricating evidence or lying about progress. I discount that possibility for a couple of reasons. First, Malcolm Frasier still maintains ties to the company. If KBLB turned out to be a fraudulent scheme, his association with the company would be a very bad thing. He evidently has enough confidence to continue to allow his photograph to be shown on the KBLB website.
Next, the 4 new strains reported recently were paid for in stock. Whoever did all that work wants to see a return on their time and investment. I'm guessing it was a faculty member at University of Michigan Ann Arbor who did this work. Faculty don't do this sort of thing for fun. They are interested in an eventual payoff, as are we all. If the consultant thought that KBLB was not a viable proposition, they would have insisted in a cash payoff.
I hope the readers of this thread will note several features. First, Kim Thompson is extremely frugal by the comparisons of Bolt Threads. Their CEO flies around everywhere giving speeches. Their headquarters is near the coast by San Francisco, while their production is in North Carolina. How much does that ocean view property lease for? Next, in spite of complaints, we know a lot more about KBLB than any competing company. I've not received a newsletter from Bolt Technology ever, even though I've been on their mailing list for at least 6 months now.
Finally, it may help to understand that Kim Thompson is fighting a multi-front battle with very limited staff and resources. He has developed DS which is not simply stronger-than-steel on a per-weight basis, but stronger than steel period. He has worked to protect the intellectual property through patent filings, not only in the US but internationally as well. (Think about your worst paperwork headache ever and multiply that by a bunch of different countries!) He has created some new strains that he believes will best DS in their properties. He has worked with Vietnam to create a plant for commercial production, obtaining governmental approval for his efforts. And he is working with the government to become an approved government contractor. (Again, think about your worst paperwork headache and multiply that by Washington D.C.)
Calls for 'scale-and-sale' and commercial production are simply singing to the choir, as far as I'm concerned. Kim Thompson cannot simply plant a few mulberry trees in his back yard and produce metric tons of silk. He understands this. I believe that China is the number one producer of silk worldwide, but Kim Thompson was wise not to go there. For every Apple, many, many companies have been unhappy with their Chinese investments. (Google, for one.) His frustration with the slow pace of Vietnam was evident in his 'grow-or-die' comment and the current effort to find a US producer who can produce silk in quantity at a reasonable cost.
I wonder if someone could check to see if the registered stock owners still include Notre Dame and other individuals that KBLB has worked with. If they were selling off their stock, that would be a little discouraging. But if someone could check those books, I'm betting they are not the ones selling off their shares.
As to the future, my crystal ball is as murky as everyone else's. I do feel confident that Kim Thompson understands the need to produce commercial quantities and is working on that problem as quickly as humanly possible. I would normally want to buy stock in companies like Spiber and Bolt Technologies to cover my bases on this new technology, but I have far less confidence in them than I do in KBLB. It is certainly true that privately owned companies don't have to share information with the public the way that KBLB is doing, but I'm not confident they will be able to get the kinks worked out and produce silk that is strong and cheaper than what silkworms can do.
For the moment, Kim Thompson is selling additional shares to fund the company's operation. It is the only way he has to stay in business. He is diluting his own shares as well as ours. I am buying stock as quickly as my limited resources allow, aware that the price may continue to sag, but hopeful that commercial production is not too far away and the stock will climb once that begins.
