Market Promising Analysis

Introduction

Resveratrol, a compound with antioxidant, anti-inflammatory, anti-tumor and cardiovascular protective effects, has a market scale nearing several billion dollars nowadays (Fig.1). Such high economic benefits and market potential make it one of the most promising directions for Versatobacco!

Before this chapter, we have got lots of supportive results and conclusions:

• Through the results of FBA and wet-lab experiments, we have validated the feasibility of Versatobacco in synthesizing resveratrol via the shikimate pathway.
• Through dynamic Flux Balance Analysis (dFBA), we have obtained the accumulation models of resveratrol over time. See details
• Through corporate research, we have acquired key data on the costs of related instruments and consumables, management and maintenance costs, and market prices of the compounds within the industry chain. See details

Then here, we will analyze the profitability of producing resveratrol with Versatobacco, identifying profitable time periods and the optimal timing for maximum profit, while assessing the risks involved.

Assumptions

• Laboratory with basic equipment and technology for production is already available.
• For mass production, the transfection method for the leaves is stable, with significant production visible in approximately 2-4 weeks.
• The analysis subject is consistent with FBA, targeting 1700gFW of leaves (approximately 2m²).

ROI Analysis

We first model the Return on Investment (ROI) for the production of the target compound in the HQT knockout model. The ROI is calculated using the following formula, which indicates the value returned from an investment, i.e., the economic return a business gains from an investment activity. It requires the calculation of costs (C) and profits (P):

$$ ROI(\%) = \frac{P}{C} \times 100\% \tag{1} $$

Costs can be divided into fixed costs and changeable costs. Through industry research, we consider that fixed costs mainly arise from production materials, leaf transfection, and product purification (S.M.1), while changeable costs include the total expenses for labor management of 2m² of tobacco leaves per hour and the maintenance of the cultivation environment.

Fixed Cost: $$ FC = c_{mat} + c_{trans} + c_{puri} \tag{2} $$

Changeable Cost: $$ c(t) = c_h \cdot t \tag{3} $$

Total Cost: $$ C = FC + c(t) \tag{4} $$

Income is generated from the sales of resveratrol at different time points:

$$ I = Q_d \cdot p_0 \cdot q(t) \tag{5} $$ where \( q(t) \) is the function of metabolite concentration over time.

Thus, the profit at different time points is:

$$ P = I - C \tag{6} $$

Parameters

where \( THR \), \( D2W \), \( i \), \( r \), \( t_0 \), \( d \), \( k \) are parameters in \( q(t) \)

Results

For 2m² tobacco leaves, Versatobacco can generate a profit from production of resveratrol between 2-5 weeks with a positive ROI (Fig.2). The ROI value reaches its maximum (39%) around 20d, indicating that harvesting the tobacco and extracting resveratrol at this point would yield the highest economic benefits (Fig.2).

Risk-Return Analysis

After identifying the optimal time for maximum ROI, we still need to assess the risk associated with the returns at that time. In practice, metabolite yields may vary due to slight differences in tobacco batches, cultivation environments, etc., and prices may fluctuate due to company differences and market demand.

To address this, we take the time \( t^* \) where ROI is maximized and the corresponding product accumulation \( q^* \). At this value, we use the Monte Carlo algorithm to simulate the fluctuations in returns caused by random factors.

The product price and yield will follow a normal distribution around \( p_0 \) and \( q^* \), respectively:

$$ p = p_0 + \epsilon_p, \ \epsilon_p \sim N(0, \sigma_p^2) \tag{7} $$

$$ q = q^* + \epsilon_q, \ \epsilon_q \sim N(0, \sigma_q^2) \tag{8} $$

The technical success rate follows a binomial distribution, which will impact the final yield:

$$ s = \frac{s_0}{N}, \ s_0 \sim B(N, P) \tag{9} $$

Thus, the net cash flow at different time points is calculated as the inflow minus the outflow:

$$ CF(t) = s \cdot Q_d \cdot p \cdot q - C \tag{10} $$

Net Present Value (NPV) refers to the difference between the present value of cash inflows and the initial investment, discounted at the cost of capital. In our model, we set a fixed initial investment \( I_0 \) to cover all expected project expenses.

$$ NPV = \sum_{t} \left[ \frac{CF(t)}{(1 + r)^t} \right] - I_0 \tag{11} $$

If the NPV is greater than zero, the project is feasible; the larger the NPV, the more favorable the project, and the better the investment returns.

Parameters

Results

For 2m² tobacco leaves, harvesting them at the moment of maximum ROI yields an expected profit of 761 CNY, with a probability of approximately 87% that the net present value (NPV) will be greater than zero (Fig.3). This indicates that our plant chassis has a high probability of profitability in resveratrol production, demonstrating potential for market application.

Supplementary Materials

S.M.1 Fixed Cost in ROI

Through enterprise research, there are three major fixed costs by using plant chassis, which include experimental materials, agrobacterium transformation, and product purification.

Experimental Materials

Experimental materials include tobacco plants, culture environment, vectors, etc. For 2 square meters of tobacco leaves, we estimate that the experimental materials cost approximately 100 CNY.

Agrobacterium Transformation

For agrobacterium transformation, we have chosen the high-efficiency and high-quality vacuum infiltration method Vacuum-assisted infiltration delivers agrobacteria into a variety of plant tissues such as leaf dises, intact leaves or whole plants by submerging the target tissues into the agrobacterial suspension (Loh H S, 2014). Application of vacuum to the plants forces air out from stomata at the first place. When vacuumis released, the agrobacterial suspension is drawn into plant tissues because of pressure difference (Bechtold N, 1998). This method is suitable for large-scale production of recombinant proteins owing to advantages in terms of speed, yield and cost. For the transfection of 2 square meters of tobacco leaves, we estimate that the operating cost of each vacuum device is 50 CNY.

Product Purification

Product purification will determine the final product pricing. We will conduct a cost analysis based on 98% purity.

Resveratrol is a type of phenolic acid. However, the phenolic acid content in tobacco leaves is particularly high, then how should we work with the plants to extract resveratrol? According to Lin Zhang (specialist of Chengdu Aktin Chemicals, Inc), current method is as follows:

First, use macroporous resin with multiple gradients of methanol and water to remove water-soluble substances like phenolic acids and glycosides from the metabolites, leaving behind less polar substances such as chlorophyll and fats. At the same time, set an intermediate gradient to obtain moderately polar substances, which include resveratrol. Next, it is recommended to directly use solvent crystallization to further purify the products (typically using ethyl acetate or acetone for resveratrol).

Depending on the source, the industrial process roughly involves the gradient separation with macroporous resin as described above, followed by solvent crystallization. We estimate around 400 CNY for this part. However, if the purity is not high, a reverse-phase column chromatography (C18, polyamide, etc.) should be used for further purification. Therefore, we calculate the final cost of purification as 600 CNY.

S.M.2 Market Price and Demand Quantity

Currently, the industrial synthesis of resveratrol is primarily done by extracting it directly from Polygonum cuspidatum (Reynoutria japonica Houtt.), which leads to the low cost. In China, the market price for 98% pure resveratrol is approximately 1500 CNY/kg. Given the molecular weight of resveratrol (C₁₄H₁₂O₃) as 228 g/mol, the cost is calculated as:

$$ 1.5 \, \text{CNY/g} \times 228 \, \text{g/mol} \times 10^{-3} = 0.342 \, \text{CNY/mmol} \tag{12} $$

Therefore, in the analysis of 1700 gFW leaves, the cost per unit is:

$$ 0.342 \, \text{CNY/mmol} \times 1700 \, \text{gFW} = 581.4 \, \text{CNY/(mmol/gFW)} \tag{13} $$

Currently, resveratrol has widely used in health foods, anti-aging products, and cosmetics. We set its market demand at 100%.

S.M.3 Initial Investment

We estimate the initial investment for the resveratrol extraction project to be approximately 9,500 CNY. It is important to note that this investment represents only a fraction of a larger project, as the number of tobacco cultures is only a part of the entire project. This funding will primarily cover:

• Infrastructure setup
• Equipment and reagents purchase
• Human resources management and insurance