Periodic Reporting for period 1 - EcoFLEXY (Innovative nanocellulose bioplastic film from fruit waste) Reporting period: 2019-09-01 to 2019-12-31 Summary of the context and overall objectives of the project Cellugy is a biotech company located in Aarhus (Denmark). Officially incorporated in April 2018, it received the SME Phase 1 grant in September 2019. Cellugy has developed ecoFLEXY, a disruptive bio-cellulose material that enables a more readily recyclable alternative to conventional packaging composed of multiple materials (often including aluminum and wax). Conventional multi-layer packaging materials are difficult to recycle because of the need to separate the different layers. Moreover, many countries do not have the recycling systems and processes necessary to handle these complex laminates. In contrast, mono-material packaging is fully recyclable since all layers are made of the same type of polymer, which facilitates sorting.Given its unique features (nano-size fibrils with equivalent chemical composition to the ones in pulp), ecoFLEXY allows Cellugy to answer the needs of pulp packaging manufacturers for mono-material solutions. EcoFLEXY is made by a consortium of microorganisms that feed on sugar and (in the presence of oxygen) produce bio-cellulose thus; its environmental impact is highly limited and it fully disintegrates at room temperature in less than 4 weeks (EN 13432). Moreover, it presents a very good barrier to oxygen and can be further functionalized to meet the specific demands.The objective of the SME Phase 1 feasibility study was to validate/define the best go to market strategy, technical requirements to scale up production, and IPR strategy. The feasibility study was completed on December 2019. Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far The feasibility study was divided in 3 key areas:1. MARKET FEASIBILITY STUDY. Identification of the trends that can promote ecoFLEXY implementation in the market. Deep understanding of the competitors, technologies, and Cellugy differentiation. Key market segments identified and unique value proposition created to fit these segments. Discussions with key market players enabled the discovery/confirmation of the needs, challenges, strategic CSR goals, performance, and volume requirements. Close relationships with key customers/partners were stablished and a strong market interest for ecoFLEXY was proven.2. SCALE UP ANALYSIS. Improvement of the bioprocess economics, analysis on how to scale up to larger-scale pilot production, analysis of the risks linked to the use of waste materials, and drafts of preliminary productions flows. Overall, the feasibility to produce in a cost-effective way was confirmed. Food packaging regulations were reviewed and preliminary compliance reports were achieved with no special difficulties. Discussions with packaging providers pointed out additional regulatory requirements. To increase volumes of production and thus market penetration, licensing was incorporated to our business model. The income statement and balance sheet were adjusted according to the recent changes in the business model. The new financial plan was presented to several investors. Support from a key biotech investor was achieved. Key risks that might prevent our solution from entering the market were identified and mitigation strategies were put in place.3. IPR strategy plan. The first patent application was filled in Denmark. Several key patents to protect Cellugy from its competitors have been identified and applications planed. Complete IP portfolio reviewed. The business plan has been updated with the key learnings of the feasibility study. Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far) Since ecoFLEXY is made from waste materials, comparable in performance and cost with competing technologies, biodegradable at ambient temperature, VOC free, food grade, and tunable to meet customer demands, it has the potential to revolutionize the packaging industry, but also contribute to our society welfare. Some of the expected impacts are:POLITICAL – Protecting and promoting the health and safety of European people. The revised Waste Framework Directive requires plastic waste to be managed without endangering human health and without risk to water, air, soil, plants or animals. It implements the so-called “extended producer responsibility” to ensure that the cost of managing plastic waste is covered by the producers. SOCIETAL – Contributing to a sustainable development, particularly:–SDG 13 (action in climate change) by replacing current plastic with bio-based alternatives.–SDG 12 (responsible consumption and production) by upgrading waste into different types of biopolymers.–SDG 14 & 15 (life below water and on land) by developing a packaging that at the end-of-its-life can be composted and/or recycled in the existing system for cardboard.