Gary Calton likes to say his company has the "the best work force possible -- they don't get overtime, they don't complain and they don't take vacations."
His "workers" are single-celled microbes, and Calton hopes they will help satisfy America's sweet tooth while carving a niche in the specialty chemicals market for his firm, Purification Engineering Inc.
PEI, which opened its commercial production facility and new corporate headquarters in Baltimore last week, uses the microbes to produce l-phenylalanine, an amino acid ingredient of the low-calorie sweetener aspartame.
And PEI is one of two local biotechnology firms supplying l-phenylalanine to G. D. Searle & Co., which markets the increasingly popular sweetener under the trade name NutraSweet.
Demand for the sweetener may surge following the announcement last week that PepsiCo. Inc. will drop saccharin from its diet soft drinks and begin sweetening them entirely with aspartame.
The other local company supplying Searle with l-phenylalanine is Genex Corp. of Rockville. Like PEI, Genex hopes the success of aspartame will boost its fortunes.
Both of the young companies are betting that the amino acid will generate the revenue they need to show profits, attract additional investment and develop other products.
Genex, founded in 1977, reported its first profit in this year's third quarter, but said it was because of a one-time settlement payment rather than product sales. Industry analysts expect it to become profitable in 1985.
PEI, a privately held firm founded in 1981, believes its new production process is more cost-efficient than Genex's but, until recently, has been struggling to raise the $4 million needed to build the full-scale production plant.
L-phenylalanine is PEI's only commercial product and Genex's most successful. Genex also makes an enzyme-based drain cleaner and the aspartame ingredient l-aspartic acid.
Now, both companies are working to expand their l-phenylalanine production capabilities to keep pace with the demand for aspartame.
Searle already is selling virtually all of the sweetener it can make -- about 7.5 million pounds a year -- and plans to double its production with a new plant that should begin operation in January. Searle has had to buy aspartame from an Italian manufacturing firm to meet demand.
Sales of aspartame have been climbing fast, to $325 million in 1983 from $72 million in 1982. Sales this year should total about $550 million, and could reach $1 billion in 1985, said analyst Nelson M. Schneider, who follows Searle and Genex for E. F. Hutton & Co. Inc.
PepsiCo would not say how much aspartame it will buy, but Schneider estimated it will need about 3.75 million pounds a year, or 3 million pounds a year more than it uses now.
"Obviously, we're delighted," PEI's Calton said of Pepsi's announcement; Genex would not comment.
Diet soft drinks already account for about half of Searle's aspartame sales, Schneider said. Other beverage companies may want to follow Pepsi's lead, but Searle may not be capable of making enough of the sweetener for everybody. "Pepsi may have preempted the marketplace," Schneider said.
PEI says it has produced "multi-ton" amounts of the beige l-phenylalanine powder at a pilot facility in Columbia, Md. The company expects to start shipping from the Baltimore plant this week. The facility will start with a production capacity of 1.2 million pounds a year of the substance, and is expected to expand to 2 million pounds a year in mid-1985.
Genex currently is starting up a facility in Paducah, Ky., with an initial production capability of 4 million pounds a year of l-phenylalanine and 4 million pounds of l-aspartic acid, the other amino acid ingredient of aspartame.
Searle also produces some l-phenylalanine itself and buys the rest from Ajinomoto of Japan, W. R. Grace & Co. of New York and sellers on a spot market.
L-aspartic acid is a more commonly available organic chemical that is made by many firms.
Genex uses a patented fermentation process to produce l-phenylalanine, and has been producing as much as 100 tons a month, or about 40 percent of Searle's needs in the third quarter, Schneider said.
The company also sells small amounts to other customers.
Genex's profits have been squeezed, however, by the lack of its own production facility.
While its Paducah plant was being renovated, Genex arranged for Cell Products Inc. of New Brunswick, N.J., to produce the amino acid.
Product sales of $10.7 million in the third quarter barely covered production costs of $9.9 million. "That's not a lot of profit margin," said Genex spokeswoman Shellie Roth.
Genex will buy some l-phenylalanine from Cell Products through the end of the year while it shifts production to the Paducah plant, which should be operating at full capacity by the end of this year.
Genex expects a net loss in this year's fourth quarter and has predicted that its fourth-quarter product sales will be "substantially lower" than in the third quarter.
The firm will not say why it expects lower sales, but industry observers guess that it filled much of its fourth-quarter commitments by shipping extra supplies in the third quarter.
The company plans to use the Paducah plant eventually to produce a broad range of amino acids, enzymes and vitamins.
Both PEI and Genex hope to dominate the l-phenylalanine market and expand into the production of other organic chemicals with novel biological production technologies. Both have developed new, and proprietary, methods of producing l-phenylalanine that sharply undercut the cost of traditional fermentation methods.
Fermentation uses living, single-celled organisms to produce chemical changes and is perhaps most commonly recognized for its centuries-old use in making wine, beer, soy and bread.
The microbes contain enzymes, a type of protein that catalyzes reactions without changing itself. Living cells are grown and packed in a container and drenched with a "feed" substance. They convert the substance to a product and are then separated from the product.
Ajinomoto uses a multi-step conventional fermentation process in which microbes change a "feed" into two forms of phenylalanine that then must be separated. Only the l-phenylalanine form can be used for aspartame.
Genex uses a fermentation process to produce the enzymes, which are then used to convert cinnamic acid directly into l-phenylalanine.
PEI says its system cannot be called fermentation because it does not use living cells to produce the l-phenylalanine. But, like Genex, it uses living cells to produce the specific enzymes required to make the substance.
PEI's system chemically binds the cells to solid beads, breaks the cells open to yield the enzymes and feeds the enzymes to produce the amino acid.
The enzymes can be used for up to a year, without the need to grow large quantities of cells, and there are no cells to remove from the final product.
Genex uses a similar "immobilized cell" bioreactor system to produce l-aspartic acid.
PEI also has developed its own feed as a lower-cost substitute for cinnamic acid, said Charles W. Morris, who joined the company as president in March.
The new company believes its process can undercut the cost of traditional fermentation techniques by 40 percent.
The production from a 3,000 gallon reactor in PEI's process can match that of a 65,000 gallon fermentor, the company says.
Calton, who formerly worked for W. R. Grace and is now a part-time faculty member at the University of Maryland, said he started the company because he "saw a market opening" for a producer of high-value proteins such as interferons.
However, such products can take years to reach the market, so the company chose to start with l-phenylalanine -- a product that could be developed and marketed quickly.
PEI plans to begin producing l-aspartic acid and other products within a year -- a fast start for a group of scientists organized only four years ago.
Financing for the new plant included a $1.4 million private-sector loan from First National Bank guaranteed by the Maryland Industrial Financing Authority and the Baltimore Economic Development Corp.
Adler & Co. of New York provided the essential venture capital. Yuval Binur of Adler said his firm backed PEI because there is a market need for its product and it uses a "very superior" production process.
"It has all the ingredients you want for a venture deal," Binur said.