STATE OF THE ART

"Attack of the Killer Microbes" could be the title of the latest sci-fi flick -- or a description of a burgeoning new industry known as bioremediation. Bioremediation uses microorganisms -- such as yeast, fungi, and bacteria -- to break down hazardous substances into safer ones. The technology began making low-profile appearances during the mid-1980s but was thrust into the public eye by the Exxon Valdez spill, in 1989. "People like bioremediation and are comfortable with it because it's a natural type of technology," says Ron Hicks, president of the nine-year-old "grand-daddy" of the industry, Groundwater Technology, which is located in Norwood, Mass. The popularity of bugs notwithstanding, many people remain cautious. "I don't think corporations will be good customers until the Environmental Protection Agency mandates legislation," says Sam Dryden, a Boulder, Colo., venture capitalist. Echoes Patrick Latterell, general partner of Venrock Associates, in Palo Alto, Calif., "Thus far, bioremediation has not proved very effective, often because the modified bugs don't survive well in the harsh real-world environment." Still, over the past decade the number of bioremediation firms with substantial field experience has grown. Here's a sample of the start-ups braving this new world:

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Microbes En Masse
Until recently, microbes had been grown successfully only in small quantities in petri dishes, or as "bugs in buckets," as the procedure is referred to in the trade. Mycotech, a three-year-old start-up in Butte, Mont., is altering that practice. By growing fungi on a solid organic material instead of in water, venture-backed Mycotech is producing large quantities of more than 30 different microbes in a cost-effective manner, says president Robert Kearns. The company is targeting the biopesticide and bioremediation markets with its microbes, which it says have proved effective at breaking down everything from grass-hoppers to heavy toxins. Revenues for the first two years were "non-existent," says Kearns, but are approaching $1 million for 1993. Customers include utilities, refineries, and large industry players such as Groundwater Technology, with which Mycotech has a three-year marketing agreement.

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Suicide Genes
Whereas companies like Mycotech are growing naturally occurring microbes, other start-ups are cultivating genetically engineered bacteria. To date, the designer bugs have encountered more market resistance than their natural brethren. "People are afraid genetically engineered bugs are going to come up and eat their polyester," explains Groundwater Technology's Ron Hicks. GX BioSystems, a venture-capital-backed start-up in Langhorne, Pa., is developing a system to combat that fear. The idea is to genetically engineer bacteria so they die after performing designated tasks such as destroying pests or pollutants. GX BioSystems aims to begin field trials in 1995, and president James Sharpe expects the company to release its first genetically engineered product in 1997.

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Oat Elixir
Stimulating the appetites of microbes that dine on hazardous wastes and pollutants can enhance the bugs' effectiveness. Nurture Inc., in Missoula, Mont., has patented a technology that converts oats into a powder called Nurture to excite oil-eating bacteria that exist naturally in both fresh and salt water. The company, which has corporate, venture-capital, and private backing, has been developing its technology for six years and opened its first production plant in the fall. CEO Zachary Wochok expects first-year revenues to run between $1 million and $4 million. -- Alessandra Bianchi