The good patrons of Picaroons Brewtique may soon be helping to produce medical compounds each time they hoist a pint at the Fredericton microbrewery.

Picaroons is in talks with Fredericton biotech Mycodev Group Inc. on a plan to help the startup produce chitosan, a compound that has a range of industrial uses, including pharmaceutical ingredients, water treatment, fertilizer and cosmetics. Chitosan is usually extracted from the shells of shellfish, but Mycodev founder David Brown has devised a way to produce it from fungus.

“The fungus is a lot better in terms of the constant supply,” said Brown, a synthetic biologist who recently graduated from the University of Alberta. “We can grow it 365 days a year.”

He said in an interview that the big problems with chitosan production are worries about the supply of shellfish shells and the industrial waste produced by traditional methods of producing the stuff.

Brown searched for and found a form of fungus that produces a lot of chitosan, then he genetically engineered it to ensure maximum production of the fungus itself. He developed an automated system to heat the fungus and extract the chitosan.

But he still faced one problem.

 “The biggest cost for any biotech company growing fungus or bacteria is just feeding the stuff,” he said. “You can spend thousands of dollars a day feeding the fungus.”

He found his solution, as so many of us do, at his local pub.

The brewing of beer produces great amounts of waste. For each litre of beer produced, there are about six litres of wastewater, and there are yeast and barley that have to go to the landfill. Brown discussed the problem with Picaroons owner Sean Dunbar and they decided to try growing fungus from the residue of the brewing process.

Brown said he has successfully finished laboratory-scale tests, and will soon work with New Brunswick Community College with industrial-scale vats to produce the fungus. The site is near the brewery, so they can pipe the wastewater into the vat.

 “It’s free to us, which is great, and it helps the brewery,” said Brown. “They’re trying to be as green as possible.”

Mycodev expects it will be able to produce 1.2 metric tonnes of chitosan per year at the outset, valued at $500,000 to $1.5 million, depending on the grade and use. The fungal chitosan is medium quality and can be refined to produce a higher-end product.

Brown has been financing the project so far through the National Research Council’s Industrial Research Assistance Program. He was able to pitch to several potential investors last month at a Mentor Minutes competition at the Pond-Deshpande Centre at the University of New Brunswick, and walked away with the $500 first prize. He’s now continuing his fundraising with a target of $500,000.

 “It’s not very much compared to some of the other biotech companies,” he said. “And it’s not a typical biotech company where you’re waiting three to 10 years for your cash flow to become positive. We could be cash-positive quickly, possibly within … three years.”