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Amyris (NASDAQ:AMRS)

Q1 2013 Earnings Call

April 30, 2013 5:30 pm ET

Executives

Joel Velasco - Senior Vice President

John G. Melo - Chief Executive Officer, President and Director

Steven R. Mills - Chief Financial Officer and Principal Accounting Officer

Analysts

Robert W. Stone - Cowen and Company, LLC, Research Division

Brian K. Lee - Goldman Sachs Group Inc., Research Division

Vishal Shah - Deutsche Bank AG, Research Division

Michael J. Ritzenthaler - Piper Jaffray Companies, Research Division

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

Pavel Molchanov - Raymond James & Associates, Inc., Research Division

Operator

Welcome to the Amyris First Quarter 2013 Conference Call. This call is being webcast live on the Events page of the Investors section of Amyris' website at www.amyris.com. This call is the property of Amyris, and any recording, reproduction or transmission of this call without the express written consent of Amyris is strictly prohibited. As a reminder, today's call is being recorded. You may listen to a webcast replay of this call by going to the Investors section of Amyris' website. I would now like to turn the call over to Joel Velasco, Senior Vice President.

Joel Velasco

Good afternoon. Thank you for joining us to discuss highlights of Amyris' first quarter financial results, our progress and our business outlook. With me today are John Melo, our Chief Executive Officer; and Steve Mills, Chief Financial Officer.

On the call today and in this online webcast, you will hear discussions of non-GAAP financial measures. Reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is contained in the press release distributed today, which is available at amyris.com. The current report on Form 8-K, furnished with respect to our press release, is also available on our website, as well as on the SEC's website at sec.gov.

We will provide certain forward-looking statements about events and circumstances that have not yet occurred, including projections of Amyris' operating activities for 2013 and beyond. These statements are based on management's current expectations, and actual results and future events may differ materially due to risks and uncertainties, including those detailed in the company's recent SEC filings and the Risk Factors sections of Amyris' report on Form 10-Q filed with the SEC on March 28, 2013. Amyris disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the Amyris SEC filings for detailed discussions of the relevant risks and uncertainties. I will now turn the call over to John Melo.

John G. Melo

Thank you, Joel. Good afternoon, and thank you for joining us for our review of our first quarter financial results and an update on our business outlook. As we outlined in our press release, we are executing on the plan we detailed to you over the last year and are on track with our milestones and optimistic about the future, both in our commercial and financing activities.

Let me begin with a review of activities to date focused on the following 3 key areas: manufacturing, collaborations and commercial sales and pipeline.

First, on the manufacturing front. During the past quarter, we operated our farnesene industrial production facility according to our plans, bringing various fermenters online, improving our processes, and we shipped high-quality inspect renewable farnesene. The Amyris plant at Brotas, Brazil, is running as we expected with no significant surprises. Our deliberate plan has been to ensure a smooth ramp-up of production and to achieve target efficiencies. As we complete this methodical start-up process, we will focus on increasing volume throughput to lower our production cost during the second half of the year.

As we indicated in our last call, with the start of the sugarcane harvest in Brazil, we have successfully switched from raw VHP sugar crystals to concentrated cane syrup as the in-season feedstock for our fermentation. Also as planned, we are in the process of introducing one of our latest yeast strains at the plant in Brotas to further improve yield and productivity. We expect the combination of these actions to further reduce our farnesene production costs.

All in all, a good start for our first quarter in terms of farnesene production as evidenced by the receipt of $5 million in milestone funding from one of our shareholders. With the success of the scale-up in Brazil and the positive visibility this delivers in farnesene volume and cost, we have paused our contract manufacturing for farnesene.

Second, turning to collaborations. We made considerable progress in securing additional funding through our partnerships for new products. During the quarter, we closed on a major expansion of our collaboration in the flavor and fragrances industry, finalizing the terms for our multiyear project with Firmenich, which builds on the success we have achieved with a fragrance oil-producing strain.

Together, Amyris and Firmenich will work to develop and commercialize various other flavor and fragrance compounds. As part of this project, we received $10 million in collaboration funding, which, as Steve can explain further, appears as deferred revenue on our balance sheet. We anticipate similar funding levels under this collaboration in the coming years. This is a multiyear collaboration with $10 million of annual funding that could result in over 30% of Firmenich fragrance ingredients being supplied from our technology platform. And as we announced yesterday, we have a separate collaboration with International Flavors & Fragrances, IFF, another leading flavor and fragrance company to develop a specific set of new fragrance ingredients. We have received initial funding during the second quarter and are confident we can meet our upcoming milestones.

I'm pleased to say that in the first quarter, we made significant progress in our plan to generate $60 million to $70 million in collaboration funding cash for 2013, with approximately $12 million received in the first quarter, plus confirmation from Total that they are satisfied with the progress of our farnesene technical development and the associated $30 million in funding from Total during the second quarter. Our collaboration funding target is mostly contracted for the year, and we have visibility on the balance.

You may have heard me say it before, but it is worth repeating. We can develop and are developing strains that are able to produce multiple molecules. The proof of this capability lies in our collaborations with market leaders such as Firmenich, IFF, the folks at Michelin and others, where we are developing new molecules beyond farnesene and where we expect to produce these new molecules at scale. That's the power of our Synthetic Biology platform, to build living factories for a range of renewable chemicals and fuel -- fuels that meet the world's needs and being capable of scaling those effectively.

We are also extremely pleased with the success of our first and not-for-profit technology breakthrough on artemisinin, the key ingredient in the world's most effective and preferred drug in combating malaria. Last month, Sanofi started large-scale industrial production of artemisinin, utilizing Amyris' design strains. Production of these life-saving drugs produced with our technology underscores not only the success of Amyris' Synthetic Biology platform at scale, but also the positive impact this technology can have on our planet.

Turning to my third point, we continue to make progress on growing our commercial sales and our future pipeline. During the quarter, we maintained our sales volumes, focused on squalene and diesel for niche markets in testing. We also sold limited volumes of high-purity farnesene to Kuraray for customer testing in performance tires and expanded the scope of our lubricants joint venture with Cosan.

On squalene, we entered the year supplying approximately 10% of the global market for this best-in-class emollient. This is a notable milestone when you consider 2012 was our first full year of sales. While squalene use had been decreasing because of unsustainable and expensive sources, such as deep-sea shark liver and ultra-refined olive oil, we believe demand for our squalene has been growing as formulators take note of our pricing and supply stability for a more sustainable, high-performance replacement for existing squalene sources.

I was just recently in Paris for in-cosmetics, the leading trade show for the industry. And our disruptive impact in the market was clear. For instance, one of the leading personal care ingredient suppliers in Europe committed to purchasing 90% of their annual renewable squalene needs from Amyris. In short, we are about to become the world's leading squalene supplier in 2013, working closely with our global network, Nikko in Japan, Laserson in Europe and CenterChem in the United States. We are also developing new channels in Brazil and beyond, as well as building direct ties with some of the largest cosmetic houses in the world. We are experiencing several of the world's leading cosmetics brands moving to sugar squalene and increasing their overall use.

On fuels, we continue to sell diesel for the public bus fleets in Rio de Janeiro and São Paulo where we are supplying about 300 buses with Amyris' renewable diesel locally produced from sugarcane. We received considerable interest for additional fuel from these and other cities in Brazil, as well as corporate fleets, and expect we may opt to increase volumes for diesel as our production costs continue to come down.

I am also pleased to note that we produced and delivered all required volumes of renewable diesel to the U.S. Navy for testing against their marine diesel specifications during the first quarter. We currently anticipate the Navy will exercise its option for additional shipment in the coming quarters. And our work on jet fuel continues at rapid pace. We are working closely with Total with a clear plan to achieve regulatory approval in 2014.

On to our commercial pipeline. Let me make 3 quick points. First, as noted earlier, we have begun shipping test quantities of high-purity farnesene to Kuraray, testing by leading tire manufacturers around the world. Polymerized farnesene reacts with tire rubber more easily than traditional materials such as isoprene and butadiene and can strengthen adhesion of rubber components to improve tire shape stability and performance. Testing by our partner, Kuraray, showed this liquid farnesene rubber, or LFR, as we call it, reduces heat loss from friction between fillers, which leads to decreased rolling resistance and improved fuel economy. Leading tire manufacturers representing 3/4 of the global tire market are at various stages of testing this product in their own formulations. Along with our partner, Kuraray, we expect first commercial sales of farnesene for tire manufacturers later this year. We believe this application has the potential to be $1 billion in sales over the next 5 to 7 years.

Second, we expanded our joint venture with Brazil's Cosan to include renewable additives and finished lubricants in addition to the joint venture's original scope of renewable base oils for industrial, commercial and automotive markets. This expansion is consistent with our stated strategy to move our high-volume products into joint ventures.

Moreover, by moving the Amyris personnel working on lubes to Novvi, we will further reduce our operating costs associated with developing this market. The Novvi team is in advanced stages of testing with various customers and expects to begin converting Amyris farnesene into renewable base oils and finished products, such as transformer oils, later this year or early next. This is another business that we believe has the potential to be $1 billion in sales over the next 5 to 7 years.

Third, late this year, we expect to begin commercial production of a fragrance oil molecule developed under our collaboration with Firmenich. For competitive reasons, we cannot identify the particular fragrance oil, but suffice it to say, it is not made from farnesene, but it is another isoprenoid and it is widely used in household products and fragrances, such as laundry detergents and high-end perfumes. This fragrance oil will be the first of several new aroma and flavor molecules we will produce for the flavor and fragrance industry. We understand the flavor and fragrance ingredients market is about $6 billion and growing at a 5% annual rate. Working with the leading flavor and fragrance houses, we believe Amyris technology could address about 1/3 of this market. And based on our plans under current collaboration or supply agreements, our technology platform could address around $800 million of this market.

For those new to the flavor and fragrance space, formulators have suffered from the unreliable supply of natural ingredients, with supply issues stemming from a range of causes, from protection of threatened species to inconsistent quality and political instability. In collaboration with the leading flavor and fragrance houses, we are designing, manufacturing and planning to commercialize these sought-after molecules from sugar feedstocks. Various other molecules, some derived from farnesene and others produced directly from fermentation, are in development or commercial phases. Again, based on what we have seen to date, we are optimistic we could become a major supplier to the flavor and fragrance ingredient market in the next 3 to 5 years. In short, we are optimistic about our commercial pipeline, now led by Zanna McFerson who joined us during the past quarter from Cargill.

So just to recap. Before I turn the call over to our CFO, Steve Mills, for a review of our financials and to provide some additional guidance, let me say that we are pleased with the progress to date at our manufacturing plant, producing and shipping farnesene in spec, and we continue to establish collaborations that can help us accelerate product development and commercialization.

Steve will now take us through the financials before I discuss funding outlook and take some questions. Steve?

Steven R. Mills

Thank you, John, and good afternoon everyone. As you will have seen from our earnings release, we reported a loss on an adjusted non-GAAP basis for the first quarter of $28.4 million or $0.39 per share. This result is both an earnings and EPS improvement from our previous quarter and was a significant improvement compared to the results from the first quarter of 2012.

Total revenue for the quarter was $7.9 million, up from fourth quarter 2012 revenues, due primarily to an increase in collaboration and grant revenues. When comparing revenues to the prior year, please remember that last year's Q1 revenues included $23.9 million of sales related to the ethanol and ethanol-blended gasoline business, a business that we transitioned out of during 2012.

Sales revenues of our renewable products, squalene, renewable diesel and farnesene for specialty chemical applications were essentially flat for the quarter as we delivered product out of existing inventory and began to ship product from our Brotas plant. For the first quarter, our weighted average selling price of renewable products was about $7.33 per liter. We expect to see our weighted average ASP trend down during the year as we increase sales volumes in the second half of the year.

To help keep you informed of our progress regarding collaboration funding, we have provided additional disclosure in a supplemental financial information section of our earnings release. Since collaboration funding does not always match up with collaboration revenue in a given quarter due to the specific accounting treatment for a given collaboration agreement, we will provide you with both the revenue amount and the funding amount in our release.

For the first quarter of 2013, we received approximately $12 million in collaboration funding, with this amount including the $10 million from the Firmenich collaboration. Cost of products sold declined for the quarter as compared to the first quarter of 2012, principally due to the absence of the costs associated with the ethanol and ethanol-blended gasoline business. Our first quarter 2013 cost-of-products sold number includes costs related to the scale-up in production of our farnesene plant at Brotas.

During the first quarter, we continued to reduce our operating expenses. Our combined R&D and SG&A expenses were $30.6 million, down 29% from last year's first quarter due to lower personnel-related costs and lower spending levels. On a sequential quarter basis, our reduction in operating expenses was 14%. We anticipate these operating expenses to be even lower in coming quarters.

Turning to the balance sheet. Our cash balance stood at approximately $25 million at quarter end. And we had the following significant cash-related items during the quarter: Equity financing, we received $15 million in January and another $5 million in March as part of private placements to existing Amyris shareholders; we received the $10 million collaboration funding from Firmenich; and our capital expenditures, net of disposals, were about $2 million for the quarter.

Let me now turn to the outlook for the rest of 2013. In our previous earnings call, we indicated our 2013 plan called for a relatively modest level of capital expenditures, about $10 million, and we estimated our cash expenditures for SG&A and R&D would be less than $85 million for the year. And as a reminder, this $85 million number excludes depreciation in stock-based compensation. Based on where we stand today, these OpEx and CapEx targets are still in line. We also indicated that we were targeting $60 million to $70 million in collaboration funding for 2013 to cover at least 80% of our $85 million cash operating expenses.

As John noted, based on the funding received to date and the next $30 million tranche in collaboration funding from Total, we are well on our way to achieving our collaboration funding goal for the year. It is worth repeating that collaborations are a critical element of our business plan, helping us build strong technical partnerships that end with product commercialization, as well as generating a longer-term cash stream as we capture of share of the gross margin from the total value chain of the product.

I would also like to provide you with additional guidance regarding our sales outlook. We expect our renewable product sales revenue to be in the $30 million to $40 million range for the full year of 2013. We plan for stronger production in sales volume in the second half of the year as our farnesene production costs come down through a combination of improved yeast strains, lower feedstock prices and increased efficiencies at our plant in Brazil.

I'll turn the call back over to John for some remarks on our funding outlook and to open the call up for questions.

John G. Melo

Thank you, Steve. Over the last year, Amyris has been guided by a clear plan: bringing down our expenses and maintaining an unrelenting focus on cost controls while not losing sight of the innovative disruptive impact our technology can have. We developed new collaborations to cover a significant portion of our operating expenses and to drive our product pipeline across not just farnesene-related products but, as in the case of the flavor and fragrance industry, new molecules from our technology platform. With success in executing this plan and the start-up of our plant in Brazil, we are now focused on maintaining these gains and ensuring the company has enough funding to achieve sustainable, ongoing business performance. To that end, we are closing on terms with one new investor for a mix structure funding opportunity that would give us greater financial flexibility. We plan to close this transaction during the second quarter, and based on our current plan, expect this as the last equity financing event prior to cash flow positive in 2014.

Our plan is to end the year with a $4 a liter or lower production cash cost, and we remain on track for positive cash margin from our renewable products by year end. We also continue to expect to achieve cash-flow-positive Amyris operations in 2014.

Before I turn the call to you for questions, let me recap with the consistently improving technology to engineer living factories at our own plant operating according to plan, we are delivering commercial products in spec and on time to our customers globally. We are on plan to achieve our goals, and with continued support from our leading shareholders, we are confident and funded as we grow into the future.

John, the operator, would you please open the line for questions?

Question-and-Answer Session

Operator

[Operator Instructions] So we will take our first question from Rob Stone from Cowen and Company.

Robert W. Stone - Cowen and Company, LLC, Research Division

I wanted to just put the 2 things together, John, if I could. So you're well along on your expected collaboration funding. Wonder if you could give us a sense of how much of that your -- you have visibility on but it's not contracted for yet? And the second part of the question is, is that distinct from this equity financing that you just mentioned?

John G. Melo

Last question first, it is distinct from the financing that I described. And then secondly, most of it is contracted, and we have visibility on all of it.

Robert W. Stone - Cowen and Company, LLC, Research Division

Well, can you give me a sense of how much -- of the $60 million to $70 million, how much is visible but not contracted?

John G. Melo

I'd say there's somewhere around $10 million where we have visibility but it's not contracted yet.

Robert W. Stone - Cowen and Company, LLC, Research Division

Okay, that's helpful. A question on the production costs. It was mentioned that there were some onetime expenses and you were selling previously produced inventory, which probably was at higher cost. So how should we think about the impact of those factors going forward. For instance, how long do you think it'll be to use up the remaining higher-cost inventory and start to be -- seeing costs from what you're producing reflected in your cost of goods?

Steven R. Mills

Thanks, Rob. This is Steve. I think 2 points. One, the inventory that we've been selling out of has already been written down, so it's not coming into the quarter at a very high cost. We recognize that our deliberate ramp-up of production in Brotas is going to leave us at a little bit higher per unit cost than certainly we'll end up enjoying because we're running at less than full volumes. So we knew this first quarter. And really going into the second quarter, we would be running at higher costs at our own plant simply based on efficiencies and volume. And the expectations are that we will ramp up significantly in the second half of the year as we work on using the syrup in production, as well as the -- getting the efficiency from our newest yeast strain.

Robert W. Stone - Cowen and Company, LLC, Research Division

So just to make sure I'm pressing that correctly, so cost per liter is actually going to be higher in the second quarter and then you expect to make improvement in the second half?

Steven R. Mills

We'll certainly make improvements in the second half. And I don't -- as I sit here today, don't think that it'll be a significant difference between the quarters. We think we'll become more efficient at Brotas and really don't see it on a per unit basis much, much different.

Robert W. Stone - Cowen and Company, LLC, Research Division

But I thought John said that you were targeting a $4 cost or something by the end of the year or did I not get that correct?

Steven R. Mills

No, you got that correctly. It'll be by the end of year, but that's also expectations we'll be running the plant at much higher capacities in the second half of the year.

Robert W. Stone - Cowen and Company, LLC, Research Division

Okay. So the not much difference quarter-to-quarter is from Q1 to Q2 or from Q2 to Q3?

Steven R. Mills

Q1 to Q2. Sorry, I was -- I'm thinking about Q1 with the Q1 release, but we're talking Q1, Q2. Once we get the Q3, our expectations are that cost will come down significantly.

Operator

And our next question is coming from Brian Lee from Goldman Sachs.

Brian K. Lee - Goldman Sachs Group Inc., Research Division

I just had 2. First off, kind of a follow-up to Rob's question on some of the cost of goods sold. I was wondering how much, Steve, did start-up costs impact COGS this quarter, and then what's the cadence we should expect for that to normalize or decline to 0 just so that we can get a clearer view of the product-related COGS here?

Steven R. Mills

Well, we didn't disclose that amount specifically. And it was a mixture as we looked at scaling up, we return the plant on really right before the 1st of January. We don't have that cost broken out separately. We expect less of the start-up costs in the second quarter, but I would -- as I explained in answering Rob's question, the real benefit in efficiencies will be coming in the second half of the year.

Brian K. Lee - Goldman Sachs Group Inc., Research Division

So based on that answer, is it fair to assume that by 3Q, you won't have any more start-up costs embedded in the COGS line?

Steven R. Mills

That's our expectation.

Brian K. Lee - Goldman Sachs Group Inc., Research Division

Okay. And then my second question was just on the IFF agreement. If you guys can maybe provide a bit more detail. I'm just curious how long you have been in talks with them if you had any collaboration with them in the past? And then I see you guys aren't talking about any financial implications or upfront funding, so wondering if this is unique to IFF or what we should expect for future partners?

John G. Melo

Brian, this is John. I mean, in general, our partners are very sensitive about what we disclose. I just want to preset the expectations with that. And then there was actually an upfront cash piece of it, which we disclosed in the release. There is a total cash that we did not disclose. This is a relationship we've been in discussions with for over 2 years, and it's very material for both of us in what the applications are and the potential impact. And again, we are not disclosing this specific applications for competitive reasons as a request of IFF.

Operator

[Operator Instructions] So we'll take our next question from Vishal Shah from Deutsche Bank.

Vishal Shah - Deutsche Bank AG, Research Division

John, can you just remind us again what your revenue levels would be in order for you to get to cash flow breakeven in 2014, and also, what sort of expectations you have for collaboration and funding revenue as you exit the year?

John G. Melo

I'll take a couple of those and let Steve build on the back end with your third question. So the first one I'll take is our expectation year-on-year is to remain about the same. And I think, we said $60 million to $70 million in collaboration revenue we said [ph] differently, covering about 80% of our OpEx, which is what we expect, again, going into 2014. Second part of your question, the way I'd answer it, Vishal, is when you're looking at our breakeven for 2014, it is a combination of what shows up in revenue and collaborations that based on how they're being accounted for don't show up in revenue, which is kind of the way to think of it as our total cash generation from operations, which, again, breaks down into those 2 big buckets. So it's not necessarily just revenue to cost to get you to cash flow positive based on our model. It's actually total cash in from operations which includes multiyear collaborations as we bring those -- the cash for those deals in each year. So the ones we're doing this year are multiyear. There's an element of cash coming in next year from those collaborations, both in Firmenich, Total and some for IFF and then some of the others we either have or will have going into the end of the year, but they're not all revenue impacting based on the structure of the agreements. Steve?

Steven R. Mills

Well, I think the revenue level as we talked about the 2013, we're looking in the $30 million to $40 million range. Our expectations for 2014 are to be something, we believe, at least double that. And in conjunction with John's collaboration comment, the -- that's why it gets us to the cash flow positive from operations because we look at the collaboration funding as an operational activity, if that makes sense.

Vishal Shah - Deutsche Bank AG, Research Division

Okay, that's helpful. And then, you talked about the funding that you expect to receive in the second quarter from this equity raise. What's the sort of the size of the funding that you expect? You said it's that's going to be the last one before you start generating positive EBITDA?

John G. Melo

I think, Vishal, I clarified in my statement that it's a mixed financing, so it's not all equity. And we have not disclosed the total amount. Steve, I don't if you want to...

Steven R. Mills

No, it's still in discussion and negotiation as we come to it. So I just think, at this point in time, we need to say stay tuned.

Vishal Shah - Deutsche Bank AG, Research Division

Well, just maybe another way to think about it is what is your cash requirement going to be between now and to mid-next year as you think about -- on a quarterly cash flow going to be -- is it going to be $20 million, $30 million a quarter?

John G. Melo

I mean, I think we had mentioned this on the last call, that, I think, the -- for this year, we had mentioned $15 million to $25 million as the range of net cash burn. That's cash burn offset by collaboration cash, as well as operating cash. That's what we have said in the last call. And I think we're -- we still believe that's the case. And I think secondly, we're looking at this funding as -- partially, to fund us to cash flow positive, but also to ensure the company has a bit of security on the balance sheet and can continue to grow and achieve its objectives.

Operator

And we'll take our next question from Mike Ritzenthaler from Piper Jaffray.

Michael J. Ritzenthaler - Piper Jaffray Companies, Research Division

It seems like in order to hit the cash flow inflection next year that the capacity in Brotas is enough to basically get you to that. Is that a fair statement or will it include some kind of flexible manufacturing on top of that?

John G. Melo

That's a fair statement. We will have minimal contract volume, but really for a new molecule we're scaling production of, not for any material production volume in 2014. We expect for this year and next year, based on what we're seeing operationally at Brotas, for Brotas to be able to meet our volume requirements and our cost needs.

Michael J. Ritzenthaler - Piper Jaffray Companies, Research Division

Okay. And then maybe a question for you, John or Joel. On the sale of the crushing assets down in Brazil, I now that Paraíso was one that reasonably changed hand. Is that something that's being more orchestrated at a high level for the government or is that -- is there something that's kind of changing in the industry?

John G. Melo

I mean, I really would prefer not commenting. We are very close to the private equity firm that actually is a owner in both assets. We were familiar with the process, and -- but that's about all that we could comment on at this point.

Operator

And we'll take our next question from Jeff Zekauskas from JPMorgan.

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

What was the cash flow from operations in the first quarter?

Steven R. Mills

The cash flow from operations, Jeff, were approximately $24 million, $25 million when you back depreciation stock-based comp out of the loss.

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

I'm sorry 24...

Steven R. Mills

$24 million. Let's say, $24 million.

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

Negative or positive?

Steven R. Mills

Negative if you -- before collaborations and before the financing, but just strictly, the net loss and if you net out the non-significant noncash expenses.

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

Right. And you talked about, perhaps, achieving $30 million to $40 million in revenues this year from renewables. In rough terms, if you had to carve it up into big pieces, what are the big pieces that gets you to $30 million to $40 million in revenues?

Steven R. Mills

Well, it's going to be a combination of squalene, renewable diesel and sales to our joint venture partners probably for base oils and lubricants would be the biggest chunks. There's some other opportunities, but as we sit here today, that's the main parts.

Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division

So is that in the order of size? Is squalene the largest?

Steven R. Mills

It wasn't in the order of size. I just...

John G. Melo

From a revenue perspective, Jeff, that is about right, a third, a third, a third. From a volume perspective, that is not the mix because of the average selling price of squalene versus the other products.

Operator

And our next question is coming from Pavel Molchanov from Raymond James.

Pavel Molchanov - Raymond James & Associates, Inc., Research Division

You didn't talk a lot about this, this time, but I thought I would ask about the JV with Total, what the status is, when the joint venture is supposed to be formalized, and how you see the commercialization on that front progressing?

John G. Melo

Pavel, we expect the JV to be complete during the second quarter. And then we expect early volumes for products other than fuels to be supply or early supply sometime this year, early next year.

Pavel Molchanov - Raymond James & Associates, Inc., Research Division

And what production capacity would that -- is that going to come out at Paraíso or is there going to be a dedicated facility ready for the JV?

John G. Melo

This is out of Paraíso for the next 2 to 3 years.

Pavel Molchanov - Raymond James & Associates, Inc., Research Division

Okay. So no -- we should not assume any separate capacity expansion for the purpose of the JV?

John G. Melo

That is correct, for the next 2 to 3 years, for the medium term.

Pavel Molchanov - Raymond James & Associates, Inc., Research Division

Okay. Will there be -- over that 2 to 3 years, is it going to be all nonfuel product?

John G. Melo

Mostly. I mean, there will be some fuel like some jet and some minimal niche diesel, but predominantly, nonfuel sales.

Operator

Okay, ladies and gentlemen, I'm showing no further questions in the queue at this time. I would now like to turn the call back to John Melo for any closing remarks.

John G. Melo

Thank you, John. We are pleased with our first quarter's performance and believe it is just a sign of the improvements that are to come from Amyris this year and beyond. Our ability to deliver renewable hydrocarbons of equal or better performance in petroleum-based or plant-derived products allows us to meet specific consumer needs at competitive prices. And with increasing demand from industry leaders who are seeking better-performing alternatives to petroleum products and looking to develop these products in collaborations with Amyris, we believe we are well on our way to industrializing synthetic biology and transforming renewable chemicals and fuels, much like Biotech did for the pharmaceutical industry. Thank you for your time today and your continued interest in Amyris.

Operator

Ladies and gentlemen, this does conclude your conference. You may now disconnect, and have a great day.

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Source: Amyris Management Discusses Q1 2013 Results - Earnings Call Transcript

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