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Based in Thousand Oaks, California, Ceres (NASDAQ:CERE) scheduled a $110 million IPO with a market capitalization of $506 million at a price range mid-point of $22 for Thursday, February 9, 2012. CERE is one of nine IPOs scheduled for this week (see our IPO calendar).

SUMMARY

CERE is an agricultural biotechnology company selling seeds to produce renewable biomass feedstocks. 85% of revenue for the November 2011 three months came from resarch and government grants.

CERE is still very much of a development stage company, and we would avoid CERE on the IPO.

BUSINESS

CERE is an agricultural biotechnology company selling seeds to produce renewable bioenergy feedstocks that can enable the large-scale replacement of petroleum and other fossil fuels.

CERE uses a combination of advanced plant breeding and biotechnology to develop new crops, known as dedicated energy crops, that CERE believes addresses the limitations of first-generation bioenergy feedstocks, such as corn and sugarcane, increase biomass productivity, reduce crop inputs and improve cultivation on marginal land.

CERE's first large-scale commercial products are proprietary sweet sorghum varieties that can be used as a "drop-in" feedstock to extend the operating season of Brazilian sugarcane-to-ethanol mills, the operating days of which are currently limited due to the inherent limitations of sugarcane physiology and growth patterns.

CERE's dedicated energy crops can also be used for the production of second-generation biofuels and bio-based chemicals, including cellulosic ethanol, butanol, jet fuel, diesel-like molecules and gasoline-like molecules, from non-food biomass. Finally, baseload utility-scale electric power can also be generated from the biomass feedstocks grown from our seeds.

TECHNOLOGY

CERE develops low-input dedicated energy crops capable of producing high yields per acre using innovative plant breeding and trait biotechnology. By developing these types of crops, CERE enables the scalable, sustainable and economic production of bioenergy.

CERE has received multiple competitive grants and collaborations, including a United States Agency for International Development, or USAID, grant and one of the U.S. Department of Energy's first Advanced Research Project Agency for Energy, or ARPA-E, grants in 2009, as well as a $137 million multi-year collaboration with Monsanto Company signed in 2002.

COMPETITION

CERE's principal competitors may include major international agrochemical and agricultural biotechnology corporations, such as Advanta India Limited, Dow Chemical Company (NYSE:DOW), Monsanto (NYSE:MON), Pioneer Hi-Bred -- DuPont (NYSE:DD), KWS and Syngenta (NYSE:SYT), all of which have substantially greater resources.

USE OF PROCEEDS

$98 million

  • Research and development: $ 35.0 million
  • Capital expenditures primarily relating to breeding stations, production facilities, systems and agricultural equipment: $10.0 million
  • Commercial activities, including increasing the number of sales and marketing personnel, expanding CCXI's advertising and branding efforts and pursuing government approvals: $5.0 million
  • Working capital and other general corporate purposes, including seed production efforts and operating as a public company: $47.8 million
Source: IPO Preview: Ceres