On August 16th, I published a bullish case for Amyris (NASDAQ:AMRS). Since then the stock has risen from near $0.40 per share to over $0.80 per share. Such price growth has been justified by a number of new announcements by the company:
- Amyris finalized the agreement with Ginkgo, securing funding for the company and accelerating bringing new molecules to market. It also amended its agreement to extend some of the company's debt from 2017 to up to 2019.
- Amyris signed an agreement with a nutraceutical company securing $25 million in funding, an optional $5 million investment and a product supply agreement that will increase Amyris's revenue by $40 million in 2017 and eventually grow to $70 million a year.
- Finally, Amyris agreed to the terms of a deal with another nutraceutical company, getting $10 million in collaboration revenue, an equity investment of up to $20 million at $1.4/share (75% premium to market price), and $100 million in annual revenue starting in 2017.
The last bit is especially significant. It essentially doubles the current revenue run rate for the company. With gross margins at 50-60% it will also move the company significantly closer to profitability. It also makes the management's expectations of positive cash flow in 2017 quite credible.
With the asset sale coming later this year, the company has no need for dilutive funding. Its revenues are set to increase dramatically in 2017. With more deals to be announced soon, I expect the $1.40 per share purchase by its partner to be considered a bargain.
Disclosure: I am/we are long AMRS.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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