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During the IPO season Francis Gaskins, editor of IPOdesktop.com & director of research for Equities.com, regularly appears on CNBC TV, Bloomberg, thestreet.com & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg... More
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  • Amryis IPO could be a long term winner 0 comments
    Sep 28, 2010 12:32 AM | about stocks: AMRS, RDS.A, RDS.B, PG
    Valuation metrics based on IPO price of $16

    Amyris (NASDAQ:AMRS), $85mm IPO
    $646mm market cap at the IPO price of $16
    Scheduled for Tuesday, Sept 28

    SUMMARY
    . At 1.9 times book value IPOdesktop believes AMRS could be a long term winner for IPO buyers, even though it is hemorrhaging money in the near term.
    . AMRS may become a very big company with 3 or so years
    . Producing renewable products with proprietary synthetic biology
     . John Doerr’s endorsement is very meaningful:  he is well known as a Silicon Valley investment guru, based at Kleiner Perkins, and votes 9.3% of the stock post-IPO.  He is a founder & board member of Google
    . AMRS appears to have a large, influential, and growing Intellectual Property portfolio, and appears to have distribution systems lined up, see below.

    BUSINESS
    . Building an integrated renewable products company by applying industrial synthetic biology technology platform
    . To provide alternatives to select petroleum-sourced products
    . Used in specialty chemical and transportation fuel markets worldwide.

    VALUE PROPOSiTION
    Genetically modifies microorganisms, primarily yeast, and uses them as living factories in established fermentation processes to convert plant-sourced sugars into potentially thousands of target molecules

    JOHN DOERR, BOARD MEMBER
    who will post-IPO will vote 9.3% of the AMRS’s stock
    . John Doerr has been a member of AMRS’s Board of Directors since May 2006. Mr. Doerr has been a Partner at Kleiner Perkins Caufield &  Byers, a venture capital firm, since 1980.
    . He currently serves on the board of directors of Google Inc., as well as on the boards of directors of several private companies.
    . Previously, he served on the boards of directors of Amazon.com, Inc., Move, Inc., drugstore.com, Inc., Homestore.com, Inc., palmOne, Inc. and Sun Microsystems, Inc.
    . Mr. Doerr holds a Bachelor of Science and a Master of Science in Electrical Engineering and Computer Science degrees from Rice University and a Master of Business Administration degree from Harvard University.
    . His global business leadership as general partner of Kleiner Perkins Caufield & Byers, as well as his outside board experience as director of several public companies enable him to provide valuable insight and guidance to our management team and Board of Directors.

    COMMERCIALIZATION & DISTRIBUTION
    > Plans to commence commercialization of our products starting in 2011 using contract manufacturers, and to have the first capital light production facility, a joint venture with Usina São Martinho, operational in the second quarter of 2012. As AMRS commences commercial production of its initial molecule, farnesene, AMRS expects to target specialty chemical markets.
    > AMRS recently entered into the following agreements related to the development and initial commercialization of AMRS products:
    • Cosan: a term sheet with Cosan S.A. for the formation of a joint venture to develop and commercialize farnesene-derived base oils for lubricant products.
    • M&G: a collaboration agreement with M&G Finanziaria S.R.L. that establishes the terms under which M&G may purchase our farnesene for use in M&G’s polyethylene terephthalate, or PET, resins to be incorporated into containers for food, beverages and other products.
    • P&G: a supply agreement with The Procter & Gamble Company that establishes terms under which P&G may purchase our farnesene for use in its products.
    • Soliance: an agreement with Soliance for the development and commercialization of farnesene-based squalane for use as an emollient ingredient in cosmetics products.
    • Total: a collaboration agreement with Total Gas & Power USA Biotech, Inc., an affiliate of Total S.A., a French oil and gas company, that covers the research, development and commercialization of chemical and fuel products.

    U.S. DISTRIBUTION
    . For distribution of AMRS diesel in the U.S., AMRS expects to sell directly, primarily to corporations with large trucking fleets.
    . For distribution of AMRS’s diesel in other geographies, AMRS expects to sell indirectly through third parties. Recently entered into an agreement with Shell Western Supply and Trading Limited, a subsidiary of Royal Dutch Shell plc, which establishes terms under which Shell may purchase AMRS diesel fuel, commencing 18 months after AMRS notifies Shell that AMRS intends to export diesel from Brazil.
    . To build AMRS U.S. distribution capabilities AMRS established the subsidiary Amyris Fuels, LLC, which currently generates revenues through the sale of third party ethanol and ethanol-blended gasoline to wholesale customers through a network of terminals in the southeastern U.S.

    INTELLECTUAL PROPERTY
    28 issued U.S. and foreign patents and 198 pending U.S. and foreign patent applications that are owned by or licensed to AMRS.
    Accelerated patent examination program
    . Notwithstanding the increasing backlog and patent pendency at the USPTO, AMRS has obtained U.S. patents for many of its potential products through the use of a recently introduced accelerated examination program by the USPTO.
    . Using this procedure, AMRS has obtained patents for various fuel products: U.S. Patent No. 7,399,323 directed to its  renewable diesel fuel composition; U.S. Patent No. 7,540,888 directed to its renewable gasoline fuel composition; and U.S. Patents No. 7,589,243 and No. 7,671,245, which are directed to AMRS’s renewable jet products.
    . Since obtaining fuels patents, AMRS has expanded the use of this program to its chemicals portfolio and have recently obtained U.S. Patent Nos. 7,592,295 and 7,691,792 for lubricant products, and U.S. Patent Nos. 7,655,739 and 7,759,444 for adhesive and polymer products.

    COMPETiTION
    Amyris Fuels competes with regional distributors in the southeastern U.S. The primary competitive factors in the Amyris Fuels business are price, convenience, and reliability of supply. Amyris Fuels competes with other distributors of ethanol and ethanol-blended gasoline

    Chemical Products
    . Will compete with the established providers of components in incumbent products, including global oil companies, large international chemical companies and other companies specializing in specific products, such as squalane or essential oils.
    . AMRS believes that there may be a number of companies seeking to develop renewable alternatives for existing chemical markets products, including those that AMRS is initially targeting.
    Transportation Fuel Products: independent and Integrated oil refiners.
    Alternative transportation fuel products
    . Many of these companies are seeking to provide alternative transportation fuel products through investing in internal research and development programs or in emerging technology companies.
    . These efforts include processes that use non-renewable feedstocks, such as natural gas and coal, and renewable feedstocks, such as vegetable oil and biomass.
    . These technologies are in varying states of development, the most advanced of which are those using non-renewable feedstocks, such as coal. The application of refining technologies to renewable feedstocks is less developed, with demonstration units in operation using vegetable oil or animal fats at a number of oil companies and active research on refining of biomass at other companies.

    Advanced biofuels.
    . Many other companies are exploring options for the production of diesel and other transportation fuels from renewable resources in other ways.
    . These include companies using enzymes to convert cellulosic biomass, which is non-food plant material such as wood chips, corn stalks and sugarcane bagasse, into fermentable sugars to be converted into renewable fuels.
    Biodiesel.
    . Another source of renewable fuels products is the biodiesel industry, which is served by large, well-established agricultural products companies that convert vegetable oils, and in some cases animal oils, into diesel fuel.
    .  Other companies are seeking to produce diesel and other transportation fuels using thermochemical methods to convert biomass into renewable fuels.

    USE OF IPO PROCEEDS
    $74mm
    Capital expenditures, working capital and other general corporate purposes, including for building engineering services capabilities and growing AMRS’s chemistry capabilities.

    Valuation metrics based on IPO price of $16



    Disclosure: none

    Disclosure: none

    Disclosure: none

    Disclosure: none
    Stocks: AMRS, RDS.A, RDS.B, PG
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