Amyris Adds Muscle Prior to Going Public to Reassure Investors

|
Includes: AMRS, TOT
by: The Burrill Report

By Marie Daghlian

Renewable fuels and chemicals developer Amyris (NASDAQ:AMRS) is determined to avoid the fate of recent U.S energy IPOs. This week Emeryville, California-based Amyris announced a series of deals, including a partnership and $132.2 million equity investment by French oil company Total (NYSE:TOT), aimed at shoring up its position ahead of an initial public offering. The company also reincorporated as Amyris Inc. after seven years operating as Amyris Biotechnologies.

It’s possible Amyris doesn’t want to suffer the fate of most of the nine energy companies that have gone public since the beginning of the year, which as a group are currently trading 15 percent below their initial price, according to Renaissance Capital. San Francisco Bay Area neighbor Codexis, a biocatalyst developer backed by Royal Dutch Shell (NYSE:RDS.A) that went public in April, is currently trading at 22.5 percent below its IPO price.

Amyris’ biggest deal is with Total’s U.S. subsidiary—a strategic partnership to develop new products and build biological pathways to produce and commercialize renewable fuels and chemicals. The partnership combines Amyris’ industrial synthetic biology platform and emerging Brazilian production capacity with Total’s technological and industrial scale-up capabilities and access to markets. Amyris uses genetically modified microorganisms, primarily yeast, to serve as living factories to convert plant-based sugars into a range of renewable fuels and chemicals.

In conjunction with the partnership, Total is taking a 17 percent equity stake in Amyris on a fully diluted basis, acquiring 7.1 million shares of Series D preferred stock at $18.75 a share and becoming Amyris’ largest stakeholder. Total has agreed to make an additional payment to Amyris if the initial offering price is above $18.75.

“Biotechnology offers new perspectives on the conversion of biomass into molecules for biofuels and green chemistry," says Philippe Boisseau, president, Total Gas & Power. “This partnership is a milestone for Total, as we aim to become an important player in this domain." Total has also recently made significant investments in biofuels companies Gevo and Coskata.

Amyris has raised $382.9 million to date, including Total’s investment, from venture capitalists and corporates. Although the company’s revenues reached $13.7 million in the first quarter of 2010, including $2.3 million from a Department of Energy grant, it has consistently lost money and its accumulated deficit stood at $136.6 million at the end of March, according to financial data filed in its most recent S-1 statement.

Amyris also signed five other agreements during a very busy week. Brazilian ethanol producer Cosan and Amyris will establish a joint venture for the production and commercialization of cane-based renewable chemicals. Proctor and Gamble (NYSE:PG) and Amyris will enter a multi-products collaboration to use Amyris’ renewable product Biofene, its version of farnesene, in certain specialty chemical applications within P&G’s products. In a two-part agreement, Italian chemical company M&G Finanziaria will incorporate Amyris’ farnesene as an ingredient in its plastics processing and based on its successful completion, the companies will work together to combine access to low cost sugars by integrating their technologies to produce renewable fuels and chemicals. Amyris is also partnering with French renewable cosmetic ingredients producer Soliance to use Amyris’ technology to convert farnesene to produce squalane, an emollient and moisturizer, for use in cosmetics. Soliance has already begun the manufacture of farnesene in its industrial fermentation facilities using Amyris’ biotech process. Amyris also signed an agreement with Shell Western Trading & Supply, a subsidiary of Royal Dutch Shell that is active in crude oil and products trading in South America.

In April 2010, Amyris entered into a joint venture with São Martinho, a leading producer of sugar and ethanol, to construct the first commercial scale plant dedicated to the production of Amyris products including farnesene.