Amyris, Inc. (NASDAQ:AMRS) Q4 2016 Earnings Conference Call March 2, 2017 4:30 PM ET
Peter DeNardo - Director, IR & Corporate Communications
John Melo - CEO
Kathleen Valiasek - CFO
Thomas Boyes - Cowen and Company
Amit Dayal - Rodman & Renshaw
Lisa Springer - Singular Research
Nate Mitchell - FBR
Welcome to the Amyris Fourth Quarter 2016 Conference Call. This call is being webcast live on the Events Page of the Investor Section of Amyris' website at amyris.com. This call is the property of Amyris and any recording, reproduction, or transmission of this call without the expressed 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 Investor Section of Amyris' website.
I would now like to turn the call over to Peter DeNardo, Director of Investor Relations and Corporate Communications.
Thank you, Steve. Good afternoon and thank you for joining us today. With me today are John Melo, our Chief Executive Officer; and Kathleen Valiasek, our Chief Financial Officer.
Please note that on this call, you will hear discussions of non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures is contained in the financial overview slides of the company presentation, or the new release distributed today, which is available at investors.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.
During this call, we will make forward-looking statements about events and circumstances that have not yet occurred, including projections of Amyris' operating activities, anticipated transactions we are contemplating and are closing, our strategic plans regarding potential transactions, the other anticipated financial impacts on our business and financial results for 2017 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 section of its Quarterly Report on Form 10-Q filed on November 9, 2016.
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 discussion of the relevant risks and uncertainties.
Before we begin today, I'd like to note that included in our webcast is a slide presentation we will refer to in today's presentation. I would also like to note that references to record revenue and product sales in our remarks excludes historical periods when the company had engaged in ethanol sales and trading.
I'll now turn the call over to John Melo. John?
Thank you, Peter. Good afternoon and thank you for joining our call. I'm pleased to have Kathleen Valiasek, our new CFO with us today. For those of you we haven't met her already, she brings a highly regards of skill set critical to taking our business to the next level of growth. Kathy is focused on delivering on our business outlook and is already helping us drive top-line results and improved margins in balance sheet.
Today I will review our results for the quarter and the year, review key fourth quarter deliverables that help accelerate our flow, update you on our business plans and business model going forward, and provide a high level outlook for the years ahead.
Let's start with our results. We completed a record year by more than doubling our revenues over 2015. Having signed a record number of new global partners and delivered on the 2016 strategic milestones we communicated to you. As a result and excluding historical periods we engaged in ethanol sales and trading, we posted record revenues in both collaborations and product sales. In fact, our revenues of $33.2 million marked our second consecutive quarter of achieving record revenues which also help underpin record revenues of $77.2 million for 2016 overall.
In addition to the selected revenue performance, we had $3.8 million of additional sales in our health and nutrition business that we did not have capacity to produce and ship in the fourth quarter and have subsequently shipped in the first quarter.
We achieved this growth while significantly growing our gross margin and lowering our SG&A costs by 15% for the year. We believe the combination of this revenue growth, margin performance, and cost performance is the leading performance in our sector today.
During the fourth quarter, we sold 50% of our cosmetic ingredient business to Nikko Chemical for $20 million and formed a joint venture with them. This is in the form of $10 million upfront with the remaining $10 million structured as an earn-out. This business was a business that did not exist four years ago and we built into one of the fastest growing cosmetics ingredient businesses in the sector. This business represented less than 10% of our 2016 revenue and we will be consolidating this into Amyris financials going forward. Nikko is our leading distributor in Asia for cosmetic ingredients and we are already benefiting from their expertise as our new joint venture partner. We are extracting accelerated growth with their partnership and financial support for this business.
During the quarter we will also very pleased to announced Chevron's equity investment in our Novvi Joint venture for high-performance renewable base oil technology which is strategically aligned with Chevron's aggressive growth plan in lubricants. This is another good example of the quality and value of the businesses we built. The Novvi business is currently valued at around $100 million and we continued to have a 30% ownership share while also being the key raw material supplier and a long-term furnishing supply arrangement to Novvi.
In the area of biopharma, we are executing well on all three collaborations with top mobile companies in their respective areas. On one of these we achieved a key milestone a major drug discover collaboration with this leading company, delivering initial development work for new oncology drug development in just months. Our partner is very impressed that we completed in months where commonly takes years. This performance is well beyond their expectations.
All of our collaborations performed well in the fourth quarter. And we were pleased during the December to announce a multiyear extension to our collaboration agreement with Kuraray for the use of Amyris Biofene in liquid farnesene rubber and farnesene-based elastomer applications. Kuraray recently announced that Sumitomo Rubber Industries has adopted liquid farnesene rubber as a performance enhancing additive for use of the production of its latest winter tire, the Winter Maxx 02. Kuraray has indicated tire launch has performed better than expected. They have already indicated double the demand than we expected for 2017. We believe Sumitomo is the first of what could be several global tire brands that end up using liquid farnesene rubber as a performance enhancing tire additive.
Many of you have asked about the status of the MOU we announced October 13, 2016, with a leading Global Food Ingredients and Nutraceuticals Partner. We have advanced to a signed contract resulting in $10 million in 2016 revenues for licensing agreement related to the MOU. After completing an evaluation we decided that a share swap for ownership in their China fermentation facility was not the best use of our equity and not the best way for us to create shareholder value.
Let me now update you on our strategy, our business plan, and our business model. We are leading the industrialization of the synthetic biology and we believe have developed an advantage business model that more than double our revenue in 2016, and expect to more than double our revenue, product revenue in 2017, and continually improve our gross margin. We are applying innovative science to make our planet healthier, both the planet itself and the people on it. We are doing this by making high performing where chemistry accessible to everyone. We are the lowest cost producer of some of the most desired chemistry by the world's leading companies in their respective segments. We are achieving the Holy Grail for our customers of producing the lowest cost, highest quality, and pure the material they can source. We are making it plentiful and at stable prices without volatility. We have succeeded in scaling and meeting our customers' targets for all the products we develop with our collaboration agreements to-date.
We have a clear pipeline to scale three to four products a year over the next five to ten years. As a result of the traction we are experiencing and the clarity of our business model we made the following strategic moves. First, we are focusing our efforts on collaborations and expanding our relationships with existing partners. This is a solution oriented approach for customers' business challenges and is all about deep customer intimacy and a very focused analytical approach to a few targets in each of our key sectors. This has resulted in us reducing our exposure, some of our product selling efforts, and as you have seen through the Nikko joint venture, and reducing our position in Novvi joint venture. We will remain a key supplier to these businesses but the sales capability and channel management will be in the joint ventures or with our partners.
We are managing our business by focusing on three clear market sectors when we have the most advantage technology, clearly and extensive product pipeline, and some of the leading companies in these sectors as partners.
Our three sectors are health and nutrition, health and nutrition represented 38% of 2016 revenue and grew 2,000% over 2015 revenue. In health and nutrition, we have the biopharma business, which is partnered with the three of the world's leading pharma companies, the vitamin business which is all about Vitamin E and Vitamin A, and the sweeteners business which is all about a sugar replacement which is really playing into a $90 billion market opportunity when we have advantage technology.
Second sector is the personal care sector where it delivered 50% of our 2016 revenue and grew 85% over 2015. In personal care, we have fragrances which are partnered with Firmenich, Givaudan and Takasago. We have flavors which are partnered with Firmenich and Givaudan. We have cosmetic access that have partnered with Givaudan and our new joint venture partner Nikko.
Our next last segment is performance materials. Performance materials represented 12% of 2016 revenue and excluding fuels grew by 20% over 2015. The renewable fuels part was 30% of our total revenue in 2015 and less than 1% of our total revenue in 2016.
Now on to our third point over 80% of our revenue is generated from our top 10 customers. As we look ahead to 2020 and beyond this profile improves to about 90%. We have a partnership model where we enable significant competitive advantage for our partners and share in the value this creates long-term. We do real business with our partners and deliver real solutions that generate revenue today and will into the future. We are not building a portfolio of bets that we hope someday deliver revenue.
We apply -- our fourth point; we apply our innovative science where customers have identified a clear product target. The target is replacing a supply source from an existing market that is well understood and is growing faster and current supplies and support from either a volume or pricing perspective. Partners pay us to develop. They identify a cost and quality target that enables significant competitive advantage for them. We develop, we scale, and produce the product, and they formulate, integrate, and deliver to the final customer. When customers have skin in the game they select products that really matter to them and they ensure these products generate significant value. We both win. We Amyris don't have research, product selection, or market risk and our partners grow market share at a lower cost.
I could point we double down where we believe our technology is delivering best-in-class performance and where we view the market opportunity justifies investment beyond the partner funding. The high intensity sweetener market is a good example. We have successfully made a high intensity sweetener from non-TMO Brazilian sugarcane syrup that is 200 times sweeter than sugar without the calories and with visibility on achieving cost equivalency with sugar. We are currently achieving cost in this product that are in line with the purest molecules available from Stevia but without the supply limitations. We are doing this security levels that don't have the typical after taste from these type of products. Some of the world's leading soda companies have told us this is the Holy Grail of sweeteners. We are very excited about this product in our pipeline and our partner on this project is collaborating with us to get this product into the brands and make the world healthier for all. We believe the opportunity for this product is to replace or reduce sugar and we believe this opportunity has available market at about $45 million or think of it as about half the current global sugar market.
These five strategic segments are being executed today inside of Amyris and were key to our revenue and margin performance in 2016. This continued strong growth is only starting to our business and our partners.
Our business model has been a key enabler in growing our collaborations and providing short-term cash, short and long-term revenue growth, and long-term gross margin expansion. The three components of our business model are first collaborations; our partners fund the development of key ingredients to support their business strategy. This funding more than pays for our R&D organization and provides us early cash cover as we scale products for a propose. This is our early margin and cost advantage. We generated over $50.8 million in partner payments in 2016 and expect to maintain the strong performance level in our collaboration revenue for the next three to five years which is consistent with our previously stated levels of annual collaboration revenue.
Second component, we produced and sell the products we develop through our partners. In general, we sell most in a small margin to ensure our long-term sustainability.
And the third component, we have a value share mechanism where our partners share a portion of the value created from our products. The combination of the value share and the initial product margin generate over 60% gross margin at steady state production that means after it's scaled and stable in the market for a year, for the personal care and health and nutrition sectors and around 30% margin for the performance material sector. With a record of new partners contracted in 2016 the extensive pipeline of products with these partners and the continued expansion of products with our existing partners, we now have over 90% of our expected revenue through 2020 supported by our current customer relationships and product portfolio.
In 2016, we transition as a company for meeting more demand to be in sold out and needing to execute a clear production capacity roadmap to keep up with our customers' needs. We have developed this production roadmap and we are in a position to keep up with our customers' needs through a combination of partner funded and supported projects and BNDES project financing in Brazil. We will continue to have challenges like the fourth quarter, where we have $3.8 million more in sales than what we could share.
We believe this is manageable and a good problem to have. In summary, we are proud of our 2016 results and expect 2017 will be another great year for Amyris with more than doubling of product revenue while maintaining our strong collaboration performance. We also plan to continue to improve our balance sheet and post improved product margins as cost improvements and as our value share payments continue to grow.
Now let me turn to Kathy for a detailed review of our financial results and then I will end with a high level outlook for the company.
Thank you, John, and good afternoon everyone. After my first two weeks here at Amyris, I'm truly excited by the opportunities ahead of us and quite compressed by the level of commitment our customer have to Amyris and how critical our technology is to their business. It's rare to experience the level of the tendency, our customers had on our technology together we had a mutually successful relationship.
Amyris has embarked on an era of significant growth across its business, we are executing on our plan to effectively harness it, to grow our company, and build shareholder value. This is creating unprecedented demand for new partners and the potential expansion with existing partners. With the positive cycle that is building on a great track record of success in scaling and delivering products to our customers that have a positive impact on their bottom-line. This impact is why we are constantly being approached by leading companies to solve their supply chain problems and at times consider interesting strategic transactions. More on this later when John provides color on our outlook.
All of this is aligning to support increased revenues and our ability to operate from a position of strength in running our business and executing on improvements in our balance sheet and capital structure.
Now let me take you through our fourth quarter results. Fourth quarter revenues were $32.2 million and were up 227% over $9.8 million for the fourth quarter of 2015. As a testament to the strength in our portfolio this performance was driven by both product sales and collaborations growth over the prior year's quarter.
Product sales of $11.5 million were up 119% over $5.2 million for the fourth quarter of 2015. This was driven by growth across our three focused sectors, personal care, performance materials, and health and nutrition. In health and nutrition the key driver of this growth were farnesene shipments in Denver for Vitamin E and in our personal care business shipments of our second Fragrance Molecule during the quarter and continued strong performance of our cosmetic ingredients business and our cosmetics active partnership with Givaudan.
Significant quantities of farnesene were also shipped to our joint venture partner Novvi for base oils and lubricants in the Kuraray for liquid farnesene rubber or LFR in car tires. Going into 2017, we are seeing stronger than experienced demand from Kuraray due to request from their customers and we feel the adoption of LFR by other tire companies is a key growth opportunity for Amyris.
Collaboration revenues of $20.8 million were driven by the aforementioned $10 million related to MOU related partner actually $5 million from hitting a milestone with DARPA and the reminder from Biogen, Firmenich, and the Global Food Ingredients supplier we announced collaboration with in July of 2015. Collaboration revenues were up 350% over $4.6 million for fourth quarter of 2015.
In line with increasing demand we continue to work diligently to solve our capacity constraints because clear roadmap for continued expansion supported by our partners and in the near-term assets to financing the BNDES in Brazil for a planned build-out of a dedicated flavors and fragrances plant adjacent to our Brotas plant.
Adjusted gross profit which excludes depreciation, inventory provisions, and excess capacity charges was $13.2 million up from about $6,60,000 for Q4 2015. Adjusted gross profit benefited from a significant component of high margin collaborations revenue during the quarter as well as a favorable product mix especially given just under 150,000 in fuel sales during the quarter as we fully transitioned our business away from commodity products. Adjusted gross margin showed a significant improvement at 41% compared to just under 7% for Q4 2015. This will continue to improve as we benefit from less scale of a cost in our cost of goods sold for new molecules and the continued growth in the value shared component of our business model.
Operating expenses -- excuse me, such a large increase in total revenues for the fourth quarter. Selling, general and administrative expenses of $12.7 million declined slightly compared to the same period last year. R&D expenses increased to support our collaborations activity.
Adjusted operating expenses representing combined R&D and SG&A expenses excluding stock-based compensation and depreciation and amortization were $43.1 million. This primarily reflected investment in R&D supporting a diversity of new collaborations in 2016 and was up from $20.3 million for the fourth quarter of 2015.
Net loss for the fourth quarter of 2016 was $38.8 million or $0.14 per basic and diluted share. Included in the net loss were several non-cash items including a gain from changes in fair value of embedded derivatives and impairment losses. These items totaled $12.7 million. This compared with a reported net loss of $41.9 million or $0.23 per basic and $0.28 per diluted share for the fourth quarter of 2015 which primarily included an impairment charge of $26.9 million which was offset by a gain on fair value of derivatives of about the same amount.
Adjusted net loss for the fourth quarter of 2016 excluding these items and stock-based compensation was $26 million or $0.09 per basic share. This compared with an adjusted net loss of $34 million or $0.19 per share for the same period a year ago.
During the fourth quarter we successfully closed on the $25 million unsecured credit facility and an additional $5 million in equity funding from Nectar, our nutraceuticals partner which is converting our farnesene into Vitamin E. We also completed our Neossance asset divestment via our Nikko joint venture and received $10 million from Nikko ex-closing with the remaining $10 million expected to be paid over three years on the remaining cash profits contributed to Nikko from the JV.
In addition, Nikko provided working capital from the JV of $1.9 million. These are both great examples of how our pipelines have become critical partner funding needs in the short and medium-term. There is a strong co-dependency in the relationship with our partners as our technology that comes critical enabler of their business.
We are experiencing this type of support and expansion of our partners' portfolio. This is another great example of our technology leadership in our sector. We have mentioned on prior calls our desire to support partner generated financing where possible, when cash is needed to fund working capital to grow the business, which we have accomplished. This aligns our partners' interest even more so with our long-term focus when equity financing is involved puts the ownership in long-term loyal hands ahead of vested interest from a variety of standpoints in making sure our business does well.
These activities during the fourth quarter generated a significant amount of cash, leading to cash and restricted cash totaling $33.8 million at December 31, 2016. This is the highest level since Q1 2015.
Just before the end of the quarter we entered into a definitive agreement to complete another milestone we promised by resolving our near-term debt maturity issue by pushing 23.9 million of debt out which we completed in January of 2017. This included 15.3 million of notes previously due March 2017 but is now extended to April 2019. In addition 28.6 million senior secured debt held by Stegodon Corporation via our partners Ginkgo Bioworks previously due February 2017 has been extended to October 2018. This has greatly improved our near-term liquidity and puts Amyris in significantly better position to continue to improve our capital structure. This is not the last step but really the most recent in improving our balance sheet.
In 2016 Amyris set the stage for success and delivered. Today our business portfolio is strongly positioned and highly diversified and growing at a rapid cliff. Looking forward I am even more excited by the growth opportunity at top before joining the company. This opportunity is ours to win and we are on a positive role and simply need to execute to deliver another great year for 2017.
Now I will turn the call back to John.
Thanks, Kathy. In 2016 we fully transitioned our business beyond biofuels while delivering record revenues for the year. We delivered on all of our milestones and positioned the company for continued strong revenue growth. Today I can say that I have never been more confident in our competitive position and I believe we will continue to role at about the current rate with the existing partners and the product portfolio they have contracted us to develop and produce for them.
During the fourth quarter we saw several new and exciting strategic opportunities develop for the company from potential partners who approached us as a result of the competitive advantage we demonstrated in key markets. We are in very active discussions and expect one of these relationships to advance during the second quarter. This will have a material positive impact on our short-term results and is expected to provide us with the necessary resources to further accelerate our growth.
Let me summarize our high level outlook. First, we ended the year with over $100 million annual revenue run rate and we expect to continue the current level of growth for 2017.
Secondly, we communicated the framework of doubling product revenue annually and maintaining our strong performance in collaborations. We are on track to deliver more than doubling product revenue in 2017 and maintaining our framework for collaboration revenue and are happy to report there are current customers and product relationships support more than 90% of this product revenue growth.
Thirdly, our business model and sales strategy is clear and focused around three core sectors: health and nutrition, personal care, and performance materials. This is where our growth is coming from and we can continue to deliver strong growth while lowering our margins in these markets with our current product and customer portfolio.
Fourthly, we are in very active discussions with several significant strategic growth opportunities for one of these core segments. Successful completion of one of these relationships will have a material positive impact on our revenue growth and balance sheet. We believe that we are the only company in our sector that has now successfully developed and scaled several products for our customers and is delivering significant revenue and margin growth from these products. We executed on delivering on our key objectives for 2016 and are on track for another great year in 2017. We are doing real business with customers representing leadership in each of our target sectors. This is delivering real revenue growth while having a positive impact on the health of our planet and making accessible amazing chemistry for use in mainstream products. The total available market for our target sectors in current product portfolio is about $200 billion.
That more than underpins our growth base on being the advanced technology in many of these opportunities. I would like to thank our teams in Emeryville and Brazil, our investors and our partners for making such a great year possible and ultimately supporting the mission of Amyris. We are delivering the leading performance in our sector, record revenue growth, declining costs, and the leading partner portfolio to support the strength of sustainability of our company.
We have industrialized synthetic biology and have become a force for good for our partners and our planet.
I would now like to open the lines for any questions, you may have. Keith, can you help us.
Absolutely sir. [Operator Instructions].
Our first question comes from the line of Thomas Boyes of Cowen and Company. Your question please.
Yes just a couple of quick questions from me. The first we have seen an uptick in branding for your cosmetics and I was just wondering how we could think about OpEx trends going forward given those efforts?
We don't have Kathy jump-in on this. We do not see a significant OpEx change in our side specifically for that business we are dependent on our channel partner who is doing a terrific job Sephora. And based on what we've seen in the first quarter which has been a great result so far, we expect to not see again a significant change. Kathy, anything?
No, I completely agree, last year with [indiscernible] was ramping up costs, I would say in OpEx but now I feel as John said that because of Sephora we will be able to be fairly flat with OpEx in Biossance for 2017.
Got it. And then just the last one, just given some of the expansion commentary that you had, I was wondering in broad terms you could talk about the Brotas facility and may be some of the utilization rates are around that what we should think about that going forward?
Sure the Brotas facility is pretty hard to ever consider exit to utilization rates because of the way we are operating it today. Right it's basically we are switching from products to make sure we can deliver our customers the lowest cost possible for the products they are looking for. As a result when are we operating a specific product whether that's making farnesene, making tool, making spirit all, making whatever we decide to make there, the utilization and the up time for those cycles is outstanding. What happens though is every time we switch we're actually down for that period of time. So that the net impact is that we are probably under utilizing the site by 20% to 30% that's possible there because of these switch-outs in product.
I think Kathy referenced we have a design now in place. We've actually already broken ground on a second site that will be a purpose built site for our ingredients business, for the flavors, for the cosmetics, and for the fragrance ingredients and also the health products. And I think with that site us running, the growth is one all-out. We will be in the mid 80s to up or 80% utilization of the site which is exactly what we would expect for site of that type.
Thank you. Our next question comes from Amit Dayal of Rodman & Renshaw. Your line is open.
Thank you and good afternoon John and Kathy. How are you guys.
Very good, Amit. Good to hear you.
Just wanted to clarify your comments on this nutraceutical customer. You said the MOU didn't translate into definitive agreement yet, we're supplying product to could you clarify what the situation is and if we can expect revenues from this nutraceutical customer in 2017?
Yes, I would expect different revenue profile then we had communicated in the MOU and the MOU we had said there is going to be revenue but there is going to be no margin and overtime we'll improve the products and hopefully get to margin. Actually as a result of where we ended up the discussion I expect we will have short-term revenue but that revenue will be profitable and will be about products that accord their business rather than just a pass-through for our business.
Got it. And how this, the $10 million was all bracketed under product revenues from these guys?
No, if we say license fee so it will be in the collaboration dollar market.
Understood. I may have missed this. I know you provided some color on the capacity expansion plans. Did you give a number on what the CapEx or investment going into some of these efforts are going to be?
I think Kathy can talk to this. Our -- the funding for the site will be a combination of a partner funding as well as BNDES debt and the total funding between the two will be somewhere around the $70 million range. But again we're looking to finalizing that. But the important message is we're not expecting that to be either a new equity or direct funded outside of the Amyris balance sheet or inside our balance sheet. Kathy?
Yes. I think you grow faster recently had a meeting with them and I know that went very well we broke ground, and it's a great facility to finance the stability.
Great. Something we have not spoken a lot about the business case based on the products we expect to transfer into that site because frankly those are products either doing now at Brotas 1 or what we'll doing this year or in the next couple of years at CMO. So we're basically transferring stuff we are making and will be making. When you put the products inside of our plant, Brotas 2, we have about a one year or less payback on that site. So we have not had a big issue with the level of interest, people participating in that site, what they have been very focused on is making sure we have the right long-term partner so that we're maximizing value from that site Brotas 2.
Understood. In relation to the blended gross margin you are seeing now with this level of revenue mix. Should we continue to expect you know these 30% plus sort of margins going forward if collaboration in product revenues. Can you remain at similar levels going forward?
Yes, we absolutely do. As John described in a little bit more detail on our call today we value share our business model which includes the value share at the end really makes a significant difference on our gross margins. And the truth of it is in 2016 -- in 2015 we really didn't see it very much, in 2017 it's extremely impactful. I mean the actual that we would say for 2015 was $838,000 and that's for 2016 and then 2015 was around $400,000 but in 2017 it's significant.
Got it. And just may be a last question for me John you commentary around some of these strategic discussions you are having with potential catalyst coming up in the second quarter, is this just one discussion you are having or these multiple discussions you are having and one of them could materialize in the second quarter?
We are in multiple discussions, it's a competitive parcels for multiple companies are looking at the same market area and the kind of scale that we are talking about is very material for us as a company. Right I expect there will be one because we are talking to multiple about the same end markets and it will be a very material agreement for our company.
Understood. I was thinking of it in line with maybe separate discussions for may be different product lines or molecules et cetera but it looks like it's just one of sort of initiative with a multiple discussions around that one project I guess, is that correct?
Yes. To give you some color, I mean we obviously have many more pursuits and discussions going on in kind of the normal course of business and I'm not highlighting those leaving those, it's just our activity to deliver on our growth for the year. This particular one I'm referencing these are several strategics that have approached us about a specific opportunity in our portfolio that is now in market that is quite strategic for those companies. So that's why I'm referencing first of all highlighting it.
Secondly referencing it and then also making clear that the result is that we're going to end up with four, five new players around that particular segment that we are actually doing it yield for one of these two, to be the right partner, to be the right partner selected to be able to operate with us in this particular product area.
Understood. And this is not factored into any of your guidance right?
No. We actually that's one reason and we debated this a lot. One reason why we decided not to really go change or make a big deal out of guidance for 2017 until we get this deal done and then we can actually update pretty complete what the guidance looks like going forward in more detail.
Thank you. Our next question comes from Lisa Springer of Singular Research. Your question please.
Good afternoon John and Kathy and congratulations on a nice growth for the year.
Regarding the revenue breakdown you gave us for 2016 with the contributions from health and nutrition, personal care and performance materials, are you expecting those to change significantly in 2017 or should we anticipate a very similar revenue breakdown?
The 2000% in health and nutrition was pretty outstanding right. So I'm not sure.
But I think that kind of mixed and obviously health and nutrition really leading growth is something you can expect in 2017.
Okay. And the assumptions a little bit that you gave about product sales for 2017, is that based on a ramp up of products you are already producing or do you expect there is going to be new products to go into production in 2017?
Yes, there are three new products coming into production in 2017. Those are not having a material impact in total revenue in 2017. I think about the majority of the product revenue in 2017 are products we started selling in 2016. We are working for this. But 2016 products we started in 2016 are having the most material impact in revenue for 2017.
Okay. Okay and the sweetener you referenced in the call, I wonder if you could give us a little more color around that in terms of where that is in terms of the development timeline.
We are planning an Investor Day around our Annual Meeting here in Emeryville and during that we are going to actually share quite a bit. What I can tell you is obviously I said during the call that we are producing it now at about the same cost as the plant material. We think that the real tipping point to convert the sugar market into high intensity sweeteners is being priced competitively with the sugar equivalent and we believe that in the next 12 to 18 months we will actually be at exactly that price level.
Thank you. [Operator Instructions].
Our next question comes from the line of Carter Driscoll of FBR. Your line is open.
Hey this is Nate Mitchell on for Carter. Thanks for taking my questions. First question related to working cap, I understand the strategy is to source this from partners but how much do you think, how much working cap do you expect for the business to need on a of percentage basis how much would you expect that to come from your partners?
Tough question meaning we haven't thought of it that way, but I'll give you sort of a -- give you a way to think of it which is our -- we had a huge ramp in 2016. I think because of the way the cycle the total product cycle is built-in, we don't expect that same kind of ramp in 2017 for working capital and I would say that over half of what we expect in 2017 will be partner based funding for working capital.
Okay, thank you. I mean kind of building off of Lisa's question, how do you expect there is three buckets in terms of percentage revenue health and nutrition, personal care and materials, in the longer-term talking two, three, five year how do you see those evolving overtime do you see one kind of taking over just any additional color on there would be great?
Sure, if I can you give you around 2020 so not going way far out but around 2020 you could think about around 2020 about 40%, 40% to 45% coming out of health nutrition, about 30% to 40% out of personal care, and then the rest divided between collaboration revenue and performance material that kind gives you the sense of shape as we look at the business growth going forward.
Awesome. That's all I had for now. Thanks guys.
Great. Thank you
Thank you. At this time I would like to turn the call over Mr. Melo for any closing remarks sir.
Well, Keith, thank you very much. I appreciate your help, like to thank everyone for joining our call today and your support of Amyris. We are really looking forward to 2016 and obviously already off to a great start. I like to note that will be participating number of investor outreach activities in the coming months to meet with investors and share our story and we hope to have a chance to meet with many of you as we do that and again as I said in May, during our Annual Meeting we except to turn the Annual Meeting to much more of a shareholder and investor engagement of that. We expect to have a few guest speakers including some of our customers and really to get into a lot more detail about our sectors, customers behind those sectors, and how our business is growing. So I hope to see many of you at that time. Thank you very much and look forward to see you in the near future.
Thank you sir and thank you ladies and gentlemen that does conclude the program. You may disconnect your lines at this time. Have a wonderful day.
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