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Amyris Soars On CBD Deal

Feb. 06, 2019 1:55 PM ETAmyris, Inc. (AMRS)13 Comments
TechGrows profile picture


  • AMRS up more than 70% on huge volume.
  • The catalyst is a $255M CBD deal.
  • More to come from this growing company.

CBD Deal

Amyris (NASDAQ:AMRS) rose by over 70% on an unprecedented volume on February 5th because of an announcement about a major deal that was released in the morning. The deal is a partnership that is typical for Amyris - it gets fees for R&D based on milestones and then gets a percentage of sales of the product. What is unusual is the size of the deal - the R&D payments can total up to $255M, which is absolutely huge for Amyris (its fully diluted market cap is around $550M). The reason for such a large sum is that the molecules in question are Cannabinoids (active molecules in marijuana). The CBD industry is growing quickly, major companies are investing in CBD products, and industrial biotechnology, of which, Amyris is a leader, promises the cheapest way to produce CBD molecules at scale with high purity.

I do not follow the marijuana industry, so somebody else can analyze the impacts of this deal on other marijuana companies. In this article, I will focus on what this deal means for Amyris. If you are new to the company, I recommend reading an overview of it I published in June.

For those familiar with the company, I want to focus on two aspects of the deal. The first one is the collaboration payment amount. This collaboration is an order of magnitude larger than most collaborations the company has entered so far. There is no reason to think that this collaboration will stand out as the only hundred-million dollar R&D deal Amyris enters. Amyris's tech allows it to produce virtually any organic molecule. Many of those are billion-dollar markets, CBD is just extremely hot right now. Other molecules will be just as hot in the future, and companies will turn to Amyris to develop cheap ways to produce them.

This article was written by

TechGrows profile picture
Long/short investor in technology companies. Occasional angel investor.

Analyst’s 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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