Amryis Declines After Earnings Miss: San Francisco Mover

Amyris Inc. (AMRS), the U.S. biotechnology company 21 percent-owned by Total SA (FP), fell to a record low after reporting a first-quarter loss that was wider than analysts’ estimates and restructuring its manufacturing operations.

Amyris fell 21 percent to $1.99 at the close in New York, the lowest since the company began trading in September 2010. The Emeryville, California-based company posted a net loss of $94.5 million, or $1.88 a share, it said in a statement yesterday. The loss exceeded by $1.14 a share the average of eight estimates compiled by Bloomberg.

Amyris will suspend contract manufacturing of farnesene, a hydrocarbon made from sugar that can be processed into diesel, aviation fuel or specialty chemicals, at one of two facilities outside Brazil and is scaling back at a third site in the South American country, Chief Executive Officer John Melo said yesterday on a conference call.

The company will shift production to a plant it expects to complete “mid-year” at a Sao Paulo sugar cane mill owned by Paraiso Bioenergia SA, the first that Amyris fully owns.

Amyris is transitioning “from a business solely reliant on contract manufacturing to commissioning our wholly-owned industrial scale renewable farnesene plant,” Melo said.

The production changes resulted in a $36.7 million charge in the first quarter, according to the statement.

The Paraiso plant will be able to make 50 million liters (13.2 million gallons) a year. Production is expected to begin in early 2013 and it will reach full capacity within about three years, Melo said.

Contract Manufacturing

Amyris expects to wind down contract manufacturing “soon” at either Tate & Lyle Plc (TATE)’s facilities in Decatur, Illinois, or Antibioticos SA’s site in Leon, Spain, Melo said.

A third contract manufacturing operation at Biomin Holding GmbH’s facilities in Brazil will have “limited use” after Paraiso opens, he said.

Completion of another project, a 100 million liter-a-year plant at a sugar mill owned by Sao Martinho SA (SMTO3), will be delayed to late 2014 or early 2015, from next year, Melo said.

“Until they get costs lower, they can’t really bring on more production because the markets aren’t big enough for them to sell into profitably,” Ben Kallo, an analyst with Robert W. Baird & Co. in San Francisco, said by telephone.

Amyris manufactured about 919,000 liters of farnesene during the quarter, nearly half of the 2 million liters it’s made since the company was founded. The average selling price in the first quarter was $7.70 a liter, Melo said. He wouldn’t disclose the company’s production costs during the call and wouldn’t say how much production capacity is being utilized.

Visibility Lacking

“Within this call, we took an even bigger step down in the amount of visibility we have with Amyris,” Kallo said. “Visibility is very important to us,” he said.

The company’s contract manufacturing capacity this year may be cut to 10 million liters from a previous projection of 50 million liters, Jeff Osborne, an analyst with Stifel Nicolaus & Co. in New York, said today in a research note.

Former Chief Financial Officer Jeryl Hilleman, who was replaced by Steve Mills last week, wouldn’t provide analysts with a forecast of capital expenditures this year, though she said Amyris used $61.8 million in cash during the quarter and must repay some of its $29 million in debt before 2013. Amyris has about $104 million in cash.

The company has “adequate cash to sustain operations for the rest of the year,” Pavel Molchanov, an analyst with Raymond James & Associates Inc. in Houston, said today in a research note, though the company still faces challenges.

“The stock’s recent meltdown suggests that the market may see a cash crunch or even bankruptcy as a realistic scenario.”

To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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