Amyris Falls After Earnings Miss, Delay of Total Venture
Amyris fell 14 percent to $3.33 at the close in New York, the most since May 9. The company has lost 71 percent of its market value this year.
The company is still completing its first commercial plant, at a Brazil site owned by Paraiso Bioenergia SA, and a planned joint-venture with Total may be delayed, prompting concerns about profitability, Ben Kallo, an analyst with Robert W. Baird & Co. in San Francisco, said today in a note.
The company expects to begin full production at Paraiso next year, and once it has been in operation for six months it will resume construction, which has been on hold, at another Brazil site, at a sugar mill owned by Sao Martinho SA (SMTO3), Chief Executive Officer John Melo said on a conference call yesterday.
“With Paraiso not producing until 2013, and Sao Martinho not expected to run until 2015, we think it will be very challenging” for the company to “achieve profitability in the next few years,” Kallo said. He expects “the stock to remain under pressure” until the company arranges additional financing.
Amyris temporarily stopped production at two of its three third-party manufacturing partners in the quarter to cut costs, Melo said.
The company, based in Emeryville, California, posted a net loss of $46.8 million, or 81 cents a share, it said in a statement yesterday after the close of regular trading. Analysts has expected a loss of 77 cents, the average of seven estimates compiled by Bloomberg.
The company uses genetically modified microorganisms to convert plant-sugars into farnesene, a hydrocarbon that can be processed into fuels or specialty chemicals.
Amyris said yesterday that Total agreed to provide as much as $82 million over three years to support development of renewable diesel and jet fuels, and the companies may form a joint venture at the end of that period. Amyris originally announced plans in November for the venture, which it said would begin operations at the beginning of 2012.
While the agreement will help Amyris fund operations “in the near term, it also implies the JV is now multiple years away,” Kallo said.
Amyris expects to receive funding through a similar partnership with an industrial chemical company by the end of the year, Melo said on the call, without naming the potential backer.
“What you should expect from us through the end of the year is additional funding, successful commissioning of Paraiso, a steady increase in renewable product sales from inventory on hand and a continued reduction in our cash burn,” he said.
Amyris produced 810,000 liters (214,000 gallons) of farnesene during the quarter, bringing its production this year to 1.7 million liters and 2.5 million liters over the past 12 months, Melo said.
Amyris is currently focusing on sales of high-value products derived from farnesene, such as “niche diesel” in Brazil and squalane, a cosmetic ingredient, Melo said. It plans to introduce new farnesene-derived products in the future including liquid rubber for tires and fragrance oil for perfumes, he said.
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