Amyris climbed 4.2 percent to $2.70 at the close in New York, after earlier gaining as much as 32 percent.
The net loss narrowed 54 percent to $20.3 million, or 34 cents share, from $43.7 million, or 97 cents, a year earlier, Amyris said in a statement after the close of trading yesterday. Sales dropped 47 percent to $19.1 million, in part reflecting the decline in sales of ethanol produced by third parties and ethanol-blended gasoline.
The company temporarily stopped production at two of its three plants that are located at partners’ facilities during the second quarter to address issues with fermentation yields, and that strategy conserved cash as planned, according to Chief Executive Officer John Melo. “The improvements to our cost structure over the last several months are bearing fruit,” he said on a conference call yesterday.
Amyris uses genetically modified microorganisms to convert plant-sugars into farnesene, a hydrocarbon that can be processed into fuels or specialty chemicals. Production issues experienced by the company aren’t uncommon for fermentation-type businesses, said Pavel Molchanov, a Raymond James & Associates Inc. analyst.
“Industrial biotech scale-up is never a straightforward, linear process, a point that may be overlooked amid an ultra- risk-averse market,” Molchanov said today in a research note. “The scale-up issues do not permanently condemn the technology platform.”
The company’s first commercial plant, at a Brazil site owned by Paraiso Bioenergia SA, is expected to begin production in 2013 and reach its capacity within three years, Melo said on the call. The company will operate two of the site’s six fermenters “for most of the year” in 2013, though Amyris isn’t projecting the amount of commercial production, he said.
Its next project, at a sugar mill owned by Sao Martinho SA (SMTO3), won’t realize revenue until 2015, Melo said.
Squalane and Diesel
Amyris produced about 60,000 liters (15,850 gallons) of farnesene during the quarter, Steven Mills, the company’s chief financial officer, said on the call. Its output during the second quarter was 810,000 liters. The company sold two products made from farnesene during the third quarter, the cosmetic ingredient squalane and diesel fuel, Melo said. It’s developing other applications such as fragrance oils, and partner Kuraray Co. received its first order for a farnesene-derived polymer that can be used to make rubber for tires, he said.
Amyris also has developed a “new generation” of yeast strains that are performing better than its first generation strains in lab scale, Melo said. “This breakthrough gives us confidence that we can profitability produce our desired molecule farnesene at scale for chemical applications and provides visibility for longer term commodity fuels markets,” he said.
The company also has developed yeast strains capable of utilizing so-called cellulosic sugars, from non-food sources, with similar yields as conventional sugars.
“We have always said we seek to be feedstock agnostic, and we have shown ability to produce farnesene from cellulosic sugars at pilot scale at rates similar to conventional sugars,” Melo said. “We will be ready for the day when cellulosic sugars are cost competitive at scale with conventional sugars,” he said.
Mills said that Amyris expects to become cash flow positive in 2014 and intends to raise additional financing before 2013, reiterating a goal stated last quarter. “To reaffirm what we said on last quarter’s conference call, we will need to raise cash in the fourth quarter in order to fund our operations,” he said. Melo wouldn’t say how much financing his company is seeking.
“We think that financing could push the stock higher provided it is non-dilutive,” said Ben Kallo, a Robert W. Baird & Co. analyst, in a research note.
Total, France’s largest oil producer, owns 21 percent of Emeryville, California-based Amyris.
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