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Amyris Drops Most Since 2010 IPO on Production Cut: Dallas Mover

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Feb. 10 (Bloomberg) -- Amyris Inc., the U.S. biofuel company that’s 21 percent owned by Total SA, fell the most ever after it cut its production plans and said it won’t have positive cash flow this year.

Amyris dropped 28 percent to $6.99 at the close in New York, the most since it began trading in September 2010.

Amyris will focus on finishing its Paraiso factory in Brazil and won’t complete an expansion project at an existing plant in Spain, Chief Executive Officer John Melo said yesterday in a call with investors.

Without the additional capacity from the Spanish plant, Amyris won’t be able to meet an earlier production forecast of 40 million liters (10.6 million gallons) to 50 million liters of farnesene this year, Melo said. Amyris processes plant sugars into farnesene, which can be refined into transportation fuels and specialty chemicals.

“We are focusing on operational quality versus production quantity,” Melo said on the call.

The lower capacity means the company is “no longer forecasting positive cash flow from operations in 2012,” he said.

Amyris is also planning to raise about $30 million to $60 million in additional equity financing from investors that have been involved since before the company went public, according to a filing. The funding round will be complete “in the coming weeks,” Melo said.

Scaling Up

There’s “no reason to build two or three big plants if you can’t scale up to one, so scaling back production targets makes sense,” Jeff Osborne, an analyst at Stifel Nicolaus & Co. in New York, said in an e-mail today.

The lower forecast makes it “a challenge for investors to have faith they can produce at high volume,” said Osborne, who rates Amyris “hold.”

Amyris was downgraded today to “hold” from “buy” by Vishal Shah, an analyst with Deutsche Bank AG in New York, who has a target price of $9 a share.

Michael Cox, an analyst with Piper Jaffray & Co., downgraded the shares Feb. 8 to “neutral” from “overweight” with a target price is $11.

To contact the reporter on this story: Ehren Goossens in New York at egoossens1@bloomberg.net

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

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