Amyris, Inc., the creation of UC Berkeley bioengineer Jay Keasling and his students, has issued its latest financial filing, the 10-K form required by the Securities and Exchange Commission of all publicly traded corporations.
But before we get down to the dollars and sense, we’ll begin with a mystery.
The curious case of the vanishing founder
One of the most curious things about the Amyris corporate website is its rather peculiar revision of history. Click on the link for Our Story and you find three people named as the company’s founders, Kinkead Reiling, Neil Renninger, and Jack D. Newman.
Yet if you go to website of UC Berkeley’s Office of Intellectual Property and Industry Research Alliances you find this:
Amyris Biotechnologies was launched in 2003 by Jay Keasling, professor of Chemical Engineering and Bioengineering at UC Berkeley and the director of the Berkeley Center for Synthetic Biology.
For some very odd reason, Amyris has erased Keasling’s role as the corporation’s founder, and role which made him a very tidy pile of pelf.
Why has Keasling been excised, like one of those Old Bolsheviks erased [and without Photoshop] from historic pictures after Stalin’s purges? You’d think the company would exult in its founder, a man once named Discover Magazine’s Scientist of the Year.
It’s doubly odd, since Keasling’s new federally funded Joint BioEnergy Institute is right upstairs from Amyris headquarters in same building in beautiful downtown Emeryville.
Amyris announces its annual losses.
Amyris, Inc., which applies its industrial synthetic biology platform to provide renewable alternatives to select petroleum-sourced products used in specialty chemical and transportation fuel markets worldwide, today announced financial results for the first quarter ended March 31, 2011. Total revenues for the first quarter ended March 31, 2011 were $37.2 million versus $29.7 million in the prior quarter with Cost of Products Sold of $34.4 million versus $27.5 million. Research and Development expense increased to $19.7 million from $17.0 million and Sales, General and Administrative expense increased to $16.0 million from $11.0 million. First quarter GAAP net loss attributable to common stockholders was $33.1 million, compared with $25.6 million in the prior quarter. On a non-GAAP basis, the net loss attributable to Amyris, Inc. common stockholders was $29.1 million for the quarter, compared to $22.1 million in the prior quarter. A reconciliation of GAAP to non-GAAP results is included below.So, the company is losing money, and more than before — which is typical of startups, especially in the risky business of biotechnology.
The company’s balance of cash, cash equivalents and marketable securities was $227.2 million at the end of the first quarter versus $257.9 million at the end of the prior quarter.
“We continue to meet our critical milestones, including delivering our first renewable product to customers and completing our first commercial production facility,” said John Melo, CEO of Amyris. “These achievements clearly communicate that we have become a commercial operation, and our focus as a company is to ramp up our operations quickly to meet customer demand and deliver a growing portfolio of high-value, renewable products.”
But don’t fear, says the guru of biotech investing
Vinod Khosla, who made a very fat pile as a cofounder of Sun Microsystems, is very bullish on Amyris.
After he left Sun, Khosla went on to become a general partner at Kleiner, Perkins, Caufield & Byers, a powerhouse player in the biotechnology and green energy sector and the company became a big Amyris investor after Khosla’s departure in 2004 to create his own green tech investment fund, Khosla Ventures.
While our search through Amyris filings didn’t find any Khosla money in the company, he told Cassandra Sweet of Dow Jones Newswires that Amyris is one hot property in a rapidly expanding agrofuel sector:
Khosla, who founded Sun Microsystems, currently heads venture capital firm Khosla Ventures, which has invested in several companies that make biofuels from cellulosic materials such as switchgrass, wood, and agricultural waste, among other companies. While next-generation biofuels makers have trouble competing against relatively low-priced petroleum fuels, they have focused on competing in the broader petrochemicals market on higher-priced products, he said. He cited biotechnology company Amyris Inc. (AMRS) as an example.And, indeed, that’s what they’re doing
“They’re defining a path,” Khosla said. “If you can sell something for $10 a gallon as a specialty chemical rather than sell it for $3 a gallon as fuel, these companies are going to do this and sell their products in the highest- priced markets before going to the lowest-cost markets.”
While Amyris got its start with Bill and Melinda Gates Foundation to produce synthetic doses of the antimalarial drug artemisinin in the guts of genetically altered E. Coli bacteria, the company handed production off to French pharmaceutical giant Sanofi-Aventis [previously], which hasn’t been able to produce the compound any more cheaply than the plant-derived drug, which also happens to generate livelihoods for lots of Third World farmers.
And while the company promises it will produce vast amounts of fuel to keep America’s wheels turning, the only thing the company has been able to produce for sale is squalene, a natural moisturizer used in cosmetics and pharmaceuticals and the same stuff that makes your nose shiny.
Here’s the company’s 28 February press release, titled “Amyris Sells First Renewable Product”:
Amyris, Inc. announced today that it has received the first purchase order for Amyris renewable squalane. This order was generated through collaboration with Amyris’s partner, Soliance, a leading green ingredient provider to the cosmetic industry based in France. “Successful industrial production of our first renewable product to our first customer is a point of celebration for Amyris, validating the success of our platform and the value of our products,” said John Melo, CEO of Amyris. “We continue to scale our production while providing the reliable quality and delivery that our customers expect.”The first production plant comes on line
“We believe we have a novel value proposition in the market,” said Frederique LaFosse, general manager of Soliance. “The combination of a reliable, high purity, renewable squalane can provide confidence to formulators the world over to use more of this best-in-class emollient.”
Squalane is a high-end moisturizing ingredient used in a wide range of cosmetics today, currently sourced from refined olive oil or shark liver oil. Amyris squalane is renewable, of high purity and excellent stability. It has been successfully tested by Soliance and potential customers. Amyris and Soliance believe squalane may be used for expanded consumer applications which today rely on non-sustainable materials. Amyris renewable squalane was produced by manufacturing Amyris’s Biofene™, Amyris renewable farnesene, and then converting it to squalane.
On 29 April, Amyris announced it’s first production facility is up and ready to run — in Brazil.
The press release:
Amyris, Inc. (NASDAQ: AMRS) announced the completion of the first industrial-scale facility for the production of Biofene™, Amyris’s renewable farnesene. The production facility is located in Piracicaba, São Paulo, Brazil at a facility owned by Biomin do Brasil Nutricão Animal Ltda., a company focusing on animal nutrition. Amyris will operate the production facility and expects to begin Biofene production in May. To produce Biofene, Amyris feeds sugar cane syrup into three dedicated 200,000 liter fermentors containing Amyris proprietary yeast. The yeast digest the syrup feedstock and produce farnesene, which is then separated and purified. Biofene may then be sold directly into industrial applications or put through simple chemical finishing steps to form a broad range of renewable products including squalane, base oil and finished lubricants and diesel. To achieve production at full industrial scale, Amyris has developed an integrated scale-up process which connects ongoing advances in Amyris research with industrial-scale production. By miniaturizing process conditions found in production-scale fermentors, Amyris has been able to translate yeast performance successfully from discovery to production. Amyris further controls scale-up by testing performance in its pilot plant in Emeryville, Calif., followed by vetting in a second pilot plant and a demonstration facility in Amyris’s operations in Campinas, Brazil. Earlier this year, Amyris tested its yeast strains and process in several runs at 100,000 and 200,000 liter scale and generated results that were consistent with previous runs at smaller scale.Stephan Nielsen added some details in his Bloomberg account:
“The completion of our first Biofene production facility is a landmark not only for Amyris but also for the renewable products sector,” said John Melo, CEO of Amyris. “With this milestone, we are demonstrating that engineered yeast may be used to produce high-value hydrocarbon molecules on a commercial scale. This achievement reinforces our goal of providing No Compromise® renewable alternatives to petroleum to transform the chemicals industry, extend the world’s fuel supply and contribute to the betterment of our environment.”
Amyris is scaling its production through contract agreements with manufacturers located in Brazil, Europe and the United States, and has five production agreements in place including contract agreements with Antibioticós S.A., Biomin, Paraíso Bioenergia S.A., Tate & Lyle Ingredients Americas, Inc., an affiliate of Tate & Lyle PLC, and a joint venture with Usina São Martinho S.A., one of the largest sugar and ethanol producers in Brazil. Amyris has also established finishing capabilities with Glycotech, Inc.
Amyris Inc., a U.S. biotechnology company, built its first industrial-scale facility to produce from sugar-cane syrup a compound that can be converted into a renewable fuel, tapping Brazil’s expansive cane industry for feedstock. >snip<Note: Those production figures, transformed into more familiar terms for our metric-challenged readers, amounts to only 528,000 annual gallons at the starting rate, scaling up to an annual 4,491,000 gallons in 18 months. By way of comparison, the United States consumes 378 million gallons of gasoline every single day, according to the federal Energy Information Administration.
Brazil, the world’s largest sugar producer, is expected to crush 568.5 million tons of sugar cane this harvest, 2.1 percent more than last year, the Sao Paulo-based cane industry association Uniao da Industria de Cana-de-Acucar said in a statement.
Amyris, which will operate the plant, will spend less than $20 million for the facility that initially will generate 2.5 million liters a year, Chief Executive Officer John Melo said by telephone. It will be scaled up to produce 17 million liters in 18 months, he said.
So, no miraculous fuel replacements yet.
Where the financial action is
Now, for the numbers wonks among our readers, we’ll take a look at where Amyris gets its money.
We’ll open with this from the company’s annual report on how the Amyris Initial Public Offering fared:
On September 30, 2010, the Company closed its initial public offering (“IPO”) of 5,300,000 shares of common stock at an offering price of $16.00 per share, resulting in net proceeds to the Company of approximately $73.7 million, after deducting underwriting discounts of $5.9 million and offering costs of $5.2 million and in October 2010, the Company subsequently sold an additional 795,000 shares to the underwriters pursuant to the over-allotment option raising an additional $11.8 million of net proceeds. Upon the closing of the IPO, the Company’s outstanding shares of convertible preferred stock were automatically converted into 31,550,277 shares of common stock and the outstanding convertible preferred stock warrants were automatically converted into common stock warrants to purchase a total of 195,604 shares of common stock and shares of Amyris Brasil S.A. (“Amyris Brasil”) held by third party investors were automatically converted into 861,155 shares of the Company’s common stock. [Page 71]As of 25 February, according to the report, the company had 43,849,226 shares outstanding.
The shares opened for public trading last September at $16.50 per share, peaked on 27 January at $33.89, and were trading today at last look at $24.75.
Naming the major players
The largest single shareholder is French oil giant Total SA, with its shares controlled by the president of its gas and power division, Philippe Boisseau, who is also a member of the Amyris board. As of 8 December, he managed 9,651,004 Amyris shares on behalf of Total.
Here’s the statement Amyris released 9 December after Boisseau joined the board:
Amyris, Inc. announced today that Philippe Boisseau has joined the company’s board of directors. Mr. Boisseau is currently president of Total’s Gas & Power division. “Philippe brings exceptional perspective and experience to our Board,” said John Melo, chief executive officer of Amyris. “Philippe’s personal commitment to our company emphasizes the strong relationship we are building with our partner Total, a major international oil and gas company, and will help us tremendously as we ramp up our commercial operations.”Another major holder is TPG Capital, formerly Texas Pacific Group, an investment fund managing $48 billion in capital. They held 3,262,450 shares as of 31 December.
Boisseau, 48, graduated from the leading French engineering school Ecole Polytechnique, and has a master’s in particle physics. He began his career in 1986, serving in a number of French government ministries before joining Total in 1995. He worked in several management positions within the Refining and Marketing division in the US and France until 1998. Boisseau then moved to the Exploration and Production division and was appointed general manager of Total Austral in Argentina in 1999 and president, Middle East, between 2002 and 2007. Since then, he has been president of Total Gas & Power with the role to develop the downstream segment of the natural gas chain and alternative energies. He has been a member of Total’s Management Committee since January 2005.
“Biotechnology broadens perspectives for the development of industrial production in which Total has decided to position itself, and Amyris is at the heart of our initiatives in this area,” said Boisseau. “I am excited to be personally engaged in helping Amyris grow to fulfill its extraordinary potential.”
In June, Amyris and Total announced a strategic partnership encompassing Total’s investment in Amyris and a wide-spectrum master development and collaboration agreement. Total currently owns 22% of Amyris and, under their collaboration agreement, Total and Amyris R&D teams will work together to develop and commercialize certain renewable products.
Other investors — and their shareholdings — include [as of 31 December]:
- Kleiner Perkins Caufield & Byers XII, LLC, 3,724,558
- Temasek Holdings (Private) Limited, 2,724,766
- Artis Capital Management, LLC, 1,877,655
- Marsico Capital Management, LLC, 1,364,478
- FMR LLC, 1,184,919
- Invesco Ltd., 424,570
- GLG Partners LP, 228,881
- Russell (Frank) Company Inc, 163,282
- BlackRock Fund Advisors, 134,035
- Mazama Capital Management, Inc, 115,291
Temasek is a creation of the government of Singapore, Artis is a San-Francisco based and very private investment fund, Marisco is a Denver-based fund manager, and FMR is better known as Fidelity Investments.
For anyone who wants to dig deeper into Amyris SEC filings, the search begins here.
Amyris shifts its corporate status
Last June, shortly before its initial efforts to launch an IPO, Amyris did what many corporations do: It dropped its status as a California corporation and incorporated in Delaware.
The reasons? Well, consider this from the state’s Division of Corporations website:
The State of Delaware is a leading domicile for U.S. and international corporations. More than 850,000 business entities have made Delaware their legal home. More than 50% of all publicly-traded companies in the United States including 63% of the Fortune 500 have chosen Delaware as their legal home. Businesses choose Delaware not for one single reason, but because we provide a complete package of incorporations services. The Delaware General Corporation Law is the most advanced and flexible business formation statute in the nation. The Delaware Court of Chancery is a unique 215 year old business court that has written most of the modern U.S. corporation case law. Delaware’s State Government is business-friendly and accessible. Our Division of Corporations operates with a state-of-the-art efficiency and our staff provides prompt, friendly and professional service to clients, attorneys, registered agents and others. These factors have all contributed to making Delaware a premier legal home to companies around the world.Another factor: Companies that incorporate in Delaware but do no business there don’t pay any state income tax.
Under the state’s legal system, internal corporate disputes aren’t heard in the same courts non-corporate citizens use to resolve disputes, but in the chancery court, which avoids much of the hassle a company might face in, say, a California Superior Court.
Given that corporate officers are bound by the doctrine of fiduciary responsibility, it was the obvious move for a company started in Berkeley.
Amyris’ CEO, a very Melo fellow
Finally, a bit about Amyris CEO, straight from the corporate website:
John Melo has more than 20 years of combined experience as a business leader and expert in the global fuels industry. Before joining Amyris, Mr. Melo was President of U.S. fuels operations for British Petroleum, where he successfully led programs to increase marketing volumes, reduce costs, and significantly improve financial returns. During his eight years with BP, Mr. Melo also served as Chief Information Officer of the refining and marketing segment; Senior Advisor for e-business strategy to Lord Browne, BP group chief executive; and Director of global brand development. In this last role, he helped develop the “Helios” re-branding effort. Before joining BP, Mr. Melo was with Ernst & Young and a member of the management teams for several startup companies, including Computer Aided Services and Alldata Corporation.[And, by the way, UC Berkeley boasts a shiny new Helios Building, housing BP’s $500 million agrofuel research partnership based at the university.]
In 2009, Melo received $408,333 in salary payments, a $200,000 bonus, and additional compensation including $145,907 for reimbursement for temporary housing and relocation expenses, $56,877 gross-up to pay associated taxes, and $18,833 of health and life insurance premiums, for a total of $829,950.
Melo also serves on the board of another renewable fuel company, Pasadena, Texas-based KiOR, for which he received $12,500 in direct compensation in 2010 plus an additional $215,042 in stock options.
According to the latest annual report, Melo manages 371 full-time employees, 272 in the United States and 99 in Brazil.
The report also adds this:
None of our employees is represented by a labor union or is covered by a collective bargaining agreement. We have never experienced any employment-related work stoppages and consider relations with our employees to be good.And while we throwing in numbers, the Amyris CEO is also an active political contributor, with all of his recipients in the Democratic Party.
His contributions include:
- $1,000 to the Democratic Congressional Campaign Committee on 30 June 2008
- $2400 to Friends of Barbara Boxer on 2 November 2009
- $2400 to Anna Eshoo for Congress on 91 April 2010
- $2000 to ACTBLUE on 6 July 2010
- $2000 to BOXER CDP 2010 on 6 July 2010
That’s it for now!
Read more of veteran journalist Richard Brenneman's work on his blog.