In years gone by, it was not too hard to write up a summary of Gevo, Solazyme and Amyris — all aimed at fuels, all in the development stage, all used synthetic biology in closed fermenters, all had big backers ranging from brand-name equity partners to big-time strategics, all went public in the same 2010-11 IPO window.
These days, much more complex. It’s a jungle of production costs, average selling prices, offtake deals, LOIs, and MOUs. Following them requires just a certain mastering of the markets in farnesene, dielectric acid, paraxylene, oleic oil, erucic acid, squalane, fragrance oils, skin cream. Oh, and fuels like renewable diesel, biodiesel, isobutanol and jet fuel, too.
But we need not look only at the complications, friend. All you have to do is locate and measure the four horsemen of the financials — the items that are critical for industrial biotechnology at scale.
As Grantland Rice was moved to observe, you might know the Four Horsemen by aliases. In industrial biotech, you might have heard them described as Revenues, Strength, Capacity and Mix. But they are the Pale Horse, the Black Horse, the Red Horse and the White Horse.
They deliver the company from the high-value, small-market products at the top end of the price curve to the lower-value, high-volume products (where fuels reside, for example). So, the Q3 results are in and what have we learned?
Like the pale horse, these should be strong and transparent.
Total revenue for the third quarter ended September 30, 2013 was $10.6 million compared with $8.6 million in the third quarter of 2012, an increase of 24%. Revenues in the third quarter of 2013 included $4.8 million of product sales compared to $3.8 million in the same period of 2012, an increase of 27%. Going forward, Piper Jaffray’s Mike Ritzenthaler cautions: “First, that the 2014 milestones are far less granular and under control than those in 2013, and that the company will not disclose many supply agreements – obfuscating investors’ ability to gauge firm underlying demand for tailored oils.”
Digest note: Strong growth that just missed Wall Street expectations.
Aggregate revenues for the quarter ended September 30, 2013 were $7.0 million compared to aggregate revenues of $19.1 million in the third quarter of 2012. Last year’s third quarter revenues included $1.7 million of sales related to the Company’s ethanol and ethanol-blended gasoline business, a business which the Company transitioned out of in the third quarter of 2012. Of the $7.0 million in aggregate revenues in the quarter ended September 30, 2013, $4.1 million was related to renewable product sales and $2.9 million was related to collaboration and grant revenue.
Digest note: Biofene sales are gaining traction — it all depends on production capacity and cost.
Revenues for the third quarter of 2013 were $1.1 million compared to $0.6 million in the same period in 2012. They included proceeds from sales of biobased jet fuel to the U.S. Air Force (USAF) of $0.4 million, revenue under Gevo’s agreement with The Coca-Cola Company, and revenue from ongoing research agreements.
Digest note: Essentially development-stage here — the meaningful numbers await 2014 and full ops at Luverne.
Like the black horse, these should be robustly positive and utterly fearsome.
Third quarter GAAP net loss attributable to Solazyme, Inc. common stockholders was $30.7 million, which compares with net loss of $22.5 million in the prior year period. Cowen & Company’s Rob Stone and James Medvedeff: add: “2013 guidance lowered, now targeting to be cash flow positive in 2015. SZYM lowered its FY:13 revenue guidance. As such, SZYM expects FY:2013 revenue of $40-$42M and expects to be cash flow positive in 2015. Piper Jaffray’s Mike Ritzenthaler strikes a cautious note in warning: “With Bunge exploring alternatives for its Brazilian sugar business, we question whether a new owner would find much novelty in the Solazyme project – we believe investors should account for this risk.”
Digest note: has the partners and the balance sheet to manage growth. But watch Bunge.
Rob Stone and James Medvedeff of Cowen & Company note: “AMRS targets $4.00 per liter cash cost by year-end, about breakeven on the lowest ASP products in the portfolio. Jet fuel is making progress, and work continues on drilling fluids, but time to volume use is not certain.” GAAP net loss for Q3 was $24.2 million compared to a loss of $20.3 million for Q3 2012. Cost of products sold increased to $8.3 million for the three months ended September 30, 2013 from $4.4 million for the same period in the prior year. “Achieved lowest quarterly cash operating expenses since our Initial Public Offering in 2010… Following quarter-end, closed initial tranche of convertible note financing for $42.6 million.”
Digest note: Has the partners and they believe; but will costs come down and capacity expand fast enough?