Verenium Struggles to Make Ends Meet
Verenium (NASDAQ: VRNM), a biofuels startup based in Cambridge, MA, and San Diego, warned in an annual 10-K income statement filed with the SEC yesterday that independent accountants hired by the firm have raised “substantial doubt about our ability to continue as a going concern.”
Losses are piling up from the company’s research and development on specialty enzymes that convert high-cellulose materials such as sugar cane into ethanol, as well as site development for a planned demonstration facility in Jennings, LA. The company’s net losses in 2008 totaled $185.5 million, according to the SEC filing, resulting in an accumulated deficit of $622.6 million since the beginning of 2006 and a working capital deficit of $23.8 million.
“If we are not able to reduce or defer our expenditures, secure additional sources of revenue or otherwise secure additional funding, we may be unable to continue as a going concern, and we may be forced to restructure or significantly curtail our operations, file for bankruptcy or cease operations,” the company said in the regulatory filing. It also said, however, that it expects to be able to raise the cash it needs “through a combination of corporate partnerships and collaborations, federal, state and local grant funding and loan guarantees, selling or financing assets, incremental product sales and the sale of equity or debt securities.”
Verenium, formed in 2006 from the merger of Cambridge, MA-based Celunol and San Diego-based Diversa, already has a longstanding partnership with British Petroleum, which committed $90 million to Verenium late last year and agreed to put up another $22.5 million in February for a joint venture to build an ethanol plant based on the firm’s technology in Highlands County, FL. (The company said in January it had also won a $7 million grant from the state of Florida to help build that plant.)
But the company’s accountants said in the regulatory filing that the payments from BP may not be sufficient to cover Verenium’s planned operating expense, capital expenditures, and debt payments.
Public companies are obliged to share worst-case scenarios in their financial filings. But because it’s listed on the NASDAQ exchange, Verenium was under an additional obligation to call special attention to the “going concern” warning, which it did in a terse press release yesterday.
NASDAQ rules also forced Verenium to disclose in December that it was in danger of being delisted by the exchange, which requires listed companies to maintain a market capitalization of at least $50 million or total assets and total revenue of $50 million each in the most recently completed fiscal year. The company said in January that it was back in compliance on that score.
In early trading today, Verenium’s stock was hovering at around 30 cents, down about 8 percent from Monday’s close.