Amyris Sees Reward in Putting One Foot in Front of the Other in Biofuels
The renewable fuels business has been long on talk and short on action for a few years now. That helps explain how Emeryville, CA-based Amyris could achieve impressive financial results simply by fulfilling its promises—even if that means hitting some fairly incremental goals.
The company has seen its stock climb 72 percent, from $16 to $27.55 a share, since its IPO in September.
“We’re getting a good amount of attention. We’re a very high potential growth company at a critical point,” says Jeri Hilleman, Amyris’ chief financial officer. “We’re going from pre-commercial to the commercial stage. We’ve tried to be really clear about the milestones we’ve tried to achieve, and we’ve achieved them.”
Amyris (NASDAQ: AMRS) still has quite a way to go to complete its transformation into a fully integrated, profitable company, but it has made some strides in the past year. The company has been making progress on carrying out a business plan for converting sugar into specialty chemicals that go into things like cosmetics, plastics, and lubricants. Those products can be sold in small volumes, and at higher profit margins than the thing that gets the most attention—renewable fuel.
Amyris, even after raising about $400 million, certainly isn’t about to put the oil companies out of business anytime soon. But it did earn some important credibility points on Wall Street by showing earlier this year its renewable, yeast-based process to convert sugar into specialty chemicals in 100,000-liter and 200,000-liter fermenters. That was an important early step in a plan to put Amyris’ technology to work on true industrial scales over the next couple years, on its way to making large volumes of fuel, Hilleman says.
No doubt, others in the biofuel business are watching this company and taking cues. The company was founded in 2003 by a trio of postdoctoral fellows who worked with Jay Keasling at UC Berkeley. It started as a non-profit with a mission to come up with a cheaper and more abundant source of artemisinin, an anti-malarial drug compound that is derived from natural sources in Southeast Asia. The project has support from the Bill & Melinda Gates Foundation. But as the technology took shape on the artemisinin project, it wasn’t long before a group of blue-chip VCs—Kleiner Perkins Caufield & Byers, Khosla Ventures, and TPG Ventures—saw potential for more lucrative products to come from the technology.
By October 2006, as cleantech was booming, those three venture firms pumped $20 million into Amyris, named former BP executive John Melo as the CEO, and set out to use “cutting-edge tools in chemistry and biology to develop solutions for major world problems,” according to a statement at the time. John Doerr of Kleiner Perkins stated one of his oft-repeated lines: “Greentech could be the largest economic opportunity of the 21st Century.”
The rhetoric about biofuels has toned down a bit, but Amyris has a lot more experience under its belt now. The company has worked out a process in which it modifies microbes to become factories that pump out chemicals we currently get from petroleum sources. This is, without question, still a speculative business. Amyris still runs in the red, and burned through about $30 million in cash in its most recent quarter. Any dreams of capturing the largest economic opportunity of the century are still fairly far out on the horizon. But interestingly, Amyris has staked out a pretty methodical plan to start small on its way to doing something big. And its revenues have been rising—going from $30 million in the last quarter of 2010 to $37 million in the most recent quarter ended March 31.
One of the early big decisions for every biofuel company is in … Next Page »