Amyris Secures $83 Million, Genomatica and Mitsubishi Chemical Advance BioBDO Discussions

Setbacks at some of the more established biobased chemical and fuel firms seemed to cast a pall over February (see earlier posts), and I was prepared for more bad news as I dragged myself into the office. I was pleasantly surprised, however, to see several positive developments sitting in my inbox this morning:

  • Just two weeks after Amyris CEO John Melo ate crow and admitted the company was struggling to maintain peak yields (and would ratchet back aggressive capacity expansion targets), he announced a $58.7 million private placement of common stock. Existing investors Temasek Holdings, Total Gas & Power, SAS and Naxyris were included, as well as new investor, Biolding Investment. Amryis gained 7%, to close at $6.44. The company also secured $25 million in convertible debt due in 2017. Amyris had said it would need to raise cash after admitting it would not reach its 2012 guidance of producing 40-50 million liters of farnesene and becoming cash flow positive. I had hoped to hear an updated guidance at last week’s Clean Technology Conference (hosted by Jefferies), but Amyris canceled at the last minute.
  • Mitsubishi Chemical agreed to exclusively negotiate definitive agreements for a joint BDO commercial operation with Genomatica. The companies signed a MOU in April of 2011 to study the viability of deploying Genomatica’s bio-BDO process in Asia; however, Mitsubishi Chemical’s joint venture with PTT signed a separate deal with BioAmber to produce succinic acid and BDO for their PBS project. But it looks like Mitsubishi, one of the largest BDO producers globally, remains interested in Genomatica’s technology to supply BDO for its PBT and PTMG production units.
  • Arkema and Elevance Renewable Sciences have agreed to codevelop specialty polymers made from 9-decenoic methy esters produced at Elevance biorefineries. The news closely follows Arkema’s $365-million acquisitions of biobased polyamide-10,10 producer Hipro Polymers and castor-oil derived sebacic acid producer Cascada Biomaterials.

I should probably get used to the fact that not all news in the space will be job-creating, pollution-busting, disruptive technologies. The general consensus is  financing will get more competitive in 2012 and players in the space will consolidate.

Codexis Interim CEO: Management and Partnerships Remain Sold

Codexis’ interim CEO Peter Strumph , speaking at Jefferies’ Clean Technology conference today in New York, took the opportunity to dispel rumors circulating following the recent resignations of CFO Bob Lawson and CEO Alan Shaw, insisting “many threads of continuity” still exist among the company’s management and the departures do not indicate a breakdown in Codexis’ key enzyme partnership with Shell.

Strumph acknowledged concerns from investors over the proximity of the two resignations, but says there is no connection. Lawson left to accept a position at a private software company, while Shaw’s departure “was more prospective by the board of directors,” he said.

Codexis shares plummeted 19% Monday following Codexis’ announcement Friday that Shaw, who had been with Codexis since it was spun out of Maxygen in 2002, had stepped down. Lawson’s resignation was announced in late January, although he is staying on until the annual report is complete.

Rumors that the turnover indicates delays in the roll-out of biocatalysts developed under a long-standing biofuel collaboration agreement with Shell—set to expire this year—are also false. Nothing changed in the Shell relationship to provoke the board, Strumph said. “Our interests and Shell’s interests are very aligned,” he added. “Our work is nearly but not completely done, and there is a shared interest in moving the project forward.”

Shell and Codexis first signed the collaboration and licensing agreement in 2006, and over the years Shell has both committed significant funding to biocatalyst development and increased its equity stake in Codexis to 15.7% (which was placed into Shell’s Raizen sugarcane ethanol jv with Cosan in June).

While Shell is not the only player on Codexis’ dance card (a recent agreement with Mossi & Ghisolfi subsidiary Chemtex gives Codexis exclusive access to the highly regarded Proesa technology for the production of biobased detergent alcohols), royalties from the partnership are substantial. For the nine months ended September 30, 2011, Codexis posted $47 million in revenue from the agreement, accounting for 52% of the company’s total sales.

Executive Exodus Indicates Trouble at Codexis?

Codexis fell 19% today after several analyst downgrades and the announcement that long-standing CEO Alan Shaw was stepping down. Shaw, who has been with Codexis since its founding and been CEO for a decade, is leaving to “pursue other interests,” according to the release, although market watchers suspect pressure over delays in the company’s cellulosic biofuel joint venture with Shell and poor stock performance played a role.

Shaw’s departure closely follows CFO Bob Lawson’s decision to step down once the company’s annual report has been filed.

In 2010, Shaw led Codexis through what would be the first in a string of biochemical/biofuel initial public offerings (IPOs), although the stock has fallen 70% from its $13/share offer price. 

Struggles at Amyris, news that energy crop maker Ceres had slashed its IPO price (then delayed the offering altogether), and now a management exodus at Codexis threaten to cast a pall over biofuel/biochemical prospects in 2013. 

Codexis senior v.p. and CBO Joseph Sarret will speak later this week at Jefferies Global Clean Technology Conference, and will hopefully be able to address reported project delays.

‘Humbled’ Amyris Scales Back Expansions Plans

Synthetic biology firm Amyris (Emeryville, CA) says operational challenges have forced it to re-evalutate its commercialization strategy and scale back ambitious 2012 production targets for biobased farnesene. The company will focus on higher-value opportunities in specialty chemicals for the versatile C15 hydrocarbon, leaving higher-volume base oils and biofuels efforts under previously-established joint ventures with Total and Cosan.

“2011 was a year of accomplishment and a year of learning, CEO John Melo told investors on a recent conference call. Amyris opened three facilities in 2011 to produce initial volumes of farnesene and began commercial sales of derivatives squalane and diesel. However, the company has found over recent months that “it takes time to translate from peak yield levels in the lab to maintaining those yields over longer operational periods in the field,” Melo said.

Because of this, the company will not follow through on its previously announced expansion at Antibióticos’ León, Spain facility, and instead focus solely on a production project at Paraíso Bioenergia’s São Paulo, Brazil site.

Amyris will also focus on operational quality versus production quantity, Melo added. “We need to retain flexibility in how we optimize between production volume, cost, customer demand and cash, rather than driving to deliver a predetermined production volume.” The company had previously set a target of producing 40-50 million liters of farnesene in 2012—considerably higher than the 1 million liters it has produced to date.

Melo also said the company will no longer achieve its previous forecast of positive cash flow from operations in 2012 and is looking to raise equity financing to cover the gap.

However, Melo touted the company’s long list of development partnerships in polymers, cosmetics, and flavors & fragrances, and says collaborations with Total and Cosan are continuing to develop successfully. “I’m proud of what we have accomplished through our team and our partners and humbled by the lessons we have learned.”

Considered one of the frontrunners of biobased chemical development, Amyris raised $85 million in an October 2010 initial public offering. Shares have since fallen 60%, to $6.41.

Melo is speaking at Jefferies 2012 Global Clean Technology Conference next week in New York, and will hopefully have more details about revised revenue and production targets.

 

Cargill Forges Ahead in Bioplastics

Barely a month after ADM pulled out of the Telles joint venture, Cargill announced it is looking to add a bioplastics compound to its portfolio. The company’s NatureWorks PLA-based bioplastic subsidiary—itself plagued by the slow adoption rates, pricey application development efforts, and a revolving door of equity partners—annonuced today it has formed a joint venture with succinic acid maker BioAmber to develop and manufacture compounded resins made from PLA and polybutylene succinate (PBS).

The scope of the investment was not disclosed or even alluded to, and it is likely far less than the $300 million spent to build its Blair, NE PLA plant and the $500 million reportedly spent on application development. So while it’s probably not accurate to say the company is doubling down in bioplastics, it’s encouraging to see them not only forge ahead with PLA but invest to broaden their product range.

Of course, an $150 million equity investment from PTT Chemical, an affiliate of PTT Group with a pre-existing relationship with BioAmber and a drive toward PBS (a biodegradeable polymer made from succinic acid and 1,4-butanediol, or BDO) probably helped. Cargill announced last year that PTT Chemical would become its latest partner in NatureWorks (following earlier exits by Dow Chemical and Teijin). The deal, which would give PTT Chemical a 50% stake in NatureWorks, is still pending regulatory clearance.

BioAmber was previously chosen to supply succinic acid to a PBS production site at Map Pha Tut planned by PTT MCC Biochem (Bangkok)’s a  PTT Group/Mitsubishi Chemical jv. The PBS plant is expected to be commissioned by 2014. BioAmber also plans on adding capacity to convert succinic acid to BDO using technology licensed exclusively from DuPont. BioAmber also had a pre-existing relationship with Cargill; the two have been collaborating to develop a next-generation yeast that will lower production costs and capex, boost succinic acid yields, and enable the use of ligno-cellulosic sugars.

Speaking of bioplastics, I should have more information about Metabolix’s strategic direction following news ADM was pulling out of Telles. Metabolix CEO Rick Eno will be speaking at Jefferies Global Clean Technology Conference next week.