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In California, Amyris (AMRS)
reported Q1 revenues of $13.0M compared with $8.8M for Q1 2016,
and touted the “significant increase in product sales, primarily
in the personal care and health and nutrition markets, offset by a
slight decline in collaboration revenue.” Collaboration revenues
contributed $4.7M and product sales added $8.3M for the quarter.
Big Q1 miss vs analyst expectations
As Jeff Osborne at Cowen & Co noted, “Amyris reported revenue
of $13.0mn, well below our estimate of $37.1mn due to much lower
collaboration payments than we had anticipated. Management has
highlighted that these payments can be very lumpy in nature, and
attributed the miss to a failed milestone payment from Ginkgo
Bioworks. Gross Margin of 2% was well below our estimate of 40%
due to the lower collaboration payments.”
A turning point of interest
We liked one item more than anything.
In Q1 2016, product sales were $5.2M and the cost of product
sales were $11.2M, and a number of informed observers became
alarmed that the company was losing money on every product
produced, and that growth would be unsustainable. The company
noted the concerns but said that future sales would arrive with
stronger gross margins.
So, let’s look at Q1 2017.
And indeed, the company has staged a turnaround in that critical
metric. In Q1 2017, product sales were $13.2M and the cost of
product sales were $12.8M. IIt’s a rretunr to the kind of gross
margins that company had achieved by Q3 2016 — but with a 50% jump
in revenues. Long ways to go before the company is out the
financial woods, but we may see here a turning point.
The big hit is Biossance
The company recorded record quarterly Biossance sales following
successful launch into Sephora with the brand delivering high
growth and expected to drive much better than expected 2017
results — growing from approximately $500,000 in 2016 total retail
sales to over $10 million expected for 2017
The big miss is Ginkgo
There wasn’t much insight offered regarding the Ginkgo situaiton,
excepting that a mysterious milestone payment was missed —
apparently, a huge one, because the miss on revenues compared to
analyst expectations was almost $24M.
Indeed, the scale-up news from the Ginkgo universe this past week
went in a completely different direction. Ginkgo Bioworks and
Robertet USA completed the commercial-scale fermentation of “a key
flavor and fragrance ingredient” – which one, we don’t yet know.
The specific scale was 50,000 liters.
But think along the lines of rose oil ingredients and lactone
ingredients — that’s the Robertet sector. Overall, Ginkgo has a
portfolio of over 40 products under contract with 20 customers.
The Q1 developments that will impact 2017 and 2018
The company highlighted three major developments that will
positvely impact the company this year and next:
- Growing Farnesene for Vitamin E oil from around $6 million in
2016 to around $20 million in 2017
- Significant progress in healthy sweeteners with expected
commercial production in 2018 of low cost, best performing
healthy sweetener to focus on sugar replacement market
- Announced up to $95 million in anticipated equity financing
led by Royal DSM along with institutional investors over two
tranches and announced in-process reduction of the company’s
debt by approximately $75 million, significantly strengthening
the company’s balance sheet
Happy Campers at Camp Amyris
“We are pleased with our continued execution delivering increased
product sales and very healthy revenue growth for Amyris,” said
John Melo, Amyris President & CEO. “We are very excited to
join with Royal DSM to accelerate product sales in health and
nutrition markets, deliver better performing products and
accelerate market access. With their support and that of our
investors we have significantly strengthened our balance sheet and
the company’s foundation as a leading company in its sector.”
Continued Melo, “Our product portfolio is growing at a faster
rate than we expected within nutraceuticals, skin care and
fragrance ingredients. We have evolved our business to predictable
quarter on quarter product sales and continue to deliver on our
strategic milestones for delivery of our collaboration revenue.
While our competitors struggle to deliver material revenue and
predictable growth we expect to deliver around $60 million of
product revenue for 2017, or more than double from 2016, and we
expect total revenue to be better than our 2017 plan.
The Bottom Line
It’s the 5th consecutive quater of year on year product revemue
growth, and the company is targeting $115-120M in revenue in 2017
and of that $60M is expected to come from product sales.
In 2018, guidance is at $160M for product sales.
All that’s the good news. Here’s the bad news, Amyris has been
pushing back it’s time to $100M in revenue for some time. Back in
May 2016 we heard from AMyris that it was “On track to execute
2016 business plan with expected non-GAAP revenue of $90-$105
million for the year.” The company ended up with $67M for the year
— and with a $13M result in Q1, the company will need to average
out at $33M per quarter to reach its $115M target in 2017.
Needless to say, the next 90 days are perhaps the most important
in the company’s lifespan. There’s a time for building the
long-term future and there’s a time for delivering on stated
goals. Wall Street may well be able to put the past in the past
with all forgive if Amyris can break out and hit that $100M
revenue threshold, and even with a strong second half, the company
will need to reach something like $30M in Q2 revenue to maintain
belief, given the 2016 miss.
Jim Lane is editor and publisher of Biofuels Digest where this
was originally published.
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