Ceres: Biofuels Digest’s 2015 5-Minute Guide

Ceres develops & markets low-carbon, non-food grasses for advanced biofuels and biopower. It’s energy crops “can provide more fuel or electricity, new opportunities for growers and a cleaner environment for us all.”

Using advanced plant breeding and biotechnology, Ceres is developing dedicated energy crops as raw materials for renewable transportation fuels, electricity and bio-based products.

The company aims at increasing yields, lowering costs, facilitating processing and refining, and even helping reduce greenhouse gases.

Many of the same traits that benefit energy crops also benefit traditional row crops. So, Ceres supplies traits and technology to other well-known crop developers of corn, soy and other non-energy crops. The company utilizes genomics and model systems, compositional analysis, and marker-assisted plant breeding — as well as specialized, high-throughput systems to accelerate the company’s product development process.

Rankings

50 Hottest Companies in Bioenergy: #32, 2014/15

Biofuels Digest Awards

2012 New Feedstock (Trial) Award: Ceres, sweet sorghum

The Situation

Last year, it was “Brazil, Brazil, Brazil,” but recently the company has annoucned a breakthrough into the exciting world of sorghum hybrids — a crop very much on the rise.

Last season, the company’s Blade brand hybrids performed well in large-scale evaluations with livestock and dairy producers, out-yielding current sorghum hybrids and comparing favorably to other forage crops, such as corn silage, which is planted for its high nutritional value.

That opens more opportunities in Brazil, but also the US and China among other locales. In ties in well to Ceres ‘ Brazilian operation, of course, since the company announced last July that the company will enhance its product development programs in Brazil and expand its development activities in biotech traits for sorghum and sugarcane over the next four years. The programs will now be funded in part under the Brazilian government’s PAISS Agricola initiative, which promotes agricultural innovations in sugarcane as well as other energy crops. Under the PAISS program, Ceres is eligible for a multi-year credit facility of up to 75.4 million reais, or approximately US$34 million, at a government-subsidized, preferential interest rate. Receipt of the loan will be subject to customary diligence, documentation and closing conditions, and will require guarantees to be provided by or obtained by Ceres.

For the 2014-2015 growing season in Brazil, total plantings of the company’s sorghum products cover more than 4,000 hectares compared to approximately 1,000 hectares planted the previous season. The increase in planted area is due primarily to increased demand for high biomass sorghum for power generation. Following a dry start to the growing season, which delayed some plantings, growing conditions have been generally favorable to date across most evaluation regions, including adequate rainfall. Overall plantings were lower than the company’s original forecast of 5,000 hectares due to some weather delays at the beginning of the season, which provided less time to plant, and the company’s subsequent decision not to plant outside its recommended timeframe.

Type of technology

Plant biotechnology, gene marker-assisted breeding and other genomics

Major investors

Ceres is a public company. Its common stock trades on the Nasdaq Global Market under the ticker symbol CERE. Pre-IPO investors include Warburg Pincus, Soros Private Equity Partners, GIMV and Oppenheimer.

Past milestones

In February 2015, Ceres, Inc. announced that its seed product offerings in the U.S. will include three new forage sorghum hybrids, following positive results from commercial evaluations last season as well as new university results released last week that highlighted a number of performance advantages, including the highest milk yield per acre, which is a key metric for dairy operations. The company’s expansion into the forage market is expected to bring innovative new products to growers and producers, including hybrids with higher yields, greater disease resistance and improved nutrition.

In January 2015, the company reported that its multi-gene combinations in corn achieved an approximately 25% yield advantage over controls in many of its research-scale field evaluations involving two different hybrids. These replicated field evaluations were conducted in two different climatic regions in China through the company’s development collaboration with the Chinese Academy of Agricultural Sciences. Field evaluations represent a critical stage in the development of biotech crop traits, as they provide greater insight into how traits may perform in an agricultural setting.   The company has selected its best multi-gene combinations for broader field evaluations in 2015.

In July 2014, the company announced that it has licensed its Persephone genome visualization application to Bayer CropScience. The multi-year software license and collaboration agreement provides a non-exclusive license to Bayer as well as professional services including support, customizations and maintenance.

In June 2014, Ceres said that it will evaluate a number of its biotech traits in sugarcane in South America. Plantings were recently completed and preliminary performance observations will be available by the end of the year. Ceres expects to receive sugar yield results in the second half of 2015 when the first growing cycle is completed. Sugarcane provides an additional out-licensing opportunity for traits that the company is developing for its own use in sorghum and other energy crops.

In February 2014, Ceres and Syngenta announced that they have extended a joint market development agreement in Brazil. The companies will move forward with their efforts to promote the use of both sweet sorghum and high biomass sorghum at Brazilian ethanol mills. Under the renewed agreement, Syngenta and Ceres will continue to collaborate on field evaluations with mills. Syngenta will evaluate its portfolio of crop protection products alongside Ceres hybrids, while Ceres will provide both seed and research support. Both companies will coordinate outreach to ethanol mills and develop industry training programs.

In February 2014, Ceres announced the pricing of an underwritten public offering of 20,000,000 shares of common stock at a public offering price of $1.00 per share. Ceres also granted the underwriters a 45-day option to purchase up to 3,000,000 additional shares of common stock to cover over-allotments, if any. Ceres expects to receive approximately $20 million in gross proceeds, before deducting underwriting discounts and commissions and offering expenses payable by the company. Ceres intends to use the net proceeds from this offering for general corporate purposes, including working capital.

Demonstrated at commercial-scale that sweet sorghum could be used as a season-extending feedstock for Brazil’s 400+ ethanol mills. The company’s high-biomass and stress tolerance traits have demonstrated biomass yield increases of ~50% under non-irrigated conditions.

Completed IPO in February 2012.

Future milestones

Ongoing commercial sales and scale-up in pace with bioenergy industry in Brazil, Europe and the United States.

Ceres Traits to Watch

Enhanced conversion: Substantial reductions in the cellulase enzyme cocktails required to release fermentable sugars from plant biomass.  This trait could be a key enabler of the large-scale use of biochemical processes and fermentation

High-biomass, low-input traits:  High yields and greater yield stability on low-rent, marginal land. Feedstock is 50-70% of operating costs, and land rents can be a significant cost component. These traits could provide a major lever against cost and enable larger volumes/facilities.

Business model

Seed sales and trait licenses

Competitive edge

Genetics, intellectual property, early-mover advantage

Distribution, research, marketing or production partnerships or alliances

R&D: Texas A&M (leading sorghum genetics), Samuel Noble Foundation (Switchgrass genetics) and the Institute of Biological, Environmental and Rural Sciences Institute of Aberystwyth University in the U.K. (Miscanthus genetics).