Amyris raises $84.8M in IPO, prices at $16, well below expected range

September 28, 2010 |

In California, underwriting sources have revealed that Amyris Inc. will raise $84.8 million in its initial public offering of its common stock, pricing at $16 per share, well below its expected range of $18-$20 per share.

Overall, the IPO placed an overall valuation on the company of $680.6 million, according to the plan of shares contained in its most recent S-1A filings with the SEC.

The IPO, though well below expectations, was roughly comparable to the results seen with the Codexis IPO earlier this year, which raised $78 million at a price of $13 per share. CDXS shares dropped in the post-IPO gloom to a low of $6.88 but have subsequently recovered to $9.48 as of yesterday’s close, giving the company an valuation of $324.40 million.

“It will be most important to see how it trades,” commented Qteros CEO John McCarthy. “Obviously, even at $16, it’s a great deal for the company and, presuming it trades reasonably well, is good for the industry. ”

Amyris CEO John Melo is scheduled to ring the bell at the closing of today’s trading on the NASDAQ stock market in New York.

More about the IPO market for biofuels and biochemicals

What we have learned from the Codexis and Amyris IPOs is that demand from shorter-term investors in the equities markets is light on price, but it is there. A valuation of $680 million for company that has yet to turn a profit, or produce fuels or chemicals near to the target it has set for transformational success, is a hallmark of faith, and its not nothing.

Right now, we see the PetroAlgae and Gevo IPOs still on the horizon, with both companies well back of Amyris in terms of generating revenues. Crriticism of the two IPOs has been generally on the basis of coming to the market too early – before establishing demand for the product or proof positive that either’s technology will ultimately work at the required rate, titer and yields that will produce meaningful profit streams. The same criticism was leveled, though less intensively, at Amyris – which shook off the attacks and emerged with a fresh infusion of $84 million.

Short-term, long term impact on other IPOs

Short term impact: expect Gevo and PetroAlgae to consider dialing down expectations for their proposed $150 million and $200 million IPOs in light of the $162 million raised by Codexis and Amyris combined.

Mid-term impact: Expect a number of biofuels-related companies to move forward with registration of their own S-1 registrations and to test the IPO waters. The IPO market may not be strong for greentech, but it is vastly improved, and in a tough capital-raising environment every dollar raised towards scaling technology has to be considered as a part of the mix.

The Amyris primer

Amyris had its technological foundation nine years ago in the Keasling lab at Berkeley, when Jay Keasling and his team of post-docs pioneered a methodology to produce isopentenyl pyrophosphate, at rates with commercial potential, from yeast-fermented sugars.

Traditionally, sugars are fermented into alcohols, but Keasling’s group was eventually able to produce a five-carbon base chemical and a high-value target in the world of what is now known as the field of renewable chemicals. Their magic bug, genetically enhanced from a soup of DNA obtained from bacteria and the plant world, offers a path to isoprenoids, which are themselves a family of some 50,000 molecules that have applications or pathways for pharmaceuticals, fragrances, cosmetics and fuels.  After initially producing artemesinin, a potentailly low-cost synthetic base for anti-malarial drugs, they trained the bug to produce farnesene.

And what’s that? It’s a fragrant oil chemical – that distinctive acrid odor you detect in a Granny Smith Apple, that’s it. You also find traces of it in the hops used for some very nice Czech pilasters and Irish lager beers. It’s used as a component in its own right by manufacturers around the world.

The Amyris strategy

The Amyris strategy — commercialize farnesene on a contract manufacturing basis, then turn to farnesane, which you produce by adding hydrogen to farnesene. Farnesane is the company’s showcase diesel molecule, and forms the basis of its breakout from a speciality pharma and chemicals maker to a fuel player.

More about the risks and opportunities in life as an Amyris shareholder, in our Digest review of the Amyris IPO, here.

Amyris (AMRS) will be joining the Biofuels Digest Stock Index today, a basket of publicly-traded biofuels-related equities.

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