DSM invests in Amyris

May 8, 2017 |

In California, DSM led a round of investors that will put up to $95 million in equity financing into Amyris via a registered direct offering of convertible preferred stock, and private placements of convertible preferred stock and warrants. Amyris is in the process of reducing its debt by approximately $75 million.

DSM has agreed to an initial equity investment in Amyris of $25 million as part of the financing referred to above. Subject to the satisfaction of certain conditions, DSM may invest an additional $25 million in Amyris. The first tranche is expected to close on Thursday, May 11, 2017 with the second tranche (if completed) expected to close within 90 days of the closing of the first tranche. The remaining portion of the financing to be raised of $45 million consists of funding commitments provided by institutional buyers and accredited investors, including some which have previously engaged in equity and/or debt investments in Amyris.

DSM will gain a board seat in each tranche, and the companies have agreed to short to medium term product development and production opportunities in vitamins and other nutritional ingredients. DSM will benefit from Amyris’s yeast-based strain engineering platform, and Amyris will be able to accelerate its market access using DSM’s capital and large scale manufacturing expertise.

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The Multi-Slide Guide

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Total, Temasek and DSM in control

Following both investments, three strategic investors will own >50% of Amyris, with Total owning 22% and Temasek owning 17% prior to the financing.

DSM holding translates into a shareholding of ~12% and values Amyris at $200 million. Following the announce, Amyris shares dropped 38% to reflect the equity dilution, and Amyris’ market valuation stands at $97.7M.

The first tranche is expected to close on Thursday, 11 May 2017, with a second tranche, if approved by DSM’s Managing Board, expected to close within 90 days of the closing of the first tranche. As part of this investment, DSM will gain one board seat upon the closing of each tranche.

Approximately $40 million of such amount is being converted pursuant to the terms of the equity financing referred to above and in addition, $15 million has already converted into equity over recent weeks with the remainder to be paid over the next 30 days.

The companies noted that Amyris’ technology supports DSM’s strategic markets in health, nutrition, and materials as well as a growing consumer shift to (bio-) natural-like products derived from sustainable sources. For Amyris, DSM’s channels and market access and keen understanding in selecting the right products for the animal nutrition, human nutrition, and consumer health markets provide strategic value.

Cowen & Company’s Jeff Osborne wrote in a note to investors that it provided “much needed balance sheet stability”. At the end of 2016 Amyris had around $130M in debt, of which $25.9M was current, and only $32.8M in cash and restricted cash on hand.

Osborne added:

We see the partnership as a plus in that it provides Amyris with a large offtaker, but are lowering our price target to reflect the dilution associated with the deal and other debt reduction initiatives.

Cowen reduced its price target to $1.00, or a valuation of $184.5M — some 10% lower than DSM paid for the investment.

Reactions from the stakeholders

“We are very pleased with the support of our existing shareholders and we are excited to welcome DSM as one of our newest investors and a key shareholder,” said John Melo, Amyris President and CEO. “The combination of the new cash to support our strong growth, the simplification of our debt structure and a new long-term shareholder that is strongly aligned with our key growth markets of Health and Nutrition provides us a significant leap forward in our lead of the Industrial Biotechnology sector. We are very pleased with our ability to deliver better products at a lower cost while making our planet healthier and our customers’ products and businesses more sustainable.”

“Amyris has a unique yeast-based strain engineering platform that is very complementary to DSM’s capabilities in this area and will create great synergy with DSM’s know-how in fermentation, downstream process development and large-scale manufacturing,” said Chris  , President & CEO of DSM Nutritional Products. “Working closely together with Amyris and leveraging DSM’s route-to-market, will accelerate our innovation towards cost-effective, fermentation-based processes for both existing and new products.”

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