The Business of their Biology, the Biology of their Business: 10 years after IPOs, how are Amyris, Gevo, Codexis doing?

It’s been more than 10 years since the celebrated IPOs of Amyris, Codexis and Gevo showed that the second wave of industrial biotechnology (after the first wave of ethanol companies) was producing mature companies of size and substance.

Since then, the crash of oil prices in the 2010s forced a pivot by these companies. Amyris re-invented itself for industrials from cannabinoids to skin care. Codexis headed for a mix of industrials and pharma. Gevo shifted its aim from the light-duty, gasoline-replacing world of isobutanol and towards the heavy-duty market, producing sustainable aviation fuel and renewable diesel to replace kerosene and diesel. 

It was supposed to be the biology that featured rapid evolution, directional shift and disruptive transformation. Instead, the business side has been shifting faster than the technical.  There’s been biology in the business, and not just the business of biology, these past years — a shift from the Inorganic companies that used the same-old, same-old feedstocks, supply-chains and strategies and focused on product diversification, scale and optimization. Yes, Bulgari slipped over into the luxury hotel business and Boeing shifted more towards defense, but they were slow evolutions. Revolutions were rare, we saw a lot more Netflix/Blockbuster situations than we saw rapid-fire revisioning of companies, pivoting on a dime. That was then, as the saying goes, this is now.  Executives that confidently on conference stages predicted the coming of sustained $100 oil were forced to compete with $15 oil instead. Mandates went unenforced as designed. Tax credits disappeared before they could be used, or would be renewed retroactively. 

It’s been a living hell, these past ten years. What is interesting is not that it is hell. It’s the living part, the fierce competition for resources, the re-ordering of DNA, the gasp of companies breaking through the surface of the water and throwing themselves onto the land in hopes that life is better, top-side. Birth, struggle, death, extinction at a pace that befuddles ordinary observers — who are still busy pointing at Range Fuels and the “failure of industrial biotech” rather than looking at the pervasive impact this technology wave is having.

Babies in the bathwater, Amyris, Codexis, Gevo and The Renewable Energy Group — the ACGT of the industrial biotechnology business, with their signature IPOs in the 2010-12 period. Of course, Chevron famously acquired REG earlier this year, and we have just the three companies standing as independents. So, Amyris, Codexis, Gevo – how are they doing. Turns out, pretty well, though it’s taken a long time to realize the promise in the face of all the headwinds encountered during  the Roaring Teens.

Over at Gevo

• Ended the quarter with cash, cash equivalents, restricted cash and marketable securities of $546.8 million compared to $475.8 million as of the end of Q4 2021. Revenue of $0.1 million for the quarter compared to $0.3 million in Q2 2021 Loss from operations of $(16.1) million for the quarter compared to $(19.1) million in Q2 2021
• Gevo now has more than 350 million gallons per year (“MGPY”) of financeable SAF and hydrocarbon fuel supply agreements, which based on current market projections and operating assumptions, represent approximately $2.1 billion in expected revenue per year, inclusive of the value of environmental benefits. These types of contracts are expected to assist Gevo in obtaining project debt financing.
• On June 5th, 2022, Gevo executed a registered direct offering of 33.3 million shares to certain institutional investors. That offering closed on June 8th, 2022, providing net proceeds of $139.0 million. As part of the offering, Gevo issued 33.3 million Series 2022-A Warrants with an exercise price of $4.37 per share.
• The Company’s Net-Zero 1 project is on schedule and the Company continues to work towards completion of the various milestones for 2022, including, among others, executing certain commercial development, build, own and operate agreements, and selecting an EPC contractor for the project.

Gevo CEO Pat Gruber had this to say.  “Given our continued success in securing SAF supply agreements as well as the additional interest that we are witnessing in the marketplace, there should not be any question about the potential size of the market for renewable fuels. The opportunities in front of us over the next decade and beyond are large and rapidly growing. Our goal is to build SAF production capacity at a rate that will establish Gevo and its partners as a market leader and powerhouse in the renewable fuels sector. It all starts with NZ1, the engineering and design is going well. Based on what we see today we expect to stay on schedule for the 2025 start-up. Gevo’s RNG project continues to ramp to nameplate capacity of 355,000 MMBtu. All three dairies are now producing biogas which is then upgraded and injected into the sales pipeline. 

Over at Amyris

• Record consumer revenue of $43 million increased 108% compared to Q2 2021. Total reported revenue of $65.2 million increased 25% compared to the prior year quarter.Core revenue of $65.2 million increased 54% compared to Q2 2021 revenue of $42.3 million. 

• Ingredients sold out in first half with $15 million backlog to be supplied in H2

• Cost actions and price increases to deliver $50 million of EBITDA improvements in H2

• $700 million non-equity funding and earnout provides liquidity to sustained profitability

• Consumer growth was driven by solid year-over-year growth of Biossance® and strong contributions from new brands, led by JVN, Rose Inc. and MenoLabs. Direct-to-consumer sales, which comprised 45% of total consumer sales, grew approximately 98% year over year. In-store and online retail sales, which comprised 55% of total consumer sales, grew approximately 111% year over year. Revenue from Sephora grew approximately 25% year-over-year. During the second quarter, Amyris brands were available at approximately 9,000 physical locations compared to approximately 1,500 during Q2 2021.

• During the quarter, Amyris commenced production at its state-of-the-art large-scale precision fermentation plant in Barra Bonita, Brazil enabling the shipping of $15 million in ingredient backlog starting in the third quarter.

Amyris CEO John Melo had this to say. “All of our distribution channels are performing well. Our omnichannel strategy is delivering strong growth with our retail channel representing 55% of Q2 consumer revenue as consumers increasingly resume in store experiences and purchasing, and 45% attributable to direct-to-consumer ecommerce. In the second quarter, our consumer products were on the shelves in 9,000 stores which compares to 1,500 in the year ago quarter. This number is rapidly expanding with thousands of Walmart stores being added. We are very pleased with the strong operational performance and execution across our business. We delivered the most rapid growth rate of any major consumer beauty company in the categories we compete in during the quarter. The start-up of our greenfield state-of-the-art bio-fermentation facility in Barra Bonita, Brazil was a major strategic milestone, and we completed two acquisitions, one of which was a new manufacturing facility for cosmetics and personal care products in Brazil. We are moving beyond the period of significant investment and the constraints on our ingredients production capacity. We are entering the second half with a consumer business that we expect to deliver accelerated growth year-over-year, and a $15 million ingredient backlog for shipping in the second half. 

Over at Codexis

• Product revenues increased 135% to $34.6 million in the second quarter, primarily driven by revenue from sales of CDX-616 used in the manufacture of PAXLOVID, Pfizer’s COVID-19 therapeutic. Codexis previously announced the Company has entered into a multi-year agreement with Pfizer for the supply of a proprietary high-performance enzyme used to manufacture a critical intermediate for nirmatrelvir, an active pharmaceutical ingredient (API) in PAXLOVID.
• In the second quarter, Codexis had 18 customers who contributed over $100,000 in revenue, six of which contributed over $1 million in revenue.
• MAI and Codexis announced the execution of a Commercial License and Enzyme Supply Agreement, enabling MAI to utilize Codexis’ evolved terminal deoxynucleotidyl transferase (TdT) enzyme in MAI’s Fully Enzymatic Synthesis™ (or FES™) technology. The companies previously announced the successful development of this proprietary, high performing enzyme to deliver unparalleled coupling efficiency and the ability to more rapidly synthesize longer DNA sequences with fewer errors. MAI plans to provide select companies and institutions with access to a Key Customer Program slated to begin later this year with a full commercial launch planned in 2023.

Codexis CEO John Nicols had this to say. “We are encouraged by the robust product sales momentum seen in Codexis’ base of key customers in the sustainable manufacturing market, not only among our large pharmaceutical customers, but also within the food sector. In Life Science Tools, our collaborations with innovative partners like Molecular Assemblies, Inc. (MAI) and seqWell Inc. (seqWell) remain on track to leverage our CodeEvolver® platform in generating value for cutting-edge life science applications. We are also making steady advancements with our self-funded and customer-driven programs in the Biotherapeutics segment, where we are focused on harnessing the power of our platform as a drug discovery engine to build a high-value pipeline of oral biologic and gene therapy candidates.”

The Bottom Line

Not many predicted the crash in oil prices, and many ignored the challenges in finding markets in light-duty vehicles past the old E10 ethanol blendwall. These companies did not have the big markets and prices they expected for their launch products. Does any living organism have its niche forever, and forever undisturbed. Ask any yeast organism how serene it is down there in the fermentation vat. Actually, it’s a hell of combat survival of the fittest, and any thoughts of a benign Circle of Life should be jettisoned as a fairy tale told to children while the lion sleeps. In the Kingdom of Life, it’s worse than dog eat dog, it’s dog evolves into something that grabs all the other dog’s food. The fangs, the claws, and pivots so fast and loud you’d think evolution was trying to build a helicopter. What’s most amazing is that these three skinny, underfed companies tossed out into the maelstrom by their investors ten years ago are rougher and tougher adults now. Saw that $2.1 billion in locked in, financeable orders for Gevo. Now, we’re talkin’.