Amyris Inc (NASDAQ: AMRS)
Amyris, Inc. continues to trend significantly higher, holding gains of over 70% since the first trading day in October. Trading an average of 4.5 million shares a day, this tiny but mighty company has been stringing deals together at a fastidious pace. During the previous two weeks the stock has been consolidating nicely in the $1.05 range, setting the stage for a continuation in the uptrend as investors churn through a large amount of the publicly traded float which stands at approximately 90 million shares.
AMRS Is Booking Collaborations Faster Than An OTB Location
During the past two months alone, AMRS has finalized six collaborative agreements along with additional partnership agreements that are poised to be accretive to revenue and earnings in 2017.
On October 26th, AMRS announced that they have executed a definitive agreement for strategic partnership and financing with a global nutriceutical market leader, a deal that has been pending since September of this year. Under the terms of the deal, Amyris is expected to generate between $40 – $50 million dollars of revenue in 2017 and once scaled , revenue is expected to blossom into a $100 million dollar run rate in 2019, once the agreement reaches full scale production levels.
The deal further provides for an unsecured, strategic investment facility worth $25 million dollars and bound by a five year maturity term.
AMRS Inks Biopharma Agreements
Off the heels of that impressive deal, AMRS announced on Friday, October 28, that it has entered into a research agreement with a top 10 global pharmaceuticals company, inclusive of a commercial license option. The terms provide that the collaborative effort will utilize Amyris’s µPharm® platform technology to develop and test its partners target antibiotic therapeutic treatment. This deal represents the second deal utilizing the µPharm platform and the company acknowledges that they are gaining significant momentum in the biopharma space, citing a total of three executed agreements that address compounds in the biopharma industry.
Cynthia Bryant, Amyris Senior VP Corporate Development & Collaborations , addressed the deals by saying, “The flexibility and power of Amyris’s technology platform can be harnessed for a variety of applications and within biopharma can open a new area of compounds that have never been accessible for new drug discovery.” Banking from the µPharm platform technology, AMRS will develop a catalog of natural and natural- like compounds to test for efficacy in specific indications. The µPharm process involves identifying the target to improve efficiency, identify the natural candidates to treat the target and then develop a diverse population of compounds to be used for in-vivo testing.
Remaking The World One Molecule At A Time
For over a decade, AMRS has practiced the corporate vision of making a positive impact on the world through science. Originally, AMRS used its proprietary process to convert plant sugars into a low cost, anti-malarial treatment. Capitalizing on their breakthrough, AMRS has successfully developed a low cost and accessible treatment against malaria, saving well over one million children and families per year.
The technology allows AMRS to engineer organisms through their proprietary process to take renewably sourced carbon from plants and transform it into a unique molecule requested by their customers. Customer use includes producing consumer products, medical compounds and other designer uses.
Currently, AMRS is the only company that has scaled and manufactured new products from the unique ingredients made accessible through engineering organisms, providing cost advantage and high performance products for their customers and consumers.
AMRS Molecules Are Changing the Way People Live
Funded by a grant from the Bill and Melinda Gates Foundation in 2005, Amyris hit its first major milestone when the scientific team developed the technology capable of producing an artemisinic acid, which through additional processes has become an effective anti-malarial drug. The breakthrough led to partnerships and distribution agreements whereby Amyris, in association and license agreement with Sanofi, developed and delivered over 120 million anti-malarial treatments in 2014.
From a personal care perspective, AMRS is developing products derived from sustainable, plant sugar derived ingredients that are demonstrating superior performance. The cosmetic line is plant based and ECOCERT-APPROVED, manufactured by converting renewable sugarcane into high quality cosmetic ingredients and work to ensure quality, fair price and specific composition for diverse customer preferences around the world.
On the industrial front, Amyris produces a line of renewable lubricants that are being designed and engineered to perform without compromise or quality. The breakthrough in the lubricant products led to a partnership agreement with Cosan, a Brazilian company, to produce renewable base oils and lubricants. These oils, named Biofene®, led to an additional joint venture named Novvi. In 2016, ARG committed to a 33.3% stake in Novvi, enabling immediate market access and accelerating the revenue growth of Novvi’s high performance, renewable lubricant products.
AMRS At A Buck A Share, Why?
As with most emerging companies, using shares as a form of currency is essential. Currently, the company shows slightly over 234 million shares outstanding. At $1.04 a share, AMRS has a market cap valued at approximately $244 million dollars. A large chunk of share ownership sits in the hands of institutional investors, who own over 63% of the shares and insiders hold an additional 2.3% of the company stock. The publicly traded float compared to the total O/S amounts to 20.3% and the short interest sits at roughly 7% of the outstanding float.
As of June 2016, the company had less than a million dollars of cash and cash equivalents, however, the deal announced on Tuesday lends itself financial stability as it can access the $25 million dollar line of credit.
The company has positioning itself as an aggressive growth player and has executed several promising collaborations and financing agreements. Overall, AMRS might be a whipsaw stock based on its high share count and daily volume. Keep in mind though, that a large portion of these shares are tightly held, so the actual trading float is far less than the 234 million advertised.
Strong management and a unique product line and proprietary science should line the company up for continued growth through 2019, when revenues are expected to pass through the $100 million dollar level.
Not for the faint of heart but certainly a strong speculative play for the aggressive small cap investor. The company has an earnings and conference call scheduled for November 2, 2016 after market close. Investors are encouraged to listen to the call, one that I expect will provide strong guidance for the year 2017 and beyond.
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