Solazyme: On track for commercialization

Solazyme has frequently been covered here in the blog so this earnings update will not be too long. The company reported last week that it is on track for commercial production of its tailored algae oils on three continents by 2014. Still, the company’s results reportedly fell short of analysts’ earnings expectations.

While the blog is not too interested in reporting revenues given that most of the renewable chemical companies in our scope is still not mature enough to have meaningful sales, Solazyme did say that it was able to increase its Algenist sales of $16.5m by 130% in 2012. The company was able to launched 7 new products last year and reportedly successfully met all joint development agreement targets with partners such as Bunge, Chevron, Dow and Unilever.

Solazyme’s total 2012 revenue ended December 31, 2012 was $44.1m versus $39m in 2011. Other sources of revenues aside from the Algenist sales include joint development revenue of $13.2m and government program revenue of $14.4m.

Total operating expenses in 2012 were $108.5m compared to $76.1m in 2011, and full year net loss was $70m compared to $39.4m in 2011. The higher net loss last year was due to increased investments in technology platform, initiatives in capacity build-up and completion of operations in Peoria, Illinois. Total cash burn for the year was $67.6m.

Compared to Amyris’ $45m cash in pocket, Solazyme has about $260m in cash by the end of January, including a whopping $120m loan from Brazilian development bank BNDES for the Solazyme-Bunge joint venture. However, Solazyme said it doesn’t expect more government money (US money to be exact) coming in this year.

Solazyme also has to prove this year that it can deliver its new 100,000 tonnes/year production in Moema, Brazil, by the end of 2013; be able to start production by the year-end from its Solazyme Roquette Nutritionals facility in Lestrem, France; and at the same time be able to manage their operating expenses. The company expects cash operating expenses for 2013 to be between $115m to $120m, up 10%-15% versus 2012.

Here are some of the key developments that caught the blog interests during Solazyme’s conference call last week:

• Solazyme’s target is to turn cash flow positive in 2014
• Solazyme’s was able to produce algae oil with myristic acid content of more than 50%. Average selling price for myristic fatty acid last year reportedly was more than $3,700/tonne. Myristic acid  content in coconut oil and palm kernel oil is around 15%. End market applications for myristic acid include surfactants, oleochemicals and personal care.
• Solazyme was able to produce algae oil with over 90% oleic acid content and containing almost no polyunsaturated fats. The high oleic algal oil reportedly has over 3x the oxidative stability of high oleic, low linoleic canola oil broadly used in foodservice industry. Target selling price for high oleic algal oils is between $1,800/tonne to $3,000/tonne.