US Origin selloff, Amyris bankruptcy deal double-blow to biochems

Al Greenwood

10-Aug-2023

HOUSTON (ICIS)–A massive selloff in the shares of Origin Materials and the bankruptcy of Amyris dealt US renewable chemicals with double blows on Thursday.

Shares of Origin fell by 66.40% after the company announced that its second plant will be smaller and more expensive while starting later than planned.

Amyris filed for bankruptcy protection under Chapter 11 after years of operating losses.

AMYRIS BANKRUPTCY
Amyris develops strains of yeast that ferment sugar to produce chemicals used in food, cosmetics and pharmaceuticals.

These include artemisinin, an antimalarial drug that previously was extracted from sweet wormwood; squalene, a vaccine adjuvant previously extracted from sharks; and patchouli, a fragrance extracted from plants.

Since its founding in 2003, the company has incurred operating losses, requiring it to seek out equity and debt to sustain itself, according to a court affidavit by Han Kieftenbeld, interim CEO.

The past two years have been particularly challenging. During that time, revenues fell by more than 20% while the company incurred higher costs for feedstock, freight and logistics. Brand management and marketing expenses piled on additional costs, Kieftenbeld said.

At the same time, Amyris is fighting a shareholder lawsuit and two other complaints over a research, collaboration and license agreement and a dispute over earnout payments, Kieftenbeld said.

Amyris’s two core businesses, Technology Access and Consumer continue to suffer from significant losses, Kieftenbeld said.

In Consumer, each of the business’s brands lose money, Kieftenbeld said. The losses in Technology Access are mostly caused by low margins in some of its contracts.

“The company remains challenged by an overleveraged balance sheet, continuing trade losses, mounting litigation risk, deeply unprofitable contracts and dwindling trade vendor support,” Kieftenbeld said.

Amyris plans to continue operating under bankruptcy protection. It plans to sell its consumer brands while focusing on research and development (R&D) as well as scale-up, commercialisation and application development.

Amyris filed for bankruptcy protection under Chapter 11 in US Bankruptcy Court, Delaware District. The case number is 23-11131. Amryis’s operations outside the US are not included in the proceedings.

ORIGIN SELLOFF
Origin’s shares fell after it announced that it is delaying the startup of its second commercial-scale plant in Geismar, Louisiana state, US.

Initially, Origin had planned to start the plant in a single phase in mid-2025. The initial throughput capacity was 1m dry metric tonnes/year of woody biomass. The plant would cost $1.07bn.

Production would focus on paraxylene (PX), a feedstock used to produce polyethylene terephthalate (PET).

Under the revised plans, Origin will develop the plant in two phases.

The first phase will start up in late 2026 or 2027, and production will focus on renewable fuels. The second phase will start in 2028, and it will focus on furandicarboxylic acid (FDCA), a feedstock used to make the polyethylene furanoate (PEF).

Origin is focusing on FDCA because it offers higher margins and demand has been much higher than anticipated.

When completed, the two phases will consume 500,000 tonnes/year of feedstock, smaller than the earlier plans.

Total costs for the two phases will be $1.6bn, up from the earlier estimate of $1.07bn.

The following table breaks down the first phase and the completed plant, which includes the first and second phases.

Source: Origin

Origin converts woody biomass into chloromethyl-furfural (CMF), oils and hydrothermal carbon (HTC). The oils can be used to make renewable fuels.

The HTC can be used as fuel pellets, as activated carbon or as a replacement for carbon black.

CMF can be converted into PX, FCDA or other products.

SHARES IN OTHER RENEWABLES
Origin’s shares are well below its initial price when it started trading in late June 2021. It went public through a special purpose acquisition company (SPAC). Other renewable and sustainability companies also went public through SPACs.

The following tables list the companies’ closing share prices close to when they first started trading and compares them with their closing prices on 10 August.

Company Ticker 25-Jun-21 10 Aug Close
Origin Materials ORGN 9.77 1.46
Company Ticker 30-Dec-20 10 Aug Close
Danimer Scientific DNMR 23.80 2.16
Company Ticker 10-Feb-23 10 Aug Close
LanzaTech LNZA 7.30 6.19

Danimer produces polyhydroxyalkanoates (PHAs), a renewable plastic.

LanzaTech develops microbial strains that can ferment exhaust gases from industrial plants to produce ethanol.

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