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Summary:

Algae oil and fuel maker Solazyme priced shares for its IPO late last night at $18 per share — above its previously estimated price range — enabling the company to raise around $198 million when it debuts on the Nasdaq on Friday.

Solazyme Oil

Algae oil and fuel maker Solazyme priced shares for its IPO late last night at $18 per share — above its previously estimated price range — enabling the company to raise around $198 million when it debuts on the Nasdaq on Friday. Solazyme had set an estimated maximum offering of $184 million just last week, so this pricing tops that.

Solazyme’s shares will start trading on the Nasdaq today under the symbol SZYM, and we’ll see how well the stock does on its debut. Next-gen biofuel IPOs from Amyris and Gevo fared well on the public markets when they debuted last year.

Solazyme engineers efficient algal strains and grows its designer algae in fermentation tanks without sunlight by feeding it sugar. Then, using existing industrial equipment, it extracts the oil. Solazyme is a leader in the algae fuel space, but competes with Sapphire Energy, Craig Venter’s Synthetic Genomics, and a handful of other companies looking to scale up algae oil production.

While Solazyme isn’t currently selling its algae in large volumes as fuel, it is currently selling algae-based specialty biochemicals, cosmetics and food supplements. For example, Solazyme struck a deal with Dow Chemical to make an algae-based fluid for transformers.

Solazyme has raised at least $125 million throughout its eight years of existence, from investors including Chevron’s VC arm, Morgan Stanley , Richard Branson, and food and personal product giant Unilever . Unilever wants to use algae to replace palm oil, because the harvesting of palm oil has led to deforestation in Indonesia and Malaysia and has drawn the criticism of environmentalists.

But ultimately, Solazyme wants to scale up algae oil production to tackle the biofuel market. Solazyme is looking to commercialize its fuel technology in the 2013 time frame, with a production cost target of $60 to $80 per barrel. To get there, it will have to build a commercial-scale algae plant, which can cost over $100 million (one reason it needs cash from an IPO).

Solazyme updated its financials in its latest S-1, and for the first three months of 2011, ending March 31, reported $7.74 million in revenues. That’s slightly up from revenues of $5.76 million for thee first three months of 2010. At the same time, over the first three months of 2011, Solazyme lost $7.29 million, an increase from a net loss of $3.95 million for the period in 2010. For the full year of 2010, Solazyme lost $16.28 million on revenues of $37.97 million.

There is a total of 10.98 million shares of Solazyme common stock being offered, with Solazyme selling 10.38 million shares and 600,000 shares coming from selling stockholders. Solazyme is also offering the underwriters a 30-day option to purchase another 1.65 million shares.

  1. Origin Oil is another Algae based oil producer.

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  2. Where does the $60 to $80 barrel production cost come from? The S-1 states they hope to get to a little below $1,000 metric ton. With 6.9 barrels to a metric ton, this comes to $145 per barrel. Am I missing something?

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