Turning renewable materials such as plants into useful chemicals seems a great idea, particularly when these green chemicals can replace compounds made from crude oil and natural gas. Genomatica, which filed for an initial public offering on Wednesday, certainly hopes investors will agree.
The San Diego company engineers organisms to convert sugar or synthesis gas into chemicals for making a variety of products, from clothing to auto parts. Genomatica has developed its first product, called BDO, and conducted pilot and demonstration projects over the past year. It now needs to work on producing it in large-scale plants. Here are more details from Genomatica’s S-1 filing with the U.S. Securities and Exchange Commission about its IPO:
Business model. Genomatica plans to focus on developing organisms for making green chemicals and forming joint ventures or license its technology to manufacturers to produce the chemical compounds. The company expects the first commercial-scale production to take place in Europe by the end of 2012. That plant, owned by Novamont, should be able to churn out 40 million pounds of BDO per year. Other manufacturing partners include Tate & Lyle and Waste Management. By the end of 2014, Genomatica hopes to see plants producing 100-130 millions of its green chemicals per year.
Private equity raised. It has raised $84.2 million since inception, the year of which could be 1998 (according to the S-1) or 2000 (according to the company’s press releases).
Revenues/Losses. The company has yet to make money from selling its chemicals. Payments have come from government grants, joint development agreements and software licensing to research institutions. Genomatica reported $14 million in net losses on $726,000 in revenues for 2010, compared with $9 million in net losses on $887,000 in revenues for 2009. For the first six months of this year, the company posted $9 million in net losses on $1.9 million in revenues.
Risks. Building commercial plants can take more money and time than anticipated. This has been true for other green chemical and biofuel makers, and could hold true for Genomatica, whose technology requires a series of steps including “fermentation, cell separation, salt separation, water evaporation and purification.” The company competes with businesses that make chemicals from crude oil and natural gas, so whether Genomatica’s chemicals will carry attractive price tags will depend partly on the fluctuating prices of fossil fuels.
Competitors. Chief rivals include BASF, Dairen Chemical Corp, ISP, INVISTA, LyondellBasell, Formosa Petrochemical, Shell Chemical and TPC Group.
Employee count. The number of the company’s full-time employees has grown from 33 on Jan. 1, 2010 to 69 on June 30 this year.
Patents and such. Genomatica owns or licenses the use of 23 patents, including 15 in the U.S. and eight outside of it. The company has 206 pending patent applications around the world.
IPO proceeds. Genomatica, which tentatively set the IPO size at $100 million, plans to use the money on research and development, manufacturing and other corporate expenses.
Who will do well in the IPO. TPG Biotechnology Partners owns 19.1 percent. Mohr Davidow Ventures owns 17.3 percent. VantagePoint Venture Partners owns 12.6 percent. Alloy Ventures owns 10.4 percent. Batios Holdings owns 7.4 percent. Draper Fisher Jurevetson owns 7 percent. Waste Management owns 6.9 percent. Iceland Genomic Ventures owns 5.5 percent.
Image courtesy of Genomatica