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Algae company Solazyme reports revenue & losses up

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Algae oil company Solazyme, which went public in May of this year, reported both revenue and losses up for the second quarter of the year. Solazyme reported revenue of $7.4 million, up from $4.4 million in the same quarter a year ago, and at the same time, lost $17 million for the quarter, which was higher than the $6.4 million loss from the same quarter a year earlier.

The company isn’t producing all that much algae oil at scale yet, and also not generating very much revenue. Solazyme is focusing on niche markets right now like personal care products, pharmaceuticals and food. But starting in 2012, Solazyme plans to break ground on a plant to make algae oil for fuel and chemicals, and hopes to have that factory up and running in 2013.

Solazyme expects that its fuel and chemical factory will produce 550,000 metric tons of algae oil by the end of 2015. On a call with media and investors, the company said that now — two-plus months after the IPO — they are on track to hit all their milestones and timeline.

The good thing about the initial personal care market is that the margins on them are really high, though the market size is small. The opposite is true for the fuels markets; the margins are a lot smaller, but the market size is much higher (see graph below).

Solazyme’s stock fell 4.66 percent in trading today to $19.55. The company priced its stock at $18 per share when it went public two months ago.

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.

Despite that several next-generation biofuel companies have gone public in recent months, very few companies are producing biofuels on a scale to sell to the transportation market. Most, like Solazyme, are focusing on smaller markets in the meantime like nutroceuticals, biochemicals and specialty products.