The next industrial revolution is already here

$AMRS DD Thread

Synthetic Biology
$4 Trillion TAM
$177M Q1 revenue (500% YOY)
91% Q1 GM
$3.1B valuation
Unique lab-to-consumer play
Business model uses IP and brands to generate long term revenue

Lets go!

What does $AMRS do

Amyris is a synthetic biology company that owns consumer brands and supplies sustainable and natural ingredients

AMRS has a Lab-to-market platform to engineer, manufacture and market high performance, natural and sustainably sourced products.

Lets Define

Synthetic biology: Engineering organisms to develop new abilities

$AMRS engineers yeast to create a roster of molecules

Molecules can be used as ingredients for everything from cosmetic products to sweeteners and cannabinoids

Following so far? Good

Why is this the next industrial revolution?

Moore’s law type progress: Molecule production now <1 year, compared 5 prev, and getting lower
Cost: $AMRS' Squalane for eg. is 1/3 traditional cost
Global sustainability tailwinds
Greater purity control = Synthetic > Sourced

The $AMRS business model

$AMRS has a lab-to-market platform

Engineer microbes to ‘create’ molecules that can be used as ingredients

These ingredients are manufactured at industrial scale

$AMRS sells these ingredients through partnerships and consumer brands

$AMRS has 2 revenue models

Enter a supply partnership w/ MNCs (Ingredion), $AMRS receives licensing fees & profit share on sales. See below

$AMRS also develops their own consumer brands like Biossance. They market and sell products directly to retailers and consumers

A challenging business model; but worth it if successful

Challenging: R&D, supply and brand mgmt all at once is difficult in terms of resource allocation and focus

But if executed well, $AMRS has control over supply and demand. They reap all cost savings and revenue rewards

$AMRS has a massive TAM

Melo (CEO) stated that 1/3 of us already consume a product with an $AMRS molecule

Already serves a $257B TAM (Beauty, Flavors, Fragrance, Sweeteners)

Could unlock a greater TAM for global chemicals of $4T

$AMRS is currently valued at $3.1B

Disclaimer

If you’ve read this far, know that I will not be able to include every piece of $AMRS insight into this thread

This is a summary of what I think is important

If you think something new needs to be highlighted, comment at the end

Got that, ok now lets move on

Brands live longer than IP

$AMRS believes the consumer business is more rewarding than their licensing side

The numbers dont lie (excl. One-offs, Consumer & Ingredients rev accounted for 85% of underlying revenue in Q1)

$AMRS can truly go to a Lab to Consumer model

Consumer brands are high profile

$AMRS brands include: Biossance, Pipette, Purecane

Exciting new brands include: Clean Beauty Collaborative with Rosie Huntington-Whiteley; and a new hair brand with Queereye’s Jonathan Van Ness

Amrys is going for the consumer jugular here

Consumer brands is $AMRS hedge on its tech stack

Syn-bio is innovating and right now the competition is in the tech stack

$AMRS is pushing its commercial headstart into consumer ownership

If a competitor develops better tech, Amyris has hedged this by owning downstream demand

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@riskrewardcap

What you can expect:

DD on strong risk-reward opportunities
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Updates, stock commentary and changes to thesis

Ok, back to work

Q1 financials and guidance

$176.9M total reported rev (507% YOY)
$33M underlying rev (excl. A one-off payment)
91% GM (underlying GM 52%)
$103M (Adjusted EBITDA)
Debt lowered by $94M YOY

2021 Guidance

$400M total revenue
Positive full year adjusted EBITDA

But the stock plunged after earnings

GAAP net earnings affected by -$377 million of unfavourable non-cash mark-to-market adjustments related to changes in the fair value of debt and derivatives

A better way of explaining this is in the image below

Credit SeekingAlpha

Investing in $AMRS is not without risks

Amyris is facing a lawsuit from a partner. See response below

A rough history of pivoting through dead-ends ranging from malaria treatments to renewable fuels

Anecdotally, retail holders have claimed CEO ‘overreaches’ on targets

The bear case for $AMRS

Tech stack might not be as good as other competitors

Checkered past of difficulty in finding proper commercialisation use cases

Challenging to break traditional ingredient sourcing industry unless Amyris really has cost, purity, trust advantages

The bull case for $AMRS

$4T global chemicals TAM
Consumer brand ownership to hedge tech
Cheaper and purer than traditional manufacturing
Able to enter a large number of sectors such as pharma and industrial materials
Multiple long term revenue streams & good margins

$AMRS business model: its greatest risk and strength

Risk: Focus and business prioritisation

Company needs to perform smart decision-making all the way from R&D to sales and marketing

However within lies the biggest reward: a true lab-to-consumer play

$AMRS has a commercialisation headstart against competitors

$ZY ($4b): only 1 product in market; no product sales revenue ( $AMRS 13 ingredients in market)

Ginkgo $SRNG ($20B): great company with disruptive tech and IP business model but no room for error with that valuation

Weighing the risk/reward model

Risk: If execution is not consistent and leadership cannot balance focus on R&D, brands, tech, IP

Upside: competitors are behind, tech is proven, recurring revenue models work

If executed well, this small cap will grow exponentially

My personal play

Don’t fight the (bear) trend in growth stocks, I fully expect prices to fall further

I have a starter position; will DCA in planned tranches

If the market cap falls to $2B I am buying with both hands

I am just a voice on Twitter, please do your own DD

Conclusion: Why invest in $AMRS

$AMRS is a leader in a game-changing sector
Lab-to-Consumer play could be a masterstroke
IP + Brands approach can build a long term moat
If $AMRS executes successfully, its valuation should match the $4T TAM it aims to conquer

Trade safe