AMRS - AMYRIS: REINVENTING THE BEAUTY AND PERSONAL CARE INDUSTRY
AMYRIS: REINVENTING THE BEAUTY AND PERSONAL CARE INDUSTRY
Amyris, Inc. (NASDAQ: AMRS) is a synthetic biotechnology company that aims to accelerate the world’s transition to sustainable consumption through its Lab-to-Market technology platform and clean beauty consumer brands.
The Company
Amyris is known explicitly for its Lab-to-Market technology platform. It creates a portfolio connection between its proprietary science and formulation expertise, manufacturing capability at the industrial scale, and expertise in commercializing high-performance, sustainable products that give consumers the power to choose products that benefit the planet.
The Company’s technology platform offers advantages to traditional methods of sourcing similar ingredients (such as petrochemistry, unsustainable agricultural practices, and extraction from organisms). These advantages include but are not limited to the renewable and ethical sourcing of raw materials, less resource-intensive production, minimal impact on sensitive ecosystems, enhanced purity and safety profiles, less vulnerability to climate disruption, and improved supply chain resilience.
Amyris combines molecular biology and genetic engineering to produce sustainable materials that are scarce or endangered natural resources. They leverage state-of-the-art machine learning, robotics, and artificial intelligence, to enable their technology platform to bring innovation to market rapidly.
Amyris, Inc. (NASDAQ: AMRS)
Market Cap: $505.43M; Current Share Price: $1.38
Data by YCharts
We will discuss three key elements that indicate a promising future for the Company.
- Effective Business Model
The Company creates, manufactures, and commercializes consumer products and ingredients that reach more than 300 million consumers. The most significant component of the Company’s revenue is derived from marketing and selling Clean Beauty, Personal Care, and Health & Wellness consumer products through direct-to-consumer e-commerce platforms and a growing network of retail partners. In other words, the Company effectively manages the entire product cycle, including innovation, manufacturing, brand creation, and marketing.
Moreover, the Company sells its proprietary sustainable ingredients in bulk to industrial leaders who serve Flavor & Fragrance (F&F), Nutrition, Food & Beverage, and Clean Beauty & Personal Care end markets. Specifically, Amyris has active partnerships with Koninklijke DSM N.V. for the F&F portfolio, Ingredion Incorporated (Ingredion) for Reb M, Yifan Pharmaceutical Co., Ltd. (Yifan) for vitamins, MF 92 VENTURES LLC (Minerva) for the sustainable production and distribution of products in the recombinant protein segment, and ImmunityBio (ImmunityBio) for COVID-19 vaccines.
Partnering with leaders in the broader ingredients sector creates additional revenue streams for the Company, resulting in income diversification. These partnerships also help Amyris realize its ingredients’ market potential by leveraging its sizable go-to-market footprint, commercial relationships, and formulation capability.
So far as branding is concerned, the Company successfully runs several home-grown brands, including Biossance® clean beauty skincare, JVNTM hair care, Rose Inc. clean color cosmetics, Pipette® clean baby skincare, Costa Brazil® luxury skincare, OLIKA clean wellness, Purecane zero-calorie sweetener, MenoLabs, a brand focused on healthy living and menopause wellness, EcoFabulous clean beauty for Gen-Z consumers, and Stripes (peri)menopausal wellness. As recently as the first quarter of 2023, Amyris launched 4U by Tia, a new clean hair care line exclusively available in Walmart. The variety of brands Amyris offers indicates the Company’s commitment to innovation and the ability to manage multiple brands effectively.
The Company follows an astute marketing policy – it has partnered with various brand ambassadors, including Reese Witherspoon for Biossance, Jonathan Van Ness for Biossance and JVN haircare, Rosie Huntington-Whiteley for Rose Inc., Naomi Watts for Stripes, and Tia Mowry for 4U by Tia.
The Company’s partnership with these well-known personalities who share a vision for a sustainable future is a great strategy. It builds awareness of the chemistry that backs these consumer brands, signals quality, and inspires consumer trust.
Finally, Amyris distributes and sells its consumer products to retailers and directly to consumers through online e-commerce websites. The Company has various retail partnerships associated with its consumer business, including Sephora, Target, Amazon, and Walmart.
In other words, Amyris has developed a solid process to create new products and manufacture, market, and distribute them efficiently.
- Consistent investment in R&D to enable innovation and commercialization
As discussed earlier, the Company’s Lab-to-Market technology platform utilizes highly optimized and automated molecular biology, analytical, and process development tools combined with machine learning algorithms and statistical models to transform how microbes metabolize sugars. Specifically, Amyris engineers microbes, such as yeast, and uses them as catalysts to convert sugar, through fermentation, into the chemicals used in everyday life.
Amyris is one of the first companies to apply microbial engineering to manufacturing a wide range of molecules with commercial applications. Over the last decade, this has required significant, targeted investment in research and development capabilities. Amyris has successfully scaled up 15 molecules with multiple molecules in development. This investment has also resulted in the development of a suite of strains capable of producing more than 250 molecules across 15 chemical classes.
In addition to the investment of its funds, the Company has received multiple grants from the U.S. government. These grants were used to develop the Lab-to-Market technology platform consisting of highly optimized strain and process development methods, sophisticated machine learning algorithms and statistical models, and proprietary robotic tools.
As far as commercialization is concerned, as recently as 2020, Amyris formed a new entity, Clean Beauty Collaborative, with Rosie Huntington-Whiteley to collaborate in developing a new line of cosmetic products leveraging the Rose Inc. brand and content platform and bioengineered ingredients, including Squalane and Hemisqualane. In 2021, the Company entered into a joint venture agreement with ImmunityBio, a clinical-stage immunotherapy company, to develop vaccines.
Amyris works with committed long-term collaboration partners who are leaders in their respective sectors. These partners provide rapid access to large-scale volumes, expertise regarding current ingredient demand, and an understanding of costs and other specifications that support market adoption. The partnerships assist Amyris in ensuring market fit, technology needs, and scale. The Company’s partners access their Lab-to-Market technology platform and industrial fermentation expertise to reduce environmental impact, enhance performance, reduce supply and price volatility, and improve costs.
Thus, Amyris follows an effective policy of consistent investment in R&D and commercialization, which helps it achieve its aim of sustainable consumption, but also helps it stay ahead of its peers.
- Record financial performance
The Company recently reported stellar financial results for Q4 and full year FY22.
Q4 FY22 core revenue of $75.8 million grew 17% compared to Q4 FY21, driven by record consumer revenue of $52.8 million. Core revenue included consumer revenue of $52.8 million, an increase of $20.7 million or 64% compared to Q4 FY21 and the seventh consecutive quarter of record growth.
Specifically for FY22, Amyris’ consumer brands have continued their robust growth trajectory, outperforming industry standards.
According to the NPD group, in FY22, the prestige beauty industry growth stood at 15%. Every category in prestige beauty posted double-digit gains in 2022, with skin care, hair care, and color cosmetics growing 12%, 22%, and 18%, respectively.
During this time, Amyris’ brands delivered 44%, 744%, and 145% growth in these categories, significantly surpassing the industry standards.
Notably, core revenue of $269.8 million increased 44% compared to $188.0 million in FY21. FY22 core revenue included record consumer revenue of $176.9 million, an increase of 92% compared to FY21. However, total revenue of $269.8 million decreased by 21% compared to FY21, which included $153.8 million from strategic transactions.
Non-GAAP gross margin was $105.1 million (39% of revenue) in FY22 and $227.0 million in FY21. Excluding $153.8 million of FY21 strategic transactions, the non-GAAP gross margin in FY22 increased $31.9 million year over year.
The Company has sufficient cash to fund its operations – it secured $150 million in funding in the fourth quarter, along with an additional $50 million to bridge to the $200 million upfront cash payment from their strategic transaction.
Amyris has also succeeded in managing cash flows better. During FY22, the Company reduced its use of cash for operating and investing activities sequentially each quarter from ($200) million in Q1 to ($189) million in Q2 to ($164) million in Q3 to ($97) million in Q4.
The management seems to be committed to delivering quarter-by-quarter improvements in profitability and cash generation from operations and lowering costs.
The outlook for Q1 and full year FY23 is extremely promising – it is expected that total revenue (core revenue plus strategic transaction) will grow 95-100% for FY23 compared to FY22. Specifically, the strategic transaction with Givaudan is expected to generate $200 million of license revenue in the second quarter.
The Company’s “Fit-to-Win” program should deliver over $150 million of annualized cash cost improvements and working capital efficiencies. Capital expenditure is estimated at $55 million, 50% lower than FY22.
If the management can achieve these targets, the Company may succeed in ending FY23 as a self-sufficient enterprise. Amyris already has an impressive and innovative product portfolio, prestigious brand endorsements, significant R&D investments backed by government grants, and highly profitable industry partnerships. Thus, it seems that the Company will achieve record growth in the future.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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Reference:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1365916/000136591623000023/amrs-20221231.htm