The South San Francisco company LS9 recently produced five tons of industrial chemicals from plant sugars at a Florida demonstration facility, a step toward proving that its genetically engineered microbes can manufacture carbon compounds and fuels at a commercial scale.
Chief executive officer Ed Dineen says the private company is eager to raise money to finance the company’s next stage, but it’s harder these days. The company, founded in 2005, has raised a total of $81 million in four rounds of financing, the last of which came in December 2010. That money helped invest in its scientific processes, and a manufacturing plant where it could put them to test at large scale. But the funding environment for clean energy companies today is much more bearish than it was a couple years ago. “General uncertainty about the global economy, Europe, Middle East tensions, and the US election, have put various partner companies in a conservative mode,’’ Dineen says.
Another factor in the funding crunch is the falling stock prices of similar companies, Dineen says. “The track record of companies that have gone public has not been great,’‘ Dineen says. “This has made it more challenging for those of us trying to raise new money.’’
Share prices are underwater compared to their IPO prices for Gevo, Kior, Amyris, and Solazyme—all companies seeking to convert various forms of plant matter into fuels, oils, alcohols, and other compounds that are traditionally made from petrochemicals. Emeryville’s Amyris, the first to go public, was down 79 percent from its IPO price on Sept. 28, its second anniversary as a public company. It has dropped almost 72 percent this year.
Although each company in the class has different technologies and strategies, they affect each other’s fates because they influence investors who see them as a group. In the same way, Facebook’s rise stimulated investment in social media startups, and then its disappointing post-IPO share performance cooled the financing environment for that sector.
Once members of an emerging class go public, investors can also see details in their SEC filings about the mundane practical concerns and roadblocks that can delay revenues from even the most promising technologies.
Both LS9 and Amyris use synthetic biology to turn microbes into manufacturing units. Each has re-designed entire metabolic pathways in microorganisms to make them efficiently produce quantities of marketable chemicals. Once such companies begin to scale up their processes, their fortunes depend less on lab wizardry and more on other factors that no one company can control, such as crop prices, agricultural trade policies, and manufacturing contracts.
Amyris has been building two biofuels plants in Brazil, a major grower of the sugar cane that can serve as a less inexpensive manufacturing feedstock than US crops such as corn, which has shot up in price due to an ongoing drought.
Cheap feedstocks are essential if … Next Page »
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