Minneapolis, MN, August 7, 2014. BioAmber Inc. (NYSE: BIOA), an industrial biotechnology company producing sustainable chemicals, today announced its financial results for the quarter ended June 30, 2014. Highlights for the quarter included:
- Sarnia project continues to be on budget and scheduled for completion in early 2015
- An additional CDN$27 million in non-dilutive financing was secured for the Sarnia project: a CDN$7 million grant and a CDN$20 million commercial loan
- Subsequent to the quarter, a 15 year take-or-pay agreement was signed with Vinmar for 10,000 tons per year from Sarnia and 200,000 tons per year from two additional succinic acid plants following their financing, construction and commissioning
- Subsequent to the quarter, a common share offering was completed that raised an additional $35.8 million in net proceeds
“Sarnia is our focus and we continue to be on budget and scheduled to complete construction in early 2015,” said Jean-Francois Huc, BioAmber’s Chief Executive Officer. “We were successful in securing an additional CDN$27 million in non-dilutive funding for Sarnia, which combined with our recent share offering, strengthens our balance sheet and provides us with a cushion to become cash flow positive. Our take-or-pay agreements with PTTMCC Biochem and Vinmar guarantee that 50% of Sarnia capacity will be sold during the first three years of operation, and they lay out a clear path for future growth by securing the sale of most of the output from two additional plants” he added.
- Engineering for the plant is over 85% complete, 86 of the 90 work packages have been issued to sub-contractors and equipment deliveries have accelerated in recent months
- Approximately 85% of the total project costs have been committed and the cumulative total for these committed costs is on budget
- The warehouse and underground utilities are complete, the office building is nearing completion and the process building is being erected in sequences, with equipment installation underway
Other Business Highlights
BioAmber signed a 15-year succinic acid take-or-pay agreement with Vinmar International for three plants with a total annual commitment of 210,000 tons once all plants are operational
- For the first plant in Sarnia, Vinmar will purchase at least 10,000 tons per year for 15 years
- BioAmber and Vinmar have expanded the scope of the previously announced 100,000 ton per year 1,4-BDO plant, which will also produce 70,000 tons per year of succinic acid, with Vinmar purchasing a minimum of 50,000 tons per year of succinic acid for 15 years, and taking a minimum 10% equity stake in the plant. The second plant is planned to start up in late 2017
- Vinmar has also committed to purchase 150,000 tons per year for 15 years from a third succinic plant that will have a 200,000 ton per year capacity and which is planned to start up in late 2020
- Cash on hand was $54.3 million as of June 30, 2014
- A total of CDN$27 million in non-dilutive funding was secured for the Sarnia project: a CDN$7 million grant from Sustainable Development Technology Canada and a CDN$20 million commercial loan from a consortium led by Export Development Canada and including Farm Credit Canada and U.S. based Comerica Bank
- Following the end of the quarter, BioAmber completed an offering of 3.22 million common shares at a price of $12.00 per share, resulting in net proceeds of $35.8 million
- Net cash used in operating activities for the quarter ended June 30, 2014 was $3.1 million
Q2 2014 Financial Results
Revenue for the quarter ended June 30, 2014 decreased to $415,000 from $1,028,000 for the same period in 2013. The decrease was principally due to sales to two customers in Q2 2013 that will not recur until the Sarnia plant comes on line. Excluding these one-time sales, the volume sold in the second quarter of 2014 was 40% higher than the same period in 2013. Sales increased by 18% in the second quarter of 2014 relative to sales of $351,000 in the previous quarter. The Company continued to manage sales in an effort to increase inventory levels in advance of the Sarnia start up, with inventory volume increasing by 18% on June 30, 2014 relative to March 31, 2014.
Gross loss in the quarter ended June 30, 2014 was $1,836,000 compared to a gross loss of $383,000 for the same period in 2013. The increased loss was primarily due to the recording of a non-cash charge for an inventory reserve in the amount of $1,635,000. The reserve was taken to bring the recorded value of inventory in line with its net realizable value. The reduction in net realizable value was driven by the reduction seen in the average selling price. The Company’s average selling price remains approximately twice the average selling price projected for Sarnia, but is declining as certain customers request Sarnia pricing in advance of the plant starting production.
Research and development expenses for the quarter ended June 30, 2014 were $4.3 million, a slight increase of $38,000 from the same period in 2013.
Sales and marketing expenses in the quarter ended June 30, 2014 were $1.7 million, up slightly from $1.6 million in the same period in 2013. The increase was due to an increase in incentive remuneration and stock-based compensation expense.
General and administrative expenses for the quarter ended June 30, 2014 increased to $2.9 million from $2.3 million for the same period in 2013. The increase was primarily due to additional costs related to compliance and public company operations.
The Company also incurred a $1,853,000 non-cash stock based compensation charge due to the cancellation of 285,250 stock options following their voluntary forfeiture by certain employees and Company advisors.
Foreign currency gains in the quarter ended June 30, 2014 were $379,000 as compared to a gain of $28,000 for the same period in 2013. The increase was driven by a strengthening of the Canadian Dollar versus the U.S. Dollar in the second quarter of 2014, which positively impacted the value of Canadian Dollar cash balances carried to meet Sarnia vendor obligations.
During the quarter ended June 30, 2014, the Company incurred financial charges of $3.9 million, as compared to a gain of $10.6 million in the same period in 2013. The financial charges in the quarter were the result of $870,000 of interest expense and an end of term charge accretion on the loan from Hercules Technology Growth Capital, and a $3.0 million non-cash charge related to changes in the fair market value of the warrants issued in connection with the IPO. In the second quarter of 2013, the Company had recorded a non-cash gain of $11.7 million related to changes in the fair market value of these warrants. The warrants will be revalued in each reporting period resulting in a non-cash amount being recorded in the statement of operations for as long as the warrants remain outstanding.
The Company recorded a net loss attributable to shareholders of $14.1 million, or a loss of $0.75 per share, for the quarter ended June 30, 2014, as compared to a net loss of $7.2 million, or a loss of $0.47 per share, for the same period in 2013.
The Adjusted Net Loss Attributable to BioAmber Inc. Shareholders for the quarter ended June 30, 2014 was $7.5 million, or a loss of $0.40 per share, compared to an Adjusted Net Loss Attributable to BioAmber Inc. Shareholders of $9.7 million, or a loss of $0.65 per share, for the same period in 2013. Adjusted Net Loss Attributable to BioAmber Inc. Shareholders is a non-GAAP financial metric that excludes, for the quarter ended June 30, 2014, the impact of the change in fair value of the warrants issued in connection with the IPO, the non-cash expense resulting from the cancellation of certain employee stock options and the non-cash reserve taken on the recorded value of inventory. For the quarter ended June 30, 2013 it excludes the impact of the change in fair value of the warrants issued in connection with the IPO, the non-cash stock option expenses related to the vesting of certain options as a result of the IPO and a non-cash charge related to the impairment of in-process research and development and construction in progress. Please refer to Annex A: “Non-GAAP Financial Information—Adjusted Net Loss Attributable to BioAmber Inc. Shareholders” for more information regarding this non-GAAP financial metric.
Webcast and Conference Call Information
BioAmber will discuss these results on a live audio webcast, which will be available on the Internet to investors, members of the news media and the general public at 4:30 p.m. Eastern Time on August 7, 2014. To access the webcast of the conference call, go to the company’s website, www.bio- amber.com. Audio of the teleconference is also available by dialing:
North American callers: +1 (888) 390-0546 International callers: (416) 764-8688
Teleconference replays will be available through August 14, 2014: Domestic: 1-888-390-0541
International: 416-764-8677 Passcode: 414935
A replay of the webcast will also be available approximately two hours after the conclusion of the live webcast on BioAmber’s website, for a period of 30 days.
BioAmber (NYSE: BIOA) is an industrial biotechnology company producing sustainable chemicals. Its proprietary technology platform combines industrial biotechnology and chemical catalysis to convert renewable feedstock into sustainable chemicals for use in a wide variety of everyday products including plastics, resins, food additives and personal care products.
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