In Canada, BioAmber recorded net income of $4.8M for Q2 2016 and an operating loss of $1.0M on revenues of $2.5M. Revenues were up 73 percent over Q1 and 637 percent compared to Q2 2015.<\/p>\n
For those less familiar with the company, it produces succinic acid from sugar at a first commercial-scale plant which opened recently in Sarnia, Ontario. Succinic acid has a small existing global market but can be converted into a variety of chemical building blocks used to produce a range of plastics, paints, textiles, food additives and personal care products.<\/p>\n
If for some this relatively small venture is \u201cthe hope for the renewable chemicals movement\u201d, the reason lies in oxygen. Which is to say, sugar has it, succinic acid has it, but petroleum doesn\u2019t. That means that any effort to make succinic acid from petroleum involves at least one extra process step \u2014 the add-back of oxygen. It also means that the yield of succinic acid from sugar is inherently higher, on a percentage basis than, say, the production of hydrocarbons used as diesel or jet fuel, or chemicals such as ethylene.<\/p>\n
That lowers the threshold at which renewables can compete on cost with petroleum-based molecules \u2014 and that\u2019s no small matter when fossil fuel prices have tumbled to 10-year lows. Combine that with the usefulness of succinic acid as a building block, and you have a powerful combination.<\/p>\n
So, many eyes \u2014 beyond the usual collection of employees, investors, and supply chain partners \u2014 have been on the Succinic Sultans of Sarnia.<\/p>\n
The 5 Key Trends
\nLet\u2019s look at five key BioAmber trends, and measure\u2019s the venture\u2019s progress.<\/p>\n
1. Product cost.<\/p>\n
Aside from product acceptance \u2014 already assured via a transformative offtake deal with Vinmar that we covered here, there\u2019s nothing more important than product cost. It\u2019s the fatal problem for most early stage advanced bioeconomy ventures. It\u2019s the difference between being stuck in small, high-margin niche markets, possibly forever and certainly while the cash runs out \u2014 and a breakout into larger volume markets where the growth lies.<\/p>\n
There\u2019s good news here. \u201cThe cost per ton of bio-succinic acid sold continued to decrease, with a 30% reduction relative to the previous quarter,\u201d said the Company in its earnings report. In the context of overall goals? \u201cSarnia variable costs were lowered to the Company\u2019s 2016 target.\u201d<\/p>\n
2. Up-time.<\/p>\n
If you\u2019ve been following the travails of various cellulosic ethanol ventures, you know that they have excellent product prices at the moment and mandated markets. Production plant up-time has been a huge headache.<\/p>\n
On that note, it\u2019s excellent news to read that \u201cSarnia achieved an uptime rate of over 80% in the month of June 2016, having increased steadily during the second quarter.\u201d The Q3 uptime rates will be critical to understanding if BioAmber has cracked the operational puzzle, but the progress if highly encouraging.<\/p>\n
3. In-spec production.<\/p>\n
One of the ventures key performance indicators has been the production of in-spec chemicals. It\u2019s fermentation regime has shown a tendency to wobble off course in the early days \u2014 the result, 37% of the product was off-spec in Q1.\u00a0 Could be that the corner was already turned here. Less than 7% of total Q2 production of bio-succinic acid was off-spec.<\/p>\n
4. Cash and inventory on hand.<\/p>\n
The miseries imposed by a cash drain need no great emphasis here, for readers who have worked on early-stage ventures in the cash- burn phase. Suffice to say, if there\u2019s one type of burning sensation in the Valley of Death more painful than the others, it\u2019s usually the cash burn. Cash is a little light in BioAmber world \u2014 but the burn rate is low. There\u2019s $5.5M on hand as of June 30, compared to cash on hand of $6.9M on December 31, 2015. The company added in its quarterly earnings call that it closed on an additional $7.6M from the previously disclosed BDC Capital loan. So, liquidity is assured for now, but a dilutive capital raise may be in the cards before the venture breaks even at Sarnia. We\u2019ll keep an eye on that one.<\/p>\n
Another item to note is that the company has 1,200 metric tons of product inventory on hand as of Q2. The plant has a rated capacity of 30,000 tons \u2014 so, it\u2019s not a big pile-up, but worth watching as both a source of future cash and as a sign that BioAmber\u2019s deliveries are timing well with its production.<\/p>\n
5. Overheads.<\/p>\n
Project watchers have been keeping an eye on R&D expense, which had ballooned to $5.0M in Q2 2015 as the company readied to launch the new commercial plant. Happily, that\u2019s tumbled to $1.5M.<\/p>\n
Interestingly for a company going through a ramp-up, sales expense is dropping. In Q2 2015 the figure hit $1.1M for the quarter, but dropped to $584K in Q2 2016. The company noted that stock option value has dropped as the value of the company\u2019s stock has declined. If the stock begins to rise, that\u2019s go up again. But it\u2019s also a sign that the company\u2019s embrace of a big offtake relationship with selected partners such as Vinmar is going to keep that expense lower than at projects that opt to sell direct to customers.<\/p>\n
Reaction from Planet BioAmber
\n\u201cBioAmber continues to meet ramp-up expectations at its Sarnia plant. We have made excellent progress in the plant\u2019s reliability and performance, while continuing to increase production levels and drive down unit costs,\u201d said BioAmber CEO Jean-Francois Huc. \u201cSecond quarter sales were on track, generating a 73% increase in sales over Q1, while Q2 operations improved throughout the quarter, culminating in a June uptime rate of over 80%. The team is now entrenching its operating routines as our Sarnia facility moves towards full production levels,\u201d he added.<\/p>\n
The Bottom Line
\nProgress? Excellent. One more quarter of results is probably all that is needed to assure observers that BioAmber\u2019s start-up period\u00a0 is essentially over. Then, of course, the questions will be the more usual ones of price and production volume. And in the world of renewables, the rate of adoption by customers and the rate of application development.<\/p>\n
Which brings us to formulations. We raised this issue with coverage of TerraVia last week. One of the real advantages of succinic acid is that it can be used as a chemical building block. We noted in a review here that \u201cBio-succinic acid forms the basis for many high-value replacement products, including phthalic anhydride, adipic acid, and maleic anhydride. Fumaric acid is commonly used as a preservative in food and beverages, in the production of paints and coatings, as well as in the production of paper. It is the chemical equivalent of maleic anhydride (MAN) and water, and therefore can be used as a replacement for MAN.\u201d<\/p>\n
So, we\u2019ll be keeping a sharp look-out for evidence that formulators are switching from petroleum-based feedstocks to biosuccinic as a source for any or all of those. It will be a huge demand driver, ultimately, not only for BioAmber but for\u00a0 Reverdia,\u00a0 the joint venture between DSM and Roquette Fr\u00e8res, which in 2012 commenced\u00a0operations in Cassano Spinola, Italy, at a 10K\/yr biosuccinic acid plant. And somewhere out there is the mysterious Myriant venture, which opened its plant in Louisiana and drew a thick iron curtain around the project\u2019s progress.<\/p>\n","protected":false},"excerpt":{"rendered":"
In Canada, BioAmber recorded net income of $4.8M for Q2 2016 and an operating loss of $1.0M on revenues of $2.5M. Revenues were up 73 percent over Q1 and 637 percent compared to Q2 2015. For those less familiar with the company, it produces succinic acid from sugar at a first commercial-scale plant which opened […]<\/p>\n","protected":false},"author":59,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"","nova_meta_subtitle":"","footnotes":""},"categories":[5572],"tags":[6843,10408],"supplier":[1180],"class_list":["post-36819","post","type-post","status-publish","format-standard","hentry","category-bio-based","tag-biochemicals","tag-greenchemistry","supplier-bioamber-inc"],"_links":{"self":[{"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/posts\/36819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/comments?post=36819"}],"version-history":[{"count":0,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/posts\/36819\/revisions"}],"wp:attachment":[{"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/media?parent=36819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/categories?post=36819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/tags?post=36819"},{"taxonomy":"supplier","embeddable":true,"href":"https:\/\/renewable-carbon.eu\/news\/wp-json\/wp\/v2\/supplier?post=36819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}