Expands Joint Venture with Bunge and Adds
New Oil Development Project with Unilever
Solazyme, Inc. (NASDAQ:SZYM), a renewable oil and specialty
ingredients company, announced today results for the third quarter
ended September 30, 2015.
“At Solazyme, we are committed to improving the lives of people
and the planet by leveraging the power of microalgae to produce
sustainable, high performance oils and ingredients,” said Jonathan
Wolfson, CEO of Solazyme. “Today we have announced important
milestones with increased commitments from some of our key
strategic partners. These partners have been working with us for
years, understand our manufacturing capabilities, our commercial
path and the power of our technology platform.”
“We are making significant progress across our food, personal
care and industrial markets,” said Tyler Painter, COO and CFO of
Solazyme. “Although some of this progress is not yet reflected on
the top line, we believe we are building a strong integrated
business foundation with a competitive cost structure and first
class manufacturing capabilities. As we continue to focus on high
value products and our ability to bring new, sustainable solutions
to market, we are becoming increasingly well positioned to deliver
value to our stakeholders.”
Business Review
- Expanded Joint Venture with
Bunge: As announced separately today, Solazyme and Bunge
expanded the joint venture that builds upon the companies’ original
partnership. The expansion adds an additional focus on food and as
part of the agreement, Bunge’s global food team will take a
leadership role in the sales, marketing and application development
for certain food oils. In addition, Bunge will provide oil
processing, global distribution and logistics, while Solazyme will
be committing certain expertise in food related technology.
Further, the partners also entered a separate agreement to expand
their co-funded research programs to include new unique products in
nutrition and specialty fats.
- Foods - AlgaVia™, AlgaWise™ and the
Introduction of Thrive™ Culinary Algae Oil: Our food
ingredients continue to generate strong market interest and expand
their project pipelines. We are seeing customers transition from
the development stage and begin to introduce our ingredients
commercially. We also recently introduced Thrive™ algae oil, a
consumer focused culinary oil that delivers oil characteristics
superior to competing oils, such as canola oil, olive oil and
coconut oil. Initial feedback from consumers has been very
positive, and we believe Thrive™ algae oil has strong adoption
potential for cooking, baking and dressing applications.
- Personal Care - AlgaPūr™,
Algenist® and Extended Joint Development Agreement
with Unilever: We recently extended our Joint Development
Agreement with our long-term partner Unilever, which will build
upon our years of collaborative work to jointly develop a
new-to-market oil. We also continue to build upon our relationship
with BASF with the recent expansion into Brazil of the first
commercial microalgae-derived surfactant utilizing AlgaPūr™. We
also continued to grow and expand our Algenist brand, which is now
available in 22 countries and has reached 39 SKUs with a number of
product introductions planned for early 2016 including a new Power
moisturizer and a color correcting cosmetics line.
- Moema: A primary area of focus
remains planned optimization projects as we look to further improve
key production metrics. Recent developments at Moema include
production of our first food oil, reaching the production
requirements necessary to begin selling food grade oils, and
improvements in our cost profile. We are now making routine
deliveries to Unilever and are shipping to Natura Cosméticos as
well. With the combination of the expanded JV with Bunge and the
ongoing progress we are seeing at Moema, the company has made the
decision to focus production at Moema and Peoria, and to terminate
its existing contracts for the Clinton and Galva manufacturing
facilities.
- Industrials - Encapso™: We made
further progress with our Encapso™ lubricant in international
markets, including a recent order from Flotek for an application in
a new oilfield in the Middle East.
Financial Results
Total revenue for the third quarter ended September 30, 2015 was
$11.4 million compared with $17.6 million in the third quarter of
2014. The year over year decline in revenues was due to expected
decreases in funded program revenue and slower than anticipated
adoption rates for Encapso lubricant. On a sequential quarter
basis, revenues were roughly unchanged due to improved Algenist
performance, offset by funded programs. GAAP net loss was $34.9
million for the third quarter of 2015, compared to net loss of
$39.7 million in the prior year period. On a non-GAAP basis, the
net loss was $30.9 million for the third quarter of 2015, compared
with net loss of $35.3 million in the prior year quarter. A
reconciliation of GAAP to non-GAAP results is included below.
Conference Call
Solazyme will hold a conference call for investors on October
30, 2015 at 5:30 a.m. PT (8:30 p.m. ET). Investors may access the
call by dialing 973-409-9250. A live webcast of the call will be
available from the Investor Relations section of www.solazyme.com.
A recording of the call will also be available by calling
404-537-3406; access code 61311519 beginning approximately two
hours after the call, and will be available for one week. A webcast
replay from today’s call will also be available from the Investor
Relations section of www.solazyme.com approximately two hours after
the call and will be available for up to thirty days.
About Solazyme, Inc.
Solazyme, Inc. develops and sells high-performance oils and
ingredients that are better for people and better for the planet.
Starting with microalgae, one of the world's original oil
producers, Solazyme creates innovative, sustainable,
high-performance products. These include renewable oils and
ingredients that serve as the foundation for creating healthier
foods; high-performance industrial products; unique home and
personal care solutions; and more sustainable fuels. Headquartered
in South San Francisco, Solazyme's mission is to solve some of the
world's biggest problems with one of the world's smallest and
earliest life forms: microalgae. For additional information, please
visit Solazyme's website at www.solazyme.com.
Solazyme®, AlgaPūr™, AlgaVia™, AlgaWise™, Algenist®, Encapso™,
Thrive™, the Solazyme logo and other trademarks or service names
are the trademarks of Solazyme, Inc.
Non-GAAP Financial Measures
This press release includes the following financial measures
defined as a “non-GAAP financial measure” by the Securities and
Exchange Commission: non-GAAP net-loss and net-loss per share.
These measures may be different from non-GAAP financial measures
used by other companies. The presentation of this financial
information, which is not prepared under any comprehensive set of
accounting rules or principles, is not intended to be considered in
isolation or as a substitute for the financial information prepared
and presented in accordance with generally accepted accounting
principles. For a reconciliation of these non-GAAP financial
measures to the nearest comparable GAAP measures, see
“Reconciliation of GAAP to Non-GAAP Net-Loss and Net Loss Per
Share” included in the tables to this press release.
These non-GAAP measures are provided to enhance investors’
overall understanding of Solazyme’s current financial performance
and Solazyme’s prospects for the future. Specifically, Solazyme
believes the non-GAAP measures provide useful information to both
management and investors by excluding certain expenses that may not
be indicative of its core operating results and business
outlook.
For its internal budgeting process, Solazyme’s management uses
financial measures that do not include stock-based compensation
expense or special expenses such as non-cash gains or losses
related to derivative liabilities and warrant revaluations. In
addition to the corresponding GAAP measure, Solazyme’s management
also uses the foregoing non-GAAP measures in reviewing the
financial results of Solazyme. Solazyme excludes stock-based
compensation expenses and special non-cash charges from its
non-GAAP measures primarily because they are non-cash expenses that
management does not believe are reflective of ongoing operating
results.
Forward Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 about Solazyme, including statements that involve risks and
uncertainties concerning: its commercialization and production
plans; the commissioning of equipment and the ramping up of
facilities; meeting commercialization and technology targets;
successful product trials and market acceptance and adoption of its
products; and Solazyme’s ability to maintain its relationships with
its partners. When used in this press release, the words “will”,
“expects”, “intends” and other similar expressions and any other
statements that are not historical facts are intended to identify
those assertions as forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Any such
statement may be influenced by a variety of factors, many of which
are beyond the control of Solazyme, that could cause actual
outcomes and results to be materially different from those
projected, described, expressed or implied in this press release
due to a number of risks and uncertainties. Potential risks and
uncertainties include, among others: Solazyme’s limited operating
history; its limited history in commercializing products;
implementation risk in deploying new technologies; its limited
experience in constructing, ramping up and operating commercial
manufacturing facilities; its ability to successfully develop and
commercialize products; its ability to sell its products at a
profit; delays related to construction, start-up and ramp-up of
production facilities; its ability to manage costs; its ability to
enter into and maintain strategic collaborations; successful
product trials by its customers and market acceptance and adoption
of its products by end-users; its ability to obtain requisite
regulatory approvals; and its access, on favorable terms, to any
required financing. Accordingly, no assurances can be given that
any of the events anticipated by the forward-looking statements
will transpire or occur, or if any of them do so, what impact they
will have on the results of operations or financial condition of
Solazyme.
In addition, please refer to the documents that Solazyme, Inc.
files with the Securities and Exchange Commission, including its
Quarterly Report on Form 10-Q, as updated from time to time, for a
discussion of these and other risks. You are cautioned not to place
undue reliance on forward-looking statements, which speak only as
of the date of this press release. Solazyme is not under any duty
to update any of the information in this press release.
SOLAZYME, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS In thousands, except per share amounts
(UNAUDITED)
Three
Months Ended September 30, Nine Months Ended
September 30, 2015 2014 2015
2014 Revenues Product revenues $
9,133 $ 11,623 $ 26,261 $ 27,993 Research and development programs
2,266 5,936 9,483
17,896 Total revenues
11,399 17,559
35,744 45,889 Costs and operating
expenses (1) Cost of product revenue 4,570 6,598 13,601
14,458 Research and development 13,207 20,571 38,508 63,470 Sales,
general and administrative 19,596 25,883 61,845 68,127
Restructuring charges (21 ) - 372
- Total costs and operating expenses
37,352 53,052 114,326 146,055
Loss from operations
(25,953 )
(35,493 ) (78,582 ) (100,166
) Other income (expense) (2)
Interest and other income (expense), net (3,225 ) (3,188 ) (9,908 )
(8,962 ) Loss from equity method investments (5,916 ) (7,201 )
(18,291 ) (15,313 ) Gain from change in fair value of warrant
liability - - - 688 Gain from change in fair value of derivative
liabilities 176 6,205 27
6,478 Total other income (expense)
(8,965
) (4,184 ) (28,172 )
(17,109 ) Net loss
$ (34,918 ) $ (39,677 )
$ (106,754 ) $ (117,275 )
Net loss per share - basic and diluted $ (0.43
) $ (0.50 ) $ (1.33
) $ (1.57 )
Weighted average number of common
shares used in net loss per share computation - basic and
diluted
80,298 78,867 80,017 74,716
SOLAZYME, INC. RECONCILIATION OF GAAP TO NON-GAAP
NET LOSS AND NET LOSS PER SHARE In thousands, except per share
amounts (UNAUDITED)
Three Months Ended September 30, Nine Months
Ended September 30, 2015 2014 2015
2014 Net loss $ (34,918 ) $ (39,677 ) $ (106,754 ) $
(117,275 ) Gain from change in fair value of warrant liability - -
- (688 ) Gain from change in fair value of derivative liabilities
(176 ) (6,205 ) (27 ) (6,478 )
(1) Operating expenses
includes costs as follows: Research and development 1,011 1,941
3,595 5,671 Sales, general and administrative 2,513
4,347 8,717 13,022 Total
stock-based compensation expense 3,524 6,288 12,312 18,693
Litigation settlement, net of insurance reimbursement - 3,657 -
4,507 Restructuring charges (21 ) - 372 -
(2) Other income
(expense) includes costs as follows: Amortization of debt discount
and issuance costs 644 608 1,900 1,594 Debt conversion expense
- - - 1,766
Net loss (non-GAAP) $ (30,947 )
$ (35,329 ) $ (92,197 )
$ (97,881 ) Net loss per share (GAAP) -
basic and diluted $ (0.43 ) $ (0.50 ) $ (1.33 ) $ (1.57 )
Gain from change in fair value of warrant liability - - - (0.01 )
Gain from change in fair value of derivative liabilities - (0.08 )
- (0.09 ) Stock-based compensation expense 0.03 0.08 0.16 0.25
Litigation settlement, net of insurance reimbursement - 0.04 0.06
Restructuring charges - - - - Amortization of debt discount and
issuance costs 0.01 0.01 0.02 0.02 Debt conversion expense -
- - 0.03
Net
loss per share (non-GAAP) - basic and diluted $
(0.39 ) $ (0.45 ) $
(1.15 ) $ (1.31 )
SOLAZYME, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands (UNAUDITED)
September 30, December 31, 2015 2014
Assets
Current
assets
Cash, cash equivalents and marketable securities $ 117,245 $
207,308 Other current assets 22,114 26,619
Total current assets 139,359 233,927 Property,
plant and equipment - net 32,119 36,080 Other assets 37,564
42,582
Total assets $ 209,042
$ 312,589
Liabilities and
stockholders' equity
Current
liabilities
Current portion of long-term debt $ - $ 6 Other current liabilities
18,859 23,448
Total current liabilities
18,859 23,454 Other liabilities 7,889 2,668 Long-term
debt 201,831 200,091
Total liabilities
228,579 226,213 Total
stockholders' (deficit) equity (19,537 )
86,376 Total liabilities and stockholders'
(deficit) equity $ 209,042 $
312,589
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