See the accompanying notes to the unaudited condensed consolidated
financial statements.
See the accompanying notes to the unaudited condensed consolidated
financial statements.
See the accompanying notes to the unaudited condensed consolidated
financial statements.
See the accompanying notes to the unaudited condensed consolidated
financial statements.
See the accompanying notes to the unaudited condensed consolidated
financial statements.
See the accompanying notes to the unaudited condensed consolidated
financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The Company
Amyris, Inc. (the Company or Amyris) is a leading
industrial biotechnology company that is applying its technology platform to engineer, manufacture and sell high performance products
into the Health and Nutrition, Personal Care and Performance Materials markets. The Company's proven technology platform enables
the Company to rapidly engineer microbes and use them as catalysts to metabolize renewable, plant-sourced sugars into large volume,
high-value ingredients. The Company's biotechnology platform and industrial fermentation process replace existing complex and expensive
chemical manufacturing processes. The Company has successfully used its technology to develop and produce at commercial volumes
five distinct molecules.
The Company believes that industrial synthetic
biology represents a third industrial revolution, bringing together biology and engineering to generate new, more sustainable
materials to meet the growing global demand for bio-based replacements for petroleum, animal- or plant-derived ingredients. The
Company continues to build demand for its current portfolio of products through a sales network comprised of direct sales and
distributors, and is engaged in collaborations across each of its three market focus areas to drive additional product sales and
partnership opportunities. Via its partnership model, the Company's partners invest in the development of each molecule to bring
it from the lab to commercial scale. The Company then captures long-term revenue both through the production and sale of the molecule
to its partners and through value sharing of the partners' product sales.
Liquidity
The Company has incurred significant operating
losses since its inception and expects to continue to incur losses and negative cash flows from operations through at least the
first half of 2018. As of September 30, 2017, the Company had negative working capital of $5.7 million, (compared to negative
working capital of $50.7 million as of December 31, 2016), an accumulated deficit of $1.2 billion, and cash, cash equivalents
and short-term investments of $17.6 million (compared to $28.5 million as of December 31, 2016).
As of September 30, 2017, the Company's
debt (including related party debt), net of deferred discount and issuance costs of $23.7 million, totaled $164.6 million, of
which $11.7 million is classified as current. The Company's debt service obligations through December 31, 2018 are $74.5 million,
including $20.4 million of anticipated cash interest payments. The Company's debt agreements contain various covenants, including
certain restrictions on the Company's business that could cause the Company to be at risk of defaults, such as restrictions on
additional indebtedness, material adverse effect and cross default clauses. A failure to comply with the covenants and other provisions
of the Company’s debt instruments, including any failure to make a payment when required, would generally result in events
of default under such instruments, which could permit acceleration of such indebtedness. If such indebtedness is accelerated,
it would generally also constitute an event of default under the Company’s other outstanding indebtedness, permitting acceleration
of such other outstanding indebtedness.
These factors raise substantial doubt about
the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our ability to
continue as a going concern will depend, in large part, on our ability to achieve positive cash flows from operations during the
next 12 months and extend existing debt maturities, which is uncertain. Our operating plan for the remainder of 2017 and 2018 contemplates
a significant reduction in our net cash outflows, resulting from (i) revenue growth from sales of existing and new products with
positive gross margins, (ii) reduced production costs as a result of manufacturing and technical developments, and (iii) cash inflows
from collaborations and grants. If the Company is unable to continue as a going concern, it may be unable to meet its obligations
under its existing debt facilities, which could result in an acceleration of its obligation to repay all amounts outstanding under
those facilities, and it may be forced to liquidate its assets.
During the nine months ended September 30,
2017, the Company improved its liquidity as follows:
|
•
|
In January, February and May 2017, debt obligations totaling $21.0 million were extended to dates from November 2017 to April
2019;
|
|
•
|
In May 2017, the Company sold shares of its Series A 17.38% Convertible Preferred Stock, par value $0.0001 per share (the
Series A Preferred Stock), shares of its Series B 17.38% Convertible Preferred Stock, par value $0.0001 per share (the Series
B Preferred Stock), and warrants to purchase common stock for net proceeds of $50.7 million;
|
|
•
|
In April and May 2017, convertible debt obligations totaling $35.8 million were converted into shares of common stock pursuant
to their terms or exchanged for shares of Series B Preferred Stock and warrants to purchase common stock;
|
|
•
|
In May 2017, additional debt obligations totaling $29.0 million were exchanged for shares of Series B Preferred Stock and
warrants to purchase common stock;
|
|
•
|
In May 2017, the Company made debt principal payments of $21.8 million,
which in
combination with the debt conversions and exchanges
described above, reduced debt obligations by a total of
$86.6 million;
|
|
•
|
In August 2017, the Company sold shares of common stock, shares of its Series D Convertible Preferred Stock, par value $0.0001
per share (the Series D Preferred Stock), and warrants to purchase common stock for net proceeds of $24.8 million; and
|
|
•
|
In August 2017, the Company sold shares of Series B Preferred Stock, warrants to purchase common stock, dilution warrants
and a make-whole provision for net proceeds of $25.9 million.
|
See
Note 5, “Long-term Debt” and Note 7, “Stockholders’ Deficit” for more information regarding these
transactions.
The Company expects to fund operations for the
foreseeable future with cash and investments currently on hand, cash inflows from collaborations, grants, product sales and equity
and debt financings, to the extent necessary. Some of our research and development collaborations are subject to risk that we may
not meet milestones. Future equity and debt financings, if needed, are subject to the risk that we may not be able to secure financing
in a timely manner or on reasonable terms, if at all. Our planned working capital and capital expenditure needs for the remainder
of 2017 and 2018 are dependent on significant inflows of cash from renewable product sales and existing collaboration partners,
as well as additional funding from new collaborations.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP)
and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information
and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted
pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read
in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2016.
The condensed consolidated
balance sheet as of December 31, 2016 included herein was derived from the audited financial statements as of that
date, but does not include all disclosures including notes required by GAAP. The condensed consolidated financial statements include
the accounts of the Company, its wholly-owned subsidiaries and its partially-owned subsidiaries in which the Company has a controlling
interest. All intercompany balances and transactions have been eliminated. The accompanying condensed consolidated financial statements
reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows
for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31,
2017.
There have been no changes to our significant
accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 that
have had a material impact on our condensed consolidated financial statements and related notes.
The accompanying interim condensed consolidated
financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual consolidated financial
statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary
for a fair statement of the results of operations for the periods presented. In the nine months ended September 30, 2017 the
Company adopted these Accounting Standards Updates (ASUs):
|
•
|
ASU 2015-11,
Inventory (Topic 330): Simplifying the Measurement of Inventory
|
|
•
|
ASU 2016-06,
Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments
|
|
•
|
ASU 2016-09,
Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
|
None of the ASUs adopted had a material impact
on the Company’s condensed consolidated financial statements.
Use of Estimates
The preparation of the financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues
and expenses during the periods reported. Actual results could differ from these estimates, and such differences may be material
to the financial statements.
Reverse Stock Split
On June
5, 2017, the Company effected a 1 for 15 reverse stock split of the Company’s common stock, par value $0.0001 per share,
as well as a reduction in the total number of authorized shares of common stock from 500,000,000 to 250,000,000. Unless otherwise
noted, all common stock share quantities and per-share amounts for all periods presented in the financial statements and notes
thereto have been retroactively adjusted for the stock split as if such stock split had occurred on the first day of the first
period presented. Certain amounts in the notes to the financial statements may be slightly different from previously reported
due to rounding of fractional shares as a result of the reverse stock split.
The par value, number of shares outstanding
and number of authorized shares of preferred stock were not adjusted as a result of the reverse stock split.
3. Fair Value Measurement
For information about our fair value policies, and methods and assumptions
used in estimating the fair value of our financial assets and liabilities, see Note 2, "Summary of Significant Accounting
Policies", and Note 3, "Fair Value of Financial Instruments" in Part II, Item 8 of our Annual Report on Form 10-K
for the fiscal year ended December 31, 2016.
Assets and Liabilities Measured and Recorded at Fair Value
on a Recurring Basis
The following tables summarize, for assets or liabilities measured
at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in thousands):
|
|
September 30, 2017
|
|
December 31, 2016
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
12,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,000
|
|
|
$
|
1,549
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,549
|
|
Certificates of deposit
|
|
|
1,943
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,943
|
|
|
|
1,373
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,373
|
|
Total assets measured and recorded at fair value
|
|
$
|
13,943
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,943
|
|
|
$
|
2,922
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,922
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded derivatives in connection with the issuance of debt and equity instruments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,069
|
|
|
$
|
21,069
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,135
|
|
|
$
|
4,135
|
|
Freestanding derivative instruments in connection with the issuance of equity instruments
|
|
|
—
|
|
|
|
—
|
|
|
|
66,673
|
|
|
|
66,673
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Currency interest rate swap derivative liability
|
|
|
—
|
|
|
|
2,552
|
|
|
|
—
|
|
|
|
2,552
|
|
|
|
—
|
|
|
|
3,343
|
|
|
|
—
|
|
|
|
3,343
|
|
Total liabilities measured and recorded at fair value
|
|
$
|
—
|
|
|
$
|
2,552
|
|
|
$
|
87,742
|
|
|
$
|
90,294
|
|
|
$
|
—
|
|
|
$
|
3,343
|
|
|
$
|
4,135
|
|
|
$
|
7,478
|
|
There were no transfers between levels during the periods presented.
Derivative Liabilities Recognized in Connection
with the Issuance of Debt and Equity Instruments
The following table provides a reconciliation
of the beginning and ending balances for the Company's derivative liabilities recognized in connection with the issuance of debt
and equity instruments, measured at fair value using significant unobservable inputs (Level 3) (in thousands):
|
|
2017
|
|
2016
|
Balance at January 1
|
|
$
|
4,136
|
|
|
$
|
46,430
|
|
Gain from change in fair value of derivative liabilities
|
|
|
(14,190
|
)
|
|
|
—
|
|
Additions
|
|
|
129,492
|
|
|
|
(2,734
|
)
|
Derecognition upon conversion or extinguishment
|
|
|
(31,696
|
)
|
|
|
(39,869
|
)
|
Balance at September 30
|
|
$
|
87,742
|
|
|
$
|
3,827
|
|
The derivative liabilities recognized in connection
with the issuance of debt and equity instruments represent the fair value of the make-whole provisions of the Series A and B Preferred
Stock as well as the cash and anti-dilution warrants issued concurrently with the Series A, B and D Preferred Stock (see Note
7, “Stockholders’ Deficit”), and conversion options, conversion price adjustment features and down round provisions
associated with the the R&D Note, Temasek Funding Warrant, Tranche Notes, 2014 144A Notes and 2015 144A Notes (each as defined
below) (see Note 5, “Long-term Debt”). As of September 30, 2017 and December 31, 2016, included in "Derivative
Liabilities" on the condensed consolidated balance sheets are compound embedded derivative liabilities and freestanding financial
instruments accounted for as derivative liabilities of $87.7 million and $4.1 million, respectively.
The market-based assumptions and estimates used
in applying a Monte Carlo simulation approach and Black-Scholes-Merton option value approach for valuing the derivative liabilities
in connection with debt and equity instruments include amounts in the following ranges and amounts:
|
|
September 30, 2017
|
|
December 31, 2016
|
Risk-free interest rate
|
|
1.32%
|
-
|
2.33%
|
|
0.55%
|
-
|
1.31%
|
Risk-adjusted yields
|
|
19.40%
|
-
|
29.53%
|
|
12.80%
|
-
|
22.93%
|
Stock price volatility
|
|
45%
|
-
|
80%
|
|
|
45%
|
|
Probability of change in control
|
|
|
5%
|
|
|
|
5%
|
|
Stock price
|
|
$3.20
|
-
|
$3.93
|
|
|
$10.95
|
|
Credit spread
|
|
18.04%
|
-
|
28.13%
|
|
11.59%
|
-
|
21.64%
|
Estimated conversion dates
|
|
2017
|
-
|
2022
|
|
2017
|
-
|
2019
|
The valuation of the
embedded derivatives in connection with the issuance of debt and equity instruments and freestanding derivative instruments in
connection with the issuance of equity instruments can be significantly affected by changes in valuation assumptions. For example,
all other things being equal, a decrease/increase in the Company’s stock price, probability of change of control, credit
spread, term to maturity/conversion or stock price volatility decreases/increases the valuation of the liabilities, whereas a decrease/increase
in risk adjusted yields or risk-free interest rates increases/decreases the valuation of the liabilities. Certain of the Company’s
debt instruments outstanding in the form of convertible notes also include conversion price adjustment features whereby, for example,
issuances of equity or equity-linked securities by the Company at prices lower than the conversion price then in effect for such
notes result in a reset or adjustment of the conversion price of such notes, which increases the value of the embedded derivative
liabilities. A third-party valuation specialist assisted in determining estimates of fair value. See Note 5, "Long-term Debt"
for additional information regarding the conversion price adjustment features.
Currency Interest Rate Swap Derivative Liability
In June 2012, the Company entered into a loan
agreement with Banco Pine S.A. (Banco Pine) under which Banco Pine provided the Company with a loan (the Banco Pine Bridge Loan)
(see Note 5, "Long-term Debt"). At the time of the Banco Pine Bridge Loan, the Company also entered into a currency
interest rate swap arrangement with Banco Pine with respect to the repayment of R$22.0 million (US$6.9 million based on the exchange
rate as of September 30, 2017) of the Banco Pine Bridge Loan. The swap arrangement exchanges the principal and interest payments
under the Banco Pine Bridge Loan for alternative principal and interest payments that are subject to adjustment based on fluctuations
in the foreign exchange rate between the U.S. dollar and Brazilian real. The swap has a fixed interest rate of 3.94%. This arrangement
hedges fluctuations in the foreign exchange rate between the U.S. dollar and Brazilian real.
Changes in Fair Value
Changes in the fair value of assets or liabilities
measured at fair value on a recurring basis are recognized in “Gain (loss) from change in fair value of derivative instruments"
in the condensed consolidated statements of operations as follows (in thousands):
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
Type of derivative contract
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Embedded derivatives and freestanding financial instruments in connection with the issuance of debt and
equity
|
|
$
|
(3,107
|
)
|
|
$
|
(624
|
)
|
|
$
|
34,911
|
|
|
$
|
39,869
|
|
Currency interest rate swaps
|
|
|
415
|
|
|
|
(162
|
)
|
|
|
511
|
|
|
|
1,957
|
|
Total gain (loss) from change in fair value of derivative instruments
|
|
$
|
(2,692
|
)
|
|
$
|
(786
|
)
|
|
$
|
35,422
|
|
|
$
|
41,826
|
|
Assets and Liabilities Recorded at Carrying Value
Financial Assets and Liabilities
The
carrying amounts of certain financial instruments, such as cash equivalents, accounts receivable, accounts payable and
accrued liabilities, approximate fair value due to their relatively short maturities and low market interest rates, if
applicable. Loans payable, credit facilities and convertible notes are recorded at carrying value, which is representative of
fair value at the date of acquisition. The Company estimates the fair value of loans payable and credit facilities using
observable market-based inputs (Level 2) and estimates the fair value of convertible notes based on rates currently
offered for instruments with similar maturities and terms (Level 3). The carrying amounts of loans payable, credit
facilities and convertible notes at September 30, 2017 were $17.2 million, $49.4 million and $98.1 million,
respectively. The fair values of loans payable, credit facilities and convertible notes at September 30, 2017 were $12.2
million, $25.2 million and $108.0 million, respectively. The carrying amount of the DSM Credit Letter is based on estimated
payments and interest rates offered to the Company for debt on similar terms and maturities. The fair value of the DSM
Credit Letter was $7.1 million as of September 30, 2017.
Cost-method Investment
In April 2017, the Company received 850,115
unregistered shares of SweeGen common stock in satisfaction of the payment obligation of Phyto Tech Corp. (d/b/a Blue California)
under the Intellectual Property License and Strain Access Agreement entered into between Blue California and the Company in December
2016. The Company obtained an independent valuation of the shares that established acquisition-date fair value of $3.2 million
using an income approach under which cash flows were discounted to present value at 40%.
4. Balance Sheet Components
Accounts Receivable, Net
Accounts receivable, net is comprised of the
following (in thousands):
|
|
September 30,
2017
|
|
December 31,
2016
|
Accounts receivable
|
|
$
|
15,462
|
|
|
$
|
13,583
|
|
Related party accounts receivable
|
|
|
10,102
|
|
|
|
895
|
|
|
|
|
25,564
|
|
|
|
14,478
|
|
Less: allowance for doubtful accounts
|
|
|
(642
|
)
|
|
|
(501
|
)
|
Accounts receivable, net
|
|
$
|
24,922
|
|
|
$
|
13,977
|
|
Inventories
Inventories are stated at the lower of cost
or net realizable value and are comprised of the following (in thousands):
|
|
September 30,
2017
|
|
December 31,
2016
|
Raw materials
|
|
$
|
3,236
|
|
|
$
|
3,159
|
|
Work-in-process
|
|
|
885
|
|
|
|
1,848
|
|
Finished goods
|
|
|
2,289
|
|
|
|
1,206
|
|
Inventories
|
|
$
|
6,410
|
|
|
$
|
6,213
|
|
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets is
comprised of the following (in thousands):
|
|
September 30, 2017
|
|
December 31, 2016
|
Prepayments, advances and deposits
|
|
$
|
7,149
|
|
|
$
|
3,727
|
|
Prepaid insurance
|
|
|
970
|
|
|
|
645
|
|
Other
|
|
|
1,125
|
|
|
|
1,711
|
|
Prepaid expenses and other current assets
|
|
$
|
9,244
|
|
|
$
|
6,083
|
|
Property, Plant and Equipment, net
Property, plant and equipment, net is comprised
of the following (in thousands):
|
|
September 30, 2017
|
|
December 31, 2016
|
Machinery and equipment
|
|
$
|
88,532
|
|
|
$
|
82,688
|
|
Leasehold improvements
|
|
|
39,150
|
|
|
|
38,785
|
|
Computers and software
|
|
|
9,898
|
|
|
|
9,585
|
|
Buildings
|
|
|
4,834
|
|
|
|
4,699
|
|
Construction in progress
|
|
|
259
|
|
|
|
2,216
|
|
Furniture and office equipment, vehicles and land
|
|
|
2,985
|
|
|
|
2,957
|
|
|
|
|
145,658
|
|
|
|
140,930
|
|
Less: accumulated depreciation and amortization
|
|
|
(95,528
|
)
|
|
|
(87,195
|
)
|
Property, plant and equipment, net
|
|
$
|
50,130
|
|
|
$
|
53,735
|
|
Property, plant and equipment, net includes
$3.9 million and $3.1 million of machinery and equipment under capital leases as of September 30, 2017 and December 31,
2016, respectively. Accumulated amortization of assets under capital leases totaled $1.4 million and $1.0 million as of September 30,
2017 and December 31, 2016, respectively.
Depreciation and amortization expense, including
amortization of assets under capital leases was $2.7 million and $2.9 million for the three months ended September 30, 2017
and 2016, respectively, and $8.1 million and $8.6 million for the nine months ended September 30, 2017 and 2016, respectively.
Other Assets
Other assets is comprised of the following (in
thousands):
|
|
September 30, 2017
|
|
December 31, 2016
|
Cost-method investment in SweeGen
|
|
$
|
3,233
|
|
|
$
|
—
|
|
Deposits
|
|
|
2,516
|
|
|
|
409
|
|
Goodwill
|
|
|
560
|
|
|
|
560
|
|
Other
|
|
|
1,361
|
|
|
|
1,366
|
|
Other assets
|
|
$
|
7,670
|
|
|
$
|
2,335
|
|
Accrued and Other Current Liabilities
Accrued and other current liabilities are comprised
of the following (in thousands):
|
|
September 30,
2017
|
|
December 31,
2016
|
Payroll and related expenses
|
|
$
|
6,549
|
|
|
$
|
6,344
|
|
Accrued interest
|
|
|
5,586
|
|
|
|
4,847
|
|
SMA relocation accrual
|
|
|
4,554
|
|
|
|
3,641
|
|
Tax-related liabilities
|
|
|
3,575
|
|
|
|
2,610
|
|
Professional services
|
|
|
3,491
|
|
|
|
6,876
|
|
Other
|
|
|
5,128
|
|
|
|
5,792
|
|
Total accrued and other current liabilities
|
|
$
|
28,883
|
|
|
$
|
30,110
|
|
Other Liabilities
Other non-current liabilities are comprised
of the following (in thousands):
|
|
September 30,
2017
|
|
December 31,
2016
|
Deferred rent, net of current portion
|
|
$
|
8,139
|
|
|
$
|
8,906
|
|
Deferred revenue, net of current portion
|
|
|
3,744
|
|
|
|
6,650
|
|
Accrued interest, net of current portion
|
|
|
3,642
|
|
|
|
5,542
|
|
Capital lease obligation, net of current portion
|
|
|
111
|
|
|
|
334
|
|
Other liabilities
|
|
|
2,635
|
|
|
|
2,299
|
|
Total other liabilities
|
|
$
|
18,271
|
|
|
$
|
23,731
|
|
5. Long-term Debt
Net carrying amounts of debt are as follows
(in thousands):
|
|
September
30, 2017
|
|
December
31, 2016
|
Convertible notes
|
|
|
|
|
|
|
|
|
2015 Rule 144A convertible notes
|
|
$
|
31,108
|
|
|
$
|
22,766
|
|
2014 Rule 144A convertible notes
|
|
|
18,544
|
|
|
|
22,010
|
|
August 2013 financing convertible notes
|
|
|
1,042
|
|
|
|
9,247
|
|
Fidelity notes
|
|
|
—
|
|
|
|
14,983
|
|
December 2016 and June 2017 amended notes
|
|
|
—
|
|
|
|
9,975
|
|
|
|
|
50,694
|
|
|
|
78,981
|
|
Related party convertible
notes
|
|
|
|
|
|
|
|
|
August 2013 financing convertible notes
|
|
|
22,290
|
|
|
|
21,814
|
|
2014 Rule 144A convertible notes
|
|
|
21,417
|
|
|
|
17,320
|
|
R&D note
|
|
|
3,663
|
|
|
|
3,620
|
|
|
|
|
47,370
|
|
|
|
42,754
|
|
Loans payable
|
|
|
|
|
|
|
|
|
Senior secured loan facility
|
|
|
28,156
|
|
|
|
27,658
|
|
Guanfu credit facility
|
|
|
20,446
|
|
|
|
19,564
|
|
Nossa Caixa and Banco Pine notes
|
|
|
9,917
|
|
|
|
11,136
|
|
Other loans payable
|
|
|
5,283
|
|
|
|
15,391
|
|
Other credit facilities
|
|
|
779
|
|
|
|
1,868
|
|
|
|
|
64,581
|
|
|
|
75,617
|
|
Related party loans payable
|
|
|
|
|
|
|
|
|
February 2016 related party private placement
|
|
|
2,000
|
|
|
|
18,691
|
|
Other related party loans
payable
|
|
|
—
|
|
|
|
11,000
|
|
|
|
|
2,000
|
|
|
|
29,691
|
|
Total debt
|
|
|
164,645
|
|
|
|
227,043
|
|
Less: current portion
|
|
|
(11,704
|
)
|
|
|
(59,155
|
)
|
Long-term debt, net of
current portion
|
|
$
|
152,941
|
|
|
$
|
167,888
|
|
Convertible Notes
2015 Rule 144A Convertible Notes
In October 2015, the
Company sold $57.6 million aggregate principal amount of 9.50% convertible senior notes due 2019 (the 2015 144A Notes) to certain
qualified institutional buyers in a private placement. Net proceeds from the offering were $54.4 million after payment of offering
expenses and placement agent fees. The 2015 144A Notes bear interest at a rate of 9.50% per year, payable semiannually in arrears
on April 15 and October 15 of each year. Interest on the 2015 144A Notes is payable, at the Company's option, entirely in cash
or entirely in common stock valued at 92.5% of a market-based price. The Company elected to make the April 15, 2016 and 2017 interest
payments in shares of common stock and the October 15, 2016 and October 15, 2017 interest payments in cash. The 2015 144A Notes
will mature on April 15, 2019 unless earlier converted or repurchased.
The 2015 144A Notes are convertible into shares
of the Company's common stock at a conversion rate of 58.2076 shares per $1,000 principal amount of 2015 144A Notes as of September
30, 2017 (which conversion rate is subject to adjustment in certain circumstances), representing an effective conversion price
of approximately $17.18 per share. Upon conversion, noteholders are entitled to receive a payment (the Early Conversion Payment)
equal to the present value of the remaining scheduled payments of interest on the 2015 144A Notes being converted through April
15, 2019, computed using a discount rate of 0.75%. The Company may make the Early Conversion Payment, at its election, either
in cash or, subject to certain conditions, in common stock valued at 92.5% of a market-based price. Through September 30,
2017, the Company has elected to make each Early Conversion Payment in shares of common stock.
In January 2017, the
Company issued an additional $19.1 million in aggregate principal amount of 2015 144A Notes (the Additional 2015 144A Notes) in
exchange for the cancellation of $15.3 million in aggregate principal amount of outstanding Fidelity Notes (as defined below),
as further described below under “Fidelity Notes” with the same terms as the 2015 144A Notes; provided, that the aggregate
number of shares issued with respect to the Additional 2015 144A Notes (and any other transaction aggregated for such purpose)
cannot exceed 3,652,935 shares of common stock (the Additional 2015 144A Notes Exchange Cap) without prior stockholder approval.
2014 Rule 144A Convertible Notes
In May 2014, the Company
sold $75.0 million in aggregate principal amount of 6.50% Convertible Senior Notes due 2019 (the 2014 144A Notes) to qualified
institutional buyers in a private placement. The net proceeds from the offering of the 2014 144A Notes were $72.0 million after
payment of initial purchaser discounts and offering expenses. The Company used $9.7 million of the net proceeds to repay
convertible notes previously issued to an affiliate of Total S.A. (together with its affiliates, Total), representing the amount
of 2014 144A Notes purchased by Total. Certain of the Company's affiliated entities (including Total) purchased $24.7 million
in aggregate principal amount of 2014 144A Notes (described further below under "Related Party Convertible Notes").
In October 2015, as discussed above, the Company issued $57.6 million of 2015 144A Notes and used $18.3 million of the net proceeds
therefrom to repurchase $22.9 million aggregate principal amount of outstanding 2014 144A Notes. The 2014 144A Notes bear interest
at an annual rate of 6.5%, payable semiannually in arrears on May 15 and November 15 of each year in cash. The 2014 144A Notes
mature on May 15, 2019, unless earlier converted or repurchased.
The 2014 144A Notes are convertible into shares
of the Company's common stock at a conversion rate of 17.8073 shares per $1,000 principal amount of 2014 144A Notes as of September
30, 2017 (which conversion rate is subject to adjustment in certain circumstances), representing an effective conversion price
of approximately $56.16 per share. Refer to the "Maturity Treatment Agreement" section of this Note 5, "Long-term
Debt" for details of the impact of the Maturity Treatment Agreement on the 2014 144A Notes.
August 2013 Financing Convertible Notes
In August 2013, the Company entered into a
Securities Purchase Agreement (the August 2013 SPA) with Total and Maxwell (Mauritius) Pte Ltd (Temasek) to sell up to $73.0 million
in convertible notes in private placements (the August 2013 Financing). The August 2013 SPA provided for the August 2013 Financing
to be divided into two tranches, each with differing closing conditions. In October 2013, the Company amended the August 2013
SPA to include the investment by certain entities affiliated with FMR LLC (Fidelity) in the first tranche of the August 2013 Financing
of $7.6 million, and to proportionally increase the amount of first tranche notes to be acquired by Total. Also in October 2013,
the Company completed the closing of the first tranche of convertible notes provided for in the August 2013 Financing (the Tranche
I Notes), issuing a total of $51.8 million in Tranche I Notes for cash proceeds of $7.6 million and exchange and cancellation
of outstanding convertible notes of $44.2 million, of which $35.0 million resulted from the exchange and cancellation of a note
held by Temasek and the remaining $9.2 million from the exchange and cancellation of convertible notes held by Total. As a result
of the exchange and cancellation of the $35.0 million note held by Temasek and the $9.2 million of convertible notes held by Total
for Tranche I Notes, the Company recorded a loss from extinguishment of debt of $19.9 million. The Tranche I Notes are due sixty
months from the date of issuance (October 16, 2018). Interest accrues on the Tranche I Notes at a rate of 5% per six months, compounded
semiannually, and is payable in kind by adding to the principal or in cash. Through September 30, 2017, the Company has elected
to pay interest on the Tranche I Notes in kind. The Tranche I Notes may be prepaid in full or in part without penalty or premium
every six months at the date of payment of the semiannual coupon.
In December 2013, the Company further amended
the August 2013 SPA to provide for the sale of $3.0 million of convertible notes under the second tranche of the August 2013 Financing
(the Tranche II Notes and together with the Tranche I Notes, the Tranche Notes) to funds affiliated with Wolverine Asset Management,
LLC (Wolverine). In January 2014, the Company sold and issued $34.0 million of Tranche II Notes in the second tranche of the August
2013 Financing, with Temasek purchasing $25.0 million of the Tranche II Notes and funds affiliated with Wolverine purchasing $3.0
million of the Tranche II Notes, each for cash, and Total purchasing $6.0 million of the Tranche II Notes through exchange and
cancellation of the same amount of convertible notes held by Total. As a result of the exchange and cancellation of the $6.0 million
of convertible notes held by Total for the Tranche II Notes, the Company recorded a loss from extinguishment of debt of $9.4 million.
The Tranche II Notes are due sixty months from the date of issuance (January 15, 2019). Interest accrues on the Tranche II Notes
at a rate of 10% per annum, compounded annually, and is payable in kind by adding to the principal or in cash. Through September 30,
2017, the Company has elected to pay interest on the Tranche II Notes in kind.
The conversion price of the Tranche Notes is
$5.2977 per share as of September 30, 2017 (which conversion price is subject to adjustment in certain circumstances).
Fidelity Notes
In 2012, the Company sold $25.0 million in
aggregate principal amount of convertible promissory notes to entities affiliated with Fidelity (the Fidelity Notes) in a private
placement. The Fidelity Notes had a March 1, 2017 maturity date, bore interest at a rate of 3.0% per annum and had an initial
conversion price equal to $106.02 per share of the Company's common stock. In October 2015, as discussed above, the Company issued
$57.6 million of convertible senior notes and used approximately $8.8 million of the proceeds therefrom to repurchase $9.7 million
aggregate principal amount of outstanding Fidelity Notes. In January 2017, the Company issued $19.1 million in aggregate principal
amount of its 2015 144A Notes to the holders of the Fidelity Notes in exchange for the cancellation of the $15.3 million of outstanding
Fidelity Notes in a private exchange (the Fidelity Exchange), representing an exchange ratio of approximately 1:1.25 (i.e., each
$1.00 of Fidelity Notes was exchanged for approximately $1.25 of additional 2015 144A Notes). The Company did not receive any
cash proceeds from the Fidelity Exchange. The Fidelity Exchange was accounted for as an extinguishment of debt, and a gain of
$0.1 million was recognized for the nine months ended September 30, 2017.
December 2016 and June 2017 Amended Notes
In December 2016, the Company entered into
a securities purchase agreement (the December 2016 Purchase Agreement) with a private investor (the Purchaser) and issued and
sold a convertible note in principal amount $10.0 million (the December 2016 Convertible Note) to the Purchaser, resulting in
net proceeds to the Company of $9.9 million. The December 2016 Convertible Note was fully repaid in May 2017.
In April 2017, the Company entered into a securities
purchase agreement (the April 2017 Purchase Agreement) with the Purchaser relating to the sale of up to an additional $15.0 million
aggregate principal amount of convertible notes (the April 2017 Convertible Notes). In April 2017, the Company issued and sold
an April 2017 Convertible Note in the principal amount of $7.0 million to the Purchaser, for proceeds to the Company of $6.9 million.
This note was fully repaid in May 2017.
In May 2017, in connection with the Purchaser
agreeing to extend the time period for certain obligations of the Company under the April 2017 Purchase Agreement, the Company
and the Purchaser entered into an Amendment Agreement (the Amendment Agreement) with respect to the December 2016 Purchase Agreement,
the April 2017 Purchase Agreement, the December 2016 Convertible Note and the April 2017 Convertible Notes (the Amended Notes).
Pursuant to the Amendment Agreement, the Company and the Purchaser agreed, among other things, to (i) reduce the price at which
the Company may pay monthly installments under the Amended Notes in common stock to a 20% discount to a market-based price and
(ii) reduce the price floor related to any such payment to 70% of a market-based price.
On June 30, 2017, the Company issued and sold
an Amended Note under the April 2017 Purchase Agreement in the principal amount of $3.0 million to the Purchaser, for proceeds
to the Company of $3.0 million. This note was fully repaid in August 2017.
Unless earlier converted or redeemed, the Amended
Notes will mature on or about the 18-month anniversary of their respective issuance. The Amended Notes are payable in monthly
installments, in either cash at 118% of such installment amount or, at the Company’s option, subject to the
satisfaction of certain equity conditions, shares of common stock at a discount to the then-current market price, subject
to a price floor, as described above. In addition, in the event that the Company elects to pay all or any portion of
a monthly installment in common stock, the holders of the Amended Notes have the right to require that the Company repay in common
stock an additional amount of the Amended Notes not to exceed 50% of the aggregate amount by which the dollar-weighted trading
volume of the common stock for all trading days during the applicable installment period exceeds $200,000. The Company has the
right to redeem the Amended Notes for cash in full or in part at any time at a price equal to 118% of the principal amount being
redeemed. The Amended Notes are convertible at the election of the holders into common stock at a conversion price of $28.50 per
share as of September 30, 2017 (which conversion price is subject to adjustment in certain circumstances). The conversion of the
Amended Notes and the repayment of the Amended Notes in common stock is subject to a beneficial ownership limitation of 4.99%
(or such other percentage not to exceed 9.99%, provided that any increase will not be effective until 61 days after notice thereof
from the holder), and the aggregate number of shares issued with respect to the Amended Notes (and any other transaction aggregated
for such purpose) cannot exceed 3,645,118 shares of common stock without prior stockholder approval. For as long as they hold
Amended Notes or shares of common stock issued under the Amended Notes, the holders may not sell any shares of common stock at
a price less than the price floor applicable to the installment period with respect to which such shares were issued.
As of September 30, 2017, there were no Amended
Notes outstanding and $5.0 million of Amended Notes available for issuance under the April 2017 Purchase Agreement at the option
of the Purchaser.
Related Party Convertible Notes
August 2013 Financing Convertible Notes
As of September 30, 2017 and December
31, 2016, there was $21.2 million and $19.8 million, respectively, in principal amount of related party Tranche Notes outstanding,
plus debt premium of $1.1 million and $2.0 million, respectively.
2014 Rule 144A Convertible Notes
As of September 30, 2017 and December
31, 2016, there was $24.7 million and $24.7 million, respectively, in principal amount of related party 2014 144A Notes outstanding,
less debt discount of $3.3 million and $7.4 million, respectively.
R&D Note
In March 2016, as a result of the restructuring of the Company’s fuels joint venture with Total,
Total Amyris BioSolutions B.V., the Company issued to Total an unsecured
convertible note (the R&D Note) in the principal amount of $3.7 million, representing the remaining portion of the $105.0
million convertible note facility between the Company and Total initially established in 2012. In February 2017, the Company and
Total agreed to extend the maturity of the R&D Note from March 1, 2017 to May 15, 2017. In May 2017, the Company and Total
further amended the R&D Note to (i) extend the maturity from May 15, 2017 to March 31, 2018, (ii) increase the interest rate
from 1.5% to 12.0%, beginning May 16, 2017, and (iii) provide that accrued and unpaid interest will be payable on December 31,
2017 and the maturity date. The R&D Note is convertible into the Company's common stock, at a conversion price of $46.20 per
share as of September 30, 2017 (which conversion price is subject to adjustment in certain circumstances), (i) within 10 trading
days prior to maturity, (ii) on a change of control of the Company, and (iii) on a default by the Company.
Loans Payable
Senior Secured Loan Facility
In March 2014, the Company entered into a Loan
and Security Agreement (the LSA) with Hercules Technology Growth Capital, Inc. (Hercules) to make available to the Company a secured
loan facility (the Senior Secured Loan Facility) in an initial aggregate principal amount of up to $25.0 million. The LSA was subsequently
amended in June 2014, March 2015 and November 2015 to (i) extend additional credit facilities to the Company in an aggregate amount
of up to $31.0 million, of which $16.0 million was drawn by the Company, (ii) extend the maturity date of the loans, and (iii)
remove, add and/or modify certain covenants and agreements under the LSA. In connection with such amendments, the Company paid
aggregate fees of $1.5 million to Hercules.
In June 2016, Hercules
transferred and assigned its rights and obligations under the Senior Secured Loan Facility to Stegodon Corporation (Stegodon),
an affiliate of Ginkgo Bioworks, Inc. (Ginkgo), and in connection with the execution by the Company and Ginkgo of an initial strategic
partnership agreement, the Company received a deferment from Stegodon of all scheduled principal repayments under the Senior Secured
Loan Facility, as well as a waiver of a covenant in the LSA requiring the Company to maintain unrestricted, unencumbered cash in
defined U.S. bank accounts in an amount equal to at least 50% of the principal amount of the loans then outstanding under the Senior
Secured Loan Facility (the Minimum Cash Covenant). In October 2016, in connection with the execution by the Company and Ginkgo
of a definitive collaboration agreement (the Ginkgo Collaboration Agreement), the Company and Stegodon entered into a fourth amendment
of the LSA, pursuant to which the parties agreed to (i) extend the maturity date of the Senior Secured Loan Facility, subject to
the Company extending the maturity of certain of its other outstanding indebtedness (the Extension Condition), (ii) make the Senior
Secured Loan Facility interest-only until maturity, subject to the requirement that the Company apply certain monies received by
it under the Ginkgo Collaboration Agreement to repay the amounts outstanding under the Senior Secured Loan Facility, up to a maximum
amount of $1 million per month and (iii) waive the Minimum Cash Covenant until the maturity date of the Senior Secured Loan Facility.
On January 11, 2017, the maturity date of the
Senior Secured Loan Facility was extended to October 15, 2018 due to the Extension Condition being met as a result of the Fidelity
Exchange (see above under "Fidelity Notes" for additional details). This modification of the Senior Secured Loan Facility
was accounted for as a troubled debt restructuring with the future undiscounted cash flows being greater than the carrying value
of the debt prior to extension. No gain was recorded and a new effective interest rate was established based on the carrying value
of the debt and the revised cash flows. In addition, in January 2017, in connection with Stegodon granting certain waivers of
the debt and transfer covenants under the LSA, the Company and Stegodon entered into a fifth amendment of the LSA, pursuant to
which the Company agreed to apply additional monies received by it under the Ginkgo Collaboration Agreement towards repayment
of the outstanding loans under the Senior Secured Loan Facility, up to a maximum amount of $3 million. See Note 15, “Subsequent
Events” for further details regarding the Ginkgo Collaboration Agreement. The Senior Secured Loan Facility has a subjective
acceleration clause related to material adverse changes that could result in the debt being classified as current. The current
loan holder has not asserted any acceleration claim since the loan was assigned to the current note holder in June 2016, and the
Company estimates that the probability of Stegodon asserting a subjective acceleration claim is remote. Thus, the debt outstanding
under the Senior Secured Loan Facility as of September 30, 2017 is classified as a long-term liability.
Certain of the loans under the Senior Secured
Loan Facility bear interest at a rate per annum equal to the greater of (i) the prime rate reported in the Wall Street Journal
plus 6.25% and (ii) 9.50%, and certain of the loans under the Senior Secured Loan Facility accrued interest at a rate per annum
equal to the greater of (i) the prime rate reported in the Wall Street Journal plus 5.25% and (ii) 8.5%, in each case payable
monthly. The Company may prepay the loans under the Senior Secured Loan Facility at a price equal to 101% of the principal amount
plus an end of term charge equal to $3.3 million. In addition, the Company has agreed to pay (i) a fee of $425,000 to Stegodon
on or prior to December 31, 2017 and (ii) a fee of $450,000 to Stegodon on or prior to the maturity date of the Senior Secured
Loan Facility, in connection with certain waivers and releases under the LSA granted in connection with the formation of the Aprinnova
JV (as defined below) in December 2016. The Senior Secured Loan Facility is secured by liens on the Company's assets, including
on certain Company intellectual property.
Guanfu Credit Facility
In October 2016, the
Company and Guanfu Holding Co., Ltd. (Guanfu), an existing commercial partner of the Company, entered into a credit agreement
to make available to the Company an unsecured credit facility (the Guanfu Credit Facility) in an aggregate principal amount of
up to $25.0 million; in connection therewith, the Company granted to Guanfu the global exclusive purchase right with respect to
certain Company products. On December 31, 2016, the Company borrowed the full amount under the Guanfu Credit Facility and issued
to Guanfu a note in the principal amount of $25.0 million (the Guanfu Note). The Guanfu Note has a term of five years and accrues
interest at a rate of 10% per annum, payable quarterly beginning March 31, 2017. The Company may prepay the Guanfu Note in full
or in part at any time without penalty or premium.
Upon the occurrence of certain specified events
of default under the Guanfu Credit Facility, the Company will grant to Guanfu an exclusive, royalty-free, global license to certain
intellectual property useful in connection with Guanfu’s existing commercial relationship with the Company. In addition,
in the event the Company fails to pay interest or principal under the Guanfu Note within ten days of when due, the Company will
also be required, subject to applicable laws and regulations, to repay the outstanding amounts under the Guanfu Note in common
stock valued at 90% of a market-based price.
Nossa Caixa and
Banco Pine Notes:
In July 2012, Amyris Brasil Ltda. (formerly Amyris Brasil S.A.) (Amyris Brasil) entered into a Note of Bank
Credit and a Fiduciary Conveyance of Movable Goods Agreement (or, together, the July 2012 Bank Agreements) with each of Nossa
Caixa Desenvolvimento (Nossa Caixa) and Banco Pine S.A. (Banco Pine). Under the July 2012 Bank Agreements, the Company pledged
certain farnesene production assets as collateral for the loans of R$52.0 million (US$16.4 million based on the exchange rate
as of September 30, 2017). The Company's total acquisition cost for such pledged assets was R$68.0 million (US$21.5 million
based on the exchange rate as of September 30, 2017). The Company is also a parent guarantor for the payment of the outstanding
balance under these loan agreements. Under the July 2012 Bank Agreements, the Company could borrow an aggregate of R$52.0 million
(US$16.4 million based on the exchange rate as of September 30, 2017) as financing for capital expenditures relating to the
Company's manufacturing facility located in Brotas, Brazil. The funds for the loans are provided by the Brazilian Development
Bank (BNDES), but are guaranteed by the lenders. The loans have a final maturity date of July 15, 2022 and bear a fixed interest
rate of 5.5% per year. The loans are also subject to early maturity and delinquency charges upon occurrence of certain events
including interruption of manufacturing activities at the Company's manufacturing facility in Brotas, Brazil for more than 30
days, except during the sugarcane off-season. Since August 15, 2014, the Company has been required to pay equal monthly installments
of both principal and interest for the remainder of the term of the loans. See Note 15, “Subsequent Events” for further information regarding these loans.
Other Loans Payable
Salisbury Note:
In December 2016, in
connection with the Company’s purchase of a manufacturing facility in Leland, North Carolina and related assets (the Glycotech
Assets), the Company issued a purchase money promissory note in the principal amount of $3.5 million (the Salisbury Note) in favor
of Salisbury Partners, LLC. The Salisbury Note (i) bore interest at a rate of 5% per year, (ii) had a term of 13 years, (iii)
was payable in equal monthly installments of principal and interest beginning on January 1, 2017 and (iv) was secured by a purchase
money lien on the Glycotech Assets. In January 2017, the Salisbury Note was repaid with proceeds from the Nikko Note (as defined
below) and the security interest relating thereto was terminated.
Nikko Note:
In December 2016, in connection
with the Company's formation of its cosmetics joint venture (the Aprinnova JV) with Nikko Chemicals Co., Ltd. (Nikko), as discussed
in Note 9, "Noncontrolling Interests," Nikko made a loan to the Company in the principal amount of $3.9 million and
the Company issued a promissory note (the Nikko Note) to Nikko in an equal principal amount. The proceeds of the Nikko Note were
used to satisfy the Company's remaining liabilities relating to the Company's purchase of the Glycotech Assets, including liabilities
under the Salisbury Note. The Nikko Note (i) bears interest at a rate of 5% per year, (ii) has a term of 13 years, (iii) is payable
in equal monthly installments of principal and interest beginning on January 1, 2017 (which payments are subject to a penalty
of 5% if delinquent more than 5 days) and (iv) is secured by a first-priority lien on 10% of the Aprinnova JV interests owned
by the Company. In addition, the Company is required to (i) repay $400,000 of the Nikko Note in equal monthly installments of
$100,000 on January 1, 2017, February 1, 2017, March 1, 2017 and April 1, 2017 and (ii) the Company is required to repay the Nikko
Note with any profits distributed to the Company by the Aprinnova JV, beginning with the distributions for the fourth fiscal year
of the Aprinnova JV, until the Nikko Note is fully repaid. The Nikko Note may be prepaid in full or in part at any time without
penalty or premium.
Aprinnova
Working Capital Loans:
In February 2017, in connection with the formation of the Aprinnova JV, Nikko made a working
capital loan to the Aprinnova JV in the principal amount of $1.5 million (the First Aprinnova Note). The First Aprinnova Note
is repayable in $375,000 installments plus accrued interest on May 1, 2017, August 1, 2017, November 1, 2017 and February 1,
2018. In August 2017, Nikko made a second working capital loan to the Aprinnova JV in the principal amount of $1.5 million
(the Second Aprinnova Note). The Second Aprinnova Note is payable in full on July 31, 2018, with interest payable quarterly.
Both notes bear interest at a rate of 2.75% per annum.
Ginkgo Notes:
In
October 2016, the Company issued and sold a secured promissory note in the aggregate principal amount of $8.5 million to Ginkgo
in a private placement. In April 2017, the Company issued a further secured promissory note to Ginkgo, in the principal amount
of $3.0 million, in satisfaction of certain payments owed by the Company under the Ginkgo Collaboration Agreement. Each of the
notes bore interest at a rate of 13.50% per annum, payable at maturity, and had a maturity date of May 15, 2017. The notes were
repaid in full at maturity and the security interests relating thereto were terminated.
Related Party Loans Payable
February 2016 Related Party Private Placement
In February 2016, the Company issued and sold
$20.0 million in aggregate principal amount of promissory notes (the February 2016 Notes), as well as warrants to purchase an
aggregate of 190,477 shares of the Company's common stock, exercisable at a price of $0.15 per share as of September 30,
2017 (the February 2016 Warrants), resulting in aggregate proceeds to the Company of $20.0 million, in a private placement to
certain existing stockholders of the Company that are affiliated with members of the Company's Board of Directors (the Board):
Foris Ventures, LLC (Foris, an entity affiliated with director John Doerr of Kleiner Perkins Caufield & Byers, a current stockholder),
which purchased $16.0 million aggregate principal amount of the February 2016 Notes and warrants to purchase 152,381 shares of
the Company's common stock; Naxyris S.A. (Naxyris, an investment vehicle owned by Naxos Capital Partners SCA Sicar; director Carole
Piwnica is Director of NAXOS UK, which is affiliated with Naxos Capital Partners SCA Sicar, and was designated as a director of
the Company by Naxyris), which purchased $2.0 million aggregate principal amount of the February 2016 Notes and warrants to purchase
19,048 shares of the Company's common stock; and Biolding Investment SA (Biolding, a fund affiliated with director HH Sheikh Abdullah
bin Khalifa Al Thani, who was designated as a director of the Company by Biolding), which purchased $2.0 million aggregate principal
amount of the February 2016 Notes and warrants to purchase 19,048 shares of the Company's common stock.
The February 2016 Notes bear interest at a
rate of 13.50% per annum and had an initial maturity date of May 15, 2017. In May 2017, the February 2016 Notes purchased by Foris
and Naxyris were exchanged for shares of Series B Preferred Stock and warrants to purchase common stock (see Note 7, “Stockholders’
Deficit”). In addition, in May 2017, the Company and Biolding amended the February 2016 Note issued to Biolding (the Biolding
Note) to extend the maturity of the Biolding Note to November 15, 2017. See Note 15, "Subsequent Events" for further
information regarding the Biolding Note.
The February 2016 Warrants each have five-year
terms. As of September 30, 2017, the February 2016 Warrants purchased by Naxyris had been fully exercised, while none of
the February 2016 Warrants purchased by Foris or Biolding had been exercised.
Other Related Party Loans Payable
In June and October
2016, the Company issued and sold secured promissory notes to Foris in an aggregate principal amount of $11.0 million (the Foris
Notes) in private placements. The Foris Notes bore interest at a rate of 13.50% per annum and had a maturity date of May 15, 2017.
In May 2017, the Foris Notes were exchanged for shares of Series B Preferred Stock and warrants to purchase common stock (see
Note 7, “Stockholders’ Deficit”), and the security interests relating thereto were terminated.
Maturity Treatment Agreement
In July 2015, the Company entered into an Exchange
Agreement (the 2015 Exchange Agreement) with Total and Temasek pursuant to which Temasek exchanged $71.0 million in principal
amount of outstanding Tranche Notes and Total exchanged $70.0 million in principal amount of outstanding convertible notes for
shares of our common stock at a price of $34.50 per share (the 2015 Exchange). At the closing of the 2015 Exchange, the Company,
Total and Temasek also entered into a Maturity Treatment Agreement, dated as of July 29, 2015, pursuant to which Total and Temasek
agreed to convert any Tranche Notes or 2014 144A Notes held by them that were not canceled in the 2015 Exchange (the Remaining
Notes) into shares of the Company's common stock in accordance with the terms of such Remaining Notes at or prior to maturity,
provided that certain events of default had not occurred with respect to the applicable Remaining Notes. In May 2017, the Company
entered into separate letter agreements with each of Total and Temasek, pursuant to which the Company agreed that the Remaining
Notes consisting of 2014 144A Notes held by Total ($9.7 million in principal amount) and Temasek ($10.0 million in principal amount)
would no longer be subject to mandatory conversion at or prior to the maturity of such Remaining Notes. Accordingly, the Company
will be required to pay any portion of such Remaining Notes that remain outstanding at maturity in cash in accordance with the
terms of such Remaining Notes. As of September 30, 2017, after giving effect to such letter agreements, Temasek did not hold any
Remaining Notes and Total held $21.2 million in principal amount of Remaining Notes (consisting of $21.2 million of Tranche Notes).
See Note 15, “Subsequent Events”
for details regarding indebtedness incurred or amended subsequent to September 30, 2017.
Future Minimum Payments
Future minimum payments under the Company's
debt agreements as of September 30, 2017 are as follows (in thousands):
Years ending December 31:
|
|
Convertible
Notes
|
|
Related
Party
Convertible
Notes
|
|
Loans
Payable
|
|
Related
Party
Loans
Payable
|
|
Credit
Facilities
|
|
Total
|
2017 (remaining three months)
|
|
$
|
2,690
|
|
|
$
|
803
|
|
|
$
|
1,096
|
|
|
$
|
2,487
|
|
|
$
|
1,772
|
|
|
$
|
8,848
|
|
2018
|
|
|
5,160
|
|
|
|
20,938
|
|
|
|
5,787
|
|
|
|
—
|
|
|
|
33,771
|
|
|
|
65,656
|
|
2019
|
|
|
69,339
|
|
|
|
35,298
|
|
|
|
2,766
|
|
|
|
—
|
|
|
|
2,580
|
|
|
|
109,983
|
|
2020
|
|
|
—
|
|
|
|
—
|
|
|
|
2,656
|
|
|
|
—
|
|
|
|
2,500
|
|
|
|
5,156
|
|
2021
|
|
|
—
|
|
|
|
—
|
|
|
|
2,544
|
|
|
|
—
|
|
|
|
27,396
|
|
|
|
29,940
|
|
Thereafter
|
|
|
—
|
|
|
|
—
|
|
|
|
4,115
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,115
|
|
Total future minimum payments
|
|
|
77,189
|
|
|
|
57,039
|
|
|
|
18,964
|
|
|
|
2,487
|
|
|
|
68,019
|
|
|
|
223,698
|
|
Less: amount representing interest (1)
|
|
|
(26,495
|
)
|
|
|
(9,669
|
)
|
|
|
(3,764
|
)
|
|
|
(487
|
)
|
|
|
(18,638
|
)
|
|
|
(59,053
|
)
|
Present value of minimum debt payments
|
|
|
50,694
|
|
|
|
47,370
|
|
|
|
15,200
|
|
|
|
2,000
|
|
|
|
49,381
|
|
|
|
164,645
|
|
Less: current portion
|
|
|
—
|
|
|
|
(3,700
|
)
|
|
|
(5,492
|
)
|
|
|
(2,000
|
)
|
|
|
(512
|
)
|
|
|
(11,704
|
)
|
Noncurrent portion of debt
|
|
$
|
50,694
|
|
|
$
|
43,670
|
|
|
$
|
9,708
|
|
|
$
|
—
|
|
|
$
|
48,869
|
|
|
$
|
152,941
|
|
(1) Amounts representing interest include debt discount and issuance costs that will
accrete to interest expense under the effective interest method over the term of each debt arrangement.
6. Mezzanine Equity
Mezzanine equity is comprised of the following
(in thousands):
|
|
September 30,
2017
|
|
December 31,
2016
|
Contingently redeemable common stock
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
Common Stock
In May 2016, the Company issued and sold 292,398
shares of common stock at a price of approximately $17.10 per share to the Bill & Melinda Gates Foundation (the Gates Foundation)
in a private placement, resulting in proceeds to the Company of $5.0 million. In connection with such sale, the Company and the
Gates Foundation entered into a Charitable Purposes Letter Agreement, pursuant to which the Company agreed to expend an aggregate
amount not less than $5.0 million to develop a yeast strain that produces artemisinic acid and/or amorphadiene at a low cost and
to supply such artemisinic acid and amorphadiene to companies qualified to convert artemisinic acid and amorphadiene to artemisinin
for inclusion in artemisinin combination therapies used to treat malaria commencing in 2017. If the Company defaults in its obligation
to use the $5.0 million proceeds as set forth above or defaults under certain other commitments in the Charitable Purposes Letter
Agreement, the Gates Foundation will have the right to request that the Company redeem, or facilitate the purchase by a third
party of, the shares then held by the Gates Foundation at a price per share equal to the greater of (i) the closing price of the
common stock on the trading day prior to the redemption or purchase, as applicable, and (ii) the per share price paid by the Gates
Foundation plus a compounded annual return of 10%. As of September 30, 2017, the $5.0 million funding received was classified
as mezzanine equity. The Company continues to meet its obligation to use the proceeds as set forth above and believes it will
continue to do so. The probability of default is low resulting in the equity instrument not being remeasured to its redemption
amount.
7. Stockholders' Deficit
August 2017 DSM Offering
On August
7, 2017, the Company issued and sold the following securities to
DSM International B.V., a subsidiary of Koninklijke DSM
N.V. (together with its affiliates, DSM)
in a private placement (the August 2017 DSM Offering):
|
•
|
25,000
shares of Series B Preferred Stock (the August 2017 DSM Series B Preferred Stock) at a price of $1,000 per share;
|
|
•
|
a warrant
to purchase 3,968,116 shares of common stock at an exercise price of $6.30 per share
expiring in five years (August 2017 DSM Cash Warrant); and
|
|
•
|
the
August 2017 DSM Dilution Warrant (as described below).
|
Net
proceeds to the Company were $25.9 million after payment of offering expenses
and the allocation of total fair value received
to the elements in the arrangement.
The exercise price
of the August 2017 DSM Cash Warrant is subject to standard adjustments as well as full-ratchet anti-dilution protection for any
issuance by the Company of equity or equity-linked securities during the three-year period following August 7, 2017 (the DSM Dilution
Period) at a per share price less than the then-current exercise price of the August 2017 DSM Cash Warrant, subject to certain
exceptions.
The
August 2017 DSM Dilution Warrant allows DSM to purchase a number of shares of common stock sufficient to provide DSM with full-ratchet
anti-dilution protection for any issuance by the Company of equity or equity-linked securities during the DSM Dilution Period
at a per share price less than $6.30, the effective per share price paid by DSM for the shares of common stock issuable upon conversion
of its Series B Preferred Stock (including shares of common stock issuable as payment of dividends or the Make-Whole Payment (as
defined below), assuming that all such dividends and the Make-Whole Payment are made in common stock), subject to certain exceptions
and subject to a price floor of $0.10 per share (the Dilution Floor). The August 2017 DSM Dilution Warrant expires five years
from the date it is initially exercisable.
The effectiveness of
the anti-dilution adjustment provision of the August 2017 DSM Cash Warrant and the exercise of the August 2017 DSM Dilution Warrant
are subject to the August 2017 Stockholder Approval (as defined below). As of September 30, 2017, the August 2017 DSM Cash Warrant
had not been exercised for any shares and the August 2017 DSM Dilution Warrant was not exercisable for any shares.
In connection with the
August 2017 DSM Offering, the Company also agreed that, subject to certain exceptions, it would not (i) issue any shares of common
stock or securities convertible into or exercisable or exchangeable for common stock prior to October 31, 2017, (ii) effect any
issuance of securities involving a variable rate transaction until May 11, 2018 or (iii) issue any shares of common stock or securities
convertible into or exercisable or exchangeable for common stock at a price below the Dilution Floor without DSM's consent.
In connection with the
August 2017 DSM Offering, the Company and DSM also entered into an amendment to the stockholder agreement dated May 11, 2017 (the
DSM Stockholder Agreement) between the Company and DSM (the Amended and Restated DSM Stockholder Agreement). Under the DSM Stockholder
Agreement, DSM was granted the right to designate one director selected by DSM, subject to certain restrictions and a minimum beneficial
ownership level of 4.5%, to the Board. Furthermore, DSM has the right to purchase additional shares of capital stock of the Company
in connection with a sale of equity or equity-linked securities by the Company in a capital raising transaction for cash, subject
to certain exceptions, to maintain its proportionate ownership percentage in the Company. Pursuant to the DSM Stockholder Agreement,
DSM agreed not to sell or transfer any of the Series B Preferred Stock or warrants purchased by DSM in the May 2017 Offerings (as
defined below), or any shares of common stock issuable upon conversion or exercise thereof, other than to its affiliates, without
the consent of the Company through May 2018 and to any competitor of the Company thereafter. DSM also agreed that, subject to certain
exceptions, until three months after there is no DSM director on the Board, DSM will not, without the prior consent of the Board,
acquire common stock or rights to acquire common stock that would result in DSM beneficially owning more than 33% of the Company’s
outstanding voting securities at the time of acquisition. Under the DSM Stockholder Agreement, the Company agreed to use its commercially
reasonable efforts to register, via one or more registration statements filed with the Securities and Exchange Commission (the
SEC) under the Securities Act of 1933, as amended (the Securities Act), the shares of common stock issuable upon conversion or
exercise of the securities purchased by DSM in the May 2017 Offerings. The Amended and Restated DSM Stockholder Agreement provides
that (i) DSM has the right to designate a second director to the Board, subject to certain restrictions and a minimum beneficial
ownership level of 10%, and (ii) the shares of common stock issuable upon conversion or exercise of the securities purchased by
DSM in the August 2017 DSM Offering are (a) entitled to the registration rights provided for in the DSM Stockholder Agreement and
(b) subject to the transfer restrictions set forth in the DSM Stockholder Agreement.
In addition,
pursuant to the Amended and Restated DSM Stockholder Agreement, the Company and DSM agreed to negotiate in good faith
regarding an agreement concerning the development of certain products in the Health and Nutrition field and, in the event
that the parties did not reach such agreement prior to 90 days after the closing of the August 2017 DSM Offering (the August
2017 DSM Closing), (a) certain exclusive negotiating rights granted to DSM in connection with the entry into the DSM
Stockholder Agreement would expire and (b) on the first anniversary of the August 2017 DSM Closing and each subsequent
anniversary thereof, the Company would make a $5 million cash payment to DSM, provided that the aggregate amount of such
payments would not exceed $25 million. In September 2017, the Company and DSM entered into such agreement, and in connection
therewith an intellectual property escrow agreement relating to certain intellectual property licenses granted by the Company
to DSM upon the August 2017 DSM Closing became effective.
In
connection with the August 2017 DSM Offering and its $25.9 million in net proceeds, the Company also entered into a separate
intellectual property license with DSM for consideration of $9.0 million in cash, which DSM remitted to the Company on
October 28, 2017, and a credit letter (the DSM Credit Letter) to be applied against future collaboration and value share
payments owed by DSM to the Company beginning in 2018. The DSM Credit Letter had a fair value of $7.1 million. The DSM Credit
Letter has been accounted for as consideration to a customer under ASC 605-50, “Customer Payments and
Incentives”. The total fixed consideration of $34.0 million was allocated to each of the August 2017 DSM Series B
Preferred Stock, Make Whole Payment, August 2017 DSM Cash Warrant, August 2017 DSM Dilution Warrant and DSM Credit Letter at
fair value based on level 3 inputs. The August 2017 DSM Series B Preferred Stock was recognized at its fair value on the date
of issuance of $5.5 million, net of issuance costs of $0.2 million. The Make-Whole Payment is a compound embedded derivative
and was initially recognized at its fair value of $9.9 million. The August 2017 DSM Cash Warrant and August 2017 DSM Dilution
Warrant are freestanding financial instruments and have been recognized at their fair value of $10.6 million. The Make Whole
Payment, August 2017 DSM Cash Warrant and August 2017 DSM Dilution Warrant have been reported together as derivative
liabilities. Changes in the fair value of these derivatives from the date of issuance through September 30, 2017 have been
recorded in earnings.
The DSM Credit Letter
is reported as deferred revenue and its fair value has been determined based on the assumptions that DSM will realize its credit
over the next 18 months to 4 years with a 50% to 90% likelihood the credit will be utilized, fully discounted at the Company's
8.6% average cost of debt. After allocating the $34.0 million in fixed consideration to the financial instruments noted above and
the DSM Credit Letter, $0.7 million was available for recognition as revenue related to the intellectual property licenses delivered
to DSM during the three and nine months ended September 30, 2017. See Note 10, “Significant Revenue Agreements” for
further details.
August 2017 Vivo Offering
On August 3, 2017, the Company
issued and sold the following securities to affiliates of Vivo Capital (collectively, Vivo) in a private placement (the August
2017 Vivo Offering):
|
•
|
2,826,711
shares of common stock at a price of $4.26 per share;
|
|
•
|
12,958
shares of Series D Preferred Stock at a price of $1,000 per share;
|
|
•
|
warrants
to purchase an aggregate of 5,575,118 shares of common stock at an exercise price of
$6.39 per share, expiring in five years (the August 2017 Vivo Cash Warrants); and
|
|
•
|
the
August 2017 Vivo Dilution Warrants (as described below).
|
Net proceeds to the Company
were $24.8 million after payment of offering expenses.
Each share of
Series D Preferred Stock has a stated value of $1,000 and, subject to the August 2017 Vivo Offering Beneficial Ownership Limitation
(as defined below), is convertible at any time, at the option of the holders, into common stock at a conversion price of $4.26
per share. The Series D Conversion Rate is subject to adjustment in the event of any dividends or distributions of the common
stock, or a
ny stock split, reverse stock split, recapitalization, reorganization or similar transaction.
The conversion of the Series D Preferred Stock
is subject to a beneficial ownership limitation of 9.99% (the August 2017 Vivo Offering Beneficial Ownership Limitation), which
limitation may be waived by the holders on 61 days’ prior notice.
Prior to declaring any dividend
or other distribution of its assets to holders of common stock, the Company shall first declare a dividend per share on the
Series D Preferred Stock equal to $0.0001 per share. In addition, the Series D Preferred Stock will be entitled to
participate with the common stock on an as-converted basis with respect to any dividends or other distributions to holders of
common stock.
Unless and until converted into common stock
in accordance with its terms, the Series D Preferred Stock has no voting rights, other than as required by law or with respect
to matters specifically affecting the Series D Preferred Stock.
The Series D Preferred Stock is classified
as permanent equity, as the Company controls all actions or events required to settle the optional conversion feature in shares.
The
August 2017 Vivo Cash Warrants and August 2017 Vivo Dilution Warrants are
freestanding derivative instruments in connection
with the issuance of equity instruments,
which have been recorded as derivative liabilities. These
warrants have been recognized at their fair value of $13.0 million as determined by management with the assistance of an independent
third party appraisal based on level 3 inputs. Changes in the fair value of these derivative
liabilities
from
the date of issuance through September 30, 2017 have been recorded in earnings. The remaining $12.0 million in proceeds received
was allocated on a relative fair value basis, resulting in $5.5 million of proceeds being allocated to the common stock
sold
in the
August 2017 Vivo Offering and $6.2 million allocated to the Series D Preferred Stock, net of
$0.2 million in issuance costs. The Series D Preferred Stock includes a beneficial conversion feature of $5.8 million as the full
fair value of the Series D Preferred Stock of $12.0 million was greater than the $6.2 million allocated to the Series D Preferred
Stock.
In the event of a Fundamental Transaction,
the holders of the Series D Preferred Stock will have the right to receive the consideration receivable as a result of such Fundamental
Transaction by a holder of the number of shares of common stock for which the Series D Preferred Stock is convertible immediately
prior to such Fundamental Transaction (without regard to whether such Series D Preferred Stock is convertible at such time), which
amount shall be paid pari passu with all holders of common stock. A Fundamental Transaction is defined in the Certificate of Designation
of Preferences, Rights and Limitations relating to the Series D Preferred Stock as any of the following: (i) merger with or consolidation
into another legal entity; (ii) sale, lease, license, assignment, transfer or other disposition of all or substantially all of
the Company’s assets in one or a series of related transactions; (iii) purchase offer, tender offer or exchange offer of
the Company’s common stock pursuant to which holders of the Company’s common stock are permitted to sell, tender or
exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
common stock; (iv) reclassification, reorganization or recapitalization of the Company’s stock; or (v) stock or share purchase
agreement that results in another party acquiring more than 50% of the Company’s outstanding shares of common stock.
Upon any liquidation, dissolution
or winding-up of the Company, the holders of the Series D Preferred Stock shall be entitled to receive out of the assets of the
Company the same amount that a holder of common stock would receive if the Series D Preferred Stock were fully converted to common
stock immediately prior to such liquidation, dissolution or winding-up (without regard to whether such Series D Preferred Stock
is convertible at such time), which amount shall be paid pari passu with all holders of common stock.
The exercise price of the
August 2017 Vivo Cash Warrants is subject to standard adjustments as well as full-ratchet anti-dilution protection for any issuance
by the Company of equity or equity-linked securities during the three-year period following August 3, 2017 (the Vivo Dilution
Period) at a per share price less than the then-current exercise price of the August 2017 Vivo Cash Warrants, subject to certain
exceptions.
The
August 2017 Vivo Dilution Warrants allow Vivo to purchase a number of shares of common stock sufficient to provide Vivo with full-ratchet
anti-dilution protection for any issuance by the Company of equity or equity-linked securities during the Vivo Dilution Period
at a per share price less than $4.26, the effective per share price paid by Vivo for the shares of common stock issuable upon
conversion of the Series D Preferred Stock, subject to certain exceptions and subject to the Dilution Floor. The August 2017 Vivo
Dilution Warrants expire five years from the date they are initially exercisable.
The effectiveness of the anti-dilution
adjustment provision of the August 2017 Vivo Cash Warrants and the exercise of the August 2017 Vivo Dilution Warrants were subject
to the August 2017 Stockholder Approval (as defined below). As of September 30, 2017, none of the August 2017 Vivo Cash Warrants
had been exercised and the August 2017 Vivo Dilution Warrants were not exercisable for any shares.
In connection with the August
2017 Vivo Offering, the Company agreed that it would not issue any shares of common stock or securities convertible into or exercisable
or exchangeable for common stock at a price below the Dilution Floor without Vivo's consent.
In connection
with the August 2017 Vivo Offering, the Company and Vivo also entered into a Stockholder Agreement (the Vivo Stockholder Agreement)
setting forth certain rights and obligations of Vivo and the Company. Pursuant to the Vivo Stockholder Agreement, Vivo will have
the right, subject to certain restrictions and a minimum beneficial ownership level of 4.5%, to (i) designate one director selected
by Vivo to the Board and (ii) appoint
a representative to attend all Board meetings in a nonvoting observer capacity and
to receive copies of all materials provided to directors, subject to certain exceptions
. Furthermore,
Vivo will have the right to purchase additional shares of capital stock of the Company in connection with a sale of equity or
equity-linked securities by the Company in a capital raising transaction for cash, subject to certain exceptions, to maintain
its proportionate ownership percentage in the Company. Vivo agreed not to sell or transfer any of the shares of common stock,
Series D Preferred Stock or warrants purchased by Vivo in the August 2017 Vivo Offering, or any shares of common stock issuable
upon conversion or exercise thereof, other than to its affiliates, without the consent of the Company through August 2018 and
to any
competitor of the Company thereafter
.
Vivo also agreed that, subject to certain
exceptions, until the later of (i) three years from the closing of the August 2017 Vivo Offering and (ii) three months after there
is no Vivo director on the Board, Vivo will not, without the prior consent of the Board, acquire common stock or rights to acquire
common stock that would result in Vivo beneficially owning more than 33% of the Company’s outstanding voting securities
at the time of acquisition. Under the Vivo Stockholder Agreement, the Company has agreed to use its commercially reasonable efforts
to register, via one or more registration statements filed with the SEC under the Securities Act, the shares of common stock purchased
in the August 2017 Vivo Offering as well as the shares of common stock issuable upon conversion or exercise of the Series D Preferred
Stock and warrants purchased by Vivo in the August 2017 Vivo Offering.
August 2017 Stockholder Approval
The Company has agreed to solicit from
its stockholders such approval as may be required by the applicable rules and regulations of the NASDAQ Stock Market with
respect to the anti-dilution provisions of the August 2017 DSM Cash Warrant and the August 2017 Vivo Cash Warrants and the
exercise of the August 2017 DSM Dilution Warrant and the August 2017 Vivo Dilution Warrants (the August 2017 Stockholder
Approval) at an annual or special meeting of stockholders to be held on or prior to the date of the Company’s 2018
annual meeting of stockholders (the Stockholder Meeting), and to use commercially reasonable efforts to secure the August
2017 Stockholder Approval. DSM and Vivo may, at their option, upon at least 90 days’ prior written notice, require the
Company to hold the Stockholder Meeting prior to the Company’s 2018 annual meeting of stockholders. If the Company does
not obtain the August 2017 Stockholder Approval at the Stockholder Meeting, the Company will call a stockholder meeting every
four months thereafter to seek the August 2017 Stockholder Approval until the earlier of the date the August 2017 Stockholder
Approval is obtained or the August 2017 DSM Cash Warrant, the August 2017 Vivo Cash Warrants, the August 2017 Vivo Dilution
Warrants and the August 2017 DSM Dilution Warrant are no longer outstanding. In addition, until the August 2017 Stockholder
Approval has been obtained and deemed effective, the Company may not issue any shares of common stock or securities
convertible into or exercisable or exchangeable for common stock if such issuance would have triggered the anti-dilution
adjustment provisions in the August 2017 DSM Cash Warrant, the August 2017 DSM Dilution Warrant, the August 2017 Vivo Cash
Warrants or the August 2017 Vivo Dilution Warrants (if the August 2017 Stockholder Approval had been obtained prior to such
issuance) without the prior written consent of DSM and Vivo, respectively.
May 2017 Offerings
In May 2017, the
Company issued and sold an aggregate of 22,140 shares of Series A Preferred Stock, 70,904 shares of Series B Preferred Stock,
and warrants to purchase an aggregate of 7,384,190 shares of common stock at an exercise price of $7.80 per share, warrants to
purchase an aggregate of 7,384,190 shares of common stock at an exercise price of $9.30 per share, and warrants to purchase a
number of shares of common stock sufficient to provide full-ratchet anti-dilution protection with respect to the effective price
paid for the common stock underlying the Series A Preferred Stock and Series B Preferred Stock (collectively, the May 2017 Warrants)
in separate offerings, certain of which were registered under the Securities Act or others of which were private placements (collectively,
the May 2017 Offerings).
The net proceeds to the Company from the May
2017 Offerings were $50.7 million after payment of offering expenses and placement agent fees. The Series A Preferred Stock and
May 2017 Warrants relating thereto were sold to the purchasers thereof in exchange for aggregate cash consideration of $22.1 million,
and the Series B Preferred Stock and May 2017 Warrants relating thereto were sold to the purchasers thereof in exchange for (i)
aggregate cash consideration of $30.7 million and (ii) the cancellation of $40.2 million of outstanding indebtedness (including
accrued interest thereon) owed by the Company to certain purchasers, of which $33.1 million was from related parties, as further
described below.
Series A Preferred
Stock
Each share of Series
A Preferred Stock has a stated value of $1,000 and is convertible at any time, at the option of the holder, into common stock
at a conversion price of $17.25 per share (the Preferred Stock Conversion Rate). The Preferred Stock Conversion Rate is subject
to adjustment in the event of any dividends or distributions of common stock, or any stock split, reverse stock split, recapitalization,
reorganization or similar transaction. If not previously converted at the option of the holder, each share of Series A Preferred
Stock automatically converted on October 9, 2017, the 90th day following the date that the Company announced that Stockholder
Approval was obtained and effected, subject to the May 2017 Offerings Beneficial Ownership Limitation (as defined below).
Dividends, at a rate per year
equal to 17.38% of the stated value of the Series A Preferred Stock, will be payable semiannually from the issuance of the Series
A Preferred Stock until the tenth anniversary of the date of issuance, on each October 15 and April 15, beginning October 15,
2017, on a cumulative basis, at the Company's option, in cash, out of any funds legally available for the payment of dividends,
or, subject to the satisfaction of certain conditions, in Common Stock at the Preferred Stock Conversion Rate, or a combination
thereof. In addition, upon the conversion of the Series A Preferred Stock prior to the tenth anniversary of the date of issuance,
the holders of the Series Preferred A Stock shall be entitled to a payment equal to $1,738 per $1,000 of stated value of the Series
A Preferred Stock, less the amount of all prior semiannual dividends paid on such converted Series A Preferred Stock prior to
the relevant conversion date (the Make-Whole Payment), at the Company's option, in cash, out of any funds legally available for
the payment of dividends, or, subject to the satisfaction of certain conditions, in common stock at the Preferred Stock Conversion
Rate, or a combination thereof. If the Company elects to pay any dividend in the form of cash, it shall provide each holder with
notice of such election not later than the first day of the month of prior to the applicable dividend payment date.
Unless and until converted
into common stock in accordance with its terms, the Series A Preferred Stock has no voting rights, other than as required by law
or with respect to matters specifically affecting the Series A Preferred Stock.
Upon any liquidation,
dissolution or winding-up of the Company, the holders of the Series A Preferred Stock shall be entitled to receive out of the
assets of the Company the same amount that a holder of Common Stock would receive if the Series A Preferred Stock were fully converted
to common stock immediately prior to such liquidation, dissolution or winding-up (without regard to whether such Series A Preferred
Stock is convertible at such time), which amount shall be paid pari passu with all holders of Common Stock.
The conversion of
the Series A Preferred Stock is subject to a beneficial ownership limitation of 4.99% (or such other percentage not to exceed
9.99%, provided that any increase will not be effective until 61 days after notice thereof by the holder) of the number of shares
of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon conversion
of such Series A Preferred Stock (the May 2017 Offerings Beneficial Ownership Limitation). In addition, prior to obtaining the
May 2017 Stockholder Approval (as defined below), the aggregate number of shares issued with respect to the Series A Preferred
Stock (and any other transaction aggregated for such purpose) could not exceed 3,792,778 shares of common stock (the May 2017
Exchange Cap).
The Series A Preferred Stock is classified
as permanent equity, as the Company controls all actions or events required to settle the optional and mandatory conversion feature
in shares. The Make-Whole Payment was determined to be an embedded derivative requiring bifurcation and separate recognition as
a derivative liability recognized at its fair value as of the issuance date with subsequent changes in fair value recorded in
earnings until the Series A Preferred Stock is converted into common stock and the Make-Whole Payment is paid or until the Make-Whole
Payment is paid through declared dividends or cash. A derivative liability was recognized at fair value on the date of issuance
for the Make-Whole Payment in the amount of $11.0 million. The Series A Preferred Stock also contains a beneficial conversion
feature which was recognized up to the amount of $0.6 million of proceeds allocated to the preferred stock. Net proceeds allocated
to the Series A Preferred Stock were $0.
As of September 30,
2017, 20,670 shares
of Series A Preferred Stock have been converted into common stock (with the Make-Whole Payment in each
case being made in the form of common stock)
and there were 1,470
shares of Series A Preferred
Stock outstanding. For the nine months ended September 30, 2017, the Company recognized a gain of $10.0 million for the reduction
in fair value of the derivative liabilities in connection with the 20,670
shares of Series
A Preferred Stock converted into common stock.
Series B Preferred Stock
The Series B Preferred Stock has substantially
identical terms to the Series A Preferred Stock, except that (i) the conversion of the Series B Preferred Stock was subject to
the May 2017 Stockholder Approval and (ii) the May 2017 Offerings Beneficial Ownership Limitation does not apply to DSM. The Series
B Preferred Stock is classified as permanent equity at September 30, 2017, which is a change from the mezzanine classification
at June 30, 2017. As described in more detail below under “May 2017 Stockholder Approval,” in July 2017 the Company’s
stockholders approved removing a restriction preventing the Series B Preferred Stock issued in the May 2017 Offerings from being
convertible into common stock. As a result of the May 2017 Stockholder Approval, the Company now controls all actions or events
required to settle an optional or mandatory conversion feature in shares and has reclassified $12.8 million from mezzanine to
permanent equity.
The investors that purchased
shares of the Series B Preferred Stock included related parties affiliated with members of the Board: Foris exchanged an aggregate
principal amount of $27.0 million of indebtedness, plus accrued interest thereon, for 30,729 shares of Series B Preferred Stock
and May 2017 Warrants to purchase 4,877,386 shares of Common Stock and Naxyris exchanged an aggregate principal amount of $2.0
million of indebtedness, plus accrued interest thereon, for 2,333 shares of Series B Preferred Stock and May 2017 Warrants to
purchase 370,404 shares of common stock. The fair value of the Series B Preferred Stock, embedded make whole payment and related
warrants exceeded the carrying value of the related party debt and accrued interest exchanged by $8.6 million which was recorded
as a reduction to Additional Paid in Capital and considered a deemed dividend, increasing net loss attributable to Amyris, Inc.
common stockholders.
The investors that purchased
shares of the Series B Preferred Stock also included holders of certain of the Company's existing indebtedness, including the
2014 144A Notes and the 2015 144A Notes. These investors exchanged all or a portion of their holding of such indebtedness, including
accrued interest thereon, representing an aggregate of $3.4 million of 2014 144A Notes and $3.7 million of 2015 144A Notes, for
Series B Preferred Stock and May 2017 Warrants in the May 2017 Offerings. The fair value of the Series B Preferred Stock, embedded
make whole payment and related warrants exceeded the carrying value of the debt and accrued interest exchanged by $1.9 million,
which was recognized as a loss on extinguishment of debt in other income (expense).
Upon the closing of the May
2017 Offerings, all of such exchanged indebtedness was canceled and the agreements relating thereto, including any note purchase
agreements or unsecured or secured promissory notes (including any security interest relating thereto), were terminated, except
to the extent such investors or other investors retain a portion of such indebtedness.
The Series B Preferred Stock issued to DSM
in the May 2017 Offerings contains a contingent beneficial conversion feature that was recognized in the three months ending September
30, 2017, as the May 2017 Stockholder Approval occurred and the contingency no longer exists. As a result, $0.6 million was recorded
as a reduction to Additional Paid in Capital and was considered a deemed dividend, increasing net loss attributable to Amyris,
Inc. common stockholders. The conversion feature (the right to negotiate the Second Tranche Funding Option) is not a separate
unit of account requiring bifurcation.
As of September 30, 2017, 53,942 shares of
Series B Preferred Stock (including the Series B Preferred Stock issued in the August 2017 DSM Offering) had been converted into
common stock (with the Make-Whole Payment in each case being made in the form of common stock) and 41,962 shares of Series B Preferred
Stock were outstanding. A derivative liability was recognized at fair value on the date of issuance for the make whole payment
in the amount of $34.7 million. Changes in the fair value of this derivative from the date of issuance through September 30,
2017 have been recorded in earnings. Issuance costs of $1.2 million were netted against the proceeds. Additional issuance costs
of $1.0 million were expensed as debt extinguishment costs for debt that was exchanged in the May 2017 Offerings. For the nine
months ended September 30, 2017, the Company recognized a gain of $16.6 million for the reduction in fair value of the derivative
liabilities in connection with the 53,942 shares of Series B Preferred Stock converted into common stock.
May 2017 Warrants
The Company issued to each investor in the
May 2017 Offerings warrants to purchase a number of shares of common stock equal to 100% of the shares of common stock into which
such investor's shares of Series A Preferred Stock or Series B Preferred Stock were initially convertible (including shares of
common stock issuable as payment of dividends or the Make-Whole Payment, assuming that all such dividends and the Make-Whole Payment
are made in common stock), representing warrants to purchase 14,768,380 shares of common stock in the aggregate for all investors
(collectively, the May 2017 Cash Warrants). The exercise price of the May 2017 Cash Warrants is subject to standard adjustments
as well as full-ratchet anti-dilution protection for any issuance by the Company of equity or equity-linked securities during
the three-year period following the issuance of such warrants (the May 2017 Dilution Period) at a per share price less than the
then-current exercise price of the May 2017 Cash Warrants, subject to certain exceptions. As of September 30, 2017, the exercise
price of the May 2017 Cash Warrants was $4.40 per share. As of September 30, 2017, no May 2017 Cash Warrants had been exercised.
In addition, the Company issued to each investor
a warrant, with an exercise price of $0.0015 per share as of September 30, 2017 (collectively, the May 2017 Dilution Warrants),
to purchase a number of shares of common stock sufficient to provide the investor with full-ratchet anti-dilution protection for
any issuance by the Company of equity or equity-linked securities during the May 2017 Dilution Period at a per share price less
than $6.30, the effective per share price paid by the investors for the shares of common stock issuable upon conversion of their
Series A Preferred Stock or Series B Preferred Stock (including shares of common stock issuable as payment of dividends or the
Make-Whole Payment, assuming that all such dividends and the Make-Whole Payment are made in common stock) subject to certain exceptions.
As of September 30, 2017, the May 2017 Dilution Warrants were exercisable for an aggregate of 6,377,466 shares, of which 1,722,042
were exercised as of September 30, 2017.
The exercise of the May 2017 Warrants was initially
subject to, and the May 2017 Warrants became exercisable upon the Company obtaining, the May 2017 Stockholder Approval. The May
2017 Warrants each have a term of five years from the date such warrants initially became exercisable upon the receipt and effectiveness
of the May 2017 Stockholder Approval. The exercise of the May 2017 Warrants (other than the May 2017 Warrants held by DSM) is
subject to the May 2017 Offerings Beneficial Ownership Limitation. The May 2017 Cash Warrants are freestanding financial instruments
that are accounted for as derivative liabilities and recognized at their fair value on the date of issuance of $39.5 million.
As of September 30, 2017, the fair value of the May 2017 Cash Warrants was $27.0 million based on an independent third party
appraisal using Monte Carlo simulation and Black-Scholes-Merton option value approaches. For the three and nine months ended September 30,
2017, the Company recorded losses of $6.1 million and $12.5 million, respectively, to reflect changes in fair value of the May
2017 Cash Warrants. Subsequent changes to the fair value of the May 2017 Cash Warrants will be continue to be recorded in earnings
until the warrants are exercised or expire in July 2022.
The full-ratchet anti-dilution protection of
the May 2017 Cash Warrants are also freestanding financial instruments that have been accounted for as derivative liabilities
and recognized at their fair value on the date of issuance of $4.4 million. As of September 30, 2017, the fair value of the
full-ratchet anti-dilution protection feature of the May 2017 Cash Warrants was $21.7 million. For the three and nine months ended
September 30, 2017, the Company recorded losses of $19.0 million and $20.9 million to reflect change in fair value of the
derivative liability. Future changes in fair value of the derivative liability will continue to be recorded in earnings until
the warrants are exercised or expire in July 2022.
Warrant activity and
balances in connection with the May and August 2017 Offerings are as follows:
|
|
Issued
|
|
Exercised
|
|
Warrants
Outstanding at
9/30/2017
|
May and August 2017 Cash Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2017
|
|
|
14,768,380
|
|
|
|
—
|
|
|
|
14,768,380
|
|
August 2017
|
|
|
9,543,234
|
|
|
|
—
|
|
|
|
9,543,234
|
|
|
|
|
24,311,614
|
|
|
|
—
|
|
|
|
24,311,614
|
|
May and August 2017 Dilution Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2017
|
|
|
6,377,466
|
|
|
|
(1,722,042
|
)
|
|
|
4,655,424
|
|
August 2017
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,377,466
|
|
|
|
(1,722,042
|
)
|
|
|
4,655,424
|
|
Grand total
|
|
|
30,689,080
|
|
|
|
(1,722,042
|
)
|
|
|
28,967,038
|
|
May 2017 Stockholder Approval
In connection with the May 2017 Offerings,
the Company agreed to solicit from its stockholders (i) any approval required by the rules and regulations of the NASDAQ Stock
Market, including without limitation the issuance of common stock upon conversion of the Series A Preferred Stock in excess of
the May 2017 Exchange Cap, upon conversion of the Series B Preferred Stock and upon exercise of the May 2017 Warrants (the NASDAQ
Approval) and (ii) approval to effect the Reverse Stock Split (collectively, the May 2017 Stockholder Approval) at an annual or
special meeting of stockholders to be held on or prior to July 10, 2017, and to use commercially reasonable efforts to secure the
May 2017 Stockholder Approval. The Reverse Stock Split was approved by the Company’s stockholders in May 2017 and the NASDAQ
Approval was obtained on July 7, 2017.
May 2017 Exchange of Common Stock for Series
C Convertible Preferred Stock
In May 2017, Foris and Naxyris
agreed to exchange (the May 2017 Exchange) their outstanding shares of common stock, representing a total of 1,394,706 shares,
for 20,921 shares of the Company's Series C Convertible Preferred Stock, par value $0.0001 per share (the Series C Preferred Stock)
in a private exchange. In addition, Foris and Naxyris agreed not to convert any of their outstanding convertible promissory notes,
warrants or any other equity-linked securities of the Company until the May 2017 Stockholder Approval had been obtained.
Each
share of Series C Preferred Stock has a stated value of $1,000 and would automatically convert into common stock, at a conversion
price of $15.00 per share (the Series C Conversion Rate), upon the approval by the Company's stockholders and implementation of
a reverse stock split.
The Series C Preferred
Stock is entitled to participate with the common stock on an as-converted basis with respect to any dividends or other distributions
to holders of common stock.
The Series C Preferred
Stock shall vote together as one class with the common stock on an as-converted basis, and shall also vote with respect to matters
specifically affecting the Series C Preferred Stock.
Upon any liquidation,
dissolution or winding-up of the Company, the holders of the Series C Preferred stock shall be entitled to receive out of the
assets of the Company an amount equal to the greater of (i) the par value of each share of Series C Preferred Stock, plus any
accrued and unpaid dividends or other amounts due on such Series C Preferred Stock, prior to any distribution or payment to the
holders of common stock or (ii) the amount that a holder would receive if the Series C Preferred Stock were fully c
onverted
to common stock immediately prior to such liquidation, dissolution or winding-up (without regard to whether such Series C Preferred
Stock is convertible at such time), which amount shall be paid pari passu with all holders of Common Stock.
The shares of Series C Preferred Stock automatically
converted to common stock on June 6, 2017 in connection with the effectiveness of the Reverse Stock Split. The Company accounted
for the Series C Preferred Stock and the May 2017 Exchange as a non-monetary transaction that had no impact on the interim financial
statements.
Exchange Agreement Warrants
Under the 2015 Exchange Agreement, Total and
Temasek received the following warrants at the closing of the 2015 Exchange:
|
•
|
Total received
a warrant to purchase 1,261,613 shares of common stock (the Total Funding Warrant), which
warrant had been fully exercised as of September 30, 2017.
|
|
•
|
Total received
a warrant to purchase 133,334 shares of the Company’s common stock that would only
be exercisable if the Company failed, as of March 1, 2017, to achieve a target cost per
liter to manufacture farnesene (the Total R&D Warrant). As of March 1, 2017, the
Company had not achieved the target cost per liter to manufacture farnesene provided
in the Total R&D Warrant, and as a result, on March 1, 2017 the Total R&D Warrant
became exercisable in accordance with its terms. As of September 30, 2017, the Total
R&D Warrant had not been exercised.
|
|
•
|
Temasek received
a warrant to purchase 978,525 shares of common stock, which warrant had been fully exercised
as of September 30, 2017.
|
|
•
|
Temasek received
a warrant exercisable for that number of shares of common stock equal to 58,690 multiplied
by a fraction equal to the number of shares for which Total exercises the Total R&D
Warrant divided by 133,334 (the Temasek R&D Warrant). As of September 30, 2017, the
Temasek R&D Warrant was not exercisable for any shares of common stock.
|
|
•
|
Temasek received
a warrant exercisable for that number of shares of common stock equal to (1) (A) the
sum of (i) the number of shares for which Total exercises the Total Funding Warrant plus
(ii) the number of any additional shares for which the outstanding Tranche Notes may
become exercisable as a result of a reduction in their conversion price as a result of
and/or subsequent to the 2015 Exchange plus (iii) the number of additional shares in
excess of 133,334, if any, for which the Total R&D Warrant becomes exercisable, multiplied
by (B) a fraction equal to 30.6% divided by 69.4% plus (2) (A) the number of any additional
shares for which the outstanding 2014 144A Notes may become exercisable as a result of
a reduction in their conversion price multiplied by (B) a fraction equal to 13.3% divided
by 86.7% (the Temasek Funding Warrant). As of September 30, 2017, the Temasek Funding
Warrant had been exercised with respect to 846,683 shares of common stock and was exercisable
for 1,889,986 shares of common stock.
|
The warrants issued to Total in the
2015 Exchange each have five-year terms, and the warrants issued to Temasek in the 2015 Exchange each have ten-year terms. All
of such warrants have an exercise price of $0.15 per share as of September 30, 2017.
In addition
to the grant of the warrants in the 2015 Exchange, a warrant to purchase 66,667 shares of common stock issued by the Company to
Temasek in October 2013 in conjunction with a prior convertible debt financing became exercisable in full upon the completion
of the 2015 Exchange. As of September 30, 2017, such warrant had been fully exercised.
July 2015 PIPE Warrants
In July 2015, the Company entered into a securities
purchase agreement with certain purchasers, including entities affiliated with members of the Board, under which the Company agreed
to sell 1,068,379 shares of common stock at a price of $23.40 per share, for aggregate proceeds to the Company of $25.0 million.
The sale of common stock was completed on July 29, 2015. In connection with such sale, the Company granted to each of the purchasers
a warrant, exercisable at a price of $0.15 per share as of September 30, 2017, to purchase of a number of shares of common stock
equal to 10% of the shares of common stock purchased by such investor. The exercisability of the warrants was subject to stockholder
approval, which was obtained on September 17, 2015. As of September 30, 2017, such warrants had been exercised with respect to
25,643 shares of common stock and warrants with respect to 81,197 shares of common stock were outstanding.
At Market Issuance Sales
Agreement
On March 8, 2016, the Company entered into
an At Market Issuance Sales Agreement (the ATM Sales Agreement) with FBR Capital Markets & Co. and MLV & Co. LLC (the
Agents) under which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $50.0
million (the ATM Shares) from time to time through the Agents, acting as its sales agents, under the Company's Registration Statement
on Form S-3 (File No. 333-203216), effective April 15, 2015. Sales of the ATM Shares through the Agents, if any, will be made
by any method that is deemed an "at the market offering" as defined in Rule 415 under the Securities Act, including
by means of ordinary brokers' transactions at market prices, in block transactions, or as otherwise agreed by the Company and
the Agents. Each time that the Company wishes to issue and sell ATM Shares under the ATM Sales Agreement, the Company will notify
one of the Agents of the number of ATM Shares to be issued, the dates on which such sales are anticipated to be made, any minimum
price below which sales may not be made and other sales parameters as the Company deems appropriate. The Company will pay the
designated Agent a commission rate of up to 3.0% of the gross proceeds from the sale of any ATM Shares sold through such Agent
as agent under the ATM Sales Agreement. The ATM Sales Agreement contains customary terms, provisions, representations and warranties.
The ATM Sales Agreement includes no commitment by other parties to purchase shares the Company offers for sale.
During the nine months ended September 30,
2017, the Company did not sell any shares of common stock under the ATM Sales Agreement. As of the date hereof, $50.0 million
remained available for future sales under the ATM Sales Agreement.
8. Commitments and Contingencies
Commitments
Leases
The Company leases
certain facilities and finances certain equipment under operating and capital leases, respectively. Operating leases include leased
facilities, and capital leases include leased equipment (see Note 4, "Balance Sheet Components"). The Company recognizes
rent expense on a straight-line basis over the noncancelable lease term and records the difference between rent payments and the
recognition of rent expense as a deferred rent liability. Where leases contain escalation clauses, rent abatements or concessions,
such as rent holidays and landlord or tenant incentives or allowances, the Company applies them as a straight-line rent expense
over the lease term. The Company has noncancelable operating lease agreements for office, research and development, and manufacturing
space, and equipment that expire at various dates, with the latest expiration in February 2031. Rent expense under operating leases
was
$1.4 million
and
$1.3 million
for the three months ended
September 30, 2017 and 2016, respectively, and
$4.1 million
and
$4.0 million
for
the nine months ended September 30, 2017 and 2016, respectively.
Future minimum payments under
the Company's lease obligations as of September 30, 2017 are as follows (in thousands):
Years ending December 31:
|
|
Capital
Leases
|
|
Operating
Leases
|
|
Total Lease
Obligations
|
2017 (remaining three months)
|
|
$
|
307
|
|
|
$
|
2,278
|
|
|
$
|
2,585
|
|
2018
|
|
|
645
|
|
|
|
9,163
|
|
|
|
9,808
|
|
2019
|
|
|
75
|
|
|
|
7,790
|
|
|
|
7,865
|
|
2020
|
|
|
—
|
|
|
|
7,012
|
|
|
|
7,012
|
|
2021
|
|
|
—
|
|
|
|
7,248
|
|
|
|
7,248
|
|
Thereafter
|
|
|
—
|
|
|
|
10,991
|
|
|
|
10,991
|
|
Total future minimum payments
|
|
$
|
1,027
|
|
|
$
|
44,482
|
|
|
$
|
45,509
|
|
Less: amount representing interest
|
|
|
(37
|
)
|
|
|
|
|
|
|
|
|
Present value of minimum lease payments
|
|
|
990
|
|
|
|
|
|
|
|
|
|
Less: current portion
|
|
|
(863
|
)
|
|
|
|
|
|
|
|
|
Long-term portion
|
|
$
|
127
|
|
|
|
|
|
|
|
|
|
Contingencies
The Company's management assesses
contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related
to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's
management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the
amount of relief sought or expected to be sought.
If the assessment of a contingency
indicates that it is probable that a loss has been incurred and the amount of the liability can be estimated, then the estimated
liability would be accrued in the Company's financial statements. If the assessment indicates that a potential loss contingency
is not probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent
liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies
considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would
be disclosed.
The Company has levied
indirect taxes on sugarcane-based biodiesel sales by Amyris Brasil to customers in Brazil based on advice from external legal counsel.
In the absence of definitive rulings from the Brazilian tax authorities on the appropriate indirect tax rate to be applied to such
product sales, the actual indirect rate to be applied to such sales could differ from the rate we levied.
In April 2017, a securities
class action complaint was filed against the Company and its CEO, John G. Melo, and CFO, Kathleen Valiasek, in the U.S. District
Court for the Northern District of California. The complaint sought unspecified damages on behalf of a purported class that would
comprise all individuals who acquired the Company's common stock between March 2, 2017 and April 17, 2017. The complaint alleged
securities law violations based on statements made by the Company in its earnings press release issued on March 2, 2017 and Form
12b-25 filed with the SEC on April 3, 2017. On September 21, 2017, an Order of Dismissal was entered on the plaintiff’s notice
of voluntary dismissal without prejudice.
Subsequent
to the filing of the securities class action complaint described above, four separate purported shareholder derivative complaints
were filed based on substantially the same facts as the securities class action complaint described above (the Derivative Complaints).
The Derivative Complaints name Amyris, Inc. as a nominal defendant and name a number of the Company’s current officers and
directors as additional defendants. The lawsuits seek to recover, on the Company's behalf, unspecified damages purportedly sustained
by the Company in connection with allegedly misleading statements and/or omissions made in connection with the Company’s
securities filings. The Derivative Complaints also seek a series of changes to the Company’s corporate governance policies,
restitution to the Company from the individual defendants, and an award of attorneys’ fees. Two of the Derivative Complaints
were filed in the U.S. District Court for the Northern District of California (together, the Federal Derivative Cases): Bonner
v. John Melo, et al., Case No. 4:17-cv-04719, filed August 15, 2017, and Goldstein v. John Melo, et al., Case No. 3:17-cv-04927,
filed on August 24, 2017. On September 19, 2017, an order was entered consolidating the Federal Derivative Cases into a single
consolidated action, captioned: In re Amyris, Inc., Shareholder Derivative Litigation, Lead Case No. 2:15-cv-04719, and ordering
plaintiffs to file a consolidated complaint or designate an operative complaint by November 3, 2017. On November 3, 2017, the plaintiffs
in the Federal Derivative Cases filed a Notice of Designation of Operative Complaint designating the complaint filed in the Bonner
case as the operative complaint. The remaining two Derivative Complaints were filed in the Superior Court for the State of California
(the State Derivative Cases): Gutierrez v. John G. Melo, et al., Case. No. BC 665782, filed on June 20, 2017, in the Superior Court
for the County of Los Angeles, and Soleimani v. John G. Melo, et al., Case No. RG 17865966, filed on June 29, 2017, in the Superior
Court for the County of Alameda. On August 31, 2017, the Gutierrez case was transferred to the Superior Court for the State of
California, County of Alameda and assigned case number RG17876383. These state cases are in the initial pleadings stage. We
believe the Derivative Complaints lack merit, and intend to defend ourselves vigorously.
Given the early stage of these proceedings, it is not yet possible to
reliably determine any potential liability that could result from this matter.
The Company is subject to disputes
and claims that arise or have arisen in the ordinary course of business and that have not resulted in legal proceedings or have
not been fully adjudicated. Such matters that may arise in the ordinary course of business are subject to many uncertainties and
outcomes are not predictable with reasonable assurance and therefore an estimate of all the reasonably possible losses cannot be
determined at this time. Therefore, if one or more of these legal disputes or claims resulted in settlements or legal proceedings
that were resolved against the Company for amounts in excess of management's expectations, the Company's condensed consolidated
financial statements for the relevant reporting period could be materially adversely affected.
9. Noncontrolling Interests
Aprinnova
JV
The Company is a 50% owner of a joint venture,
Aprinnova, LLC (the Aprinnova JV), which the Company has determined is a variable-interest entity (VIE) under ASC 810, "Consolidation",
and that the Company is the VIE's primary beneficiary because of the Company's significant ongoing involvement in the Aprinnova
JV's operational decision making and the Company's guarantee of production costs for squalane/hemisqualane. Accordingly, the Company
accounts for the Aprinnova JV under the consolidation method of accounting.
The table below reflects the carrying amount
of the Aprinnova JV's assets and liabilities, for which the Company is the primary beneficiary at September 30, 2017 (in thousands):
|
|
September 30, 2017
|
|
December 31, 2016
|
Assets
|
|
|
33,385
|
|
|
|
30,778
|
|
Liabilities
|
|
|
3,192
|
|
|
|
333
|
|
Aprinnova JV's creditors have recourse
only to the assets of Aprinnova JV.
The change in the Company's noncontrolling interest
in Aprinnova JV for the nine months ended September 30, 2017 and 2016, is summarized below (in thousands):
|
|
2017
|
|
2016
|
Balance at January 1
|
|
$
|
937
|
|
|
$
|
—
|
|
Acquisition of noncontrolling interest
|
|
|
—
|
|
|
|
114
|
|
Net loss attributable to noncontrolling interest
|
|
|
—
|
|
|
|
—
|
|
Balance at September 30
|
|
$
|
937
|
|
|
$
|
114
|
|
10. Significant Revenue Agreements
Product Sales
Nenter Agreements
In
2016, the Company
entered into a Renewable Farnesene Supply Agreement (as amended, the Nenter Supply Agreement) with Nenter & Co., Inc. (Nenter)
to establish the terms of a supply and value-share arrangement between the Company and Nenter related to farnesene. The Company
agreed to supply Nenter with farnesene at prices and on delivery terms set forth in the Nenter Supply Agreement and to provide
Nenter with certain exclusive purchase rights, and Nenter agreed to annual minimum purchase volume requirements and to provide
the Company with quarterly value-share payments representing a portion of Nenter's profit on the sale of products produced using
farnesene purchased under the Nenter Supply Agreement. The Nenter Supply Agreement expires December 31, 2020 and will automatically
renew at the end of such initial term for an additional 5-year term unless otherwise terminated.
Under this agreement,
the Company recognized product revenues of $1.7 million and $2.8 million for the three months ended
September 30,
2017 and 2016
, respectively, and $10.6 million and $2.8 million for the nine months ended
September 30,
2017 and 2016
, respectively.
In October 2016,
the Company entered into a Cooperation Agreement with Nenter, which was terminated in May 2017. In connection with the termination
of the Cooperation Agreement, the Company paid Nenter a fee of $2.5 million
in August 2017, which is included in Sales,
General and Administrative expense for the nine months ended September 30, 2017.
Grants and Collaborations
DSM Collaboration and Licensing Agreements
In
July
and
September
2017, the Company entered into three separate collaboration agreements with DSM
(the DSM Collaboration Agreements) to jointly develop three new molecules in the Health and Nutrition field (the DSM Ingredients)
using the Company’s technology, which the Company would produce and DSM would commercialize. Pursuant to the DSM Collaboration
Agreements, DSM will, subject to certain conditions, provide funding for the development of the DSM Ingredients and, upon commercialization,
the parties would enter into supply agreements whereby DSM would purchase the applicable DSM Ingredients from the Company at prices
agreed by the parties. The development services will be directed by a joint steering committee with equal representation by DSM
and the Company. In addition, the parties will share product margin from DSM’s sales of products that incorporate the DSM
Ingredients subject to the DSM Collaboration Agreements.
In
connection
with the entry into the DSM Collaboration Agreements, the Company and DSM also entered into certain license arrangements (the
DSM License Agreements) providing DSM with certain rights to use the technology underlying the development of the DSM Ingredients
to produce and sell products incorporating the DSM Ingredients. Under the DSM License Agreements, DSM agreed to pay the Company
$9.0 million for a worldwide, exclusive, perpetual, royalty-free license to produce and sell products incorporating one of the
DSM Ingredients in the Health and Nutrition field. DSM remitted the $9.0 million license fee to the Company in October 2017.
In addition, in connection with the entry into
the DSM Collaboration Agreements, the Company and DSM entered into the DSM Credit Letter, pursuant to which the Company granted
a credit to DSM in an aggregate amount of $12.0 million to be offset against future collaboration payments (in an amount not to
exceed $6.0 million) and value share payments owed by DSM to the Company beginning in 2018.
The DSM
Credit Letter had a fair value of $7.1 million
. The DSM Credit Letter, along with the August 2017 DSM Series B Preferred
Stock, August 2017 DSM Cash Warrant, August 2017 DSM Dilution Warrant and Make-Whole Payment (see Note 7, “Stockholders’
Deficit”) are consideration to a customer under ASC 605-50, “Customer Payments and Incentives.”
As a result, the total fair
value of $33.3 million related to the August 2017 DSM Cash Warrants, August 2017 DSM Dilution Warrants, the Make-Whole Payment,
the August 2017 DSM Series B Preferred Stock and the DSM Credit Agreement reduced the $34.0 million in fixed consideration resulting
from the August 2017 DSM Offering and the DSM License Agreements. The remaining $0.7 million was recognized as revenue generated
from the delivery of the intellectual property licenses to DSM. At September 30, 2017, there was $7.1 million of deferred revenue
in connection with the DSM License and Collaboration Agreements, which will be recognized in future periods as collaboration services
are provided. The fixed and determinable consideration related to the DSM Collaboration Agreements and DSM License Agreements
will be allocated to the identified deliverables which have been determined to have stand-alone value using the relative selling
price method. The consideration allocated to the licenses will be recognized as the licenses are delivered and the consideration
allocated to the collaboration deliverables will be recognized on a proportional performance basis as services are provided.
See Note 15, “Subsequent
Events” for information regarding agreements with DSM subsequent to September 30, 2017.
Givaudan
Agreements
In
2016, the
Company
entered into a Collaboration Agreement with Givaudan to establish a collaboration
for the development and commercialization of certain renewable compounds for use in the fields of active cosmetics and flavors
(the Givaudan Collaboration Agreement). Previously, in 2015, the Company entered into a farnesene supply agreement with Givaudan
(the Givaudan Supply Agreement) for
use in the production of
a separate ingredient. Under
the Givaudan Collaboration Agreement, Givaudan agreed to pay to the Company $12.0 million in semiannual installments of $3.0 million
each, beginning on June 30, 2016; through September 30, 2017, the Company has received $9.0 million, in accordance with the arrangement.
The Company recognized (i) collaboration revenues under the Givaudan Collaboration Agreement of $1.5 million and $1.6 million
for the three months ended
September 30, 2017 and 2016
, respectively, and $4.5 million
and $1.6 million for the nine months ended
September 30, 2017 and 2016
, respectively,
and (ii) product revenues under the Givaudan Supply Agreement of $1.3 million and $0 for the three months ended
September 30,
2017 and 2016
, respectively, and $2.0 million and $0 for the nine months ended
September 30,
2017 and 2016
, respectively.
DARPA Technology Investment
Agreement
In 2015, the
Company entered into a Technology Investment Agreement with The Defense Advanced Research Projects Agency (DARPA), under
which the Company, with the assistance of five specialized subcontractors, is working to create new research and development
tools and technologies for strain engineering and scale-up activities
and is being funded by
DARPA on a milestone basis
.
The Company recognized collaboration revenues of $1.3
million and $1.3 million under this agreement for the three months ended September 30, 2017 and 2016
,
respectively, and $6.9 million and $4.8 million for the nine months ended
September 30, 2017 and 2016
,
respectively.
Firmenich Agreements
In 2013, the Company
entered into a collaboration agreement with Firmenich SA (Firmenich) (as amended, the Firmenich Collaboration Agreement), for the
development and commercialization of multiple renewable flavors and fragrances compounds. In 2014, the Company entered into a supply
agreement with Firmenich (the Firmenich Supply Agreement) for compounds developed under the Firmenich Collaboration Agreement.
The Firmenich Collaboration Agreement and
Firmenich Supply Agreement (the Firmenich Agreements)
are considered for revenue recognition purposes to comprise a single multiple-element arrangement.
In July 2017,
the
Company and Firmenich entered into an amendment of the Firmenich Collaboration Agreement, pursuant to which the parties
agreed to exclude certain compounds from the scope of the agreement and to terms connected with the supply and use of such compounds
when commercially produced. In addition, the parties agreed to (i) fix at a 70/30 basis (70% for Firmenich) the ratio at which
the parties’ will share product margins from sales of two compounds; (ii) set at a 70/30 basis (70% for Firmenich) the ratio
at which the parties’ will share product margins from sales of a distinct form of compound until Firmenich receives $15.0
million more than the Company in the aggregate from such sales, after which time the parties will share the product margins 50/50
and (iii) a maximum Company cost of a compound where a specified purchase volume is satisfied, and alternative production and
margin share arrangements in the event such Company cost cap is not achieved.
The
Company recognized
(i) collaboration revenues of $1.4 million and $1.3 million for the three months ended
September 30, 2017 and 2016
,
respectively, and $4.6 million and $5.5 million for the nine months ended
September 30, 2017 and 2016
,
respectively, and (ii) product revenues of $4.8 million and $0.3 million for the three months ended
September 30,
2017 and 2016
, respectively, and $6.9 million and $5.2 million for the nine months ended
September 30,
2017 and 2016
, respectively, under the Firmenich Agreements. Pursuant to the Firmenich Collaboration
Agreement, the Company agreed to pay a one-time success bonus to Firmenich of up to $2.5 million
if certain commercialization
targets are met. Such targets have not yet been met as of September 30, 2017
.
The one-time
success bonus will expire upon termination of the Firmenich Collaboration Agreement.
Michelin and Braskem Collaboration Agreements
In 2011, the Company entered into a collaboration
agreement with Manufacture Francaise de Pnematiques Michelin (Michelin). Under the terms of the 2011 collaboration agreement,
the Company and Michelin agreed to collaborate on the development, production and worldwide commercialization of isoprene or isoprenol,
generally for tire applications, using the Company's technology. Under the agreement, Michelin made an upfront payment to the
Company of $5.0 million.
In June 2014, the
Company entered into a collaboration agreement with Braskem S.A. (Braskem) and Michelin (the June 2014 Collaboration Agreement)
to collaborate to develop the technology to produce and possibly commercialize renewable isoprene. The June 2014 Collaboration
Agreement terminated and superseded the 2011 collaboration agreement with Michelin, and, as a result of the signing of the June
2014 Collaboration Agreement, the upfront payment by Michelin of $5.0 million was rolled into the new collaboration agreement
between Michelin, Braskem and the Company as Michelin's collaboration funding towards the research and development activities
to be performed. In addition, the Company received a total of $4.5 million of funding from Braskem under the June 2014 Collaboration
Agreement, of which $2.0 million was received in 2014 and $2.5 million was received in 2015.
In accordance with a September 2015 amendment,
the June 2014 Collaboration Agreement contractually terminated.
The
Company recognized
collaboration revenues of $6.3 million and $0 for the three months ended
September 30, 2017 and 2016
,
respectively, and $6.3 million and $0.1 million for the nine months ended
September 30, 2017 and 2016
,
respectively
, under the
June 2014 Collaboration Agreement
.
11. Stock-based Compensation
The Company’s stock option activity and
related information for the nine months ended September 30, 2017 was as follows:
|
|
Quantity of
Stock
Options
|
|
Weighted-
average
Exercise
Price
|
|
Weighted-average
Remaining
Contractual
Life
(in years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
Outstanding - December 31, 2016
|
|
|
875,021
|
|
|
$
|
55.20
|
|
|
|
|
|
|
|
|
|
Options granted
|
|
|
211,433
|
|
|
$
|
6.64
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
(133
|
)
|
|
$
|
4.20
|
|
|
|
|
|
|
|
|
|
Options forfeited
|
|
|
(137,298
|
)
|
|
$
|
28.90
|
|
|
|
|
|
|
|
|
|
Outstanding - September 30, 2017
|
|
|
949,023
|
|
|
$
|
48.19
|
|
|
|
6.7
|
|
|
$
|
3,140
|
|
Vested and expected to vest after September 30, 2017
|
|
|
867,218
|
|
|
$
|
51.73
|
|
|
|
6.5
|
|
|
$
|
2,222
|
|
Exercisable at September 30, 2017
|
|
|
558,589
|
|
|
$
|
72.64
|
|
|
|
5.2
|
|
|
$
|
—
|
|
The Company’s restricted stock units (or
"RSUs") and restricted stock activity and related information for the nine months ended September 30, 2017 are as
follows:
|
|
Quantity of
Restricted
Stock Units
|
|
Weighted-
average
Grant-date
Fair Value
|
|
Weighted
Average
Remaining
Contractual
Life
(in years)
|
Outstanding - December 31, 2016
|
|
|
454,923
|
|
|
$
|
17.48
|
|
|
|
|
|
Awarded
|
|
|
381,204
|
|
|
$
|
6.46
|
|
|
|
|
|
Vested
|
|
|
(155,849
|
)
|
|
$
|
19.54
|
|
|
|
|
|
Forfeited
|
|
|
(80,853
|
)
|
|
$
|
13.85
|
|
|
|
|
|
Outstanding - September 30, 2017
|
|
|
599,425
|
|
|
$
|
10.43
|
|
|
|
1.5
|
|
Expected to vest after September 30, 2017
|
|
|
460,278
|
|
|
$
|
10.74
|
|
|
|
1.4
|
|
Stock-based Compensation Expense
Stock-based compensation expense related to
options and restricted stock units granted to employees and non-employees was allocated to research and development expense and
sales, general and administrative expense as follows (in thousands):
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Research and development
|
|
$
|
395
|
|
|
$
|
481
|
|
|
$
|
1,320
|
|
|
$
|
1,457
|
|
Sales, general and administrative
|
|
|
863
|
|
|
|
1,327
|
|
|
|
2,622
|
|
|
|
4,188
|
|
Total stock-based compensation expense
|
|
$
|
1,258
|
|
|
$
|
1,808
|
|
|
$
|
3,942
|
|
|
$
|
5,645
|
|
As of September 30, 2017, there was unrecognized
compensation expense of $6.9 million related to stock options and restricted stock units. The Company expects to recognize this
expense over a weighted-average period of 2.7 years.
Stock-based compensation expense for RSUs is
measured based on the closing fair market value of the Company's common stock on the date of grant. Stock-based compensation expense
for stock options and employee stock purchase plan rights is estimated at the grant date and offering date, respectively, based
on their fair-value using the Black-Scholes option pricing model. The fair value of employee stock options is being amortized on
a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using
the following weighted-average assumptions:
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Expected dividend yield
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
Risk-free interest rate
|
|
|
2.0
|
%
|
|
|
1.2
|
%
|
|
|
2.0
|
%
|
|
|
1.3
|
%
|
Expected term (in years)
|
|
|
6.2
|
|
|
|
6.2
|
|
|
|
6.1
|
|
|
|
6.2
|
|
Expected volatility
|
|
|
92.2
|
%
|
|
|
76.7
|
%
|
|
|
81.6
|
%
|
|
|
73.0
|
%
|
12. Related Party Transactions
Related Party Financings and Debt
See Note 5, “Long-term Debt” for a description of related
party debt and related transactions during the three and nine months ended September 30, 2017.
Related Party Revenues
For the three and nine months ended September 30,
2017 and 2016, related party revenues were as follows:
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
DSM
|
|
$
|
1,337
|
|
|
$
|
—
|
|
|
$
|
1,486
|
|
|
$
|
—
|
|
Novvi
|
|
|
—
|
|
|
|
1,390
|
|
|
|
—
|
|
|
|
1,390
|
|
TOTAL
|
|
|
77
|
|
|
|
—
|
|
|
|
77
|
|
|
|
—
|
|
|
|
$
|
1,414
|
|
|
$
|
1,390
|
|
|
$
|
1,563
|
|
|
$
|
1,390
|
|
Related party accounts
receivable balances as of September 30, 2017 and December 31, 2016, were $10.1 million and $0.9 million, respectively.
Novvi Joint Venture
In June 2017, the Company made a $60,000 equity
contribution to Novvi LLC, its joint venture with Cosan US, Inc., American Refining Group, Inc., Chevron U.S.A. Inc. and
H&R Group US, Inc. focusing on base oils, additives and lubricants.
Pilot Plant Agreements with Total
The Company and Total are parties to two five-year
agreements, each dated April 4, 2014 and subsequently amended, under which the Company leases space in its pilot plants to Total
and provides Total with fermentation and downstream separation scale-up services and training to Total employees, and utilizes
Total employees to perform certain research and development services for the Company. In February 2017, the Company and Total
amended these agreement to provide that the Company would not be charged for the cost of Total’s employees on or after May
1, 2016, other than overhead charges. At September 30, 2017 and December 31, 2016, the net amounts on our condensed
consolidated balance sheets in connection with these agreements were payables to Total of $1.6 million and $1.8 million, respectively.
13. Income Taxes
The Company recorded income tax provisions as
follows (in millions):
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Benefit from (provision for) income taxes
|
|
$
|
0.3
|
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.4
|
)
|
The amounts for all periods presented are comprised
of accrued Brazilian withholding tax on interest on intercompany loans. Other than those amounts, no additional provisions for
income tax have been recorded, net of valuation allowance, due to cumulative losses since commencement of the Company's operations.
Due to decreases in the Company's intercompany loan balances, provisions for income taxes decreased for the three and nine months
ended September 30, 2017 as compared to the prior year periods.
14. Net Loss per Share Attributable to Common Stockholders
Basic net loss per share attributable to common
stockholders is computed by dividing the Company’s net loss attributable to Amyris, Inc. common stockholders by the weighted-average
number of shares of common stock outstanding during the period. Diluted net loss per share attributable to common stockholders
is computed by giving effect to all potentially dilutive securities, including stock options, restricted stock units, common stock
warrants and convertible promissory notes using the treasury stock method or the as-converted method, as applicable. For the three
months ended September 30, 2017 and September 30, 2016, basic net loss per share attributable to common stockholders
was the same as diluted net loss per share attributable to common stockholders because the inclusion of all potentially dilutive
securities outstanding was antidilutive. For nine months ended September 2017, the $35.4 million gain attributable to derivative
liabilities was removed from the calculation for diluted net loss attributable to common stockholders, as its inclusion would
be anti-dilutive.
The following table presents the calculation
of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts):
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Amyris, Inc.
|
|
$
|
(33,861
|
)
|
|
$
|
(19,704
|
)
|
|
$
|
(70,612
|
)
|
|
$
|
(48,579
|
)
|
Less deemed dividend on capital distribution to related parties
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,648
|
)
|
|
|
—
|
|
Less deemed dividend related to beneficial conversion feature on Series A preferred stock
|
|
|
—
|
|
|
|
—
|
|
|
|
(562
|
)
|
|
|
—
|
|
Less deemed dividend related to beneficial conversion feature on Series B preferred stock
|
|
|
(634
|
)
|
|
|
—
|
|
|
|
(634
|
)
|
|
|
—
|
|
Less deemed dividend related to beneficial conversion feature on Series D preferred stock
|
|
|
(5,757
|
)
|
|
|
—
|
|
|
|
(5,757
|
)
|
|
|
—
|
|
Less cumulative dividends on Series A and Series B preferred stock
|
|
|
(2,567
|
)
|
|
|
—
|
|
|
|
(4,242
|
)
|
|
|
—
|
|
Net loss attributable to Amyris, Inc. common stockholders, basic
|
|
|
(42,819
|
)
|
|
|
(19,704
|
)
|
|
|
(90,455
|
)
|
|
|
(48,579
|
)
|
Interest on convertible debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,093
|
|
Accretion of debt discount
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,304
|
|
Gain from change in fair value of derivative instruments
|
|
|
—
|
|
|
|
—
|
|
|
|
(35,443
|
)
|
|
|
(37,593
|
)
|
Net loss attributable to Amyris, Inc. common stockholders, diluted
|
|
$
|
(42,819
|
)
|
|
$
|
(19,704
|
)
|
|
$
|
(125,898
|
)
|
|
$
|
(75,775
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic
|
|
|
37,529,694
|
|
|
|
16,612,690
|
|
|
|
27,280,894
|
|
|
|
15,118,144
|
|
Basic loss per share
|
|
$
|
(1.14
|
)
|
|
$
|
(1.19
|
)
|
|
$
|
(3.32
|
)
|
|
$
|
(3.21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding
|
|
|
37,529,694
|
|
|
|
16,612,690
|
|
|
|
27,280,894
|
|
|
|
15,118,144
|
|
Effective of dilutive convertible promissory notes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,773,531
|
|
Weighted-average common stock equivalents used in computing net loss per share of common stock, diluted
|
|
|
37,529,694
|
|
|
|
16,612,690
|
|
|
|
27,280,894
|
|
|
|
17,891,675
|
|
Diluted loss per share
|
|
$
|
(1.14
|
)
|
|
$
|
(1.19
|
)
|
|
$
|
(4.61
|
)
|
|
$
|
(4.24
|
)
|
The following outstanding shares of potentially
dilutive securities were excluded from the computation of diluted net loss per share of common stock because including them would
have been antidilutive:
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Period-end stock options to purchase common stock
|
|
|
949,023
|
|
|
|
924,062
|
|
|
|
949,023
|
|
|
|
924,062
|
|
Convertible promissory notes (1)
|
|
|
8,133,594
|
|
|
|
4,431,610
|
|
|
|
8,133,594
|
|
|
|
1,584,026
|
|
Period-end common stock warrants
|
|
|
31,303,080
|
|
|
|
977,561
|
|
|
|
31,303,080
|
|
|
|
977,561
|
|
Period-end restricted stock units
|
|
|
599,425
|
|
|
|
498,304
|
|
|
|
599,425
|
|
|
|
498,304
|
|
Total potentially dilutive securities excluded from computation of diluted net loss per share
|
|
|
40,985,122
|
|
|
|
6,831,537
|
|
|
|
40,985,122
|
|
|
|
3,983,953
|
|
______________
|
(1)
|
The
potentially dilutive effect of convertible promissory notes was computed based on conversion
ratios in effect as of the respective period end dates. A portion of the convertible
promissory notes issued carries a provision for a reduction in conversion price under
certain circumstances, which could potentially increase the dilutive shares outstanding.
Another portion of the convertible promissory notes issued carries a provision for an
increase in the conversion rate under certain circumstances, which could also potentially
increase the dilutive shares outstanding.
|
15. Subsequent Events
Additional Agreements with DSM
On November 17, 2017, the Company entered into
additional agreements with DSM as follows:
|
•
|
DSM agreed to purchase 100% of the equity ownership in Amyris Brasil (excluding certain assets)
from the Company for a purchase price of $30.7 million, subject to certain adjustments. The Company will have a right of first
refusal to purchase the manufacturing facility owned by Amyris Brasil located in Brotas, Brazil (the Brotas 1 Facility) if DSM
determines to close or significantly reduce production at the Brotas 1 Facility;
|
|
•
|
The Company will borrow $25.0 million from DSM and will then repay:
|
|
◦
|
amounts outstanding under the Guanfu Note, and
|
|
◦
|
certain other outstanding indebtedness of Amyris Brasil, which amount will be deducted from the
purchase price;
|
|
•
|
DSM will pay the Company an upfront license fee of $27.5 million
in connection with a license agreement executed in November 2017; and
|
|
•
|
The Company and DSM will enter into other commercial agreements.
|
|
|
|
The closing of the transactions described above
is subject to several conditions, including the execution, delivery and assignment of certain agreements and contracts, obtaining
certain third party and governmental approvals, and making certain regulatory filings and registrations. The parties may terminate
the transactions in the event the closing has not occurred by March 31, 2018.
Additional Agreements with Ginkgo
On November 13, 2017, the Company and Ginkgo
entered into additional agreements as follows:
|
•
|
The Ginkgo Partnership Agreement (which supersedes the Ginkgo Collaboration Agreement), whereby
the Company and Ginkgo agreed to:
|
|
◦
|
continue to collaborate on limited research and development;
|
|
◦
|
provide each other licenses (with royalties) to specified intellectual property for limited purposes;
|
|
◦
|
share in the net profits from sales of a certain product to be developed under the Ginkgo Partnership Agreement on a
50/50 basis, subject to certain conditions; payments will begin on December 31, 2018 and end on September 30, 2022, provided
that net profits will be payable to Ginkgo only to the extent they exceed principal and interest payments under the November
2017 Ginkgo Note (as defined below);
|
|
◦
|
the Company will pay Ginkgo $500,000 in connection with certain fees previously owed to Ginkgo.
|
The Ginkgo Partnership Agreement provides for an initial
term of two years, unless earlier terminated in accordance with its terms, and automatically renews for successive one year terms
thereafter, subject to voluntary termination by either party; and
|
•
|
The Company issued to Ginkgo an unsecured promissory note (Ginkgo Note) for $12.0 million, with interest at 10.5% per year,
maturing on October 19, 2022.
|
Biolding Note Amendment
On November 13, 2017, the Company and Biolding
further amended the Biolding Note to extend the maturity date from November 15, 2017 to December 31, 2017.