Amyris Inc (AMRS) 2013 Q4 法說會逐字稿

Welcome to the Amyris fourth quarter 2013 conference call. This call is being webcast live on the events page of the Investors section of Amyris' website at www.amyris.com. This call is the property of Amyris; and any recording, reproduction, or transmission of this call without the expressed-written consent of Amyris is strictly prohibited.

As a reminder, today's call is being recorded. You may listen to a webcast replay of this call by going to the Investors section of Amyris' website.

I would like to turn the call over to Joel Velasco, Senior Vice President.

Good afternoon. Thank you for joining us to discuss highlights of Amyris' fourth quarter and full-year 2013 financial results, our recent progress and business outlook. With me today are John Melo, our Chief Executive Officer; and Paulo Diniz, our Chief Financial Officer.

On the call today and on this online webcast, you will hear discussions of non-GAAP financial measures. Reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is contained in the press release distributed today, which is available at amyris.com.

The current report on Form 8-K furnished with respect to our press release is also available on our website as well as on the SEC's website at sec.gov.

We will provide certain forward-looking statements about events and circumstances that have not yet occurred, including projections of Amyris' operating activities for 2014 and beyond. These statements are based on management's current expectations; and actual results and future events may differ materially due to risks and uncertainties, including those detailed in the Company's recent SEC filings and the Risk Factors sections of Amyris' quarterly report on Form 10-Q filed with the SEC on November 5, 2013.

Amyris disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to the Amyris SEC filings for detailed discussions of the relevant risks and uncertainties.

I will now turn the call over to John Melo.

Thank you, Joel. Good afternoon and thank you for joining us today.

In 2013, we delivered our best financial results, technology progress, and operational performance to date. As we've done in prior quarters, let me begin with a review of our activities, namely successful technology and production ramp-up, the progress in expanding our renewable products portfolio through sales and collaborations. Paulo Diniz will then review the past quarter's financials in greater detail before we provide some guidance for 2014 and our outlook for the next few years.

Let me start with our farnesene production at Brotas, located next to the Paraiso sugarcane mill in Brazil. In December, we completed one year of operations at Brotas, our first industrial biorefinery. During the year, we successfully scaled our production and demonstrated that our farnesene strain can perform as well at Brotas as in our labs in California.

As you may recall, in mid-2013, we ramped up production in all six 200,000 liter fermenters, utilizing our second generation of farnesene-producing strains. The second-generation farnesene strains are delivering productivity at scale beyond what is theoretically possible for our first-generation farnesene strains. And while we have more to go to achieve our target efficiencies, the combination of continued technological and operational improvements allowed us to reduce farnesene production costs from $12 per liter at the beginning of the year to approaching $4 per liter in the final months of the year.

By producing about 3.5 million liters of in spec, high-quality renewable farnesene, we believe we have put to rest any lingering doubts about our ability to manufacture renewable products. Going forward, we expect further unit cost reductions. So, for competitive reasons and the desire of our partners, we will no longer provide updates on per unit production costs or volumes.

We calculate that we finished the year with the average of our quality runs resulting in about $3.50 per liter production costs. This provides us with confidence to underpin our 2014 plan.

At Amyris, we know the first year of scale-up is the toughest and we are glad to have the first year of learnings behind us. As we indicated in our prior call, we have taken advantage of our planned annual preventive maintenance during the first quarter to make some performance improvements to the Brotas plant. As of today, we've completed the maintenance work and are ready to restart farnesene production with low-cost syrup when the sugarcane harvest begins in mid-March. Of course, we've built sufficient farnesene inventory during the second half of 2013, which has ensured our renewable product sales are not affected during this period.

In addition to our progress with farnesene, during the fourth quarter of 2013, we completed our first industrial-scale campaign to produce our second commercial molecule, a fragrance oil for our partner Firmenich. During the final months of 2014, we completed successful scale-up and industrial production and since the quarter end, shipped significant volumes of this high-value fragrance oil, which is being marketed by Firmenich to leading brands around the world under our existing agreement. This versatile and high-value fragrance oil, produced through fermentation of sugars, can be utilized across many consumer care applications, from laundry detergents to high-end fragrances.

Later this year, building on the successful scale-up of production at a specialty contract manufacturer and thanks to some of the improvements we are making at Brotas today, we plan to produce significant additional quantities of our fragrance oils at our own biorefinery in Brotas. This will support our customer needs for greater volumes, while driving significant additional cash margins from our production assets. Going forward, you should not think of Brotas as a farnesene-only plant, but a true biorefinery to produce fermentation, renewable products from sustainably sourced sugars.

By using Brotas as a multi-product manufacturing facility, focused on production of high-value products that our customers need, we believe that we can achieve a cash payback of the Brotas plant in about two more years. Put simply, we expect to generate cash margins of about $10 million to $15 million in 2014 and another $40 million to $50 million in 2015 from Brotas based on our current plans and existing product pipeline.

We are realizing our vision of industrializing synthetic biology. We are engineering yeast that is producing molecules that solve our customers' biggest supply challenges. We have successfully scaled three fermentation molecules, four farnesene derivatives and have more than 20 additional products in our pipeline that are contracted with some of the world's leading brands.

Moving from production to our revenues or said differently, our inflows, we continue to deliver on the two pillars of our business model, collaboration inflows and renewable product sales. For the third year in a row, we achieved approximately $60 million in annual collaboration inflows. As you can see from our press release, we received $55 million in collaboration inflows through the end of the year. And in January, received an additional $4.5 million that had been completed and invoiced in December 2013. These collaborations are the core value creation element of our business model.

We have a growing portfolio of more than 20 molecules under contract for a product pipeline that, we believe, represents more than $1 billion in revenue near at the end of this decade. This revenue excludes fuels and lubricants growth with our joint venture partners and provides the key underpinning to our expectation of 60% to 70% cash gross margins for the near future.

Our first commercial collaboration, the farnesene program, funded through our partnership with TOTAL continues to be a success.

In early 2013, we announced the formation of our joint venture with TOTAL to commercialize renewable diesel and jet fuels derived from farnesene. As I said at the time we formed the joint venture, TOTAL has been a strategic partner and a model of how global brands can leverage our inspired science to deliver sustainable solutions for the growing world population. As we complete the third year of this collaboration program, we are adding new strategic programs in segments that our technology is cost and performance advantaged.

We have also reached agreement with TOTAL on a new five-year cooperation that provides them access to our pilot facilities and enables us to work together in process development and scale-up activities that will continue to improve our production costs. We've already demonstrated that working together, we can solve problems faster and have a positive impact on our production costs. This formalizes this aspect of our relationship and reduces our operating costs at the Emeryville pilot plant. We expect to sign this agreement in the coming weeks.

Another example of how our collaborations can evolve quickly is our success in the flavor and fragrance industry. At this time last year, we had just announced the expansion of our collaboration with Firmenich as well as the addition of our collaboration with IFF. During the last year, we not only completed the scale-up of our first fragrance product for Firmenich, but also are building strains to produce a range of other flavor and fragrance molecules for our partners, as we announced with IFF earlier today. We expect to generate about $20 million of collaboration funding annually from our flavor and fragrance partners and believe this is a good model for us to expand into consumer care and the cosmetic industry.

We have an excellent track record of collaborating with the world's leading brands. Most of our collaboration partners are or have expanded their agreements with us. We consistently hear from our partners that they view us as world leaders in synthetic biology. In fact, our partners at IFF indicated recently in their quarterly call that Amyris is reaching milestones faster than originally expected.

This morning, we announced an agreement with IFF to expand our collaboration with them into the second phase of a program we started last year. The progress we have achieved with IFF is another example of our success in developing the specific molecules our clients need, bringing innovation from lab to industrial scale on a timely manner. This is in line with our collaboration model. We are engineering and scaling a strain that produces a core molecule for our partner's business. This will enable them to grow sustainably and provide the consumer with better-performing products that are cost competitive and better for our planet.

In addition to our collaboration inflows, we are also focused on building a product sales pipeline that generates strong positive cash margin for our business. In 2013, our product sales increased about 50% to $15.8 million and recognized renewable product revenue. We did have additional sales in December of our fragrance oil and Brazil renewable fuels that did not ship and is expected to be recognized as revenue during 2014. This represents an additional $4.5 million, bringing our total product sales to about $20 million, in line with our prior guidance.

Let me provide you some color of our product sales for 2013, which were primarily our cosmetics emollient, Neossance, Squalane, as well as our sale of renewable diesel in Brazil, Diesel de Cana. And other farnesene-derived products for Novvi into lubricant base oils and Kuraray for liquid farnesene rubber serving the tire industry.

We now represent about 18% of the global Squalane emollient market and are on track to become the leading supplier of a growing Squalane market, as we gain acceptance by leading brands worldwide. Historically, the Squalane market size peaked at about $180 million. We now believe we can grow this to a $300 million market with a significant market share. We have a distinctive proposition for customers in this market. We provide the highest-purity Squalane, stable supply, and a guaranteed price for customers prepared to make a long-term commitment. This is a good example of our No Compromise offer and what is driving our growth.

There are about 300 or more brands using our Squalane today, often with multiple products and SKUs per brand. We continue to get strong, positive feedback from the customers for our Squalane, which is one of the highest-quality emollients available. We expect continued growth in this sector and expect to introduce an additional high-performance renewable emollient to the market later this year. This new molecule will serve a lower price point and much larger emollient market than the high-end Squalane molecule. We will continue with our value proposition of highest performance in class, stable supply, and the ability to provide a price guarantee for long-term customer commitments.

As for fuels, we remain committed to building this business for the long run with TOTAL, our leading shareholder. In Brazil, we increased the number of public transit buses using our renewable diesel to over 400 buses operating daily in Sao Paulo. As for our renewable jet fuel, we are nearing ASTM validation, following submission of our research report with TOTAL. We have been pleased by the support we have received from OEMs as well as the FAA. While we have not yet generated commercial sales, our jet fuel has powered multiple aircraft from Embraer regional jets to an Airbus A320 at the Paris Air Show and most recently, an Etihad Boeing 777 in Abu Dhabi.

With our now joint venture in place and regulatory approvals nearing, we are aggressively pursuing our commercialization strategy for jet fuel with TOTAL. We are committed to meeting customer demand, possibly as early as the World Cup in Brazil, once we obtain all the required regulatory approvals. We continue to work closely with our partner, TOTAL, and are focused on the long-term success of our fuels joint venture that was announced in the fourth quarter.

Success in fuels requires a very strong balance sheet and a long-term commitment to achieve competitive economics. We have the best-performing renewable jet and diesel fuels in the world today. These fuels are providing good value in niche markets and especially in markets that are supply limited like Brazil. We do not expect renewable fuels to be very attractive in the US market for the short and medium term, and believe they will provide very low returns and be very capital-intensive in the near term.

As we reflect on our progress in 2013 from starting up our own biorefinery in Brazil to scaling up new molecules for leading brands, to delivering over 50% gross margins through collaboration inflows and product sales, we are continuing to focus on enabling the world's leading brands to grow profitably and without harm to our planet by solving their most challenging supply needs. And thanks to continued support of our investors and partners, we begin 2014 optimistic about the future for Amyris.

Let me now turn the call over to Paulo Diniz for a review of our fourth quarter and year-end financial results. He will then provide some guidance for 2014, which was summarized in our press release. I will also provide our outlook for the years ahead before we take some of your questions. Paulo?

Thank you, John; and good afternoon, everyone. Let me highlight some key points from our fourth quarter 2013 results as well as our full-year performance. Looking at revenues from renewable products and collaborations, we finished the fourth quarter of 2013 with total revenues of $15.4 million. This compares to $5.9 million in the fourth quarter of 2012. On the full year, our total revenues reached $41.1 million, which compares with $34.9 million in 2012, which excludes ethanol and ethanol-blended gasoline sales, a business we transitioned out of in 2012.

To add a bit more detail, fourth quarter revenues from our renewable products [is coming renewable diesel and farnesene] for performance materials applications were $4.5 million, which is 50% higher than our renewable product revenues in the fourth quarter of 2012. As John described, this fourth quarter sales amount does not include an offtake agreement for 1 million liters of renewable fuel that was signed in December, which [we are using], nor does it include revenue associated with shipment of our new fragrance oil that arrived at Firmenich in early January of this year.

Including these two transactions would have put us above $20 million for the year, though consistent with our guidance. Nevertheless, on a GAAP basis, our renewable product revenue for 2013 was $15.8 million, 50% higher than our renewable product revenue in 2012.

The other key element of our revenues is grants and collaborations, which on a GAAP basis was $10.9 million in the quarter compared to $2.8 million in the same period of 2012. For the full year, revenues from grants and collaborations reached $25.3 million compared to $24.1 million in 2012. However, looking at grants and collaborations on a non-GAAP cash basis, which is how we manage our business, cash inflows reached $54.6 million for the year compared to $61.9 million in 2012. It's worth noting that in early January 2014, we received an additional $4.5 million of collaboration cash inflows. These collaboration inflows were invoiced but not received at the end of 2013 and which have brought our total cash from collaborations for 2013 to approximately $60 million, in line with our guidance.

The biggest differences between the GAAP and non-GAAP collaboration figures are, one, time of revenue recognition; and two, the TOTAL collaboration cash, which is treated as debt for GAAP purpose until December 2016 and when TOTAL makes its final go, no-go decision.

As John discussed, collaboration inflows are and will remain an important pillar of our business model. These inflows provide us with upfront funding to build strong technical partnerships intended to result in product commercialization. Collaborations also generate a long-term cash stream as we capture a portion of the gross margin from the value chain of the product.

I'll turn now to our cost of goods sold, which increased to $12.1 million for the fourth quarter of 2013, compared to $5.4 million in the same period of last year, when we exclude loss on purchase commitments and write-off of production assets. The increase was primarily driven by higher volumes sold and manufacturing costs associated with the initial production of our second molecule. Our first fragrance oil, which was produced at a contract manufacturing facility in the fourth quarter.

As discussed in our press release that we also note that we achieved a non-GAAP gross profit of $38.2 million in 2013, representing a 54% gross margin on our total non-GAAP revenues from your renewable products and collaborations compared to a gross margin of 33% in 2012 on a non-GAAP basis.

Moving on, I must emphasize that financial discipline remains a top priority for Amyris and we continue to focus on reducing our overall operating expenses. Our combined R&D and SG&A expenses were $27.4 million in fourth quarter compared to $35.5 million in the same period of last year. For the 12 months, our combined R&D and SG&A expenses of $113.1 million for the year were reduced by 26% compared to $152.3 million in 2012. On a non-GAAP basis, that is excluding all-cash items, our combined operating expenses were $84.5 million in 2013 compared to $113.2 million in 2012, also a 25% drop.

As you can see in our press release, we incurred a GAAP loss of $139.4 million for the quarter or about $1.83 per share. However, it's very important to note that this number includes $110 million of non-cash or unrealized loss in the quarter from changes in the fair value of derivatives related to some of our outstanding convertible notes, which was a consequence of the appreciation of our stock price in December. When we exclude this non-cash loss and all the non-cash items such as depreciation, amortization, and stock-based compensation, our non-GAAP net loss was $19.6 million for the quarter or a non-GAAP loss of about $0.26 per share.

Turning to our balance sheet, our cash balance at the end of 2013 was $8.3 million, which compares with a cash balance of $30.7 million at the end of 2012. However, it's important to note that we received $28 million in mid-January from the second tranche of our convertible note financing led by Temasek. As one would expect, due to our financing activity during the year, we ended 2013 with a debt position of $152.1 million, which includes the convertible notes issued earlier in the fourth quarter. Also important to note is that the balance of $134.7 million of derivative liability is mostly the result of embedded derivatives in our convertible notes with our main stockholders, TOTAL and Temasek.

Let me now focus on our 2014 outlook before turning the call back to John to discuss our long-term outlook. Similar to 2013, we continue to estimate a modest level of capital expenditure for the year with a target of less than $10 million. These investments will support our strategy to streamline our Brotas plant to accommodate additional molecules as well as enhance our research and development capabilities. We are targeting renewable revenues and collaborations inflows of $100 million to $115 million from grants and collaborations in renewable products for the year. John will detail our strategy to achieve these cash inflows in 2014 and beyond. But a critical piece of that strategy is to focus on products that can generate positive margin for us.

We've remained committed to our hard-earned financial discipline and are planning for cash operating expenses for R&D and SG&A to be less than $85 million. Again, for clarity, this $85 million operating expenses exclude non-cash items such as depreciation, amortization, stock-based compensation, and loss on disposal of fixed assets. Our overall target is for Amyris to keep a boost non-GAAP gross margin of over 60% and to become EBITDA positive during the second half of 2014.

In summary, based on our 2014 business plan, which targets, one, blending renewable product sales and collaboration inflows to build out a robust topline; two, operating our large-scale manufacturing facility consistently and cost effectively; and three, remaining cost conscious by embracing financial discipline, we are confident of our ability to meet our goal and challenge of becoming cash flow positive from operations in 2014.

I will turn the call back over to John for some additional comments and to open the call up for questions.

Thank you, Paulo. Our technology and scale-up success in 2013 enables us to focus on profitable revenue growth. Production volume was an important proof point for our technology and manufacturing capabilities, but we did not believe it is the key value driver for our business going forward.

The two key drivers of value for our business and our stockholders are sales of high-value products that solve customer needs and generate strong cash margins, and the flexibility of our Brotas plant to produce multiple molecules to meet the needs of our customers and deliver industry-leading returns. We are not a single-molecule company trying to use complicated chemistry to adapt a single molecule into many markets. Our high-value products are selected by our collaboration partners; developed, scaled up, and produced by us; and then, finished and marketed with or by the partner. This is a business model that is working for us. As I said before, we have over 22 molecules contracted with multiple partners and are in active negotiation or at the final agreement stage with several others.

Our business model is clear. We partner with the world's leading consumer brands to engineer microorganisms to make products that sustain their growth and enable them to beat their competition. We are applying our inspired science to deliver sustainable solutions for a growing world. The products we make are better performing than their alternative raw material source. Our products are designed to perform better, cost less to make, and provide the consumer a better choice. These brands pay us to build a product pipeline and we earn a long-term annuity from the margin of the products we produce for them.

Our business model is working, as evidenced by our results against our guidance to you last year. Our renewable product sales increased by nearly 50% year-on-year and we maintained an average selling price of over $7 per liter, better than we expected earlier in 2013. As I noted earlier, our farnesene production costs dropped from $12 per liter at the start of 2013 to below $5 per liter with the average of our best-performing runs achieving around a $3.50 a liter production cost.

We delivered on our target of $85 million in cash OpEx, which was mostly covered by nearly $60 million in collaboration funding. We kept our CapEx under $10 million. We continue to expect to achieve cash flow positive from operations during 2014 and to become profitable during 2015.

Our business and financial plan is driven by our commitment to producing and delivering high-value products to our customers. Instead of producing high volumes, we are focusing on maximum revenue and cash margin from our first plant and our collaborations are delivering industry-leading cash gross margins and sales growth. Based on our current product pipeline, we expect Brotas to deliver $300 million to $400 million of renewable product revenue by the end of 2016.

We will continue to focus on our farnesene production to high-value markets, enabling us to use the extra availability to produce our first fragrance oil at Brotas, which we expect to increase our cash gross margin as well as support a cash payback for the Brotas plant to as little as two years from now.

As I noted earlier, our payback calculations are based on $50 million of product cash gross margin in 2014 and over $50 million of cash gross margin in 2015. We expect to maintain a healthy cash gross margin for the next three years to four years, with renewable product revenues doubling each year and collaboration revenues reaching $60 million to $70 million annually. We expect our year-over-year cash OpEx to remain relatively flat with any increases coming from annual inflation and from expense growth required to support the additional collaboration needs of our partners.

In recent weeks, we announced the signing of our agreement with Sao Martinho, the world's most efficient sugarcane processor to continue our joint venture plant and to extend their option for a second plant. We expect both these plants to support our growth in the performance farnesene and lubricants businesses, and expect these projects to be funded by the JV and our collaboration partners. The combination of these two facilities with Sao Martinho represents the equivalent capacity of four Brotas plants.

In closing, let me address our longer-term outlook. We aim to end this decade with the world's leading brands no longer thinking of bio-based materials as an alternative, but thinking of them as the first place they look to solve their supply needs and to help them win in the market. We believe brands will shift how they think about chemistry. Instead of making do with the chemistry they have, they will use synthetic biology to make the chemistry they need to win in the market, while doing less damage to our planet.

Our aspirational goal is to be in 90% of all households by the end of the decade. We are enabling brands to access the chemistry they need at a lower cost and with reliable access to supply. We are disrupting the traditional chemical intermediate suppliers by delivering a better and more sustainable solution. We first achieved this with artemisinic acid to help stabilize the market for the world's leading anti-malarial. We have provided stability for the Squalane market and are now the leading solution provider in the fragrance ingredient business.

We are the only company in the sector that has successfully scaled and commercialized three different fermentation molecules and has demonstrated synthetic biology at industrial scale. Through many lessons, we've built a track record of delivering breakthrough technology. First, we helped develop artemisinic acid strains that Sanofi is currently using to make one-third of the world's leading cure for malaria with our technology.

With our fragrance oil, we have delivered high-quality product to Firmenich and its customers; and of course, farnesene, for everything from fuels to base oils to polymers for the tire industry and Squalane as best-in-class emollient.

2013 was an exciting year for Amyris. And 2014 promises to be even better. We have much more to do and a strong pipeline of agreements to deliver on.

Karen, would you please open the line for questions?

Certainly. (Operator Instructions) And our first question comes from the line of Jeff Osborne from Stifel.

Great, thank you. I just had a couple of questions on the guidance. I was wondering if you could talk about your expectations for cadence of revenue through the year. John and Paulo, with the shutdown in the first quarter I imagined, there is a little bit of a slowdown there, are you going to make everything up through the inventory that you built up?

Just I think the way to think of it is, I would expect the first quarter to be fairly in line with what we've seen as a run rate coming out of 2014 and then growth in the second half of 2014.

Okay. And then, to help me understand the payback analysis that you're referring to with the $15 million this year, is there a way you could divulge what the cash losses were for 2012 and 2013, just so we can kind of reconcile the numbers over time for Brotas?

Yes. We actually finished fourth quarter positive and I think we can probably get you the total number for the year. Paulo, I don't know if we have it in front of us, but if not, we can follow up with that number for you.

Okay, perfect. And then, the only other -- I had a couple of fundamental questions, but only other guidance question was on the OpEx of $80 million to $85 million, now, how do we think about the split of R&D and SG&A for the year? Is there any moving pieces relative to recent trends there?

No, I think it's fairly constant. I think we saw the moves through the year and it stayed constant as we finished the year and we don't see any real shift coming into the first quarter.

Perfect. And then, the two other questions I had, John, were on the fragrance production on the contract manufacturing side, it sounded like, if I heard you right, some of that was just timing of production and then delivery to the customer was I guess an issue in terms of revenue recognition for the quarter, but can you just talk about kind of the longer-term plans, a, confirm that the timing was the issue? I understood what you were saying correctly, but also more importantly, just talk about moving from contract manufacturing to Brotas over time, and when you would expect that to be done to then drive that margin appreciation that you referenced?

Yes, I know. Great question. It was purely timing. We had the production complete by the year-end and did not have the ship and leave the site and therefore could not recognize it as revenue. And then, regarding the transition, we actually had our people operating at the contract manufacturing facility, got very comfortable with the process; and just to make it clear for everyone, it's actually a very like process, almost identical to the farnesene manufacturing process, which gives us great comfort in going into Brotas. So people from Brotas very like process and then we've given ourselves plenty of space to mitigate any risk, and we expect to produce the first fragrance molecule during the middle months, probably the July-August time frame in Brotas.

Okay, good. And the last question I had was just on the Squalane market, you indicated that you are hopeless to grow it from $180 million to $300 million annually. Now, how do you do that? I guess my understanding was that a lot of the shark oil production and kind of tough olive crop that people have had has led to some reduction in terms of tons produced. Are those just products that exited the market that you can reinvigorate them from years past, or how do you go about growing a total market with a new molecule? Is it just all based on cost or do people have to create new SKUs using your product and it might take some time?

A little bit of all, so I'll break it down into three parts, right. The first part is which like we think we've achieved now, it's just stabilizing the market, making sure the slippage goes away, because people don't have to worry anymore about not having enough supply, and I think that we've accomplished and are actually well engaged with the leading brands in the world in that regard.

The second is applications that switched out of Squalane to lower-quality emollients when supply was challenged historically, and that is a big shift of the growth we see over the next couple of years is purely not new, but applications coming back to using the emollient that they're familiar with, that had switched out before, and that's really driven by stable supply and competitive pricing.

And I think the third, which is the one we're probably most excited about is we see several new applications emerging that in the past were of interest but because of the cost and supply, Squalane was not available for them. So I'll give you three examples, or maybe two examples; one is soaps, where Squalane is actually a great emollient to use in soaps but traditionally people wouldn't do it, because of supply and cost challenges. And then, the other is wipes, having an emollient like Squalane in a wipe does both help refresh the skin and make it softer. So those are just a couple of new applications, a couple of old applications coming back, and then stabilizing the market and seeing a lot of share come to us because of supply stability and price stability.

Excellent, I appreciate all the detail. Thank you.

Welcome.

Thank you. Brian Lee, Goldman Sachs.

Hi. This is Britt Boril on for Brian Lee. Thanks for taking the question. I was wondering, can you give us any idea of a split for your renewable product sales for Squalane and other products like, I guess your biodiesel, and how we should think about that mix going forward with the fragrance oil?

Yes. We've not provided that. I'll give you a simple huddle to think about. It's more revenue than volume, which is kind of a third, a third, a third. Think of a Squalane a third of the revenue, fragrances a third, and then other, which includes fuels and other applications about a third, but that is a broad range and just given you a way to think of revenue and it doesn't necessarily connect the volume directly because of the price points that we have for those markets.

Okay, thank you. And then, does the 2014 revenue guidance include that $15 million or so of renewable products that were supposed to be slated for 4Q13, but had the timing issues?

Yes, it does include, but again, very probably, we are going to be having the same situation at the end of 2014, correct?

Okay. And then, maybe just can you talk about what steps are left in the regulatory process for the jet fuel approval?

Joel is probably the best to jump in, he's been in the middle of the process with our commercial team. Joel, do you want to comment on that?

Sure. I mean I think it's the regulatory process that's industry led all around the world and it started. We've submitted the report to the ASTM and then we expect the ballot I believe began today or yesterday and there are several committees they have to review. Our expectation is that this will take a few months. At the same time in Brazil, the oil and gas agency has to once ASTM has approved has to basically codify it into their laws and that will take a few weeks, but they've been fully briefed it in the system. So our expectation is assuming we get all the OEM support in the coming months, we should have approval, but it's still got a lot of steps to jump through.

Okay, great. Thanks for the color. I'll hop back in the queue.

Thanks, Britt.

Thank you. Pavel Molchanov, Raymond James.

Hey, guys. In the filing about the joint venture with TOTAL for fuels, I think it said that a final investment decision can be made anytime between now and kind of early 2017. Is that still the case and can you give us anymore clarity on where in that three-year cycle you expect TOTAL to actually pull the trigger?

Hi, Pavel. I think it's still the case and I don't think we are in a position to really speculate on that. What I'd say is I expect us to build the business together as much as we can at a point where we need volume beyond what Amyris can supply. TOTAL is going to be in a place, they have to make a decision regarding CapEx investment in the joint venture to build the plant and I don't think any of us are in a position to speculate when we think that would occur.

Okay. And then, follow-up on with regard to fuel. So you've said you're at $3.50 per liter for the best runs. Obviously, to sell fuel in any sort of mainstream commodity market, you would have to be at least half or ideally even a third of that. Is there a realistic trajectory to getting to $1.00 or $1.50 a liter kind of costs to sell fuel?

Pavel, I'm going to speak with a different hat on for a second. I'm on the Board of the fastest-growing fuel marketer and midstream company or one of the fastest-growing in the US, and I'm not looking for any fuel that's priced in that range and would have no interest in it. So I can tell you that our conclusion is in the US market specifically, especially with the abundant production of gasoline in the Midwest and the Gulf Coast, there is little desire for anything other than taking down the RFS standard, taking less and less renewable fuel, and frankly making it as cheap as possible, which is probably more like the $0.70 to $0.80 a liter range which isn't something that we have any desire to play in.

Okay. And is it your sense that in geographies outside North America, you don't have to be anywhere near $0.70 to $0.80?

Correct. I mean, Brazil is a good example. But we don't like to build a business dependent on kind of the market forces or the regulatory forces that are in place in those markets, but the fact is that the basics in those markets are quite interesting, they're short, they have to import a lot, and they have a real strategy around sustainable fuel as a way to bridge the gap around the shortage that they're dealing with both in gasoline and diesel, and we see jet around the world that's quite interesting, because a lot of the airline companies view using renewable jet as a great opportunity to demonstrate their commitment and interest in reducing the carbon footprint over time, but we also don't see that as being mainstream fuel. We use it. We see it as being niche fuel as we spoke about in the past.

Alright, I'll leave it there. Appreciate it.

Thank you. Jeff Zekauskas, JPMorgan.

Good afternoon. It's Silke Kueck for Jeff. How are you?

Hi, Silke, doing well, thank you.

I have a couple of questions. The first one is on the guidance. So it looks like that you're expecting maybe $40 million in product revenues next year and like $60 million to $75 million in collaboration revenues. Of the collaboration revenues, how much is committed already today through TOTAL and IFF and other partners and what part of the revenue is still collaborations that you plan to sign?

Yes, over half of the collaborations are either already under contract or in the final stages of contracting. And then, the second part of your question, Silke, could you repeat that for me?

I think we would just spend some time to get it, I was just wondering like how much is already committed and what still needs to be signed?

I think that's probably true what I just said, half is contracted or in the final stages of contracting; and I think on the product side, from a revenue perspective, it's probably about the same, if not slightly better, just to give you a sense of the overall revenue outlook.

Okay, that's helpful. And in terms of production volumes, how much can Brotas produce today on an annualized basis and what do you think the utilization rates will be next year?

I'll try to break that down, Silke. Very good questions. I'd say it can produce a lot more that we need today. I can also give you another data point, which is our exit rate for the year, kind of gives us good confidence to be able to achieve about 1 million liters or better of monthly production if we were doing just farnesene. And I think the key message we gave during the release script was basically that because we're going to be doing multiple molecules, actually, we will not be fully utilizing the plant for production because we want to ensure we give ourselves plenty of space for transition and in light of the space that we have and the productivity that we're achieving with the technology that actually we can produce all the volume we need by only producing during the time that we have access to lowest-cost electricity and raw material.

Okay. Thanks. That's helpful. I'll get back into queue.

Thank you. (Operator Instructions) Our next question comes from the line of Mike Ritzenthaler from Piper Jaffray.

Hey, good afternoon.

Hey, Mike. Good afternoon.

How much does the cash contribution or the cash production cost from Brotas change during the cane harvest versus the fallow months? And is the plan to have sort of any annual shutdown like this to do maintenance in 1Q?

I think, I mean, I don't really want to forecast a lot --

Hello? Hello?

Sir, you're still connected. One moment. Please resume.

Mike, are you there?

And Mike, your line is open again.

Okay, great. Yes, I'm still here.

Mike, (multiple speakers).

The question was around the cash contribution sort of seasonality as we go through the year, and I was curious about kind of your annual plans, but I'd just be interested in your thoughts there.

Yes, and I was going to really break it down into two parts. First, our outlook for whether or not we'd make this a regular routine and I really don't want to talk to that, because a lot of that will depend on the ramp-up of the high-value or high cash contribution products. I think your second question, kind of what does the cash cost impact profile look like through the year, you can think of it as probably somewhere around $0.60 to $0.75 differential in our production cost from having the in-season versus out-of-season impact.

Okay, that's helpful. On the mix in the quarter of volumes, you had kind of alluded to a third, a third, a third in a previous question. I was curious about the contribution from Novvi, that's been running about a quarter of volumes. I was wondering if that had changed meaningfully in the fourth quarter?

It did not change meaningfully in the fourth quarter. And again, the way we're looking at it into 2014, we actually look at that as upside into our forecast in 2014.

Okay. One last one from me on the joint venture of Sao Martinho as you look out over the next couple of years as volumes improve, is the contemplation to finish what you had and build a new plant, and is that kind of a 2017, 2018, later this decade, kind of an event?

It's different for both projects. I think the project that's currently 46% complete, our ideal there is to have that in production sometime by the end of 2016. And then, the other project is probably sometime in 2018, just to give you a sense of phasing and how we're looking at those projects, and the key trigger for the first project is, again, we see a significant interest and demand from the tire industry, assuming that continues to progress well, we expect to see our first industrial tires being produced with our raw material inside of them by the end of this year, and that will start to trigger more demand, that will then lead us to making sure we have Sao Martinho operating in 2016.

That makes sense. Thanks for the clarity.

Thanks, Mike.

Thank you. And I have no further questions in the queue. I'd like to turn the conference back for any closing comments.

Very good. Thank you, Karen. Really appreciate your help. I'd like to thank everybody for their time today and continued interest in Amyris. Again, we're excited that we now have the start-up year behind us. We successfully started up, we've launched another molecule, and are really excited about what 2014 has ahead of us. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone, have a good day.