Amyris Inc (AMRS) 2017 Q1 法說會逐字稿

Welcome to the Amyris First Quarter 2017 Conference Call. This call is being webcast live on the Events page of the Investors section of Amyris' website at 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 now like to turn the call over to Peter Denardo, Director of Investor Relations and Corporate Communications.

Thank you, Crystal. Good afternoon, and thank you for joining us this afternoon.

With me today are John Melo, our Chief Executive Officer; and Kathy Valiasek, our Chief Financial Officer.

Please note that on this call, you will hear discussions of non-GAAP financial measures. Reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures is contained in the financial overview slides of the accompanying presentation or the news release distributed today, which is available at investors.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.

During this call, we will make forward-looking statements about events and circumstances that have not yet occurred, including projections of Amyris' operating activities, anticipated transactions we are contemplating and are closing, our strategic plans regarding the potential transactions and their anticipated financial impact on our business and financial results for 2017 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 on the company's recent SEC filings and the Risk Factors section of its annual report on Form 10-K filed on April 17, 2017. 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 discussion of the relevant risks and uncertainties.

Before we begin today, I'd like to note that included in our webcast is a slide presentation we will refer to in today's presentation.

I'll now turn the call over to John Melo.

John?

Thank you, Peter. Good afternoon, and thank you for joining our call.

Today I'll review our results for the first quarter, review the strategic and financial transactions we announced last week, and provide our outlook for 2017. I'll start with a review of our results, which Kathy will cover later in more detail.

The first quarter was the fifth consecutive quarter where we more than doubled our product revenue over the prior year. We are very pleased with the performance of our products and partnerships and the strong demand we are continuing to experience for each of our products. We have now introduced more than 10 products to date that are each delivering more than $1 million in annual product revenue, and we have 3 brands that are on track for more than $10 million in annual sales. We also have our first [DRE] molecule with farnesene, where we expect our first molecule of $30 million or more in annual product sales this year and well on our way to $100 million in annual sales from that DRE molecule. We have the highest product revenue of any company in our sector, and we are just starting. Several of our competitors have indicated in their quarterly filings that they are struggling to get adoption or that they have weak demand from their customers. We are working hard to keep up with our customer demand with each of our key segments, and each of our partners increasing their 2017 orders during the first quarter. I will cover this in more detail and also provide more detailed guidance later during our call.

Our collaboration payments also remained strong over first quarter of 2016, but as we said before, are choppy and not very predictable by quarter. Our partnerships and these payments have been consistent on a yearly basis and are a key differentiator for our business model over our competitors. We expect these payments to be slightly over the high-end of our $50 million to $60 million range this year. These partnerships and the related payments are a strong example of the market leadership we've demonstrated with our technology platform. We deliver solutions to our partner supply channels. A key partner mentioned to me in the last several weeks, "You are our product innovation pipeline." We appreciate the trust our partners have in us. This trust comes from being the fastest-to-market, with predictable timing and cost to engineer, scale and produce better products that deliver better economics and product differentiation to our partners. This is very different than some of our competitors, doing business with related companies and restructuring their contracts to drive revenue.

Our collaboration revenue comes from market leaders where we are delivering products to help them gain competitive advantage and where we are both winning through the value share arrangements in our collaboration agreements. After the quarter ended, we announced our most material partnership to date in terms of alignment with our strategic direction and growth opportunities. Our partnership with DSM includes production at world-class -- at our world-class fermentation factory, scaling strategic products and developing products for health and nutrition segments. This partnership is the direct result of our demonstrated market leadership in nutraceuticals and is structured to provide Amyris for long-term financial stability both our partners and investors are seeking. This is the most material partnership we've entered into since our IPO and the relationship with Total, before the IPO. We have referenced this partnership during our last call, and this is a good example of the choppiness in our collaboration revenue. We expected to close this quarter -- to close this deal before the end of the quarter. It took a month longer, and the structure is more long-term and very product-focused. We will deliver the value we expected from this partnership starting later this year.

Our product sales increased 164% over the first quarter of 2016. Our product sales will deliver more revenue than our collaborations this year for the first time since we decided to exit the ethanol trading business and shift away from renewable fuels. We will more than double product revenue this year to over $60 million, and are on track to deliver over $160 million of product revenue in 2018, with most of this coming from current partners and products where we are experiencing significant traction.

Let me explain in more detail the key drivers of our revenue and what you can expect. First, we recorded record quarterly Biossance sales following the brand's successful launch into Sephora. Biossance is delivering high growth. Sephora told us this is one of the most successful independent brand launches they've ever experienced. This is a business that generated about $500,000 in total retail sales in 2016, and is on track for over $10 million this year and could be $20 million in retail sales for next year. This revenue has little impact on our production capacity. We have enough production of squalane to more than meet this retail revenue without any stress on current capacity. We really like this business, and it's fully in our control. It has excellent gross margins, and it's making a real difference to the health of our customers' skin and the health of our planet. It's also an easy business to find a customer, and I like that. The customer for this business is everyone over 20 years old that cares about healthy skin. We are just scratching the surface of the potential for this business. We are in less than 40 Sephora stores, we are in the sephora.com store, the biossance.com store and have several shows on the Home Shopping Network. Each of these channels is performing very well, and our focus is additional reach to consumers through more channels and more doors. As a result of our strong channel partnerships and early retail success, we have one of the lowest marketing costs in skin care today. We are investing less than $0.40 for every dollar of revenue, and have very strong customer loyalty repurchase rates. Customers -- consumers love our product, and some of our products we can't make fast enough to keep in stock. We are making a product that truly does make your skin healthier. We are about real science behind the product and not just another brand story. Our history is about better health and access to the best treatments. This is a good example of the real impact of our technology.

The second big driver of product revenue growth is our farnesene for use to make Vitamin E oil. This is a partnership with Nenter in China and is performing better than all of us expected. This represents around $15 million of our increase in product revenue for 2017 over 2016, and is expected to represent over $30 million of 2018 product revenue. This is a great example of why cost leadership and product performance matters. Using farnesene as the raw material to make Vitamin E results in over a 30% cost advantage and better performing product and process than the alternative. This has provided our partner with a significant competitive advantage. Our partner has indicated a desire to purchase over 90% of our farnesene production for the next 2 years, as they expand their current capacity for Vitamin E oil. We are considering this currently, as we consider the highest value opportunities to use our existing manufacturing capacity.

This is another critical point of [distinctiveness] about our business in comparison to many competitors. We are an optimization and value-driven business, not a volume and utilization business. We generate more revenue and create more value by using our limited capacity to make the highest value products and to access the best value share opportunity, not by making the most volume of a single molecule. We can generate anywhere from $50 million to $160 million in product revenue and value share using our current capacity based on the products we choose to make and the amount of that product.

Our third value driver for us, our fragrance and active cosmetic ingredient business, continues to perform very well. We expect 50% to 60% revenue growth in this business this year, and also the commercialization of 3 new products. This is our best year ever in terms of new products, and a trend we expect to continue for the coming years.

Our 2 existing products continue to perform better-than-expected, and our customers continue to expand products in development with us.

In addition to our 2017 revenue, as noted on our last quarterly call and in recent announcements, we continued to execute on entering the $90 billion sugar market with healthy sweeteners that are focused on replacing sugar through our technology. Based on the progress of our development work, we expect industrial production of several leading healthy sweetener products in 2018. We believe we are on track to be the low-cost leader of natural white sweeteners with low calories that are substantially and naturally sourced. We're excited about the partnerships in this segment, and the early response from product testing. We expect this segment to represent over $50 million of 2018 product revenue.

In addition to these products in our core focus markets, our performance materials through Kuraray for the tire industry and through Novvi for industrial lubricants are also performing very well. Our Kuraray business will be double what we expected this year as a result of additional tire manufacturers adopting our liquid farnesene rubber and the better-than-expected success from our first tire partner launching. And finally, last week, we took another significant step toward funding our company to sustainable, self funding and simplifying our balance sheet.

The financing and debt reduction transactions, to be detailed by Kathy, was born out of Royal DSM approaching us with a desire to have access to our technology which supports DSM's strategic markets in health, nutrition and materials. For Amyris, DSM's channels and market access and keen understanding in selecting the right products for the animal nutrition, human nutrition and consumer health markets provide significant strategic value. This new relationship is expected to be relatively similar to our partnership with Venture, where we have experienced quick success in growing with them in the nutrition market. We expect to replicate that success with DSM and leverage each other's key strengths to grow in high-growth mobile markets for animal and human nutrition as well as consumer health.

In summary, we are pleased to have put Amyris on much more solid financial footing, in fact, the strongest footing the company has been on since our IPO, and to have lowered our debt by 1/3 while gaining the leading company in health and nutrition as a leading shareholder and strategic partner.

So now let me summarize. Product revenue matters. It is the indication of how well our strategy is working and the impact we could have on the health of the planet. Our product revenue is predictable and is growing at a better rate than we expected. We are the leading product revenue generator in our sector, and we are not having an issue with customers and consumers wanting our products.

Collaborations are the key to our product success. Our partners select products that are strategic and provide them with competitive advantage. The revenue from collaborations is choppy quarter-on-quarter, but predictable for the full year. We have the leading product and partner portfolio in our sector and it is, and has been, delivering significant value.

The sweetener opportunity is a significant step up for Amyris. DSM is a deep strategic partner that understand and is a leader in health and nutrition markets. The sweetener business and the DSM partnership provide us with significant competitive advantage and can be the real difference maker for our technology platform, having a deep impact on the health of our planet.

Our competitive advantage comes from having the leading technology platform in our sector. We design and engineer chemistry for a healthier planet. We use nature's biology to produce and deliver lowest-cost products that are strategic to our partners. We are establishing strong leadership positions in large markets that are pervasive in everyday consumer lives.

Our focus on health and nutrition, personal care and performance material markets, and our mission to make better products for a healthier planet is starting to really deliver. Each of our key partners has increased their orders in the first quarter.

Now let me turn to Kathy for a detailed review of our financial results, and then I'll provide our outlook for 2017. Kathy?

Thank you, John, and good afternoon, everyone. We are pleased to have recently announced some key strategic and financial transactions that we had mentioned on our last earnings call. This includes a series of agreements for up to $95 million in equity financing led by Royal DSM and including other investors, some of which have previously engaged in equity and/or debt investments in Amyris.

Tranche 1 of approximately $47 million closed this past Thursday, and the second tranche of up to $48 million, which is subject to approval by DSM's managing board, is expected to close within 90-days of last week's closing. This second tranche is also led by Royal DSM and will include other investors.

With each closing, DSM will gain 1 board seat. Since our last call, we have improved our cash liquidity and our balance sheet and are in the process of reducing our debt by approximately $75 million, deploying less than about $20 million in cash to achieve the reduction. Aside from our term loans for our consulting, we now have [FERC] maturities of approximately $6 million. Together with the debt reduction and the cash from the closing of tranche 2, we feel we are well on our way to sustainability.

Now let me take you through our first quarter results, following which I'll detail the financing we announced last week and how it affects and simplifies our debt and capital structure.

First quarter revenues were $13 million compared with $8.8 million for the first quarter of 2016. While collaborations were down somewhat due to the timing of bid close, the top line performance was due to continued growth in product sales.

Product sales were $8.3 million, up 154% over $3.1 million for the first quarter of 2016. This increase was the result of Vitamin E sales, which continued to ramp; liquid pharmacy and rubber shipments to our tire partner, Kuraray; as well as the shipment to one of our fragrance partners and growth within our Aprinnova and Biossance lines for claiming-related sales.

Collaboration revenues of $4.7 million were about $1 million lower than the year-ago quarter due to the timing of milestone inflows and the delayed signing of new partnerships. We anticipate that Q2 2017 revenue will increase sequentially and quarter-over-quarter, driven by anticipated strong product demand and milestone-based recognition of DARPA collaboration revenue, and we anticipate the same level of revenue grant from Q2 through Q4, as we experienced last year.

Adjusted gross margin, which excludes depreciation, inventory provisions and excess capacity charges was $1.3 million compared to an adjusted gross margin of $5.1 million for the same period a year ago. This was impacted by our need to run the Brotas plant through what has historically been a seasonal shutdown period for the plant every year in Q1 due to the rainy season, and at the same time, the annual shutdown of the sugar mill adjacent to our plant. For the first time, we needed to run straight through this season in order to meet customer demand and ship on time. As a result, BHP molasses at higher cost than sugar was used in addition to higher costs incurred due to the rainy season.

We expect our adjusted gross profit and margin to dramatically improve through the second quarter, as we are now past the seasonal issue that impacted cost. I will also note that our anticipated value share on products shipped in Q1 may somewhat offset adjusted growth loss recorded for the quarter as we achieved delayed recognition for the value share.

For the first quarter of 2017, selling, general and administrative expenses were $12.8 million compared with $12.3 million for the same period last year. Here, we continued to keep these expenses in check despite a 47% quarter-over-quarter increase in total revenue. This was offset by higher R&D expenses that came in at $14.8 million compared with $11.9 million for the same period last year due to collaboration activity with DARPA, the Department of Energy and Ginkgo Bioworks. Adjusted operating expenses representing combined R&D and SG&A expenses excluding stock-based comp and depreciation and amortization were $24.1 million, this was up from $19.9 million for the year-ago quarter, primarily reflecting collaborations-related R&D activity.

Net loss for the first quarter of 2017 was $37.4 million or $0.13 per basic and diluted share compared with the same period last year of $15.3 million or $0.07 per basic and $0.12 per diluted share. The significant driver of the quarter-over-quarter increase in net loss was tied to a much lower gain from the change in the fair value of derivatives in Q1 of 2017 of $2.3 million compared with $21.7 million in Q1 of 2016. Adjusted net loss for first quarter 2017, excluding these items and stock-based compensation, was $38.2 million or $0.13 per basic share. This compared with an adjusted net loss of $34.7 million or $0.07 per basic share and $0.17 per diluted share for the same period a year ago.

Now let me take a moment to review our debt at March 31 as well as the impact of the tranche 1 financing and debt convergence that we announced this past Thursday. After that, I'll take you through what we believe will be a much-improved capital structure, once we complete our planned second tranche financing. As previously mentioned, we have been able to reduce our debt significantly since our last call. In connection with last week's transactions, we had convertible debtholders convert approximately $7.1 million principal amount of debt, and also certain shareholders converted their loans to equity of $29 million in principle. Also, since March 31, we had debtholders convert $24 million into equity at conversion prices ranging from $1.14 to $3.74. Additionally, we paid cash of less than $20 million to retire certain short-term notes. The debt reduction in process related to these transaction totals about $75 million or, overall, about a 30% reduction in debt. We have also extended the term of one of our notes to 2018 in the amount of $3.7 million. So aside from our term loan for our facilities, we now have FERC maturities of approximately $6 million. The next significant debt maturity is not until Q4 of 2018.

As we announced last week, we closed on approximately $47 million in equity financing, $25 million coming from our new long-term strategic partner, DSM, and $22 million from other financial investors.

The transaction's structure was fairly complex due to NASDAQ rules allowing for sale of equity at a discount in excess of 20% only with a shareholder vote, which we expect to hold during the first week of July. The preferred stock sold in the financing will be automatically converted to common stock within 90 days of shareholder approval. The transaction was priced at a 20% discount to market. Discounts in these transactions are fairly typical, especially within our industry and given the recent volatility in our share price. Together with our anticipated revenue growth, the cash from tranche 1 of our recent financings, and the expected cash from tranche 2 and the progress we have made to restructure and reduce our debt, we feel that Amyris is now on a path to sustainability. Looking forward, we are encouraged by the progress we have made towards strengthening Amyris to create a better financial foundation for our rapidly growing company.

Now I'll turn the call back to John.

Thanks, Kathy. While we still have a lot of work to do, we've made significant steps to solve legacy issues regarding our capital structure and our debt overhang. This will simplify our company, reduce interest expense and provide greater clarity to our stakeholders and partners that we engage with on really moving forward their long-term product innovation. But this will also enhance our ability to continue our growth path and to lead the company into the sector for 2017 and beyond. The power of our technology platform is known, and our ability to mutually succeed with our partners is evident via our strong relationship with partners like Nenter, DSM, Firmenich, Givaudan and many others. This reputation is why partners like Nenter and DSM have approached us, and it has and will continue to support further growth for Amyris.

Let me now turn to our outlook. Our product revenue has delivered 5 consecutive quarters of doubling year-on-year revenue growth, and we expect this strong growth to continue and to be predictable. We expect product revenue for 2017 of over $60 million and over $160 million in 2018. We expect collaborations for 2017 to be on the high end of our $50 million to $60 million annual collaboration revenue range. The collaboration revenue is choppy and not predictable by quarter, but is expected for full year delivery for 2017. We expect total revenues of between $115 million and $125 million for full year 2017. This equates to over 100% product revenue growth over 2016 and another strong year of performance with our collaboration partners and the resulting payments from these partners.

For 2018, we expect total revenues to exceed $210 million. The majority of our product revenue growth between 2016 and '17 is derived from our skin care products, Vitamin E oil and the value share of our ingredients business. All of our other products are also growing but have a less material contribution to our business. For 2018, we expect continued material growth from these key products. The additional benefit from the 3 new products we are launching this year in our ingredient business and the first year of product revenue from our sweetener business.

So in summary, first, we are demonstrating clear leadership in our sector. We are delivering material product revenue growth, our competitors are not. Secondly, our product revenue is predictable, and our collaboration revenue is choppy quarter-on-quarter. We have the leading partner and product portfolio in our sector and year-on-year, our collaborations are delivering. The best of our business model, our value-share component, is just starting to drive cash for the company. We generated less than $1 million last year in value share. For 2017, we'll generate between $7 million and $10 million and for 2018, we expect $30 million to $40 million in value share. This is pure margin from the sharing of the cost benefit we delivered for our customers.

Thirdly, we now have 3 significant step-out opportunities in our portfolio. Number one, our skin care line is delivering products consumers want. We are selling out our stock. It is a product line where we control our destiny. Second, farnesene is delivering a real breakthrough molecule. It is on track to become our first $100 million molecule annually over time. Thirdly, we partner in health and nutrition with DSM. We are very excited about the depth of knowledge and the success they have had in the food and nutrition markets, connected with our best-in-class technology to combine for accelerated growth in this segment. Lastly, we have the best cash position since our IPO and the lowest net debt that we've had in over 3 years. We are well positioned to be self-sustaining from a cash position and a much more attractive partner for our collaborators and investors. There is no other shoe to drop.

Thank you for your continued support and your continued help in making the world healthier. We succeeded in malaria, failed becoming a successful renewable fuel company and now have the necessary traction to drive and have the positive impact that we aspire for a healthier planet.

I'd now like to open the line for any questions you may have. Crystal, can you help us?

(Operator Instructions) And our first question comes from Sameer Joshi from Rodman & Renshaw.

My first question is you repeatedly made the comment that you are differentiated from -- and you are seeing success in your products that your competitors are not. What is -- what do you attribute this to? Like, what is the reason that you're seeing success and -- where others are not being able to capture market share?

I think it is early, Sameer. So I hope -- hold hope, and I think the industry and the world needs all of our competitors to succeed in getting their products to market. I think our difference is we've been doing this for 10 years, we have over $1 billion invested in the company and we've built a platform that is now very predictable. We're not a single-product company. We basically take what customers need for their business. We engineer it, we scale it and we produce it. The fact that we have a predictable platform, the fact that we're now engineering products for our customers in less than 1 year at a cost that's less than $900,000 per molecule, those 2 data points, I think, are step-outs in our industry. And we're not done yet. I mean, there's still a long ways to go. I think the other part is the factory, the fact that we can actually tell a customer, "We're going to engineer, produce and deliver to you," is something no one in the industry has been able to achieve. So I think the fact that the platform is what it is, it's predictable, it's low cost and delivers what customers want and the fact that our factory can turn those products and deliver really takes us out of the group of competitors that I recall companies doing science experiments versus companies that are actually delivering real commercial success. If you look at product revenue, the only competitor that was even near us was Intrexon, and they delivered less product revenue than we did in the last quarter and they have flattened out with their product revenue. So I look at that and think that is a perfect example of a company that has lots of science, lots of experiments, but no real traction in delivering products to market.

Yes, understood. Speaking of production capacity, Brotas 2 was ground broken in January. Can you give us an update on the progress of that build out?

Sure. That development is going very well. We are on track to have the plant completed, built out by the end of 2018. I'd expect in the fourth quarter of '18. I'd expect first production in the first quarter of '19.

And the outlook you have given for 2017 and some of it for 2018, it can all be achieved using the existing capacity at Brotas, right?

We will be -- yes, we will be using -- we are using this year a little bit and more next year contract sites to meet all of our demand. So basically, the way to think of it is contract sites will be a bridge to Brotas 2 in 2019, and we have identified those and are already starting to do tech transfer with some of those contract sites.

Got it. Understood. Just one more on -- before I move on to the debt transaction. Can you give us an update on the noncore assets? What -- are you getting any revenues or generating any revenues from the "noncore assets" that you are holding for sale? Or...

Well, one of the things that happened is one of those noncore assets that we classified as noncore has become a significant revenue driver for us. So I would say the only noncore that we have now is already something that we have started bringing in other investors to and we'll continue, which is really our Novvi joint venture. It is a great business. We think lubricants are a great future, especially renewable lubricants. But we think our role in that business is purely as a supplier, and we are seeing significant demand and interest from industrial companies wanting to invest and become partners in that business with us. We did that already last year. We'll continue to do that this year. And as a result, we'll continue to take down our ownership and just focus on being a supplier for that industry.

And you mentioned sweetener product. Do you think it will be introduced in 2018 and you will have some revenue from it in 2018?

Yes, I mean, we expect about $50 million or so in revenue from sweeteners in 2018. That is a partner project. So we're not saying that because we hope to [kill the market] ourselves. We actually are partnered with people who are very integrated with the market, have existing supply agreements and are helping us get the product tuned and ensure that we are the best-in-class.

Got it. Got it. Just a clarification from Kathleen on the debt. So $75 million of debt is being reduced, only $20 million cash is being used. So roughly $65 million is converted or retired. How should we look at it, that remainder of $55 million?

$55 million to $60 million, correct.

And has it already occurred or is it -- will it occur after the 90-day second closing [as] elimination of debt...

Essentially, all are already incurred.

So the $75 million debt is either converted or repaid already?

Correct.

Correct.

(Operator Instructions) And our next question comes from Jeff Osborne from Cowen and Company.

Just a couple questions. I'm trying to sum the numbers that you gave to get to the $60 million. So if I heard you right, for product revenue, you're talking about $10 million this year in Biossance revenue, $20 million I think I heard you say in Vitamin E. And then on the value share for ingredients, I think I heard $7 million to $10 million. So I think I'm missing $20 million, $25 million. Can you just help me, where would that be coming through?

Yes, I'll give you the numbers. We may have given you a little bit more ranges. So let me give you the big buckets. Flavors and fragrances, $14 million. And this is purely product revenue, right, Jeff?

Exactly, yes.

So flavors and fragrance is $14 million; skin care around $20 million because you covered Biossance, but skin care includes Biossance and Neossance, where it's now called Aprinnova, our [JV] with the Japanese, Nikko Chemicals; and then the vitamins, which is actually about $24 million for the year. So before you get to any of our industrial products, you're at about $56 million in product revenue for '17. And then the rest will get us a bit over to $60 million because it's the polymers to Kuraray, it's the farnesene supply to Novvi and then some other smaller businesses that we have. But the major one, the $56 million, really covers the heart of our business: skin care, vitamins, flavors and fragrance.

Okay. That's helpful. And then I imagine it's somewhat confidential, but the $50 million to $60 million in collaboration funding, can you just kind of go through and rank order the major partners to get that? Obviously, it came in a lot lower than we were expecting in Q1. You mentioned the timing is difficult to predict. But can you just walk through who the top 5 guys are in kind of order of size or magnitude? And then just any color for modeling if that's based on the milestones that you expect to achieve. Do you think that's more back-end loaded in the second half of the year? Or is there one big item next quarter? How should we be thinking about that piece?

Yes, you bet. Let me try and take you through. And I want to highlight, Jeff, we also were a bit disappointed. We had everything in place for what we expected in the first quarter. And one of our partners, Ginkgo Bioworks, failed to make milestone payment to us, and that's really the big difference we have in the first quarter. So from a delivery standpoint and a technology partnership standpoint, we really did everything we expected in the first quarter. So I just wanted you to know that, that it's not because of a technical miss. It's actually a failed payment that we're working through. But let me take you through what the top look like [vertical]. So think about Firmenich, DARPA, Givaudan, PureCircle and DSM being our 5 top collaboration generators, and think about all of those being fairly equal. There's a couple outliers, but they're all north of $5 million with the exception of a couple of outliers.

Okay. And then any thoughts on timing just from a modeling perspective? Should we back-end load the year? Or do you have line of sight that maybe the Ginkgo comes in, in 2Q and some other bigger, chunkier checks?

I'd say fourth quarter is going to be good, but I think the second and third are going to be balanced. And the second and third -- one second, Jeff. You could think of the second and third each around the 10-ish level in collaborations. And then obviously, a pretty big step out in the fourth quarter really as we become really active with DSM.

Got it. Okay. And then I know you highlighted that you produce for value and not units or utilization levels. But that being said, can you just talk about what the utilization is in Brotas currently? I think I heard you say you [tool] an underutilization charge, but I just wanted to understand kind of how you're looking at running the plant. And then also, I was just -- out of curiosity, how was -- I assume you switched over to cane and no longer using molasses. How has that changed over in feedstock?

Yes, you bet. Let me -- I'll let Kathy talk about the utilization charge. Let me give you both answers on how utilization is looking and then specifically, what happened with the switchover to cane syrup. The utilization is, we are operating around-the-clock in getting as much uptime as we can. The only time we're down at the plant is when we're switching from one molecule to another. And each molecule switch is, call it, on average about 10 days or so: 5 on the front, 5 on the back end and that is to sterilize the plant for running another molecule. So that's actually -- when we think about downtime at the plant, it is all to do with molecule switching. And obviously, that matters a lot to us because the molecules we're switching to are very large revenue generators, but not significant volume. But the -- so that's point one is -- like when we ran farnesene, we're running farnesene at 80%, 90% uptime. When we're running each molecule, running at that, and what brings upside down our utilization is really when we switch molecules, so just keep that in mind. I think for the question on the feedstock, we have switched over to the syrup. Everything we've seen so far in the switch has gone very well, back to what we expect. So I don't expect any major issues. And as you've noticed, sugar prices are back where they should be. So this should be a very good year for us as far as unit costs are in the -- or during the season.

Got it. And then the -- did Kathy have a comment on the underutilization charge itself?

So just if I look quarter-over-quarter, it's so much less than it was in Q1 '16, obviously, just depicting that, as we said, that we have to run full stop. So it was relatively small when you compare it against 2016.

Got it. And then the last one I had is just a clarification. The restatement of Q4 revenue, how much of that flow through in Q1? And if it didn't flow through in Q1, how do we think about that flowing through the P&L in 2017?

It was 0 in Q1. And the numbers I gave you, Jeff, don't include any of that flowing through because I look at that as a bit of a guess, right? It's not something we have planned for. And therefore, the revenue that comes in from that will just be a move from what we had in '16 to '17. And we expect that adjustment to come through in the second quarter, right? It will be incremental to what I gave you as our view for second and third quarter in collaboration revenue.

Okay. And remind me again, is that $9 million, $10 million in round numbers?

It was $10 million.

$10 million, okay.

(Operator Instructions) And we have no further questions from our phone lines. I would now like to turn the conference over to John Melo for any closing remarks.

Thank you, Crystal. We promised you on our last call that we expected to complete certain strategic and financial transactions that will have a material impact on our business. While change is difficult at times, these steps have provided growth capital, reduced the complexity of our capital structure, already reduced our debt by a significant amount and improved our balance sheet. We have not yet started to communicate the commercial value of the relationship with DSM, and that will be forthcoming as DSM and us work through the specifics on products, time-to-market and what we will end up doing together. We could not be more excited and see it as a significant step forward for our company as well as a healthier planet.

I'd like to note that Amyris will be hosting its first Annual Biotech Summit tomorrow at our headquarters here in Emeryville. This summit includes -- will include investors, partners and key guest speakers, and it promises to be an exciting event, showcasing how biotech is disrupting high-growth markets. The primary portion of this event will be videocast live, and we hope many of you will have a chance to view the program we have planned.

In closing, I'd like to especially thank our partners and our investors for their key support in aligning Amyris on its mission to support a healthier planet through sustainable, better-performing products. Thanks, again, and have a great afternoon.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a great day.