by Jim Lane (Biofuels Digest) Raises $80M at $10 per share; becomes first new industrial biotech company to complete IPO in more than a year. What went right and how? Is the IPO window re-opening?
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First and foremost, there’s the modesty factor.
The IPO is a relatively small one, raising $80M, compared to the nearly $200M hauled in by the likes of Solazyme and Gevo at the height of the IPO boomlet in 2011.
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In terms of the structure of the offering — the late addition of warrant sweeteners could well have made the difference — providing that upside “kicker” for the investor that balanced more effectively against the perceived risk of an early-stage company.
In terms of market structure — we see that qualifying BioAmber as an “emerging growth company” under the terms of 2012′s JOBS Act ensured that the offering has more regulatory latitude…
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Reduced scale-up risk. Though the IPO proceeds will, in part, be dedicated to the first commercial plant, BioAmber has been running at its demo plant for three years now in Pomacle, France at the 350,000 liter scale — far more progress towards scale-up than some of its peers.
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Lower feedstock risk exposure. As BioAmber detailed in its last revised S-1A registration statement, “Our process requires less sugar than most other renewable products because 25% of the carbon in our bio-succinic acid originates from carbon dioxide as opposed to sugar. This makes our process less vulnerable to sugar price increases relative to other bio-based processes.”
Less policy risk. An advantage that the pure-play renewable chemical companies have over their fuel-only or “fuels and chems” peers? There was never any expectation of market subsidies or mandated usage…
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Biggest risk left?
The market for succinic acid itself is relatively small. The key to BioAmber (and other developers, like Myriant) is finding a market for biosuccinic as a “drop-in” replacement for other, incumbent petroleum-based chemicals, addressing what BioAmber termed “a more than $30 billion market opportunity.” That claim is yet to be proved — and the hard yards of commercialization lay ahead for the company to develop novel markets at scale. READ MORE and MORE