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No Revenues, No Problem! Thoughts on Coskata’s IPO Filing
11:10 AM MST | December 21, 2011 | By REBECCA COONS
The filing included by-now familiar figures on the addressable market and risks, so I pulled out a few noteworthy points:
They were not kidding, but in all fairness their sales history is not the weakest among biofuels IPOs (table). Coskata posted $250,000 in revenue for its fiscal year ended December 2010, and joins a growing list of biochem/biofuel firms looking to go public with little or no commercial sales.
Those that have launched, namely Codexis, Amyris, Gevo, and Solazyme, were posting sales figures in the range of $38-$83 million. Four of the seven yet to launch have generated less than $1 million in sales in their latest fiscal year. Many revenue streams are dominated by government grants, with limited to zero product sales.
Biochemical efforts are taking a backseat to biofuels. Several companies, like Elevance or Gevo, have decided to target biochemicals either before fuels or concurrently. Ideally, this strategy delivers a quicker route to commercial sales, higher margins, and meaningful volumes (instead of being a drop in the bucket in the behemoth fuels market). It also gives companies an opportunity to bring down the cost of cost of production—ultimately facilitating a smoother entry into fuels.
Coskata gives its biochemicals pipeline an addressable market of $100 billion. The company is collaborating with Total Petrochemicals on a microorganism that can produce propanol, a precursor to propylene. Total is working separately with IFP Energies Nouvelles and Axens to develop an optimized technology to dehydrate alcohols. Coskata expects to expand its efforts into four-, five-, and six-carbon chemicals, and has demonstrated in the laboratory that it can produce propanol, butanol, butanediol, hexanol, organic acids, and certain fatty acids.
Coskata expects its Boligee plant to be funded by a combination of IPO proceeds, cash on hand, and $88 million in debt financing through the USDA’s Biorefinery Assistance Progam. The first phase of the project will produce 16 million gals/year in 2013. Modular expansions will add 62 million gals of annual capacity in 2015.
The estimated cost of the facility was not disclosed, although a comparably-sized cellulosic biorefinery project announced recently by Mascoma and Valero is expected to cost $232 million. Mascoma and Valero have signed a definitive agreement to form a jv to build and operate the 20 million gals/year facility at Kincross, MI. Funding will include a “significant financial commitment” by Valero and an $80 million DOE grant. Mascoma filed for an IPO in September.