Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Here's Why Amyris Stock Jumped as Much as 28.5% Higher Today

By Maxx Chatsko - Mar 16, 2018 at 1:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The industrial biotech pioneer announced full-year 2017 earnings.

What happened

Shares of synthetic biology pioneer Amyris ( AMRS 2.46% ) soared over 28% today after the company announced fourth-quarter and full-year 2017 earnings. The company reported 113% revenue growth in 2017 compared to 2016, guided for up to $195 million in total revenue for 2018, and appeared to be gaining traction with its new business model that relies heavily on value-sharing agreements with customers.

However, the devil is in the details. As of 12:51 p.m. EDT, the stock had settled to a 19.7% gain.

Man in suit pointing to a green bar chart showing growth.

Image source: Getty Images.

So what

Amyris has been plagued by poor management, high manufacturing costs, excessive dilution, and a lack of traction for almost every product it's tried to launch. It simply hasn't been a good investment. But Mr. Market thinks the current turnaround strategy could yield different results, as evidenced by today's stock jump and a slow and steady trek higher in the last year. Is this time really different?

There are some encouraging numbers in the report of full-year 2017 operations, but there are important details investors shouldn't overlook, either. 





Total revenue

$143.4 million

$67.2 million


Licenses and royalties revenue

$64.5 million

$15.8 million


Grant and collaboration revenue

$36.6 million

$25.8 million


Product revenue

$42.4 million

$25.5 million


Product gross profit

($21.5 million)

($31.2 million)


Net income

($98.4 million)

($97.3 million)


Data source: Amyris press release.

Full-year 2017 revenue rocketed 113% higher year over year, but that was only made possible by massive contributions from licenses and royalties revenue. Over time, this revenue category will report revenue received from value-share agreements. They're essentially profit-sharing arrangements allowing Amyris to capture value from the downstream sales of customers' products that contain ingredients supplied by the industrial biotech.

However, that's not what happened last year. Most of the licenses and royalties revenue reported in 2017 is non-recurring and came from one partner, DSM. Roughly $57 million of the total came in the fourth quarter alone in two separate transactions: an up-front license fee of $27.5 million and the sale of Amyris' lone manufacturing facility for $30.7 million -- not from actual product sales.

Product revenue did grow a healthy 66% from 2016 to 2017. More importantly, gross product margin trended in the right direction in that span thanks to better inventory management and a healthier product mix. The key word there is "trended." Unfortunately, Amyris spent $1.55 to generate every $1 in product revenue in 2017. That's simply not sustainable and shows that the industrial biotech pioneer is still struggling to corral manufacturing costs, although high-margin sales from its own personal care brand, Biossance, should help to improve gross margin moving forward.

Now what

At this point Wall Street is just happy to see any signs of life and progress at Amyris, which has struggled to deliver against its goals for most of its time in the market. Finally meeting its ambitious revenue guidance (a healthy beat, in fact) was seen as a positive development.

That said, the company was only able to meet guidance through two transactions that won't happen again in 2018. And the fact that management attempted to pass off those transactions as "value-share" agreements to argue that its business plan is gaining traction shouldn't sit well with investors. While the value-share business model is now becoming the norm for analytical companies in the field (also called "organism engineering" companies), it's still largely unproven and comes in a few different flavors. Amyris' may prove bitter when all is said and done.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amyris, Inc. Stock Quote
Amyris, Inc.
$5.84 (2.46%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.