Shares of Amyris (NASDAQ:AMRS) fell more than 22% today after the business filed a form NT 10-K with the Securities and Exchange Commission. That's the ominous filing code for the "notification of inability to timely file form 10-K," which is the annual report for a business. Believe it or not, this is the seventh consecutive year (!) the synthetic biology pioneer has been unable to submit its annual report to the SEC on time.
The explanation given for the delay this year isn't reassuring markets. Amyris stated it needs more time to reconcile "significant transactions" from November 2018 involving DSM, a key customer. That would be worrisome enough, but the submission went on to list two more reasons for the late filing. The business also needs time to address a material weakness in its financial reporting and says it will admit that there's "substantial doubt" about its ability to continue operations.
As of 1:24 p.m. EDT, the stock had settled to an 18% loss.
Check out the latest earnings call transcript for Amyris.
Wall Street appears to have been caught off guard by the recent admissions, but the NT 10-K filing didn't actually contain any new information.
Individual investors who have been keeping up with quarterly reports from Amyris have known for some time now that the business is grossly overestimating its royalty revenue from DSM. Wall Street has chosen to ignore that reality to date. In fact, this is the second time in the last year the stock has been punished for concerns over its financial reporting, even though the details haven't changed.
Similarly, Amyris has quietly admitted for much of the past year that it's not confident in its financial reporting (likely stemming from its overestimation of royalty payments from DSM). It hasn't provided more detail than that, so investors don't really know what the problem is, how the company is attempting to fix it, or why it's taking so long.
Finally, the business has been operating with ongoing concern that it doesn't have enough cash or liquidity to fund operations for the last several years now. That's not too surprising considering Amyris reported an operating loss of $120 million in 2018. That figure is likely to deteriorate even further if the business has to restate revenue totals that were overestimated.
As is the case for many synthetic biology companies past and present, Amyris has relied much too heavily on storytelling and not enough on building a sustainable business. Most of the products at the heart of that storytelling haven't been successfully commercialized. That has led the business and shareholders on a wild ride through the markets in recent years. Given an honest accounting of the details publicly known right now, investors shouldn't go anywhere near this industrial biotech company.