What happened

Shares of Amyris (NASDAQ:AMRS) gained over 12% today after the company announced it had signed a binding term sheet with the Infectious Disease Research Institute (IDRI) to collaborate on a SARS-CoV-2 vaccine candidate. 

Specifically, IDRI will develop a vaccine candidate based on its RNA vaccine platform, while Amyris will supply squalene for use in the vaccine adjuvant. Several seasonal influenza vaccines administered to adults over the age of 65 have included squalene-containing adjuvants, which help to boost the body's immune response to the vaccine. The idea is that adjuvants will become a useful component of SARS-CoV-2 vaccines, too. 

As of 12:09 p.m. EDT, the small-cap stock had settled to a 5.2% gain.

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So what

Squalene is commonly harvested from blue shark livers and olives, although the extraction processes are inefficient and prone to market risks. For example, there are ethical concerns regarding commercial shark fishing, and some of the planet's most productive olive-producing regions have faced increasing pressure from pests in the last decade.

Amyris has genetically engineered yeast to manufacture farnesene through fermentation. Two farnesene molecules can then be combined to form one squalene molecule. Bioprocesses can be scaled more easily than shark- or olive-based harvesting methods, require a significantly smaller footprint, and can be lower cost. The company has manufactured farnesene and its derivatives for various uses over the years, including transportation fuels (farnesane) and cosmetics (squalane). 

It's possible adjuvants will be added to SARS-CoV-2 vaccines administered to people of any age. However, squalene-based adjuvants are typically only included in vaccines administered to those 65 years and older, which represents a relatively small market size. Amyris is jumping on the coronavirus pandemic bandwagon nonetheless.

Now what

Amyris has touted its ability to manufacture various products and opportunistically jumped into many markets in the last two decades. But past efforts to commercialize transportation fuels, performance polymers, lubricants, flavors, fragrances, vitamins, cannabinoids, sweetener ingredients, and others haven't panned out or were sold off to keep the lights on. The business has never posted consistent profits. 

Could a squalene-based adjuvant be different? Perhaps. However, Amyris doesn't own a manufacturing facility and it's not clear if the company's farnesene manufacturing process is approved by the U.S. Food and Drug Administration (FDA), which would be required for a squalene-based adjuvant. Therefore, individual investors need to weigh whether the signing of a binding term sheet is a noteworthy event or just another public statement from a company with a long history of overpromising and underdelivering.