BioAmber reaches milestones in third quarter
November 5, 2015 - BioAmber Inc. third quarter financial release included important production milestones met at its commercial-scale bio-succinic acid plant in Sarnia.
By Andrew Macklin
Key operational highlights include:
- Sarnia is producing high quality succinic acid that has been qualified by a number of customers;
- Sarnia performance to date is validating the Company’s cost of goods target;
- Fermentation results are confirming there is no longer scale-up risk for the biotechnology;
- Following the end of the quarter the Company began commercial shipment of Sarnia produced bio-succinic acid.
“Our third quarter was an exceptional one from an operational standpoint. The plant was commissioned in a short period of time, a remarkable achievement given that Sarnia is a first-of-kind commercial scale facility. We successfully managed the potential ramp-up and performance risks associated with our proprietary yeast technology, the production process and the new facility,” said Jean-Francois Huc, BioAmber’s chief executive officer. “The superior performance we are seeing in the Sarnia plant is due to our unique yeast, the five years of operating experience we gained in the demonstration plant in France and applied to Sarnia, and the perseverance and hard work of our operations, engineering and R&D teams,” he added.
Fermenters at the Sarnia plant are operating 25 per cent above the yield target and 40 per cent above the productivity target set for 2015. The yield and productivity performances in Sarnia are already exceeding the long term targets set for the plant;
The purification process has a recovery yield that has already met the target set for 2015.
In October the Sarnia facility passed a commercial operation test in which it ran continuously for several days and surpassed the plant fermentation, purification and production rate targets.
Over 100 customers have been shipped product for testing and ‘qualification’, with 15% of these customers having already confirmed the high quality of Sarnia bio-succinic acid.
BioAmber and its general contractor Alberici were awarded the John Beck Award, an annual recognition for the construction project in Ontario exhibiting exceptional safety performance.
Cash on hand was $34.2 million as of September 30, 2015. Net cash burn for operating expenses was $1.9 million per month in Q3 2015, excluding costs related to Sarnia commissioning and start up.
Third Quarter 2015 Financial Results
Revenues for the quarter ended September 30, 2015 decreased to $352,000 from $469,000 for the same period last year. Average selling prices declined as customers sought pricing more in line with the prices to be paid for production coming out of the Sarnia facility.
Gross loss for the quarter ended September 30, 2015 decreased to $15,000 from $979,000 for the same period in 2014. This was driven by the recognition of certain fixed costs in cost of goods sold during the third quarter 2014 at the French demonstration plant, which did not recur in the third quarter of 2015.
Research and development expenses for the quarter ended September 30, 2015 increased to $6.0 million from $3.6 million for the same period in 2014. This was driven primarily by an increase in expenses related to the commissioning and start-up of the Sarnia plant, partially offset by the decrease in royalty expense due to the termination of the DuPont and E. coli technology licenses.
Sales and marketing expenses for the quarter ended September 30, 2015 decreased slightly to $921,000 compared to $954,000 for the same period in 2014.
General and administrative expenses for the quarter ended September 30, 2015 decreased to $2.2 million from $2.4 million for the same period in 2014. This was primarily due to the Canadian Dollar depreciation against the U.S. Dollar from 2014 to 2015, partially offset by an increase in insurance and legal fees related to the start-up of operations in Sarnia.
During the quarter ended September 30, 2015, the Company incurred net financial income of $1.6 million as compared to a charge of $507,000 in the same period in 2014. The net financial income in the quarter was the result of $1.3 million non-cash gain related to changes in the fair market value of the warrants issued in connection with the Company’s initial public offering (IPO Warrants). Additionally, warrants issued in 2009 and 2011 (Legacy Warrants) were reclassified from equity to a liability as a correction of an accounting error and were revalued to account for $769,000 of this gain. Net financial income in 2015 was partially offset by interest expense including accretion for the end of term charge on the Company’s long-term loan from Tennenbaum Capital Partners in the amount of $792,000.
Foreign exchange loss for the quarter ended September 30, 2015 increased to $610,000 from $288,000 for the same period in 2014. This was driven by the weaker Canadian dollar versus the US dollar for cash balances held in Canadian dollars.
The Company recorded a net loss attributable to BioAmber Inc. shareholders of $7.1 million, or a loss of $0.27 per share for the quarter ended September 30, 2015, compared to a net loss of $8.1 million, or a loss of $0.39 per share, for the same period in 2014.