Amyris-Why Should We Believe Now?

Amyris’ website states, “Amyris delivers high-performance alternatives to petroleum, plant and animal-based products across a wide range of consumer and industry segments.”

They’re one of many companies working on platforms for, and advancements in, biosynthesizing cannabinoids via fermentation. They could throw a stone at one of their competitors. Demetrix, co-founded by Jay Keasling, PhD, is another of a growing number of companies working on this technology and is located just steps from Amyris’ front door in Emeryville. Demetrix has an interesting connection to Amyris that we’ll get into later.

The cannabis industry can make for strange bedfellows and familiar neighbors.

One of the benefits of having an experienced cannabis cultivator (especially one who has cultivated thousands of licensed plants and also understands a great deal about the science behind secondary metabolites) on our team is that we get to have ongoing exploratory conversations about potentially disruptive tech. Disruptive tech like fermenting cannabinoids. If this tech ever becomes possible at-scale, it will significantly change not only the way cannabinoids are produced, but also consumed. Claims of doing this at-scale anytime soon stood out to us, so we did some digging into Amyris.

Let’s start by taking a look at Amyris’ historical stock performance.

That spike towards $500 and subsequent plummet that occurred in 2011 and continued into 2012 raises some questions. Wonder if it has anything to do with this.

Having failed in all of its previous endeavors, including a recent pivot towards sweeteners and baby products (for the latter they partnered with a celebrity most of you probably recognize from Transformers 3), Amyris has now shifted one of its goalposts to the emerging cannabis industry. Every other failing company from high-risk industries seems to be doing it. Why not them?

The stock flatline in the previous chart is exacerbated by the stock’s historical variance. Here is a better representation of its recent performance:

You’ll notice it doesn’t really reflect any bull-run after news that Amyris received their first cannabinoid milestone payment in May. LAVVAN Inc. agreed to collaborate with Amyris this March and paid them $10 million on May 10th for hitting a CBD milestone. Not a bad turnaround time for cutting-edge, revolutionary emerging technology.

Never heard of LAVVAN? You probably aren’t alone. Here’s what their website looks like.

Aside from an online contact form, this image of their home page reflects their entire website.

Pretty basic and bare-boned. Vague, at best.

What about their leadership team?

Some of them came from a few recognizable brand names, but none of the people stand out as cannabis or CBD industry names.

Let’s take a look at some backgrounds.

Hmmmm…no cannabis-related experience for the CEO. Let’s look at some of the advisory board backgrounds from the unrecognizable brands. Here’s Brian Loeb’s background:

And Michael Bush’s:

So no cannabis or hemp industry experience there, either. It's amazing how common this is in an industry that’s existed legally in some fashion for some time; recreationally for five years (Colorado-2014) and medically for over 20 years (California-1996). Even though they are emerging industries and the growing number of jobs in them has created an experience/knowledge gap, there is still a pool of experienced talent to pull from.

Maybe now would be a good time to bring up Amyris’ aforementioned connection to Demetrix. If you read into the article linked earlier, you may have had this spoiled for you:

Neil Renninger was one of Amyris’ co-founders. He then went on to co-found Ripple Foods, which you may know from their plant-based “milk” products. We’ve tried the chocolate flavor. It’s not half bad if your palate has already adjusted towards less artificially-sweetened products. Neil studied Chemical Engineering at UC Berkeley and worked as a lab assistant for the aforementioned Keasling, who remains on the board of the company he helped found.

Amyris seems reminiscent of this cautionary tale.

Add some suspect accounting, questionable sustainability in the financials, and a lawsuit to the mix and we’re staying far away from Amyris for the foreseeable future. We can’t stomach the volatility and the scientific concerns until we see some consistent, definitive results.

We understand that it could be an inexpensive gamble which many traders and investors like to have in their portfolio. We can’t argue they may be right for some people. Too many red flags for us.

Update: after composing this piece, but prior to publishing, Amyris’ stock surged on the back of recent news that they hired a new CEO, Neil Closner (formerly of MedReleaf). MedReleaf was purchased by Aurora for over $2 billion in 2018. We have numerous concerns around many publicly-traded cannabis companies and the house of cards they’ve built for themselves and their C-suites. Congrats if you made some money on Amyris’ run-up. Our guess is many are still bag-holding.

A popular investment resource site (one we use regularly for insight) has a brighter outlook on this stock than we do. We’d add this caution: of 15 articles on the site by this author, 12 feature Amyris.

Stock portfolios are like fantasy teams: yours to manage as you see fit. Absorb as much info as you want from as many sources you want to use, then make up your own mind how to act.

Just because Amyris brought on a team from within the industry doesn’t mean they are any closer to being able to accomplish their goal of fermenting cannabinoids at scale. Everyone thought the Warriors adding Boogie Cousins to their already star-studded roster last season assured that they would run away with the NBA championship and everyone knows how that worked out.

9/11/2020-Cannabinoid Maker Hits Amyris With $881M Trade Secrets Suit