By Oliver M. Bayani
BioAmber, hedquartered in Minnesota uses microorganisms to ferment biomass to produce succinic acid. Photo by BioAmber.
Another company using biomass to replace petroleum-based ingredients found in consumer goods has announced plans to raise up to $150 million through an initial public offering.
BioAmber Inc., headquartered in Minnesota, uses microorganisms to ferment biomass to produce
succinic acid, a naturally-occurring substance that could replace its petroleum-derived cousin maleic anhydride. Both substances are used to create high-value chemicals used in the plastics, textiles and pharmaceutical industries including 1, 4-butanediol.
The company already has a commercial scale plant in Pomacle, France running since last year but it plans to build three facilities located in Sarnia, Ontario, Rayong, Thailand and an unverified plant to be constructed either in the United States or Brazil using the proceeds from the I.P.O.
In contrast to its aggressive expansion, profitability for BioAmber is still out of arm's reach. The company lost $10.8 million for the six months ended June 30, 2011 and had accumulated a deficit of $22.6 million over that period.
However, it expects to begin recording revenue from commercial sales of bio-succinic acid in the first quarter of 2012, according to the S-1 document filed with the United States Securities and Exchange Commission
Since its inception in 2008, the company has raised a total of $76.1 million from investors including Japan's Mitsui & Co. and its venture arm Mitsui & Co Venture Partners, private equity firm Naxos Capital Partners, French venture capital firm Sofinnova Partners and the Cliffton Group
BioAmber is the 13th biochemical company to have filed or had a successful I.P.O. since last year. It began with Codexis in Nasdaq, followed by Solazyme and Vinod Khosla-backed firms Amyris, Gevo, and KiOR. PetroAlgae, Myriant, Ceres, Genomatica, Mascoma, Elevance Renewable Sciences and Fulcrum Bioenergy are latest companies which filed S-1 documents in recent months.
The filing did not specify the exchange the company plans to list its shares on, but said it intended to trade under the symbol "BIOA."
Expansion plans
The first of BioAmber's new facilities to be built will be the $200 million Sarnia plant able to produce 34,000 tons of succinic acid at full capacity per year, much bigger compared with the 3,000 ton capacity at Pomacle. With an initial capacity of 17,000 ton by 2013, the facility to be built in cooperation with Mitsui starting next year.
Construction on the Thailand plant will also begin next year, with Mitsui again as partner, but this facility is expected to be operational later in 2014. With an expected cost of $200 million, the Thailand facility will have a bigger annual production capacity than Sarnia with around 65,000 tons at full capacity.
Meanwhile, the unverified plant is expected to be similar in size to the Thailand project and will cost around $210 million to build.
According to the company's S-1, two further plants located in France and in Brazil could be possible after BioAmber sent a non-binding letter of intent with Tereos Syral S.A., a starch, starch sweeteners, alcohol and proteins maker in Europe.
To scale up manufacturing capacity and cut down costs, BioAmber decided to eventually replace the Escherichia Coli, popularly known as E.Coli, microorganism that they been using to produce bio-succinic acid with a bio-engineered yeast developed by Cargill, Inc exclusively for them.
The current market for succinic acid is only approximately 40,000 tons per year, representing a market size of approximately $300 million. However, BioAmber cited recent industry reports by Global Industry Analysts and Frost & Sullivan saying that the global succinic acid market will grow up to 180,000 tons, based largely on bio-succinic acid's performance, cost advantages and environmental benefits.
