BioAmber (NYSE:BIOA)

CAPS Rating: 1 out of 5

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Member Avatar TSIF (99.96) Submitted: 7/8/2014 12:19:21 PM : Underperform Start Price: $11.68 BIOA Score: -10.76

Probably should have left this one alone, but it jumped into my investigatory limit order, so now I'll ride it awhile.

The take or pay deals from multiple plants over the next several years may turn the tide for BioAmber, but I still suspect the price will adjust back down as expectations/timing/revenues don't align with investor sentiment, although low volume generally allows for higher share price to be maintained and volume spike rises.

"succinic acid as a platform chemical that will substitute adipic acid and other petro-derived building blocks"...."chemical catalysis to convert renewable feedstock into sustainable chemicals for use in a wide variety of everyday products including plastics, resins, food additives and personal care products.". The $30M bleed will continue as the factory gets completed and started. Additional loans were taken for the build out. Another dilution should not be needed immediately as long as they can get low interest loans, but it's not unusual for an equity raise when stock prices are firm. R&d AND S&G will stay ahead of cash flow for some time.

Short term call, need to watch this one. Erratic jumps/drops.

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Member Avatar TMFBlacknGold (98.88) Submitted: 7/8/2014 10:58:24 AM : Outperform Start Price: $9.86 BIOA Score: +30.53

BioAmber isn't as flashy or sexy as some other industrial biotech companies, but it has a compelling investment argument. Biosuccinic acid has gained tremendous popularity as a building block molecule to replace petroleum-based succinic acid in the industrial manufacturing of polymers (1,4 BDO, THF, GBL, etc), coatings, personal care ingredients, and more -- all well-established markets. Companies such as BASF (the world's largest chemical company), Purac, BioAmber, and multiple chemical manufacturers are eyeing the molecule for greening their supply chains. The trend is certainly BioAmber's friend, as many in the industry have partnered with the company for offtake agreements and/or signed take-or-pay contracts for a combined 210,000+ MT of production (not all biosuccinic acid).

The biosuccinic acid platform of BioAmber utilizes E. coli bacteria and is protected by intellectual property that expires between 2015 and 2021 in varying international jurisdictions. Additional intellectual property covering the production of organic acids from engineered yeast (licensed from industrial biotech powerhouse Cargill) expires between 2019 and 2026 and a separate grouping that expires between 2031 and 2033. Not bad.

BioAmber has plenty of demand for capacity coming online soon (30,000+ MT of biosuccinic acid at Sarnia, Ontario) and in the near future (several facilities with 100,000+ MT capacity of various molecules planned in next decade). That will ensure growth, early revenue and profits, and secure a leadership position in the markets. Additionally, BioAmber has been extremely smart with financing expansion to commercial scale (many non-dilutive grants, partnership funding, low-interest loans), which is a rarity for the pioneers of the industrial biotech industry.

One big problem is that companies began eyeing a bioadvantaged (more efficient to produce with a biocatalyst than via petrochemicals/thermocatalysts) production route for succinic acid before the glut of shale gas and oil hit the international markets. While still bioadvantaged, prices for succinic acid have been slammed by cheap production from China. I still think the market will expand along with the expansion in production, and there's always the "green premium/advantage" that will help domestic producers.

There's a lot to cover, but I'll circle back around in a future comment to this.

Maxxwell

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Member Avatar OKwarrior (26.69) Submitted: 6/9/2014 12:07:25 AM : Underperform Start Price: $9.57 BIOA Score: -34.52

yet another pie in the sky w/ minimal revenues

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Member Avatar OklaBoston (68.81) Submitted: 5/23/2014 6:27:46 PM : Outperform Start Price: $12.20 BIOA Score: +6.17

Insider ownership on a decided up-trend.

CEO, CFO, and a 3rd director have all made open market buys this month.

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Member Avatar ETMatyahoo (44.94) Submitted: 2/20/2014 11:16:57 AM : Outperform Start Price: $13.61 BIOA Score: -12.20

Innovative chemists.

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Member Avatar TerryHoodSr (51.67) Submitted: 1/23/2014 8:36:03 AM : Outperform Start Price: $9.97 BIOA Score: +24.58

long term potential, TP $17

credit suisse has nice write-up; "BioAmber has a disruptive biological process to convert renewable sugars (i.e., Corn) into high
value chemicals including Succinic Acid and BDO economically and without subsidies."

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