Is Bioamber Inc (BIOA) a Good Long-Term Investment?

And, of course, there is sustainability. Recent life cycle analyses show that just 0.04 kg of carbon dioxide is emitted per kilogram of bio-succinic acid produced. That compares quite favorably to the 7.1 kg of carbon dioxide per kilogram of succinic acid produced from petrochemical processes. The company is also less dependent on sugar costs because 25% of the carbon that ends up in its bio-succinic acid is derived from carbon dioxide supplied during fermentation. Now it’s easy to see why 19 customers are waiting for shipments.

What are the risks?
The company has produced only 1.25 million pounds (568 metric tons) of product to date, but that is mostly attributable to a lack of capacity rather than a lack of competency. That may worry some investors, though. Its biggest competitor, Genomatica, produced 5 million pounds of butanediol — a major derivative of succinic acid — over a five-week period in late 2012 and is quickly turning heads throughout the industry as it races to full commercial scale. That is a pretty big deal. The butanediol market represents a $4.3 billion opportunity, or roughly 22% of the company’s total bio-succinic opportunity.

Foolish bottom line
I believe that there is a lot of value in the industrial biotech industry right now for long-term, buy-and-hold investors. Bioamber Inc (NYSE:BIOA) has dropped since its debut, but if snagged at the right price, I believe it could be a solid long-term investment. It is closer to commercial scale than other industrial biotech peers. Just be sure to keep an eye on Genomatica, which will soon be operating in 600,000 liter bioreactors in a 100 million-pound-per-year facility.

The article Is BioAmber a Good Long-Term Investment? originally appeared on Fool.com and is written by Maxx Chatsko.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool owns shares of Solazyme.

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