Solazyme Inc (SZYM), Amyris Inc (AMRS): Can These Companies Prove Big Oil Wrong?

In all, the company’s platform can produce more than 20 chemical building blocks that enable a wide range of oils, fuels, polymers, solvents, resins, coatings, and more. Unlike competitors trying to manufacture and sell their own products, Genomatica will license the technology it develops to the industry for rapid deployment at a fraction of the cost.

Investors hoping to get into the shining star of bio-based chemicals had their hopes dashed last summer, when the company withdrew plans for an IPO. It wasn’t alone. Several renewable companies, including waste-to-fuels company Enerkem, nixed IPOs last year, citing unfavorable market conditions (poor industry performance) as the their main concern. Whether Genomatica holds an IPO anytime soon remains to be seen, but it will be one for investors to watch.

On the algae front, companies such as Algenol and Joule Unlimited are turning heads with their initial commercialization plans. In the same week that Exxon Mobil Corporation (NYSE:XOM) and Synthetic Genomics stated that their algae technology was “at least 25 years away,” Algenol announced that it had achieved peak production rates of more than 9,000 gallons of ethanol per acre per year. Corn ethanol achieves a yield of just 400 gallons on the same basis.

Algenol is targeting even higher yields for its platform, which will be important if the company wants to keep up with Joule Unlimited. The company is developing a modular commercial algae platform that may ultimately produce 25,000 gallons of ethanol and 15,000 gallons of diesel per acre per year. Steering clear of IPO talks, Joule has raised more than $110 million in private financing since its inception.

Foolish bottom line
Can these companies and others like them show Big Oil that there’s real merit behind biocatalytic processes? Everything hinges on development and the mitigation of unknown factors surrounding the technologies. It will be difficult to decipher in much detail, but investors will want to keep an eye on production costs coming from Solazyme Inc (NASDAQ:SZYM) and Amyris Inc (NASDAQ:AMRS) in the next several years. Industrial biotechnology should capture huge pricing advantages with cheap and non-volatile sugar prices, compared with the currently favored feedstock of natural gas.

The article Can These Companies Prove Big Oil Wrong? originally appeared on Fool.com 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 recommends Total and owns shares of Solazyme.

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