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Codexis chief out, Ceres IPO delayed

Jim Lane

Ceres delays IPO (again); Codexis CEO and enzyme guru Alan Shaw resigns.

In California, visionary industry leader Alan Shaw resigned as CEO of Codexis (CDXS) and the Ceres IPO, scheduled for last Thursday, did not occur and has yet to be rescheduled as of press time. The Ceres IPO remains on the NASDAQ calendar.

At the same time, Ceres said that current shareholders had indicated that they would purchase up to 1 million shares in the company’s upcoming IPO, and the company warned that severe drought conditions in south-central Brazil will adversely affect sweet sorghum crop yields.

The changes at Codexis and delayed IPO at Ceres are indications that life in the public markets remains a rough one for early-stage industrial biotech companies. The changes at Codexis come after the company’s shares fell 65% off their initial IPO price of $13.00 in 2010, despite the company’s relatively steady performance in its fuels business and a fork into the renewable chemicals business, including a landmark deal with Chemtex.

At Ceres: confidence from insiders, drought in Brazil

The company reports: “We are receiving reports that while some of the 2011/2012 sweet sorghum crops being produced from our seeds are growing quite well, others are suffering from the adverse weather conditions. As a result, we expect that this drought will likely lead to overall reduced yields for the 2011/2012 sweet sorghum crops and may adversely affect the demand for our seeds for the 2012/13 growing season.

Ceres: still a good IPO deal?

IPO Candy writes in Seeking Alpha: “If Ceres succeed, the newly discounted share offering of $16 to $17 might be a bargain…The long-term financial model of the company aims at operating margins of 47% to 63%. To put these in context the gross margins at Monsanto are 51%. If one believes these margins to be achievable and applied to a $400M revenue level in 2016 the company supports a per-share intrinsic value of $65.”

Changing of the Guard at Codexis

Over at Codexis, the company reported that Peter Strumph, formerly Senior Vice President and Business Head of Pharmaceuticals, was appointed as the company’s interim Chief Executive Officer, after CEO Alan Shaw resigned “to pursue other interests”, though the company said that Shaw will continue to serve as a special advisor to the Board of Directors.

Shaw served as President of Codexis since its inception and Chief Executive Officer since 2002, and led the company development and 2010 IPO, which was the first in the current wave of industrial biotech initial public offerings.

As interim CEO, Peter Strumph brings more than twenty years experience in senior manufacturing and operations management in the biopharmaceutical industry, including executive leadership position makes society poorer. No matter how you “feel” about electric cars, the OECD Policy Brief and the related discussion paper, “Electric Vehicles Revisited – Costs, Subsidies and Prospects” suggest that global thought leaders are rapidly distancing themselves from the idea that electric drive is a sensible solution.

The discussion paper begins with an introduction that explains, “SZYM) sold some 14 million shares into the
same market at roughly the same price, more than tripling the haul that Ceres is looking at. Now, Solazyme has been the #1 ranked company in the 50 Hottest Companies in Bioenergy two of the past three years, but Ceres has been solidly among the top echelon of that poll for several years. and the company has largely delivered on the development timelines it has shared with the market.

Public markets supply capital, they do not supply patience, and the long-term commercialization timelines for companies such as Ceres and Codexis are proving to be deeply-discounted by retail investors for the market, policy and technology risk that long timelines impose on otherwise fine companies. In short, companies need to provide nearer-term cash flow stories in order to support the valuations they seek.

Disclosure: None.

Jim Lane is editor and publisher  of Biofuels Digest where this article was originally published. Biofuels Digest is the most widely read  Biofuels daily read by 14,000+ organizations. Subscribe  here.

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