Management shake-up en route to execution, profit
The hammer drops in Emeryville. Company president Portela, CTO Renninger, general counsel Tompkins out; new CFO, reshuffle and promotions within.
After an 90% stock plunge, Amyris responds. We look at the drama of who’s in and who’s out – but also beyond – to execution and profitable production.
In California, Amyris (AMRS) announced a major management reshuffle as the company contends with its ambitions for growth, difficulties in ramping up production to meet the goals originally set after its IPO, and a share price that has dropped from a high of $30.78 to yesterday’s $2.83.
Who got the sword?
In the reshuffle announced days prior to the company’s Q1 earnings call on Tuesday, three key executives are out: Mario Portela, President of Global Operations and Chief Operating Officer; Tamara Tompkins, Executive Vice President, General Counsel and Corporate Secretary; and Neil Renninger, Chief Technical Officer. Dr. Renninger will remain as a member of Amyris’s Board of Directors. Amyris CFO Jeryl Hillerman was also replaced this week by Steve Mills in a long-contemplated move.
“We are realigning our management team as we pursue our current production ramp up. We are committed to achieving profitable, predictable operations,” said Amyris CEO John Melo.
New management roles
Peter Boynton will lead business development activities; Gary Loeb will serve as Amyris General Counsel and Corporate Secretary; Mark Patel is being promoted to Senior Vice President of Commercial Operations, responsible for leading products strategy and sales growth; Ramesh Raman is being promoted to Senior Vice President of Global Manufacturing, responsible for manufacturing and supply chain; and Christine Ring will lead legal technology strategy and intellectual property.
Continuity in R&D, Science, strategic partnerships, and corporate affairs
Joel Cherry will remain as head of R&D; Joel Velasco will continue his role leading external communications and policy as well as strategic partnerships; Paulo Diniz will continue to lead Amyris Brasil while expanding his responsibilities in strategic partnerships; and Jack Newman will remain as the Chief Science Officer.
The View from the Street
Raymond James equity analyst Pavel Molchanov, wrote an evocative note on the shake-up.
“Having withdrawn production guidance in February and announced a dilutive ”emergency” equity raise in March, Amyris is in rough shape. The stock’s year-to-date decline of over 70% makes it by far the worst performer in our alt energy coverage universe. In this context comes news that Amyris is reshuffling its executive ranks, with the head of operations, chief technical officer and general counsel leaving the company. Concurrently, Steven Mills becomes the new CFO, though the CFO change had been in the works since last year. CEO John Melo appears to retain the board’s support at this point.
“While management changes (and we suspect layoffs too) are probably inevitable given the company’s current condition, ultimately the solution to the recent scale-up difficulties needs to be a technical/operational one, not just cost-cutting. The stock’s recent meltdown suggests that the market may see bankruptcy as a realistic scenario. While in no way minimizing the challenges faced by the company, we think that there is ample cash on hand to sustain operations into 2013 – but the stock could remain in the penalty box until there are clear signs of progress in commercialization.
The cast changes, the show must go on
It’s a sweeping announcement, right before the earnings call, but there’s little to be gained by focusing on the drama of who’s in and who’s out. Worth pointing out that the dancers now out in front were all promoted out of the Amyris chorus line.
The pressure is on CEO John Melo to articulate – to investors, and as soon as possible – what the specific problems are at the fermenters. If there is a basic flaw in the technology platform, firing the general counsel won’t solve anything. If there’s no basic flaw, then as a public company, Amyris will be expected to resume guidance to Wall Street and meet those forecasts, or John Melo will certainly be the next to mount the guillotine.
It is fair to note that the company, judging from share price, is facing an extinction-level threat in investor confidence based on its scale-up difficulties. Faced with similar circumstances, other boards have prepared whole layers of management for atonement via the hara-kiri. By contrast, the Amyris board has taken a “salvation lies within” approach, blessing a change in the technical team leadership consisting of one promotion and one co-founder exiting a management role but retaining a seat on the board. That takes cojones. Let’s hope their faith proves out.
Melo and the team certainly know all this better than the Digest, and are doubtless going to tackle this task, starting next week with investors via the company’s quarterly earnings call. Expect Melo to put the ‘night of the long knives’ quickly behind the company, and focus the message on products, technology and partners, which remain impressive – and on a streamlined, execution-oriented management team.