Total elects to bottle up the IP and protect itself against Amyris “hardship” as it advances towards commercializing key biofuels.
In California and France, Amyris (AMRS) and Total announced the formation of Total Amyris BioSolutions B.V., a 50-50 joint venture that now holds exclusive rights and a license under Amyris’s intellectual property to produce and market renewable diesel and jet fuel from Amyris’s renewable farnesene. Amyris also plans to initiate sales of renewable jet fuel in Brazil once it achieves ASTM validation.
“The joint-venture Total Amyris Biosolutions is a first step towards the commercialization of our renewable diesel and jet fuels. We are in the phase of scaling-up the industrial process and we expect to start commercialization within the next few years, once our joint research and development goals are met,” said Philippe Boisseau, President, Marketing & Services and New Energies, and a member of TOTAL’s Executive Committee. “As far as commercialization is concerned, the new joint-venture will benefit from the know-how and customer access of TOTAL, which operates in more than 130 countries and is aiming to become a key supplier in renewable fuels,” Boisseau added.
“The formation of this joint venture, anticipated by our streamlined collaboration agreement signed last year, paves the way for us to initiate our fuels commercialization efforts globally, building on Amyris experience with renewable diesel in Brazil and the growing demand for lower-emission jet fuels worldwide,” said John Melo, President & CEO of Amyris, Inc. “TOTAL has been a strategic partner for Amyris for the last three years and a model of how global companies can leverage our inspired science to deliver sustainable solutions for a growing world,” Melo added.
Background to the JV
In July 2012, the Company and Total entered into a series of agreements to establish a framework for forming a joint venture to produce and commercialize farnesene-based and farnesane-based diesel and jet fuels and to provide the Company with convertible debt financing for research and development relating to the JV Products, including a Master Framework Agreement, a second amendment to the Technology License, Development, Research and Collaboration Agreement, Securities Purchase Agreement and Registration Rights Agreement.
The interim JV
The July 2012 Agreements contemplated that the Parties would form an interim joint venture entity in advance of the completion of the R&D Program to provide Total with (i) certainty that the Parties’ joint venture would receive the proposed intellectual property licenses from the Company and (ii) an option for Total to purchase the Company’s interest in the interim joint venture in the event the Company were to experience a financial hardship prior to the formation of the production and commercialization joint venture. Consequently, the Parties incorporated JVCO on November 29, 2013.
The Parties have agreed that JVCO’s purpose is limited to executing the License Agreement and maintaining such licenses under it until one of three outcomes occurs.
1. Go. Total elects to go forward with either the full (diesel and jet fuel) JVCO commercialization program or the jet fuel component of the JV commercialization program.
2. No-Go. Total elects to not continue its participation in the R&D Program and the JV.
3. Buy-out. Total exercises any of its rights to buy out the Company’s interest in the JV.
Timing on the go / no-go
A final decision from Total on whether to proceed with commercialization is generally due no later than early 2017.
Following a Go Decision, the Articles and Shareholders’ Agreement would be amended and restated to be consistent with the shareholders’ agreement contemplated by the July 2012 Agreements.
The Bottom Line
There are two way to look at this interim JV a bundle of sudden excitement at Total about the technology as it burns through milestones or, Total seeing enough investment to date and promise going forward to bottle up the technology rights inside a JV, should Amyris be sold, founder, or otherwise be diverted from carrying on with its obligations under the original 2012 agreement. Looks to the Digest like the latter. Which is good news for all parties.