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Amyris hits production snags in biofuel operations

The company, which makes biofuel from a microbes, said it will stay the course, and expects a demo flight with its biofuel soon.

Amyris specialty chemicals and biofuels are made in industrial fermenters. Amyris

Startup Amyris has hit a speed bump producing chemicals and fuels from sugar cane, another sign of the technical difficulties biofuel companies have had.

In an earnings call last week, Amyris CEO John Melo said the company had trouble maintaining reliable production of its operations in Brazil. "We showed conclusively that our technology does work at scale, but also learned that it takes time to translate from peak yield levels in the lab to maintaining those yields over longer operational periods in the field," he said on a conference call with investors last Thursday.

As a result, Amyris said it will produce less than it had anticipated this year, which will mean it will not be cash-flow positive from operations this year and it will need to raise additional equity. The news brought the company's stock down 30 percent on Friday. The conference call also led to reports that Amyris was exiting the biofuels business.

Despite the reliability problems, the company intends to stick with its strategy of producing both biofuels and biochemicals, Amyris senior vice president of external relations Joel Velasco said on Monday. The company plans to have a demo flight with its biofuel soon, he added.

Amyris was among many companies formed in the 2000s with the goal of making biofuel from non-food sources, such as sugar cane or wood chips. But most of them ran into technical or financial roadblocks, so that there are no commercial-scale cellulosic biofuel facilities in the U.S.

To avoid the low-margin fuel business, a number of companies have avoided biofuels altogether and focused on making commodity chemicals in the near term. Amyris, for example, launched a venture to manufacture farnesene, a chemical used in cosmetics and lubricants, in Brazil from sugar cane.

"Prioritization has been part of our approach for quite some time," Velasco said. "We have been working on a joint venture with oil major Total to bring those (jet fuel and diesel) products to market since it requires significant scale and capital for what is inherently a lower margin business."

Amyris has genetically engineered microbes, primarily yeasts, to consume sugar and produce a desired product, such as jet fuel or speciality chemicals. The company, which was first funded by the Bill and Melinda Gates Foundation to make an antimalaria drug, went public in 2010.