Amyris Q3 2021 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2021

There are 10 speakers on the call.

Operator

Welcome to the Amyris Third Quarter 2021 Financial Results Conference Call. This call is being webcast live on the Events Page at the Investors section of the Amyris website at amyris.com. As a reminder, today's call is being recorded. You may listen to a webcast replay of this call by going to the Investors section of Amyris' website. I would now like to turn the call over to Han Kleistenbeld, Chief Financial Officer of Amyris.

Operator

Please go ahead.

Speaker 1

Good afternoon, everyone. Thank you for joining us today. With me are John Nello, President and Chief Executive Officer and Eduardo Alvarez, Chief Operating Officer. John will provide a business update and Eduardo will share operational performance highlights and I will finally review our final results for our financial results for the quarter. Please note that on this call, you will hear discussions of non GAAP financial measures, including, but not limited to, underlying sales revenue, gross margin, cash operating expense and adjusted EBITDA.

Speaker 1

Reconciliations of these non GAAP measures The most directly comparable GAAP financial measures are contained in the financial summary section slides of the accompanying presentation or the press release distributed today, which is available on our website. The current report on Form 8 ks furnished with respect to our press release is also available on our website as well as on the SEC's website. During this call, we will make forward looking statements about future events and including Amyris' outlook for 2021 and beyond, Amyris' goals and strategic priorities, anticipated transactions and other future milestones, as well as market opportunities and growth prospects. These statements are based on management's current expectations, And actual results and future events may differ materially due to risks and uncertainties, including those detailed from time to time in our filings with Securities and Exchange Commission, including our 10 ks for full year 2020. Amyris disclaims any obligation to update the information in these forward looking statements, whether as a result of new information, future events or otherwise.

Speaker 1

Before we begin today, I'd like to note that included in our web is a slide presentation we will refer to. The slides will also be posted on the Investor Relations section of Amyris' website following the call. I'll now turn the call over to John. John?

Speaker 2

Thanks, Han, and good afternoon, everyone. Today, I'll cover our Q3 business performance, an update on our strategy and the near term outlook, including our initial 2022 outlook. Slide 4. With The Q3, we delivered another quarter of very strong strategic execution amid challenging and very frustrating global supply chain conditions. These supply chain issues are impacting near term performance, and as a result, our revenue in the Q3 was below our expectation.

Speaker 2

Shipping delays, along with major manufacturing disruptions in China, are global in nature and persisting into the 4th quarter. However, We believe that these are short term in nature and have no impact on our long term growth targets and the increasing consumer demand for high quality Sustainable products. I will speak to these issues in more detail shortly. In the Q3, we once again realized record underlying revenue and record consumer revenue growth demonstrating continued year over year and sequential growth. Our 3rd quarter underlying revenue was up 40% versus the Q3 of 2020 and consumer revenue was up 89% versus the same quarter last year.

Speaker 2

Also, our multi year consumer growth was very strong at 121% cumulative annual growth rate for the 3 quarters year to date of 2021 compared to 2018. 2021 will be the 1st year that our consumer revenue outsizes our ingredients revenue. We have been deliberate in our choice of clean beauty, Personal Care Health and Wellness Markets. These markets are high growth, high margin and capital light. We believe that clean beauty will become the beauty industry, a segment for which we are viewed as leaders and which is growing at double the rate of the traditional personal care market.

Speaker 2

Turning to Slide 5 now. Our consumer business continued to grow sharply during the quarter with very strong execution of the launch of our new brands. The response to our new brands and customer loyalty to our existing brands during the quarter strengthens our belief and conviction In our longer term growth targets, we have grown our consumer business by over 8.4x over the last 24 months. This is exceptional growth and the best growth at scale that we are aware of in beauty, demonstrating the power of our strategy, Our portfolio and our ability to effectively engage the consumer. The momentum in all of our brands gives us confidence to accelerate investment in our consumer business and continue to develop amazing, clean and sustainable platform molecules that enable us to deliver The best performing consumer products in the categories we participate in.

Speaker 2

We launched 4 new consumer brands during the quarter: Rose Inc, JBN Clean Hair, TerraSonic Clinical and Olica further expanding our foothold In clean beauty and personal care end markets, we started late in the quarter with these new brands and they have less than a full month of sales included in our Q3 results. That said, the new brands have exceeded our initial expectations and their strong traction has accelerated into the 4th quarter. We expect JVN and Rose Inc. To deliver more than $20,000,000 of revenue in their 1st 12 months. Additionally, we completed 3 acquisitions, including Olica, Beauty Labs and MGM Power, adding strategic digital online influencer and social selling capabilities as approximately 50% of our consumer revenue is being generated from e commerce.

Speaker 2

Our online business is the fastest growing business in our portfolio and also our most profitable With most brands delivering over 80% gross margin for online sales, Rose Inc, Clean Color Cosmetics, JVN Clean hair care and terra sauna clean skincare are each formulated with 1 or a combination of our unique sustainable ingredients that we created and manufactured. Each of these brands has a hero ingredient that we invested and produced along with distinctive formulations that are disrupting their respective categories. Our products have excellent consumer ratings an industry leading repeat purchase. This gives us great confidence in the underlying demand to support continuing more than doubling our annual revenue for the next few years. We are delivering the best growth in our sector and we expect to continue at this pace or better for the next few years.

Speaker 2

JVN is a great example of our portfolio connection with hemisqualane at the core of its formulation. With hemisqualane, we invented new chemistry to remove the use of silicones In hair and body care, with this hero ingredient, we are truly revolutionizing hair care and also making our planet safer and more sustainable for all. This ingredient, along with our exclusive formulations and incredible brand partner, is leading us to much better growth than Olaplex, our key competitor in this category. This is our lab to market platform at work. We targeted A major sustainability problem with the widespread use of harmful silicones.

Speaker 2

We invented new chemistry and are now a leading producer and supplier Of the best performing replacement for dirty silicones, demand for hemisqualane is growing rapidly, both in relation to the JVN brand and as an ingredient for other brands and formulators. Rose Inc, another brand launched during the quarter It's similar to the JVN story in the clean color cosmetics category, delivering comparable revenue to JVN in the 3rd quarter. Bio silica is a key ingredient to this color cosmetic line. We have developed a process to derive bio silica from the ashes of sugarcane that is used in our industrial applications and are in process of using this as the new default base for color cosmetics in the industry. In addition to reusing residual products, biosilicon enables clean color to perform much better on the skin and last twice as long.

Speaker 2

The chain doesn't stop there. We then formulate our color products, which squalane. When squalene is incorporated with color cosmetic formulations, the product moisturizes the skin and makes the color feel softer on the skin, Not a hard dry paste, great applications grounded in sustainability and powered by the performance of synthetic biology. Both Jonathan Van Ness and Rosie Huntington Whiteley are great partners to help promote the message of clean beauty formulated with high performing sustainable ingredients Created and manufactured by Amyris. We are coupling our product leadership with amazing data science tools and digital marketing.

Speaker 2

We strategically added Beauty Labs and MGM Power to our portfolio in the Q3. MGM Power is a leader in influencer marketing, which I believe is the future of digital marketing. MG EMPower is the key enabler to our fastest growing sales channel. Live selling sessions hosted online by key micro influencers directly to their followers. This is the equivalent of Home shopping network on the Internet with much deeper engagement and much better sales conversion.

Speaker 2

We believe accessing the right influencer talent And having deep data and learnings with this community is the key to thriving online. Direct to consumer is currently about 50% of our consumer revenue and delivering gross margins that are greater than 80% for most of our brands. We believe this revenue mix is sustainable as we expand our portfolio. We now go to Slide 6 and let's talk about our challenging operational conditions during the quarter. As a growing global business, we rely on timely marine shipping to meet customer demand.

Speaker 2

During the quarter, we delays at the Port of Savannah, Georgia related to a cargo that was scheduled to be unloaded in August, which was not unloaded until mid September, causing a shortage of farnesene, which is critical for producing squalane. Bottlenecks like this negatively impacted our ingredients revenue by approximately $6,000,000 in the 3rd quarter and increased our costs by approximately $3,000,000 to $4,000,000 negatively impacting our gross margin during the quarter. Another major pinch point globally has been accessing materials from China, Where critical packaging and other items for our brands are produced. Across the board, our consumer business was impacted by supply chain disruptions related to China, and we estimate a negative impact of between $6,000,000 $7,000,000 during the quarter to our consumer business. As an example, Pipette, our fast growing clean baby and mother care brand experienced out of stock conditions and 4 of the top selling products during critical sales and promotional periods in the Q3.

Speaker 2

The shortfall lasted about 7 weeks. We are focused on removing our dependency on global supply chains and taking control of our manufacturing to avoid future surprises. We are very focused on completing construction of our Brazil ingredient plant and completing the build of our consumer production facility in Reno, Nevada. Eduardo will update you on the progress of these projects in a moment. Brazil will start production early in 2022 and Reno will be full production in the first half of twenty twenty two.

Speaker 2

These facilities will not only provide us much more resilience on the supply chain, they will also reduce our operating costs significantly and improve our gross margin by about 1,000 basis points. The challenges I just described are manageable. I can confirm that demand for our clean, sustainable ingredients and for our industry leading clean beauty brands is increasing beyond our expectations. These supply chain issues are global in nature and we know they will have an impact during the Q4 as well. Anticipating this, During the Q3, we prioritized and secured the supply needed for most of our expected demand in the 4th quarter.

Speaker 2

We're now doing the same to ensure we have replenishment for the end of the year shipments to set up for the Q1. Let me now turn to Slide 7, the JV partnership for next generation COVID-nineteen RNA vaccine. As I have explained on multiple occasions, our lab to market platform is versatile. We have chosen to focus on certain verticals because of addressable market, growth and margin profile and the speed of technology adoption. We have the only proven business model in our industry And the demand for our products is a great testament to the future of all chemistry.

Speaker 2

It will be clean and sustainable and mostly made from synthetic biology enabled through fermentation. Flavored, Fragrance and Health Ingredients was our first commercial vertical, including such amazing ingredients as natural vanillin and sandalwood, where we are now the world's leading supplier. We have some of the best brands in the fastest growing categories in beauty and personal care, and our business model is delivering the best growth in our sector. Beauty is our 2nd major vertical. Over the years, we have established strategic partnerships with the leading companies in each of these sectors.

Speaker 2

This is how we've built Amyris. Today, we announced the creation of our latest commercial platform with the creation of a new fifty-fifty joint venture with immunity bio, a leading late clinical stage immunotherapy company developing Next generation therapies that drive immunogenic mechanisms for defeating cancers and infectious diseases. We are very excited with the expansion into our next vertical, biopharma. Immunity Bio's Executive Chairman, Doctor. Patrick Soon Shiong and I share a common vision to make the lowest cost, best performing next generation RNA based COVID-nineteen vaccine that's available to all.

Speaker 2

Immunitybio has invested significantly in developing world leading DNA and RNA vaccine production capacity and will be responsible for the manufacturing of the vaccine once human trials are successfully completed in South Africa. Partnering with immunity bio provides us the capability to complete human trials and upon successful completion, Quickly move into manufacturing with the objective to deliver 1,000,000,000 doses next year through our JV, Addressing the unmet needs of access to vaccines in developing countries, cold chain and durability challenges facing the world today. We have visited Immunity Bio's manufacturing facilities and can confirm they will be ready to produce over 1,000,000,000 doses In 2022, starting as early as the Q1, the JV Company is structured to minimize Capital investment for both parties. We will each be leveraging what we already have. Immunity has excellent manufacturing assets and clinical trial capability.

Speaker 2

Amyris has capacity for billions of doses of squalene supply for the adjuvant and is contributing our advanced RNA technology specifically for COVID-nineteen. We are in active discussions with several governments from the U. S. To Brazil, Portugal and South Africa, and with the successful completion of human trials can quickly scale distribution. The JV will be operated as a separate entity with its own management to not distract us from our core business.

Speaker 2

Before I hand off to Eduardo, let me make a few comments about the rest of this year and the outlook for 2022. We have built the leading synthetic biology platform in the world. This could be measured in many ways. The number of products scaled, individual molecules from different pathways produced in fermentation and delivered at industrial scale to partners, not just fartasine derivatives. Thousands of tons of clean ingredients produced that are reducing the carbon footprint of many industries.

Speaker 2

We have the underlying assets, expertise, pipeline, growing brands to deliver $2,000,000,000 of revenue by the end of 2025. We are experiencing stronger demand than expected for our consumer brands and are super frustrated by the short term challenges of global supply chains. We will quickly work through these issues. We expect to end the year between $330,000,000 $370,000,000 in revenue. We are changing our outlook out of prudence.

Speaker 2

We are adjusting to inventory that we have on hand. We have the potential for significant upside if we are able to access more components and ingredients. We are doing everything possible to ship material, but these external factors are directly impacting our revenue and margins. For 2022, we expect revenue to exceed $500,000,000 We have previously indicated an expected revenue of $1,000,000,000 for 2023. This performance is consistent with the guidance we've been providing of doubling Recurring revenue annually.

Speaker 2

Our 2022 revenue consists of around $200,000,000 from our legacy brands, Most of this from Bioscience and Pipette, which are both accelerating in growth and delivering very strong performance into the 4th quarter. $50,000,000 of this from brands launched in 2021, such as JVN and Rose Inc, dollars 75,000,000 from brands that we plan on launch and are purchasing in 2022. We have a strong pipeline of signed brands and are in the middle of purchasing 3 new assets for the portfolio and then $100,000,000 from the earn out and technology collaboration payments and over $100,000,000 in ingredient sales. This is how we underpin over $500,000,000 of our 2022 revenue, which we have a lot of confidence in. We expect this to deliver gross margin in the 60% to 65% range and to be EBITDA positive for 2022.

Speaker 2

We've grown our consumer business by 8.4x during the global pandemic and expect to deliver over $325,000,000 of profitable consumer revenue in 2022 from a business that delivered $17,000,000 of revenue during 2019. We have not been able to keep up with this growth in our supply chain and back office, And we are really focused on investing and keeping up without slowing down this consumer demand for our products. We are very pleased with the underlying demand in our business and the growth in our recurring revenue. This is the best proof that synthetic biology is Truly a critical component to a healthier planet. We are the only sustainable path to clean, natural chemistry That is sustainable and that is what consumers throughout the world are demanding now.

Speaker 2

Eduardo will now cover our operational performance and provide an update on our new projects for resilience and added capacity. Eduardo?

Speaker 3

Thank you, John. In addition to reviewing operational results, I'm going to describe the strategic investments we are making in production capabilities for both our ingredients and for our consumer portfolio. In our ingredients business, we achieved record results for our leading fragrance product delivering production and performance that was 20% higher than our production stretch targets during the 3rd quarter Production campaign. We achieved similar improvements for all our flavors and fragrance ingredients we produced in the 3rd quarters. Our teams are delivering the best performance for all of these ingredients as we continue to scale them.

Speaker 3

Despite shortfalls, We sold all our ingredient production as consumers continue to demand the best natural and sustainable ingredients. Expanding also on John's comments on the supply chain shortages in ingredients, I want to add a few comments. John captured only those shortfalls due to raw materials. In fact, we had delays in the delivery of membranes, which pushed out about half our vanillin purification to the 4th quarter. This represented another $2,000,000 in revenue missed ingredients that were pushed to the next quarter.

Speaker 3

By the way, that production campaign right now is running very smoothly. We are making strong progress with sustainable squalene for pharma Position as an ingredient for vaccine adjuvants. Our scale up production already achieved Industry leading purity levels of over 99.5%. Our natural fermentation based squalene supply has the potential to be transformational as the world needs a scalable vaccine platform that can replace adjuvants derived from SHARC. As a result, we are finalizing our long term production agreement to scale up production of squalene operating under pharma GMP conditions.

Speaker 3

Another new ingredient, biosilica, which is produced by processing sugarcane ashes, This is a waste product of burning sugarcane fibers to generate sustainable electrical energy at our fermentation plant. This project demonstrates our full commitment to capturing value from our waste streams and cultivating the circular economy. Commercially, we have received tremendous interest from the market and over 500 customers have sampled our biosilic with many more in the pipeline. Let me also provide an update regarding a new fermentation plant at Barrabonita in Brazil. Although we have encountered difficulties related to the sourcing of certain construction materials, especially steel, We have worked very hard to keep the delivery of key items on schedule.

Speaker 3

All the fermenters are already installed in the fermentation tower and all our long lead equipment will be delivered in the next few weeks and also in the 1st part of 2022. We remain on target to start production at this plant in early 2022. Looking at our consumer products during our 3rd quarters, We launched 4 new brands and our team successfully formulated, produced and delivered 28 new products on time. We're making important changes to our production and supply chain capabilities to underpin the future growth. As John mentioned, we are building a new production capability to support the scale up of our brands We have leased 150,000 square foot manufacturing facility in Reno, Nevada.

Speaker 3

This facility is designed to bring full Compounding, filling and packaging capabilities in house. This facility is large enough to accommodate our growth expectations across product lines and brands to meet our needs for the next 3 years. We are targeting production of this new facility For the first half of twenty twenty two, the advantages are a much simpler resilient production model, faster scalability and lower unit costs. This plant will be a crucial foundational capability to supplement our excellence in formulation, marketing and brand building. Let me close by concluding on the 3 priorities that we have for the rest of this year.

Speaker 3

First, we must continue progress on construction of the new plants in Barra Bonita and Reno. 2nd, our consumer business is an all hands on deck approach to deliver the best end of the year holiday season and to ramp up for Q1 production. For example, for pipette, our production in the 4th quarter must also deliver the opening inventory for 6,000 new doors we expect in the Q1 of 2022, and we are on track to do that. And finally, monitoring and reporting on the progress of our RNA vaccine clinical trials that John mentioned. With that, I will turn the call over to Han to review the financial results.

Speaker 3

Han?

Speaker 1

Thanks, Eduardo. Please turn to Slide 9. Despite the factors we've discussed which impacted revenue during the quarter, our revenue growth trajectory remains intact, and we record another quarter of record sales revenue both on an underlying basis and for our consumer brands. We also continue to systemically address our capital structure and have made tremendous progress the past 18 months on both the debt and equity side of the balance sheet. We further reduced our legacy debt position to €102,000,000 This compares to $297,000,000 at the start of 2020 $171,000,000 at the start of this year.

Speaker 1

We have consistently guided for to be below €100,000,000 by the end of this calendar year, and we have clear line of sight to achieving this. On the equity side, we have continued to diversify our shareholder base with the expansion of long institutional investors versus the year ago quarter. Also, we have nearly fully addressed the outstanding warrants of which only €4,000,000 remain, which compares to €50,000,000 this time last year. Cash at the end of the quarter was €150,000,000 compared to €38,000,000 at the end of Q3 2020. During the quarter, we had above average use of cash of around $100,000,000 In addition to working capital needs associated with our rapidly growing business, uses of cash included $23,000,000 associated with various transactions, including M and A €15,000,000 associated with ongoing construction of the Brazil plant, which was in full motion during the quarter and approximately €7,000,000 of investments in inventory and other costs to ensure supply chain readiness for our new brand launches and the end of year holiday season, which equated to that.

Speaker 1

Total revenue of $48,000,000 increasing 40% compared to Q3 2020 revenue of $33,000,000 Product revenue of $37,000,000 increased 17% compared to the Q3 of last year with product revenue of $31,000,000 driven by record consumer revenue of $23,000,000 an 89% increase. Total year to date revenue of $277,000,000 improved 197% versus the prior year period. Total revenue included €154,000,000 of proceeds resulting from strategic transactions. Total underlying revenue, which is the sum of product And collaboration, R and D and other services increased 39 percent to $123,000,000 compared to $89,000,000 in the 1st 9 months of 2020. Product revenue of $102,000,000 increased $26,000,000 or 33% compared to the 1st 9 months of last year, driven by a $25,000,000 or 73 percent increase in consumer sales.

Speaker 1

Biosound's international expansion continued through Space and Kay in the U. K. And can now be found in 14 different retailer chains worldwide. Perpet also continued to deliver on its commitment to improve the accessibility of clean products for babies, mothers and families and can now be found in 2 36 new stores across Canada, and it was also launched 180 new stores in the U. S.

Speaker 1

During the quarter. Also, as previously commented, Rose Inc. And JVN hosted a number of launch events and got into the market in this past quarter. 3rd quarter ingredient revenue decreased versus the prior year quarter, primarily due to previously discussed supply chain and sourcing challenges during the quarter. Demand for our ingredients remained strong and through the end of Q3 sales volume for Squalane Used in skincare and other products surpassed total 2020 sales volume.

Speaker 1

We look forward to have our Baraboolita plant coming online early in 2022 As demand continues to increase and production capacity will only become more critical to meeting our ambitious growth targets. Non GAAP gross margin of $18,000,000 or 37 percent of revenue grew from $14,000,000 or 41 percent of revenue in Q2 2020. Margin as a percent of revenue was down primarily due to the impact from the supply chain challenges that we previously described on this call. High shipping costs and special air freight among others were drivers of cost increases. Lastly, ingredients product mix was a factor as well as No longer having the value share on the FNF portfolio following the DSM transaction, which was €4,000,000 in the comparative quarter of last year.

Speaker 1

Cash operating expense of $81,000,000 increased by $38,000,000 or 88% compared to the prior year quarter. We invested approximately €9,000,000 in headcount €5,000,000 for fulfillment and shipping due to increased consumer sales, partly driven by the new brand launches. Adjusted EBITDA of minus €73,000,000 decreased €40,000,000 year over year, primarily due to higher operating expense. GAAP net loss is significantly influenced by non cash mark to market adjustments related to changes in the fair value of debt and derivatives. GAAP net loss of CAD 33,000,000 or CAD0.11 per share compared to a loss $84,000,000 or $0.37 per share in Q3 2020.

Speaker 1

Adjusted net loss of $80,000,000 or $0.27 per share compared to an adjusted net loss of €50,000,000 or €0.22 per share in Q3 of 2020. Let me make a few comments regarding year to date. Total year to date revenue of 277,000,000 improved 197% versus the prior year period. That total revenue included €154,000,000 of proceeds from strategic transactions. Underlying revenue increased 39 percent to $123,000,000 compared to $88,000,000 in the 1st 9 months.

Speaker 1

And then product revenue of $102,000,000 increased $26,000,000 or 33 percent compared to the 1st 9 months of 2020, driven by a €25,000,000 or 73 percent increase in consumer sales. Non GAAP gross margin of €205,000,000 or 74% of revenue improved from $44,000,000 or 47 percent of revenue in the 1st 9 months of 2020. Excluding the contribution from the strategic transactions, gross margin of $51,000,000 grew $30,000,000 compared to the 1st 9 months of 2020, primarily due to consumer related growth. Adjusted EBITDA of minus €12,000,000 improved €84,000,000 year over year due to revenue and margin growth and proceeds from the strategic transactions. Now let me turn to Slide 12.

Speaker 1

Shortly after announcing our Q3 financial results, we also announced that we have commenced a $400,000,000 convertible note offering. This offering is a natural continuation of an 18 months process of retiring costly legacy debt, diversifying and institutionalizing our shareholder base as well as the funding of strategic capital projects such as our Barabunita Ingredients plant and funding rapidly accelerating growth. We are excited about the future and believe these strategic steps, both operationally and regarding our capital structure, will set us up well for continued success. With that, I'll turn the call back over to John.

Speaker 2

Thank you, Han. We set ambitious operational and financial goals, and we believe that our winning business model and portfolio is well positioned to achieve an estimated $2,000,000,000 in revenue during 2025. Given the high growth expectation for the consumer portfolio In the end markets we have chosen to serve, the portfolio is expected to shift further toward consumer from 40% of total revenue in 2020 to 72% by 2025. Targeted 2025 consumer revenue is $1,400,000,000 from our expanded family of brands. Meanwhile, we also expect to continue to grow our ingredients business to a total of about $500,000,000 with a total of 30 molecules being scaled and actively being manufactured.

Speaker 2

We have the leading technology platform in our industry, a proven business model and significant growth momentum. Now is also the right time to execute the last step in our strategy for capital structure. Now is the moment to really capitalize our business for growth, eliminate expensive legacy debt and fully fund our manufacturing footprint. Over the last 2 years, we have all observed firsthand how delicate the balance of our world is. And I'm really proud of the people at Amyris for their dedication and commitment to creating, producing and making available products to the world that impact all of us with minimal impact to our environment.

Speaker 2

Andrea, let's now go to the questions, please. Thank you.

Operator

And our first question will come from Colin Rusch of Oppenheimer. Please go ahead.

Speaker 4

Thanks so much guys. Can you give us just a sense of the timing for the completion of trials with immunity bio and when we can see those results come out?

Speaker 2

Hey, Colin, good to have you on the call. We're expecting early results by the end of the year and then final results probably early in the year, early Q1.

Speaker 4

Okay, perfect. And then with the CapEx elements that are coming part of the next year, what are you guys waiting on for those deliveries? And where are those elements right now just in terms of Their location in the world and their timing, I guess how confident are you in terms of having those things all arrive on time early next year?

Speaker 2

We actually need him to arrive hopefully by the beginning of December. One of the things That I know is pretty hard to appreciate is with the level of growth we're experiencing on the consumer business, I mean, we're having to pull forward as much raw material as we can. And when I say raw material, I'll give you an example of one of the things that's kind of silly, but causes significant issues for us. The caps on bottles is a perfect example and pumps, those are two great examples of different components that are actually critical for our consumer business, and that we expect mostly from China. I would tell you right now that most of what we need is on water.

Speaker 2

So the big issue is, can we get it all unloaded and can we get ports cleared? We believe, based on what we're seeing right now, that we'll fine. But just for the abundance of prudence, we wanted to make sure we realigned our Expectations for the year with what we have on hand and hopefully if we can get the ships unloaded and the components And on time for manufacturing, we'll be able to ship everything we expect by the end of the year and be nearer to where we thought we'd finish off our year to begin with. So I hope that helps, Colin. Eduardo, do you want to add anything to that?

Speaker 3

I think you captured it very well. The numbers that you saw really include products that's already either produced or already in the distribution centers.

Speaker 4

Okay. Thanks so much guys. I'll take it all offline. Thanks.

Speaker 2

Thanks, Colin.

Operator

The next question comes from Rahul Sargarathlian of Raymond James. Please go ahead.

Speaker 5

Good afternoon, John, Han, Eduardo. Thanks so much for taking our questions and John's good to speak with you again. I guess my first question is, congratulations on being the 1st company with a CVG products to market. So you didn't really cover that too much on the call. So Would you ever give us a little bit of an update on the CBG beauty products, any sort of next cannabinoids and sort of new form factors around the cannabinoids?

Speaker 2

Sure. Happy to do that. I mean, the first thing I'll tell you is, we've already booked multi millions of revenue this year from CBG. So I can tell you the CBG is off to a good start and we're excited about its potential. Right now, the major product we're formulating in, obviously, is our product targeted at acne and other skin conditions.

Speaker 2

What I will tell you that we're finding from consumer feedback is that for achy bones, For muscle pains, especially sport related muscle pains, COVID related cramping and muscle pains And a lot of other bone inflammations, the combination of the CBG and the squalane formulation we're seeing have A tremendous impact on those pains. I mean, somewhat very, very surprising like overnight, cramping going away and muscle pains and bruising going away. So we're in process of launching an application targeted at that on how good we're seeing the efficacy and the clinical data that we're getting back. And again, we expect to see our Consumer brand around those categories, TerraSana, continue to do very well. I always look at consumer ratings and how well we're getting repeat purchase from the brand as a great sign of the brand's future potential, and I think we're seeing that in spades.

Speaker 2

And I'd expect to see quite a bit of growth going into the Q4 and into next year. So those are two examples of where we're really Aggressively moving CBG. We have several other minor cannabinoids now in the portfolio. I'd expect our second and third likely out by the end of 2022. And the other thing I'd say is we've had some major breakthroughs in enzyme discovery and gene use to provide us great confidence that we have no IT limitations now relative to anybody else in the market to where we are in the pathway and how we've evolved the technology.

Speaker 2

So not only We have a platform now that's able to very quickly, 6 months or less, engineer and scale minor cannabinoids, but also clear of anybody's IP and really focused on ensuring we've got the best pathway to be able to scale minor cannabinoids quickly to market. I mean, the other thing I'd say, really an important point. We're now under about $1,000 a kilo, and we expect Over the next couple of quarters, we'll be at $500 a kilo or less for production cost of CVG. And that's also pretty miraculous. I don't think anyone is anywhere near that cost of goods for CVG.

Speaker 2

And we're excited about what that gives us in market power and being able to really scale for different applications as we take minor cannabinoids to market.

Speaker 5

Indeed, that's been really good color. Appreciate that. So just a quick Follow-up question and pivoting towards fermentation capacity. You refer in the PR to new fermentation facilities being constructed. How do you see the balance and strategic balance between proprietary fermentation capacity versus CMO, are you seeing bottlenecks out there?

Speaker 5

And how are you setting up your strategy around fermentation capacity?

Speaker 2

Look, I mean, it starts with our observation that 3rd party fermentation capacity is not as efficient. It has significantly greater risk of contamination and it's much higher cost.

Speaker 6

So for

Speaker 2

us, the priority is really simple. It's move everything we can as fast as we can to our proprietary manufacturing in Brazil. And just to give you a sense, I mean, in a way, our cost of goods in our proprietary system is at least half of what it is doing at the 3rd party and in some cases, a third, right? So for us, that's a major priority. It is not keeping us from volume.

Speaker 2

We've I mean, CBG is a good example. We've been producing as much CBG as we want At our Spanish facility in Lyon, the Spanish facility is a great manufacturing facility that we've actually taken a lot of downstream processing and skids and really customized the facility for our strains and our production, But it's costly. The feedstock is costly and the processes are not as efficient. So we do have approval and expect to be producing CBG In Brazil, as soon as Eduardo gets the plant up and operating, which will be early in 2022. So we're very excited about that, which is why I put out there that with the Brazil move for all of our fermentation, we'll add about 1,000 basis points of gross margin to our overall or improve it by 1,000 basis points to our overall gross margin.

Speaker 2

So we're excited about that,

Speaker 1

but that's how we look at it.

Speaker 2

It's not a matter of can we do party or not. Scaling in a 3rd party is very simple and we have a machine for how we do that. We put our people in the 3rd party. We have great SOPs for how we do that. We operate in big or small tanks, doesn't really matter to us.

Speaker 2

But it's all a matter of efficiency and cost and then being able to actually do it resiliently, is really what Eduardo has been working on. Eduardo, would you like

Speaker 1

to add something to that?

Speaker 3

Yes. Rahul, just to build on that. I think The two things I would say, for us, the Barra Bonita plan also gives us resilience, not just access to scale, Because of the fact that we can start to do a lot of our processing in a single site and avoid some of the risks in raw material deliveries that John alluded to in the ingredients discussion around the Q3. The second point that I would like to just say is that we sized the facility for Brazil for Barra Bonita to more than meet our needs for the next 2 to 3 years. And this is remembering that we are seeing a 30% to 40% CAGR on all of those natural ingredients that we manufacture.

Speaker 5

Great, John and Eduardo. Thanks so much for including us in the questions today. We'll get back in the queue.

Speaker 2

Thank you. Thanks, Rahul.

Operator

The next question comes from Laurence Alexander of Jefferies. Please go ahead.

Speaker 6

Good evening. I guess the first one is, you gave some initial comments on the bridge for 2022. How should we think about the odds of further molecule monetization in 2022, 2023? That is, How

Speaker 2

much of

Speaker 6

a priority is it for you or what do you see as kind of the demand pull or the possible potential magnitude if that were to happen?

Speaker 2

Hey, Lawrence, good to have you on the call. Look, we're not proactively working that, I will tell you, I mean, a good example is, our NOV Industrial Lubricants Company, which has been doing well in the background. That's something we talk about very much, but it's now partially owned, I think somewhere between 20% 30% owned by Chevron. And I can tell you on the back of some of the moves Chevron has made in lubricants that, that is a potential for us to monetize that technology. It's not core to us long term.

Speaker 2

And I would expect potential opportunities to come our way there. I think the other are some of the farnesene derivatives, especially in the industrial side that we have been very surprised and how much demand has accelerated for our, farnesene polymer application into the tire industry. I would say in our core specialty ingredients, not likely at all, especially the unique pathways, unique molecules. But on financing derivatives, where there are very interesting derivatives that are accelerating demand for industrial markets, We may be opportunistic around that. And I also want to just clarify that none of that is built into our north of $500,000,000 revenue for 2022.

Speaker 2

So it will be opportunistic.

Speaker 6

And how should we think about the SG and A run rate Going forward, given where it was in Q3?

Speaker 2

Look, I think the main message for Q3 is there's a lot of one times in there that are related to both costs of a lot of the M and A activity, Costs of supply chain, on boarding, just a lot of different costs in there, probably in the 8 to $10,000,000 range that were onetime. So when you look forward, I mean, I would expect A more steady number to look around the $70,000,000 range versus what we put out there. And we are looking at that cost base very carefully to ensure we have leverage as we continue to grow. Han, is there something else you'd like to add on that?

Speaker 1

No, I think that's spot on. I think in terms of the bifurcation between the ongoing and the and kind of the more one off items in nature. I think John also mentioned Just launching and setting up the new brands, obviously, takes an initial effort and investment. So we don't capitalize that. We put that out there as an expense.

Speaker 1

And then lastly, what I would say and we've talked about this in the past is, there is a variable component to the growth of the consumer business in particularly because the fulfillment and shipping expense is actually captured in selling. And so as the business continues to grow, that in terms of consumer activity, number of orders and support, that piece will be somewhat proportionate to that. But that's where I would put it.

Speaker 6

And then just lastly, if I may, just one quick one on enzymes. Given Can you characterize it sounds as if you have a pretty broad freedom of action in enzymes. And if so, is there a revenue opportunity to license For people who are in kind of more conventional enzyme markets?

Speaker 2

Another great question, Lawrence. We don't much about our enzyme discovery engine mainly because we've used it for our own needs, right? We probably have one of the most advanced Enzyme discovery machines inside of our platform. We do it for enzymes or to facilitate the development of our pathway for producing our target molecules. And I'll tell you where we are looking at monetization there.

Speaker 2

It's actually in biopharma. We see very interesting, enzymatic needs in biopharma, And we see that our discovery platform could be very interesting. And we're currently exploring targets, especially as we think about our relationship with immunity bio and some of their needs for both proteins and enzymes and some of the work we could do there as a way to start to really explore that portion of our platform. So the answer is yes, targeted biopharma and very focused on some specific targets that we're currently exploring.

Speaker 6

Thank you.

Operator

The next question comes from Dan Brennan of Cowen. Please go ahead.

Speaker 7

Hi, good afternoon. This is Kyle on for Dan. Thank you for taking my Questions here. I'll put these 2 together and then jump back in the queue. So, just I just wanted to talk about the guidance a little bit and performance in the quarter for consumer revenue.

Speaker 7

So relative to our expectations, consumer revenue missed by pretty good margin. And I was just wondering if there's anything to going to hear any underlying business that may have been weaker than expected or is most of this dominated by supply chain issues? And then my second question, you guided the full year to $330,000,000 to $370,000,000 in total revenue, which is Lower than the magnitude of the Q3 miss and fairly wide range. Is there any detail you can provide on the bridge to the updated guide for by consumer revenue, ingredients revenue, grant and collaborations, etcetera? Thank you.

Speaker 2

You bet, Kyle. So I'll take the first part And maybe Han can take the second part on the bridge to the guidance. On the first part, look, I think the most Material part of this was the supply chain issues, specifically, across all brands, componentry. And componentry from China that really started to become a problem through the quarter as the Chinese started to shut power off and limit the operation of many factories in China. But I think the other point, Kyle, is The new brands only had a few weeks of selling during the Q3.

Speaker 2

So if you wanted to connect 2 dots, Those would be it. I can tell you that the weeks that they sold for, we generated much more revenue than we on a weekly basis. And I can also confirm for you that we're now a month into the 4th quarter And those brands are performing extremely well, better than we expected. And our base is doing very well. I can tell you, like just to start off the month of November, Bioscience is well over 2x last year's November, right?

Speaker 2

So if we can maintain that momentum, I think we have a great quarter in the making. And one that I think we've done the prudent thing by getting expectations in the right place for everyone. So maybe that actually takes us to Han and how we connect the dots for the Q4?

Speaker 1

Yes, really and certainly as it relates to consumer, Three dynamics to think about. John already touched upon it a little bit, but just to put them together. So you have continued sequential growth on and we've obviously seen that quarter to quarter. So that's one element. The other one, as John just alluded, is the new brands, the addition We had kind of a week at the back end of Q3 and now we will have a full quarter of these new brands performing.

Speaker 1

So that's the second brick, if you will. And then the 3rd piece is really the fact that we have the holiday season, the end of year holiday season ahead of us. And if you look historically at our performance, so last year when we had 3 brands and you look at Q3 to Q4, You see a significant uptick because of that level of activity and that holiday season. So again, to repeat, three dynamics: Sequential growth, ongoing holiday season and then the new ones that come in. And That gives us confidence that where we've put guidance that Q4 should be able to deliver on getting us into that range.

Speaker 2

And Kyle, for your I think for your benefit and everybody else's out there, here's the way to think about it. Think about consumer In the Q4, somewhere in the $50,000,000 to $60,000,000 range. Think about ingredients in the $15,000,000 to $20,000,000 range. And then think about the rest being some of the collaborations that are really pretty consistent quarter on quarter. And that kind of gets you to a solid, call it, dollars 70,000,000 to $80,000,000 that's built in, of which most inventory is currently on hand for us to deliver on.

Speaker 2

And again, whether we do more than that really depends on can we get additional stock and we're working hard on that. But I hope that gives you a sense of magnitude and where the buckets are in the Q4.

Speaker 7

That's great. Thank you so much.

Operator

The next question comes from Tycho Peterson of JPMorgan. Please go ahead.

Speaker 8

Hi, this is Rachel on for Tycho. Thanks for taking the questions. So sticking with Kyle's theme of the consumer brands, diving into the 4 new brands that you guys launched this quarter. You mentioned that they launched later than expected. Can you just give us some more color on what led to that delay?

Speaker 8

Was that really only supply chain driven to you? Or were there any other factors that One to that.

Speaker 2

Completely supply chain. As a matter of fact, we ended up not having all the SKUs that we wanted ready to go in the right quantities, And we were not really able to fill all the retail orders we had to be able to get those brands out in stores, right? So but purely driven by supply chain and having product ready to go.

Speaker 8

Great. That's helpful. And then on the legacy consumer brands, you guided Bioscience and Pipette towards about $200,000,000 next year. So what do you expect those legacy brands to do in 2021, especially given these recent supply chain headwinds? And then can you talk about your confidence in the ramp to those legacy brands through next year?

Speaker 2

Yes. Look, I expect the legacy brands to do somewhere between 125, 125 range for 2021? And then the second part, Rachel, regarding next year?

Speaker 8

Yes. Can you talk about your confidence specifically for those legacy brands ramping from the $125,000,000 this year to $200,000,000 next year?

Speaker 2

Yes. Look, the majority of that growth, if I think about what's driving it is Bioscience. And the number we've guided to is actually quite a bit softer than the current growth, right? Bioscience right now is growing at a little more than double last year's 4th quarter, if I just look at current performance, right? And we're guiding to something slightly less than that.

Speaker 2

If you think about the current run rate, to give you a way to connect dots, current run rate for Bioscience is about $130,000,000 And just based on normal trajectory And being a bit softer in how we want to guide, that gets us very comfortably north of $200,000,000 between bioscience, pipette and purcane.

Operator

Great. Thank you. The next question comes from Amit Dayal of H. C. Wainwright.

Operator

Please go ahead.

Speaker 1

Thank you. Good afternoon, everyone. Maybe this is for Han. What should we think about in terms of the margin outlook for the Q4? Hey, Amit.

Speaker 1

Thanks for joining. I think, look, If you think about margin profile, it's very similar to what we've been saying, right? So if you just bifurcate Between the two big pieces, one being consume and the other one being ingredients. I think we made some comments last about ingredients in a bit more detail that those are economically disadvantaged right now because of not having the Barabilita facility. Hence, all that emphasis, John explained it, Eduardo emphasized it too that, that is a critical project to us and and getting us in a more integrated facility.

Speaker 1

On the consumer side, we've always guided 60% to 70% With some of the brands being at the higher end of that range, certainly, as you know, 50% of our Revenue in consumer is from e commerce from direct to consumer. That sits even above the top end of that range. So We've seen that. We've continued to see it every quarter. So that hasn't changed from a guidance perspective.

Speaker 1

And we've even seen that now with the new brands coming in. So If you think about profile, that's the way to kind of model it out.

Speaker 7

Got it.

Speaker 1

And For next year, the $500,000,000 guidance roughly for the revenue side, is that just Based on your potential estimates or are there any contracts, etcetera, underlying that number that support that view?

Speaker 2

Amit, for all the so on the ingredient side, That's predominantly all contracted and that is all based on existing ingredients and current growth rate to our existing panels. On the collaborations and the earn out, that's also predominantly contracted. And then on the brand The existing brands, obviously, that's all based on all the current doors that we have contracted. The brands we launched this year is also based on current doors that contracted. And the brands that we are launching in the year, I can tell you already, several of those brands already under contract with retailers that we're launching into.

Speaker 2

So maybe the best way to think about it is about 70% to 80% of that revenue for next year already has spoken for agreements and channels to be able to sell into.

Speaker 5

Okay. Thank you. That's helpful. That's all I have, guys. Thank you.

Speaker 2

Thanks, Amit.

Operator

The next question comes from Craig Irwin of ROTH Capital Partners. Please go ahead.

Speaker 9

Hi, good evening and thanks for taking my questions. So John, I don't understand the global supply chain problem. It's a headache and I think that the cost of doing business right now, the $50,000,000 adjustment to your guidance, I'm going to guess that A large chunk of that really is consumer given the mix shift you guys have been driving. And can you maybe talk us through the opportunity To use increased airfreight, incremental sales of $50,000,000 would mean sort of A chunky potential for upside into the back end of the year. I know you'll probably give up 20 points of margin on those sales, but it fertilizes New customers for growth in 'twenty two and beyond.

Speaker 9

Can you talk us through the logistics of whether or not this is doable or feasible to allow Amyris to execute on that for the holiday season?

Speaker 2

Craig, I really appreciate question and you can only imagine all of our frustration, right? This has not been a fun quarter, especially after a pretty good run for us. And we have and I mean Eduardo's team has scoped out, priced and has a few 747s that we're looking at being able to lease to be able to do some movement, especially in and out of China. And the cost is Pretty extreme. It's actually a little more than the 20 points that you're referring to.

Speaker 2

And the other thing to highlight, the mix of impact is actually on a revenue basis, We may need to use that if we have further limitations that we believe put at risk some of the upside. And our rationale in moving down the guidance is to really focus on everything we have in hand and in control right now. So we know where we can end the quarter solidly. We are again exploring those options for what can we add and really doing cost benefit trade offs. And to your point, one of my big drivers with the team is, I'm not willing to sacrifice any demand in how we're managing, making those decisions going into the rest of the quarter.

Speaker 2

So hope that helps. I don't know if Eduardo wants to add anything on that.

Speaker 3

Yes. The only other thing I would say John is Craig, we did actually derisk the components aside from the examples that John used around the caps and the bottles for Pat that he mentioned, all the rest of the components are in very good shape. I think where we are considering this expedited Our shipment has been in some raw materials, and that's where we're looking at those options. But I think just to reemphasize the numbers That guidance that John shared already are underpinned by products that are already produced and on the distribution center. So anything else we do would be just to of the risk 2022 and making sure that we can capture additional upside.

Speaker 9

Understood. Thank you. Just to follow-up on a question that I guess the associate from Cowen asked. John, when you responded to the mix question about Ingredients, Consumer, Other, you kind of walked us into a range of about $10,000,000 You said roughly $70,000,000 to 80,000,000 But the delta on your guidance between the low and the high is a little bit wider than that. It's 40,000,000 So in a circumstance like this, usually, I understand a Board is looking at a range of scenarios and they really want to give guidance that's responsible.

Speaker 9

But can you maybe give us a little bit of color? Do we need this increased use of airfreight to hit the top of the guidance? Could it possibly carry us over the top of the guidance? And what would have to go wrong or what would have to be problematic to reach the low end of guidance?

Speaker 2

Great question. So Let's play with, call it like that last $10,000,000 to the top end of guidance, the $60,000,000 to $70,000,000 range dollars 3.60 to $370,000,000 range. And the $360,000,000 to $370,000,000 range is really in the reach of what Eduardo just said of us having the stock that we need. What would have to happen for us to go above that, above the 360 to 370 is really Either cargoes getting unloaded on time at the U. S.

Speaker 2

Ports, that's number 1. And if not cargoes getting unloaded on time, us deploying the use of the leased 747 to move goods between China and the U. S. Those are really the two things that we could pull and we do have access to, obviously, the leased plane, to be able to go above that $370,000,000 mark. And again, whether ports start getting uncongested or not, is to be seen, right?

Speaker 2

But we're watching that very carefully. So I hope that helps. It's 360, 370 is what we have in house to underpin. And then hopefully, we can bring something in above that. But I wanted to be prudent and make sure we're covered all the way through going into the Q4.

Speaker 9

Understood. Thanks again for taking my questions.

Speaker 2

Thanks, Craig.

Operator

We have time for one more questioner and that is Graham Tanaka of Tanaka Capital Management. Please go

Speaker 4

ahead. Hi, guys. Can you hear me?

Speaker 2

We can, Brian.

Speaker 4

Thank you. I'll

Speaker 2

try to

Speaker 4

make this quick. I one of the subjects we've already covered. I do think there are there's a need to try to understand a little bit more about the immunity BIO joint venture, fifty-fifty relationship. And I'm wondering, if you could just start with, if the clinical trials do prove to be positive. What are your expectations on the performance of the 2nd generation COVID vaccine versus what's out there now in terms of efficacy, safety, durability of response, duration of response, etcetera, and as well as commenting on price For shot or vaccine?

Speaker 4

Thanks.

Speaker 2

Yes, Graham. So a couple of things. First of all, I'm planning on We haven't defined a date yet, but I am planning on Patrick and I doing a live session with investors online, when I say live, a Zoom session with investors to be able to answer questions jointly. And we'll work on getting a date in for that, I think that would be helpful for everyone, especially around the questions. Regarding some of your questions about the vaccine, here's how We look at it and this is all based on data we have now and some initially peer reviewed results that we have from some of the early and current testing that we're seeing, okay?

Speaker 2

So think about it as 96 percent efficacy, 96% efficacy single shot. And then as far as the data we have, 1 year, efficacy, without need for a booster shot. Whether it goes beyond a year or not, just we don't have enough data to be able to say. My guess is we'll see how that goes. The way we're thinking about pricing is somewhere around $7 based on where we are for cost of goods.

Speaker 2

The way to think about this is, so by the way, that $7 I think is below The $7 pricing of our vaccine is below the cost of goods that we've seen out there for Pfizer and others. So That's really what we're thinking about. And based on our cost of goods, we think 1,000,000,000 doses at that level contributes several 100 of 1,000,000 of dollars to us in financial contribution for the JV in 2022, assuming, again, we launch and get the 1,000,000,000 doses out there and produce. So it's giving us a lot of excitement about what's possible. And our focus is just manning the JV, making sure it's got the right resources and letting it execute and making sure it has the space, especially with Patrick's technical capability and his teams to really get this to market fast.

Speaker 4

Yes. And Your target market, I guess, there are 1.34 1,380,000,000 of population in Africa, is this intended to be approved, applied for and approved and distributed in all of Africa or where? What markets Would you plan to ship the 1,000,000,000 doses? Thanks.

Speaker 6

Well, I

Speaker 2

mean, I can tell you right now, obviously, we're very focused on South Africa. That's where the trial is. We are in active discussions in Brazil to ensure that the Brazilians have access to this technology. We're active in discussions in Portugal as an entry point to the EU. And as you can imagine, we're active in discussions with the U.

Speaker 2

S. Government. For anybody to think that any government in the world right now is Sleeping well, believing that COVID is under control, you got to be kidding yourself. There is a 4th wave starting. We have no idea where this goes.

Speaker 2

Frankly, everybody just wants security, health for their population and they're looking for a technology that can do that in a cost effective way without a lot of complexity in the supply chain. Everything we've seen in the data from our vaccine and the conversations we've had with multiple governments give us confidence that if we can get right results, we can get this thing out, scale and create a lot of value for us and our shareholders.

Speaker 4

Yes. I just want to confirm on cost. You had said earlier, based on the use of the Swalley adjuvant that it would help reduce cost by boosting the performance of the active ingredient for the vaccine. How much Lower could your how much could your cost be? For example, Pfizer reported in last quarter that they had a high 20% pretax margin I'm with a shift in the Q3.

Speaker 4

I'm just wondering if you would be in that range or higher?

Speaker 2

I expect it to be higher. I mean, I mentioned that our selling price will be somewhere around the $7 range. You can imagine that our cost of goods based on all the modeling And experience we have to date would say that we're looking at a cost of goods south of $2 a unit.

Speaker 4

Okay. And you might have different distribution costs that might be higher than Pfizer, of course. So what would be the timing For example, if you give us a little more guidance in terms of data points on your Phase 1, I think it's a Phase 1, 2, 3 trial, so that already is a little different. If you could discuss when the data might be released, when you might be applying for approval In South Africa, how could you could you get accelerated approval in other countries? And is this something that's a second half next year phenomenon, first half, first quarter?

Speaker 4

Could you give us a little guidance on timing? Thanks.

Speaker 2

Sure, Graham. Look, I'll just give you a couple of data points, right? From a results that we're comfortable speaking publicly about, I would say, Q1, We are parallel tracking the approval in South Africa. We're working very closely. When I say we, Patrick, specifically and immunity bio with the South African government, so we expect that to be a fast track.

Speaker 2

And we are in discussions with the Brazilians to be able to take the data from South Africa and accelerate pretty quickly. So I would say, production and approvals first half, Real impact to the P and L second half of the year.

Speaker 4

Okay. And just to confirm, there's been Some discussion of the fact that I guess it avoids the cold chain issue. In other words, it does not have to be frozen. Is that correct? And I'm just wondering if that would how much that might help the process?

Speaker 4

Thanks.

Speaker 2

Yes. Based on our current production process, It's actually freeze dried and therefore can be in the market for 1 year at room temperature, not any controlled temperature environment.

Speaker 4

Well, that's fabulous. Okay. I just getting back to some of the issues that were brought up earlier, if I could just ask one more question on, What were your when this year is all said and done and we're looking at next year to model for next year, what would this year's startup cost be in terms of impact of starting up new brands and investing in a new plant, which I understand You actually write off a lot of what might normally be capitalized on the barbed into plant. So if you could just estimate for us what the start up costs would be this year that would be absent next year? And then what the lost revenues might be this year with your guidance type scenario For the Q4, what kind of how much lower would total revenues be?

Speaker 4

Is it that $40,000,000 to $50,000,000 that or that's I guess it's $30,000,000 to $70,000,000 is that pretty much all the shortfall from the supply chain problems or are there other issues? Thanks.

Speaker 2

Yes, Graeme. And I think as we said earlier, there were 2 drivers. The main one is supply chain, but we also did not get as much selling time in the Q3 from the new brands as we would have liked, right? So, we had a few weeks versus what we were hoping to be about 6 weeks or so of selling time. So, That is an impact.

Speaker 2

And I think one of the other folks in the call, I think, help clarify that at the end of the day, we're hoping for much more like a $30,000,000 to $40,000,000 impact in total between 3rd Q4 than the total 70 that we guided. But we wanted to give ourselves lots of cushion and ensure that we didn't have a problem with delivering on what we say, right? So especially with how unpredictable the supply chain is at this point in time. I think the way our model Working is actually a little bit better than our a lot better than our expectation. We expected new brands to deliver about 10,000,000 a year in their 1st 12 months.

Speaker 2

The reality is the new brands we're launching now are starting to really track towards $20,000,000 1st year revenue, so double what we expected. And the costs are actually really in check. So think about it as $5,000,000 to $7,000,000 in investment to develop a new brand, dollars 20,000,000 to $30,000,000 in total to make it profitable. And our current track record is $1,000,000,000 valuation for a brand in 3 to 4 years versus 5 or 4 to 5 years, as we did with Bioscience. Right now, Bioscience exceeds $1,000,000,000 valuation in the public domain, basically looking at folks who Buy brands like that.

Speaker 2

I think we have Pipette well on its way to that, so that's $2,000,000,000 brands. And now with Rose Inc. And JBS performance, we definitely see them in that same path, but getting there much faster. So Lower investment than expected to get to profitability, and then obviously, faster path to $1,000,000,000 in valuation based on our current performance for consumer. And with that, let me move to closing comments.

Speaker 2

Otherwise, I have my colleagues and everybody else listening who's probably going to take my head off. So Let me go there now. Look, I just want to thank everybody for being on the call. I want to thank everybody for their patience with us. The headwinds around supply chain are super frustrating.

Speaker 2

At the same time, I can tell you I've never been more excited and confident About our underlying business, demand is much stronger than we can deliver on. We're focused very much on not destroying demand, keeping consumers engaged and making sure We stay in touch with them. And on the B2B side, we're moving a lot of inventory from partners and warehouses to ensure that no factory goes without being able to produce end products. And that's something that's really giving us a lot of credibility With our partners on the B2B side, on the ingredient supply side, I can tell you from our partners, whether it's Chibidon, Firmenich or DSM, every one of them is having issues having to slow down or stop factories because they can't get raw materials. And we've been very fortunate to keep delivering the raw materials, Even if it means moving inventory around, it does affect obviously our revenue because we don't get credit for taking inventory from a distributor to an end customer.

Speaker 2

But We see this as temporary. No question in my mind as we get through the Q4, we'll have a much more resilient supply chain and we'll get beyond this and keep our Growth momentum. And I think my last point is, I couldn't be more excited about having the $100,000,000 to $500,000,000 or more in revenue for next year without any one time deals and seeing the amazing performance of our underlying business. With that, I'd like to thank everybody.

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Earnings Conference Call
Amyris Q3 2021
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