ADL Bionatur Solutions (ADL-BS) announced on 22 July 2019 that its existing contract manufacturing (CMO) production agreement with Amyris (AMRS, Nasdaq) has been extended to 2020, with the associated additional revenue expected to exceed €12m. Amyris develops and markets fermentation-derived ingredients for the health and clean beauty markets, and indicates that its current portfolio is growing over 100% in 2019. The contract expansion signals Amyris’s confidence in ADL-BS’s fermentation facilities and production capabilities, and underpins our growth forecasts for ADL-BS, as our model already anticipated that the Amyris contract would be extended into 2020 and beyond.
ADL Bionatur Solutions |
Amyris contract extended to 2020 |
Contract update |
Pharma & biotech |
24 July 2019 |
Share price performance
Business description
Analysts
ADL Bionatur Solutions is a research client of Edison Investment Research Limited |
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ADL Bionatur Solutions (ADL-BS) announced on 22 July 2019 that its existing contract manufacturing (CMO) production agreement with Amyris (AMRS, Nasdaq) has been extended to 2020, with the associated additional revenue expected to exceed €12m. Amyris develops and markets fermentation-derived ingredients for the health and clean beauty markets, and indicates that its current portfolio is growing over 100% in 2019. The contract expansion signals Amyris’s confidence in ADL-BS’s fermentation facilities and production capabilities, and underpins our growth forecasts for ADL-BS, as our model already anticipated that the Amyris contract would be extended into 2020 and beyond.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
12.8 |
(12.7) |
(2.52) |
0.0 |
N/A |
N/A |
12/18 |
25.3 |
(16.3) |
(0.43) |
0.0 |
N/A |
N/A |
12/19e |
60.8 |
1.8 |
0.05 |
0.0 |
45.7 |
N/A |
12/20e |
73.5 |
6.2 |
0.16 |
0.0 |
13.1 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
This Amyris expansion follows previous contract expansions announced in June and December 2018. ADL-BS will produce up to five ingredients for Amyris during the contracted period and an extension option is in place for future years.
On 9 July 2019, ADL-BS also reported that it expanded its CMO production agreement with an unnamed longstanding client (active in the nutrition, health and sustainable living industries). ADL-BS produces a specific food supplement for several years for this client, and the production extension represents a 75% increase (reflecting over €2.5m of additional revenue) compared to the initial amount agreed for 2019.
ADL-BS continues to expect positive overall EBITDA for 2019, and we believe these announcements are supportive of the favourable demand trends underlying ADL-BS’s fermentation and CMO operations. We expect to receive further guidance and review our estimates when the firm reports H119 results in the coming weeks.
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Research: Investment Companies
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