Investment Highlights

With abundant sugarcane feedstock and ability to use retrofitted ethanol plants, Amyris should be able to scale to hundreds of millions of gallons of biofuels over the next several years. We expect the company’s revenues to have a CAGR of XX% from 2012 – 2016.

Unlike Brazilian ethanol (an alcohol), Amyris’ biofuel (a hydrocarbon) is exempt from the 54c/gallon import tariff. We estimate Amyris can achieve profits of XXc – XXc per gallon at current diesel prices.

With a feedstock price dictated by Brazil’s large ethanol industry, Amyris should not find itself in the type of dire straits now faced by American biodiesel producers that use soybean feedstock, the price of which is dictated by the food industry.

We have used the following methods – a) Target EV based on steady state revenues, normalized net margins, and a growth multiple, b) Multiple of EV/Revenue, to arrive at a market cap of $XX- $XXM for Amyris, and an estimated price per share of $XX – $XX for the common shares ( in the event of an IPO)

Investment Concerns

The sharp fall in natural gas prices (and the continuing abundance of natural gas spawned by drilling shale) could limit the long term market opportunities for alternative fuels. Amyris’ fuel is not in commercial volumes. We expect initial commercial scale production to commence in 2012. Technological or logistical issues (such as the needs to raise capital) could push that date out, adding downside to our valuation.

The commercial diesel market prices can also add substantial volatility to our outlook for Amyris. We note that the soybean-based diesel market has been buffeted by a sharp fall in fossil-derived diesel prices since 2008.

Future technologies such as those from algae promise to bring biofuels at a cost that is significantly lower than any currently in the market.