On November 28, we hosted a special conference call/webcast regarding our expanded strategic alliance with Royal DSM to provide additional clarity and transparency beyond the details we provided in our joint news release with DSM on November 17. You can find the presentation from that event here.
This heralds a new era for Amyris. We have successfully transitioned over the last 5 years from being a Biofuels business to a leading Biotech business with huge potential. Amyris is now a leading creator of high-value ingredients and products made from sustainable sources. This transaction with DSM takes us one step closer to being able to realize our vision that one day all products will be made our way.
Through the sale of our Brotas production facility in Brazil and the establishment of a long-term supply partnership for our high-volume products, the closing of which is subject to customary conditions as detailed in the 8-K we filed on November 24, the agreement with DSM is worth an aggregate consideration over a 3-year period of $96 million with the potential for significant value share payments to Amyris going forward. Included are two key items:
From our inception in 2003, Amyris has excelled at fermentation-based R&D, creating molecules from sustainable sources at speed and at scale, whereas DSM has an advantage when it comes to high-volume manufacturing due to the company’s success in running many plants and optimizing efficiencies to bring down cost. As a result, both of us saw fantastic synergies to further our partnership through a joint commitment for farnesene production for mutual benefit and with the potential for new projects.
DSM is taking on serving existing supply agreements and allocating capacity to ensure there is no interruption in meeting our customers’ needs. Specifically, DSM has a focused commercial license to manufacture farnesene for certain products and will continue to the supply needs of our existing customers. DSM will also sell farnesene to our Novvi joint venture for use in Novvi’s renewable base oils and lubricants.
Moving forward, our expanded partnership with DSM will enable us to focus on our core strength of developing break-through bioscience technologies, molecule by molecule – which we can apply through a portfolio approach that continues to target key markets and opportunities.
Overall, we look forward to completing a transition from operating a plant originally designed to produce large volumes of farnesene for biofuels to producing an expanding number of high value, specialty ingredients in categories of need. The deal enables us to accelerate the construction of a second Amyris production facility at Brotas for these higher-margin products, while maintaining our manufacturing process development and business support capability based in Campinas, Brazil.
This is a turning point for our business. The shift allows us to improve returns and cash flows in order to continue to provide sustainable growth for Amyris and our partners. And, it enables us to focus on our commitment to create and deliver healthier products. Our scientists are driven to create a world for future generations which is both natural and sustainable. Together with our partners we are enabling consumers the world over to buy, use and consume products made from sustainably created natural ingredients. Our vision is that one day all the products we consume will be made in this way.
This blog post contains forward-looking statements about events and circumstances that have not yet occurred, including projections of Amyris’ operating activities, the anticipated closing of the proposed transaction with DSM, our strategic plans regarding this potential transaction and its anticipated impact on our business, potential benefits of our extended strategic alliance with DSM, our planned construction of additional manufacturing facilities and financial results for 2017 and beyond. These statements are based on management’s current expectations and actual results of future events may differ materially due to risks and uncertainties, including those detailed in the company’s SEC filings under the heading “Risk Factors.” Amyris disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the Amyris SEC filings for detailed discussion of the relevant risks and uncertainties.