By Pablo Erbar
Industrial bioscience company Amyris Inc (NASDAQ:AMRS) has established a cosmetic ingredients joint venture with Nikko Chemicals Co., a Japanese specialty cosmetic provider. Nikko has distributed Amyris’ cosmetic ingredients in the Japanese market for years, making the venture a great fit.
The agreement includes the purchase of 50% of Amyris’ Neossance business by Nikko, for what amounts to around $20 million. Amyris Inc (NASDAQ:AMRS) will receive $10 million upfront, while the other half is set to be structured as an earn-out over the course of the first three years.
As indicated by the Japanese firm’s CEO Shizou Ukaji, “Nikko has been involved in the sugarcane-based squalane business since the product’s inception by Amyris and we believe this is an opportune time to join forces”. Management believes the additional financial, marketing, innovation, and business development synergies derived from the joint venture will result in a significant expansion in terms of market applications.
Amyris Inc (NASDAQ:AMRS) CEO and President John Melo concurred, stating: “this agreement is another key step among several in our stated plan to build greater value for our business, and ensure access to partner-driven growth capital while positioning the company to significantly expand product sales”.
As a result of the joint venture, sales are expected to increase by at least 50% annually while expenses should drop by around $1.5 million on a yearly basis. The joint venture will not only increase resources, but will accelerate innovation and new product development.
Disclosures: The author, Pablo Erbar, holds no interest in any of the securities or entities mentioned above. He has not received compensation for this article, other than from Small Cap Nation. The statements above do not constitute recommendations. The article has been based on publicly available information, and seeks to be unbiased and non-promotional.