Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Three Opportunities for Solazyme Inc (SZYM) Investors

Page 1 of 2

Investors looking to get into industrial biotechnology should keep a watchful eye on renewable oils manufacturer Solazyme Inc (NASDAQ:SZYM). The developmental stage company has some pretty big ambitions and, should its goals be realized, is in for some eye-popping growth. Looking for some more specific reasons to keep Solazyme on your watchlist? Here are three opportunities for investors taking the long-term approach to the company.

Solazyme Inc (NASDAQ:SZYM)

1. Diverse target markets

Today the word “oil” is associated with crude oil, petrochemicals, and fuels. However, oils reach into a broader range of everyday life. When you hear the word “oil” you should think not just about fuels, but about foods, lubricants, fragrances, and body lotions, too (just to name a few). Investors of Solazyme Inc (NASDAQ:SZYM) will get to enjoy next-generation alternative fuels — including blendstocks and drop-ins — as well as specialty chemicals, personal care products, and nutritional products.

The diverse range of chemicals that can be manufactured on the company’s platform will one day help to distribute risk across various unrelated customers, partnerships, markets, and continents. There are far too many spooky examples of over-dependence in the history of investing to name just one, but know that Solazyme Inc (NASDAQ:SZYM) is aiming for diversity and stabilization. Volatility in any one market or with any one partner will not necessarily spell disaster for the company or shareholders.

2. Financially strong

In what could be considered a rarity in the industrial biotechnology industry, Solazyme Inc (NASDAQ:SZYM) is actually leaps and bounds ahead of peers when it comes to its balance sheet. It had $239 million in cash and short-term investments at the end of March, which will go a long way toward commercializing products and biorefineries in the next two years. The company expects operating expenses to fall between $115 million and $120 million in 2013, so that war chest will disappear pretty quickly.

Solazyme will continue to be compared with industry pioneer Amyris Inc (NASDAQ:AMRS), as both push into uncharted waters for commercial scale bio-based chemicals production. From a product standpoint the comparison is not very far off. The two companies are commercializing multiple products in similarly diverse markets: Amyris Inc (NASDAQ:AMRS) with building block molecules, Solazyme Inc (NASDAQ:SZYM) with tailored oils. However, the latter has managed a much healthier balance sheet and burn rate to date.

It will be a costly and unprofitable next several years for the company, but it will not have to dilute investors at nearly the same rate as other bio-based chemical producers. You would be hard pressed to find similar financial health in other companies in the developmental stage, especially in this capital-intensive industry.

3. Can you say “growth”?

Solazyme will jump from 1,820 metric tons of renewable oil capacity (from its demonstration facility in Peoria) now to over 125,000 metric tons before mid-2014.

Biorefinery Nameplate Capacity Commissioning Product by…
Peoria (product development) 1,820 metric tons Active (test quantities)
Solazyme Roquette Nutritionals 5,000 metric tons June 2013 2H13
Solazyme Bunge 100,000 metric tons 2H13 4Q13
ADM/Clinton 20,000 metric tons Early 2014 Early 2014

Source: Solazyme

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!