| Engineering Year | Bioreactor Turnaround Time | Batches Per Year |
|---|---|---|
| 325 days | 16 days | 20 |
| 325 days | 14 days | 23 |
| 325 days | 12 days | 27 |
In the best-case scenario above an additional seven batches could be squeezed out of each bioreactor in a facility. For instance, a facility with six 500,000 liter bioreactors would see batch capacity increase by an extra 21 million liters per year — enough to increase a Solazyme Inc (NASDAQ:SZYM) biorefinery’s capacity by nearly 20,000 metric tons. It may seem like a long shot to cut production time by 25%, but I wouldn’t bet against advances in synthetic biology, creative young engineers entering the industry, or the evolution to continuous processes.
Thanks to selling prices, not all products are created equally. For instance, Solazyme announced that it has increased the level of myristic acid in its myristic oil profile to 60%. That may not seem like an incredible feat of science, but consider that that is 400% more than “natural” sources of the compound. Additionally, selling prices for myristic acid averaged $3,700 per metric ton in 2012. Here’s a quick sketch showing how selling prices can absorb less-than-stellar product yields.
Source: Solazyme.
I explained the difference between bioreactor volumes and realized product volumes earlier this year, so I won’t bludgeon you with the details again. But you can see the general trend from the visual above. Increasing the level of a target fatty acid in an oil profile will lead to greater economics, while the opposite will result in tighter margins. Such improvements can have a big compounding effect when combined with falling production costs. You can also see that high-volume, low-margin products such as fuels will need to be highly concentrated to be economically feasible.
Foolish bottom line
The three terms highlighted above should help in reading future press releases or SEC filings when companies choose to disclose such production metrics. They should also help provide a more complete picture of the industrial biotech industry for investors. The next several quarters are especially critical for Solazyme, Amyris, and Gevo — all of which are ramping production at key facilities, building new facilities, and on the verge of launching new bio-based products to the market. There is plenty more ground to cover, however, so next week we will break down commissioning and ramp up schedules for the industry. As always, let me know if you have questions in the comments section below.
The article 3 Terms Solazyme Investors Absolutely Must Know originally appeared on Fool.com and is written by Maxx Chatsko.
Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool recommends Total SA (ADR) and owns shares of Solazyme.
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