* Shares close at $20.71; IPO price $18
* IPO priced above range, sold more shares
* Trading on Nasdaq under symbol "SZYM"
(Adds details on oil prices, Gevo and Amyris IPOs)
By Clare Baldwin and Peter Henderson
NEW YORK/SAN FRANCISCO, May 27 Shares of
biofuel maker Solazyme Inc SZYM.O rose 15 percent in their
stock market debut on Friday after the company's IPO raised
more than expected.
South San Francisco-based Solazyme uses algae to make oil
and plans to sell fuel oil, dietary supplements and skin care
products. It is the latest of a handful of companies that make
fossil fuel alternatives and have sought money successfully
from the U.S. capital markets.
U.S. crude oil prices have risen from under $40 per barrel
in early 2009 to around $100 per barrel now. Political turmoil
in the oil-rich Middle East and growing demand from developing
economies threatens to keep those prices high.
"Petroleum has no place to go but up," Solazyme Chief
Executive Jonathan Wolfson said in an interview on Friday.
Solazyme's shares closed at $20.71 on the Nasdaq, well
above their IPO price of $18. Shares of Gevo Inc (GEVO.O) and
Amyris (AMRS.O), which came public within the last year and
whose businesses both also include biofuel production, closed
on Friday at 32 percent and 83 percent above their respective
If all goes as planned, Solazyme could sell diesel fuel for
$4 per gallon or less, Wolfson said. The company projects it
can produce oils for the fuel market at a cost of about $3.44
per gallon, or $0.91 per liter, in a built-for-purpose
commercial plant that would use sugarcane feedstock. Refining
costs would add another 50 cents or so per gallon.
For all of the enthusiasm, however, the companies are still
in their early stages. Solazyme is trying to build up its
commercial operations and has not yet turned a net profit.
It has business relationships with major companies
including Roquette, Sephora, QVC, Bunge Global Innovation,
Chevron USA and Dow Chemical Co, and received a $22 million
U.S. Department of Energy grant in December 2009. But funding
from third party research agreements and government grants
remains a substantial portion of Solazyme's revenue.
Solazyme posted a net loss to common stockholders of $7.3
million on revenue of $7.7 million in the three months ended
March 31. It expects to continue to post losses for at least a
few years as it grows its business.
Going forward, its products will also have to be approved
by government regulators. The sale of diesel and jet fuels in
the United States is regulated by agencies such as the
Environmental Protection Agency and the California Air
Resources Board. So far, Solazyme has not registered any of its
fuels in the United States or elsewhere.
Solazyme's chemical products and nutritional supplements
are also subject to review under the EPA's Toxic Substances
Control Act and U.S. Food and Drug Administration regulations.
Wolfson said the fuel registration was ongoing and he had
"no reason to believe" the process would not be successful.
The company uses sugarcane as a feedstock and Wolfson said
the company could mitigate the risk of currency fluctuations by
selling in markets that supply feedstock -- such as Brazil --
as well as the United States.
Solazyme and its stockholders sold 10.975 million shares at
$18 each in an IPO on Thursday, raising $197.55 million. They
had planned to sell 9.975 million shares at $15 to $17 each.
Of the shares sold in the IPO, most came from the company,
which said it would use the proceeds to fund research and
development and for general purposes.
Underwriters on the IPO were led by Morgan Stanley (MS.N)
and Goldman Sachs Group Inc (GS.N).
(Reporting by Clare Baldwin in New York and Peter Henderson
in San Francisco; editing by Lisa Von Ahn, John Wallace, Andre
Grenon and Bernard Orr)