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PE, VCs Look to Feed on $100M Genomatica IPO

NEW YORK, Aug 24 (Reuters) – Genomatica Inc, which makes chemicals from renewable feedstocks, wants to raise as much as $100 million in an initial public offering to capitalize on burgeoning interest in the green chemistry sector.

The San Diego-based company, in a filing with the U.S. Securities and Exchange Commission on Wednesday, did not say how many shares it will offer or at what price.

The company plans to list its common stock on the Nasdaq exchange under the symbol “GENO.”

The amount of money a company says it plans to raise in its first IPO filing is used to calculate registration fees. The final size of the IPO can be different.

Proceeds from the offering will be used for research and development costs and capital expenditures, according to the filing.

The company warned it has never made any revenue from selling chemicals, has never turned a profit and may never turn a profit.

Genomatica also has no plans to pay a dividend, meaning the stock would have to grow consistently to remunerate investors.

The company’s technology reprograms E. coli bacteria to produce several chemicals using a range of feedstocks, not just corn like several key rivals.

Most of its technology does not yet have patent protection in the United States, the company said in the filing.

Genomatica has begun began making small batches of butanediol, a chemical used to make spandex, as part of a licensing partnership with Tate & Lyle.

While it has been successful producing butanediol in small batches, Genomatica said it has no experience producing, storing and transporting the chemical in large batches.

The company also relies heavily on joint-venture partners to build and run plants, a large risk if partners decide to pull out. Earlier this week Genomatica announced a joint venture with Novamont to build a butanediol plant in Italy.

The hunt to produce chemicals from feedstocks other than fossil fuels has sparked intense interest from companies both big and small, including Metabolix, Exxon Mobil and Dow Chemical. The interest is akin to the dot-com race of the late 1990s.

What remains to be seen is which company’s technology will emerge the winner and become the renewable chemical industry’s equivalent of Google Inc.

Genomatica is clearly betting it can be such a winner, though so far it is unclear whether Wall Street wants to go along for the ride.

Shares of rivals Gevo and Solazyme have each dropped about 30 percent since their own IPOs earlier this year. Metabolix, which has seen its stock drop 66 percent since launching in 2006, has never made money.

Morgan Stanley, J.P.Morgan, Jefferies, Piper Jaffray and Raymond James are underwriting the Genomatica offering.

The company had been scouting possible exchange listings for weeks. In late June a digital sign on the Nasdaq exchange in Times Square prematurely announced, “Nasdaq Welcomes Genomatica.”
Genomatica’s current investors include Mitsubishi, TPG, Draper Fisher Jurvetson, Alloy Ventures and Waste Management.

TPG, a private investment firm, is Genomatica’s largest investor with about 19 percent of shares before the offering.

(Reporting by Jochelle Mendonca in Bangalore and Ernest Scheyder in New York; Editing by Maju Samuel, Dave Zimmerman and Matthew Lewis)