CEO: James Levine.
Revenue: $61.3 million in 2011; $52.1 million in 2010.
Net income: $5.2 million in 2011; net loss of $14.2 million in 2010.
No. of local employees: 90.
Headquarters: Sorrento Valley; moving to Torrey Pines in June.
Year founded: 2007.
Stock symbol and exchange: VRNM on Nasdaq.
Company description: An industrial biotech company that develops environmentally friendly enzymes.
Key factors for success: The company’s tailored enzymes are used to make products and industrial processes greener and more cost-effective for various sectors, including the fuel and food markets.
Verenium Corp., a San Diego-based industrial biotechnology company, has closed on a $37 million sale of its oilseed processing business and other assets to the food and beverage unit of Royal DSM N.V., a multinational science company with headquarters in the Netherlands.
President and CEO James Levine said most of the assets went toward paying off Verenium’s outstanding debt, which had become an “overhang” on the company — interfering with its stock market potential.
Investors were pleased; sending shares soaring to a new 52-week high of $4.38 days after the deal was announced.
“(The debt) was an impediment to funding the company the way it should be funded,” Levine said. “People were concerned with how we were going to repay. Now we can get on with building the business and letting investors really understand the business.”
In an April 2 statement announcing the full retirement of $35 million in debt, Chief Financial Officer Jeff Black called the repayment “an important milestone” that will give Verenium “a more flexible capital structure that will allow us to invest in areas critical to grow our business.”
Laurence Alexander, an analyst with Jefferies & Co. Inc. in New York, was optimistic about the company developments in his latest research note. “With the sale of the oilseed processing enzyme platform to DSM, Verenium has effectively ended the debt saga and repositioned the company for growth,” he wrote.
A ‘Compelling Opportunity’
Verenium, a company formed in 2007 through the merger of San Diego’s Diversa Corp. and Cambridge, Mass.-based Celunol Corp., creates environmentally friendly enzymes that are used in products and industrial processes.
The oilseed business, which brought in $7.5 million of the company’s total $61.3 million in revenues last year, included one commercial product, Purifine PLC, used for soybean processing, Levine said.
Under terms of the agreement, Verenium will continue to manufacture Purifine PLC and supply the enzyme to DSM Food Specialties B.V.
Levine said the sale of the business, for a price that equaled five times its annual sales, presented a “compelling financial opportunity” for Verenium, especially in respect to its need to pay down debt.
He said the deal also made sense because the oilseed processing business would have required infrastructure in China and Latin America. “The cost of doing that for a single product didn’t really make sense,” Levine said. DSM already has global infrastructure.
Along with the oilseed business acquisition, DSM also took Verenium’s oilseed customers and corporate partnership agreements with Bunge North America, Alfa Laval and Desmet Ballestra Group. Also included are earlier-stage oilseed enzyme products, licenses to certain enzymes for use in the food and beverage markets, and access to new “biodiversity” gene libraries to be developed by Verenium.
Next Stop: Torrey Pines
With the oilseed business gone, Verenium is left with three core business lines — animal health and nutrition, grain processing and oilfield services. Levine said the company is exploring ways to take its current products and launch them into new industry areas, with an eye on the food and detergent segments.