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Having largely divested its fuels business, the company now focuses on higher margin products. It produces molecules for fragrances and cosmetics, nutraceuticals, drugs, tire rubber and more. Their current gross margin is over 58% (source). Moreover, they are experiencing huge product sales growth. In the past two quarters, Amyris achieved product sales growth of over 45%, after having double-digit growth rates for the prior three quarters. In Q2 2016, product sales reached $4.9M, while total revenue was at $9.6M (source).
Amyris is still making large capital investments, which sales revenue alone cannot cover. To that end, it does collaborative research projects where large corporate partners give Amyris cash to do research work to figure out the feasibility of producing certain molecules. If the studies succeed, Amyris also gets to produce those molecules and earn more money that way. Recent collaborations include those with Biogen (NASDAQ:BIIB), Johnson & Johnson (NYSE:JNJ) and Cathay Pacific (owned by Swire (HKG:0019)) (source). In effect, Amyris's customers are sponsoring R&D work for the company.
Finally, Amyris gets grants from the US Government for research purposes. Recently, the Department of Energy gave Amyris a multimillion-dollar grant for research into biofuels (source). More importantly, DARPA, the Pentagon's research arm, gave Amyris a $34 million grant to create technologies to develop new molecules and bring them to market faster (source). Under the terms of the agreement, Amyris gets to keep the IP for all new molecules developed in this program.
The long-term potential of the company is enormous. The competitive advantage of the company can roughly be divided into two parts.
