Solazyme Inc (SZYM) is utilizing its algae technology platform to enter into different applications and end markets, in particular the nutrition market, despite the dissolution of its joint venture with Roquette, says Pavel Molchanov, Analyst at Raymond James & Associates, Inc.
“Solazyme can make fuels, specialty chemicals, cosmetics and also nutrition products. In the long run I would expect fuels and chemicals to be the dominant revenue driver for the company, but cosmetics and nutrition is an important opportunity for generating revenue and margin relatively quickly, quite simply because the pricing and the margins in these markets are so much higher than in the commodity fuel market,” Molchanov said.
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Solazyme had a joint venture with Roquette Freres, a French producer of starches, and the two were looking to start production at their first plant this summer; however, the companies had different expectations for how quickly to move forward, Molchanov says. Since dissolving the JV, Molchanov sees Solazyme entering the nutrition market on its own, as the company has the rights to the technology.
“Roquette, as a large mature company with lots of things on its plate, wanted to move more slowly; Solazyme wanted to move more aggressively, and they decided to part ways,” Molchanov said. “It would have been ideal if they could move forward with that next expansion next year, but Solazyme is the company where the technology originated. Solazyme keeps the rights to the technology, and therefore it’s going to get into the nutrition market on its own, rather than through the JV with Roquette.”
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