Verenium Corporation (VRNM) Q2 2010 Earnings Call Transcript August 9, 2010 5:00 pm ET Executives Kelly Lindenboom – VP, Corporate Communications Carlos Riva – President & CEO Janet Roemer – President & COO of Enzymes Business Jamie Levine – EVP & CFO Analysts Laurence Alexander – Jefferies Pamela Bassett – Cantor Fitzgerald Paul Resnik – Olympia Capital Markets David Kaye [ph] – Tenor Capital [ph] Pete Finolie [ph] – River Ridge [ph] Presentation Operator
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Such statements are only predictions, and actual events or results may differ materially from these projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to our ability to satisfy all closing conditions in our pending transaction with BP, IP partners, competitors; and, regulatory and market forces. Certain of these factors and others are more fully described in our filings with the SEC, but not limited to our report on Form 10-Q for the quarter-ended March 31st, 2010.These forward-looking statement speak only to the date hereof and the Company expressly disclaims any intent or obligation to update these forward-looking statements. I will now turn the call over to Carlos. Carlos Riva Thanks, Kelly. Good afternoon, everyone, and thank you for joining us on today's call. Today I am pleased to report that the second quarter was a very productive one for the company. It was an especially productive quarter for our Enzyme business. Product revenues increased significantly on both year-on-year and quarter-on-quarter basis. We believe this is a clear signal that the full impact of the recession in our target enzyme markets is behind us and that our newer products will continue to gain traction in the market as they become a larger proportion of the mix of total product revenue. During the past quarter, we were also able to decrease our operating expenses. In addition, in April, we received a further $4.9 million award from the Department of Energy to fund activities at our demonstration plant in Jennings, thus further enhancing our cash position. Critical importance, we recently announced an agreement for the sale of our cellulosic biofuels business to BP for $98.3 million. To recap the terms of this transaction, upon closing, BP will acquire Verenium’s facilities in Jennings, Louisiana, including our pilot plant and demonstration facility together with our R&D facilities in San Diego, our cellulosic biofuels technology and related IP as well as our holdings in the joint ventures we currently have with BP. In addition, BP will employ select scientists and personnel needed to continue the cellulosic biofuels development program.
In return, Verenium will receive a $98.3 million payment from BP. An additional $10.7 million currently in restricted cash will be released to Verenium upon BP’s assumption of the lease for our San Diego facility. After the close of the transaction, Verenium will retain our core commercial enzyme business, which will include approximately 80 of our 270 current Verenium employees who we believe make up the right team to support our business plan moving forward.Select key hires have been identified to round out the team and we anticipate recruiting for those roles through 2011. We will also retain the supporting technology required to further develop our business, including enzymes for lignocellulosic biofuels as well as the potential to access certain biofuels applications developed by BP using the technology acquired from Verenium. And lastly, we will retain the option to remain in our San Diego facility over the next 24 months while we transition to new fit-for-purpose facility. We believe firmly that the sale of capital intensive cellulosic biofuels business is the best path forward for Verenium and its stakeholders. This transaction provides us the financial flexibility to focus on what we do best, delivering high performance industrial enzymes to lucrative and growing markets. In addition, Verenium will retain ownership of or royalty-free access to all the intellectual property we currently use in our commercial enzyme business. Finally, we may retain the option to license cellulosic technology now being developed by BP that the company may utilize in the future for its own advanced biofuels program. Read the rest of this transcript for free on seekingalpha.com