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Verenium Corporation (VRNM)

Q3 2009 Earnings Call

November 9, 2009 10:00 am ET


Kelly Lindenboom - VP of Corporate Communications

Carlos Riva - President and CEO

Jamie Levine - EVP and CFO

Jeff Black - CAO


Amanda Sigouin - Jefferies & Company

David Woodburn - ThinkEquity

Sarah - Lazard Capital Markets



Welcome to Verenium's Third Quarter Financial Results 2009 Conference Call. (Operator Instructions) At this time I would like to introduce your host for today's call, Kelly Lindenboom. Please go ahead.

Kelly Lindenboom

Thank you for joining Verenium's third quarter 2009 financial results conference call. I'm Kelly Lindenboom, Vice President of Corporate Communications. With me today are Carlos Riva, our President and Chief Executive Officer, and Jamie Levine, our Chief Financial Officer. Jeff Black, our Chief Accounting Officer, will be joining us for Q&A.

The agenda for today's call is as follows: First Carlos will review the selective accomplishments and business highlights in the third quarter of 2009, then Jamie will provide a perspective and key corporate initiatives and the summary of our financial results for the third quarter, and finally we will open the call up for your questions.

Before we begin I would like to advise you that this discussion will include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These statements involve a high degree of risks and uncertainty and relate to matters such as the company's strategy; future operating plans; markets for the company's products; partnering and collaboration activities; public policy and financing activities; technical and business outlook. Such statements are only predictions and actual events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include but are not limited to risks related to the company's IP, partners, competitors and regulatory and market forces.

Certain of these factors and others are more described in the company's filings with the SEC, included but not limited to the company's report on Form 10-Q for the quarter ended September 30, 2009.

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.

We are pleased with the results we achieved for the third quarter as we continue to make important progress throughout our organization and in both our bio-fuels and specialty enzyme businesses.

Let me begin by discussing some of the recent corporate initiatives we undertook on the financial front to improve our overall capital structure. Most recently in October we raised $12.3 million in net proceeds through a public stock offering.

In August, we were successful in exchanging a portion of our 5.5% convertible notes to reduce debt.

In September we effected a one for 12 reverse stock split in order reach a broader bases of institutional shareholders by elevating our share price to a more attractive level and while also addressing compliance with NASDAQ's listing requirements. In addition throughout the quarter we continued to aggressively manage expenses and to conserve cash.

Jamie will address these items in more details in a few minutes, but I want to reiterate the importance of achieving financial strength and flexibility to help ensure Verenium's future growth and success. This continues to remain a top priority going forward.

I would now like turn to our biofuels business, where we have continued to make progress on a number of fronts.

First, we announced in September that Carey Buckles joined as Vice President of Biofuels Operations, further strengthening the leadership team at our Jennings, Louisiana site. Carey comes to us with extensive expertise in both industrial and biotech facility operations. His experience will be of great help to our organization, as we optimize our biofuels operations through continued process improvements as we move closer to commercial scale production of cellulosic ethanol.

Second, we will continue the optimization phase at our 1.4 million gallon per year demonstration plant in Jennings. Essentially, optimization valves running a series of, what we refer to as campaigns, which we seek to closely and systematically reevaluate different stages of our process

As we discussed last quarter, we transitioned from operating the plant on sugarcane to gas to energy cane. I am pleased to report that we have been successful in running energy cane through a series of campaigns, as well as the fully integrated process from start to finish producing cellulosic ethanol.

This experience has provided a critical learning and know how that will serve us well as we focus on refining our process technology for our first commercial plant. Moving forward, we plan to start testing sorghum in addition to continuing work with energy cane.

Next importantly, we are able to escalate the scale of effectiveness of our onsite enzyme production putting us ahead of target with development plants in this area. This is a key achievement as enzyme production is the single largest cost in our production process. As we recently disclosed, we currently target the overall cost of ethanol production at about $2.10 per gallon for our commercial facilities.

We believe that there is a significant opportunity in the future to drive down that number and through the utilization of our pilot and demonstration plants and R&D facilities in the San Diego; we intend to continue to work to improve all elements of our process including enzymes.

Additionally, last month, we announced that we have signed an agreement with Value Prior to Pulping, or VPP, a consortium funded by the US Department of Energy, the State of Wisconsin and several large forest product companies to test the potential of Verenium's C5 technology to produce biofuels from feed stocks sourced from various pulp and paper mill processes.

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