ADL Bionatur Solutions SA (MC:ADLB) announced on 22 July 2019 that its existing contract manufacturing (CMO) production agreement with Amyris (AMRS, Nasdaq) has been extended to 2020, with the associated additional revenue expected to exceed €12m. Amyris develops and markets fermentation-derived ingredients for the health and clean beauty markets, and indicates that its current portfolio is growing over 100% in 2019. The contract expansion signals Amyris’s confidence in ADL-BS’s fermentation facilities and production capabilities, and underpins our growth forecasts for ADL-BS, as our model already anticipated that the Amyris contract would be extended into 2020 and beyond.
This Amyris expansion follows previous contract expansions announced in June and December 2018. ADL-BS will produce up to five ingredients for Amyris during the contracted period and an extension option is in place for future years.
On 9 July 2019, ADL-BS also reported that it expanded its CMO production agreement with an unnamed longstanding client (active in the nutrition, health and sustainable living industries). ADL-BS produces a specific food supplement for several years for this client, and the production extension represents a 75% increase (reflecting over €2.5m of additional revenue) compared to the initial amount agreed for 2019.
ADL-BS continues to expect positive overall EBITDA for 2019, and we believe these announcements are supportive of the favourable demand trends underlying ADL-BS’s fermentation and CMO operations. We expect to receive further guidance and review our estimates when the firm reports H119 results in the coming weeks.
Business description
Based in Spain, ADL Bionatur Solutions provides contract manufacturing (CMO) of fermentation-based products and services focused on the health, beauty and wellness sectors. It has established CMO/API business lines and its own proprietary development line of novel or innovative products.