Fulcrum Bioenergy’s $115M IPO: The 10-Minute Version

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Fulcrum Bioenergy’s $115M IPO: The 10-Minute Version

Posted: 29 Sep 2011 02:34 PM PDT

Jim Lane
The first zero-cost feedstock biofuels company comes to the public markets with its IPO.
Like to see how this “Back the the Futuresque” technology unlocks value by converting household garbage into transportation fuel?
Here’s our 10-minute version of the IPO from Fulcrum Bioenergy.

In California, Fulcrum Bioenergy has filed an S-1 registration statement for a proposed $115 million initial public offering. The number of shares to be offered and the price range for the offering have not yet been determined. The company proposes to list under the symbol FLCM. UBS Investment Bank is the underwriter for the offering.

The company is currently ranked #45 in the world in the 50 Hottest Companies in Bioenergy. The rankings recognize innovation and achievement in fuels and are based on votes from a panel of invited international selectors, and votes from Digest subscribers.

Fulcrum becomes the 12th company to file for an IPO in the industrial biotech boom, which began with a successful listing on the NASDAQ by Codexis (CDXS) in 2010. IPOs by Amyris (AMRS), Gevo (GEVO), Solazyme (SZYM), and KiOR (KIOR) have followed. In recent months, PetroAlgae (PALG.OB), Myriant, Ceres, Genomatica, Mascoma and Elevance have also filed S-1 registrations for proposed IPOs.. Three in the past week, in fact.

Here’s the S-1 registration, in a conveniently downsized 10-minute Digest version – with some commentary along the way as to what is driving value in the Fulcrum model, opportunities for the intrepid investor, and some risks which we have translated from the ancient and original SEC into modern English.
Company Overview

Fulcrum produces advanced biofuel from garbage. Its business model combines a proprietary process and zero-cost municipal solid waste, or MSW, feedstock to provide them with what they term “a significant competitive advantage over companies using alternative feedstocks such as corn, sugarcane and other sources of biomass in the production of renewable fuel”. According to the filing, they have entered into long-term, zero-cost contracts for enough MSW located throughout the United States to produce more than 700 million gallons of ethanol per year; the core element of their technology, they confirm, has been demonstrated at full scale.

They intend to use a substantial portion of the IPO proceeds of this offering to fund the construction of its first commercial-scale ethanol production facility, the Sierra BioFuels Plant. At this facility, they expect to produce approximately 10 million gallons of ethanol per year at an unsubsidized cash operating cost of less than $1.30 per gallon, net of the sale of co-products such as renewable energy credits.

For a company that believes in waste, they sure don’t believe in large overhead. It’s a poster child for lean management in the development of advanced bioenergy. Employee headcount is just 17, at IPO time, with just 2 in research and development.

Development costs to date: net losses of $12.4 million, $16.5 million, and $18.0 million for 2008, 2009 and 2010, respectively and $13.8 million for the six months ended June 30, 2011. Total: $63.8 million.

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