TVIA : TerraVia Holdings Stock Analysis and Research Report

2017-10-20 - by Asif, Contributing Analyst

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TerraVia is a food, nutrition and specialty ingredients company that harnesses the power of algae, the origin of all plants. Its innovative platform uses microalgae to produce high-value triglyceride oils, proteins, fibers, micronutrients and other ingredients. The inherent flexibility of its technology platform and the broad usage of these materials across multiple industries allow us to approach a wide range of customers across myriad end markets. TerraVia has streamlined its strategy to focus on food, nutrition and specialty ingredient products and began to more broadly commercialize these products in 2015, and in May 2016, TerraVia changed its name from “Solazyme, Inc.” to “TerraVia Holdings, Inc.”, and changed its Nasdaq ticker listing symbol from SZYM to TVIA. With the transition to the TerraVia brand and its refined focus on food, nutrition and specialty ingredients, TerraVia announced in March 2016 its intention to attract a new CEO with proven industry experience in food and nutrition to drive commercial growth. On August 8, 2016, TerraVia announced the appointment of Apu Mody as its Chief Executive Officer, effective upon the commencement of his employment with TerraVia, which occurred on August 22, 2016. Additionally, in August 2016, TerraVia sold its Algenist skincare brand, a transaction in line with its strategy to focus efforts on core growth engines in food, nutrition and specialty ingredients. The unique composition of its oils, powders and other algae-derived products address specific customer requirements. TerraVia is commercializing high-value oils and powder products with companies that primarily use them as ingredients. TerraVia has developed and are commercializing products for specialty food ingredients, animal nutrition ingredients, consumer food products and specialty personal care ingredients. Over its history, TerraVia has also invested in and developed products, technology and market opportunities in the industrials area, which includes fuels, industrial oils, and the oilfield/Encapso ® business. In line with its strategy to focus its commercial efforts on food and specialty personal care ingredients, the company expect to pursue strategic alternatives for the industrials business and its objective will be to identify partners who have the operational capabilities needed to realize the potential of those businesses.

AlgaWise and Thrive Brands

Its food oils are formulated to offer a variety of functional benefits such as enhanced structuring capabilities and stability while providing robust formulation and process flexibility. These food oils have the potential to improve upon conventionally utilized specialty fats and oils and its high oleic algae oil has received an FDA generally recognized as safe (GRAS) "No Questions" letter. Currently, these oils are commercially available in its AlgaWise ® branded food oil platform and in its consumer culinary oil Thrive® brand. In addition, TerraVia has developed novel methods of preparing powdered forms of triglyceride oils and vegan proteins, and its powdered ingredients are composed of unmodified whole algae cells. AlgaVia ® Lipid Powder (commonly known as whole algae flour) and AlgaVia ® Protein (commonly known as whole algae protein) are whole algae ingredients that can improve the nutritional profile of foods and beverages. AlgaVia ® Lipid Powder is a new fat source that allows for the reduction or replacement of dairy fats, oils, and eggs. AlgaVia ® Protein is a new vegan source of protein that is free of known allergens and gluten. Both AlgaVia ® Lipid Powder and Protein can be used across a range of applications such as beverages (ready-to-drink and powdered), bakery, snacks, bars, dressings, sauces and frozen desserts and each ingredient received a FDA GRAS “No Questions” letter. In May 2016, TerraVia and Bunge announced that TerraVia launched a native, whole algae DHA, docosahexaenoic acid, a long chain omega-3 fatty acid as a sustainable specialty feed ingredient, prioritizing the aquaculture market. Its manufacturing process is compatible with commercial-scale, widely-available fermentation and oil recovery equipment. TerraVia operate its lab and pilot fermentation and recovery equipment as scaled-down versions of its large commercial engineering designs, such as those used to perform development work under certain agreements with strategic partners and to fulfill commercial supply agreements. TerraVia has scaled up its technology platform and have successfully operated at lab (5-15 liter), pilot (600-1,000 liter), demonstration/small commercial (120,000 liter) and large commercial (approximately 500,000 liter and above) fermenter scale. On August 16, 2016 TerraVia sold tis Algenist skincare business to TCP Algenist LLC, an affiliate of Tengram Capital Partners and Algenist Holdings, Inc. Upon closing, TerraVia received approximately $18.8 million in cash, net of closing costs and a 19.9% ownership interest in Algenist Holdings Inc., which will be accounted for under the equity method. TerraVia expect to supply active ingredients formulated in the Algenist product line to Algenist. TerraVia has presented the historical results of Algenist as discontinued operations for all periods presented in this filing.

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