BioAmber Inc. BIOAQ

Motley Fool - 3 top stocks under $5

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https://www.fool.com/investing/2017/03/08/3-top-stocks-under-5.aspx

BioAmber is an interesting company for growth-minded investors. The industrial biotech company has genetically engineered yeast to produce bio-succinic acid from low-cost agricultural sugars. The chemical is traditionally sourced from petrochemicals, but the manufacturing process is too expensive -- even at today's market prices for crude oil -- for succinic acid to be used more broadly. In this instance, using a biological production route is actually cheaper than relying on petrochemicals. It's similar to why we make ethanol with yeast and corn sugar instead of petrochemicals, which was the dominant production route not that long ago.

One of the biggest problems for BioAmber has been the dismal track record of industrial biotech companies to date. Analysts have grown weary of the field and have deemed the company guilty by association, but opportunistic investors may want to look more closely.

Unlike its peers, BioAmber is focusing on a single biological production route. Since this has already been perfected, they ceased research and development activities not related to ramping up its first commercial scale facility in Sarnia.That saves a lot of money from running off the ledger, as evidenced by a net loss of just $20 million in prior 12 months. Amyris and TerraVia have lost $90 million and $136 million, respectively, in the same period.Unlike its peers, BioAmber produces a drop-in chemical that's in high demand in multiple industries. They had no problem convincing chemical leader Mitsui to take a 40% ownership stake at Sarnia and purchase a significant amount of its production,which will eventually hit 30,000 metric tons per year.In fact,a 2nd facility is being planned that will produce 200,000 metric tons per year of bio-succinic acid - much of it converted to two other bulk chemicals - sold entirely to Vinmar. The financial terms should close later this year.

They're still in early stages of commercial life, having generated just $9 million in prior 12 months, although it has steadily improved margins as production volumes increase (something peers have not been able to do). While BioAmber will attempt to strike a balance of government and partner funding for its second facility, the estimated price tag hints that it will need to take on a hefty amount of debt. That's not ideal, but if it can successfully scale operations at Sarnia in the next year, then analysts will be forced to properly account for its growth potential.