Making the case for eating algae

by Jeff Gelski
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AlgaVia algae ingredients, TerraVia, Solazyme
TerraVia offers algae-based ingredients in AlgaVia and AlgaWise.

SOUTH SAN FRANCISCO – For consumers wary of eating products with algae, or for companies wary of incorporating it into their products, algae’s history in the human food chain might be worth considering.

Jonathan Wolfson, TerraVia, Solazyme, algae oil
Jonathan Wolfson, c.e.o. of TerraVia

“With accelerating consumer interest in healthier eating, people like to talk about the hottest new superfood, but it all starts with algae,” said Jonathan Wolfson, chief executive officer of TerraVia, South San Francisco, in a March 14 earnings call. “Before there were foods like chia, acai, kale or quinoa, there was algae. Nothing can be more heirloom, more ancient or more original.

“It's the origin of our food chain, and unbeknownst to many, we've been consuming algae oils for as long as we've been eating fish. Those omega-3 oils we were all told to eat salmon for are not produced in the salmon or any other fish for that matter. They're made in algae and make their way up the food chain to the fish we eat.”

TerraVia, formerly known as Solazyme, Inc., offers algae-based ingredients in AlgaVia and AlgaWise. Mondelez International, WhiteWave Foods and Hormel Foods are all customers of TerraVia, Mr. Wolfson said.

The company on March 11 announced its name change and that it had entered into a definitive purchase agreement for a strategic financing round of about $28 million. Also, under a five-year global supply agreement reached on March 14, Unilever will purchase renewable algae oils for use in its personal care products.

“Our new agreement with Unilever is an enormous validation of our commercial readiness,” Mr. Wolfson said. “The agreement is expected to generate over $200 million in revenue over five years, covering the supply of multiple oils. We also have a separate joint development agreement, including funding for continued innovation.”

In the fiscal year ended Dec. 31, 2015, TerraVia recorded a net loss of $141,447,000, which compared to a net loss of $162,141,000 in the previous fiscal year. Total revenues of $46,131,000 were down 24% from $60,391,000. The revenue decline was due to expected decreases in funded program revenue and lower product sales, primarily for certain industrial applications as the company narrowed its focus on higher value product sales.

In the fourth quarter, a net loss of $34,693,000 compared to a net loss of $44,866,000 in the previous year’s fourth quarter. Total revenues of $10,387,000 were down 28% from $14,502,000.

Tyler Painter, TerraVia
Tyler Painter, c.f.o. and c.o.o. of TerraVia

Fiscal year 2016 may include new product introductions, new developmental and commercial partnerships, and increased revenue from the core business, said Tyler Painter, chief financial officer and chief operating officer.

“It may also include execution on alternatives for certain of our non-core activities,” he said. “These factors make it difficult at this stage to provide specific guidance.”
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