Verenium Investor Day Presentation

On May 28, 2008, Verenium Corporation held an Investor's Day conference at its pilot cellulosic ethanol plant in Jennings, Louisiana. The very informative presentation, held in front for analysts and investors, discussed its specialty enzyme business that may hold one of the keys to the promise of cellulosic ethanol. Do your own due diligence by watching the very informative presentation here. Those who invest the time will find the presentation very intriguing and potentially rewarding.

Focus on Verenium and Cellulosic Ethanol

The last few years have brought the United States to a realization that many have feared for some time: Both our national security and economy is vulnerable to the vagaries of the oil markets. This is a stggering realization if you have the courage to really ponder it. Imagine, the most powerful country on the planet (at least until recently) is not in control of its own destiny. With this in mind, our leaders in Washington made a big push to ethanol in an energy bill passed a couple of years ago that included mandates and generous subsidies to quickly get production ramped up. Unfortunately, currently the only economical method in the U.S. to produce ethanol is with corn as its input. Unfortunately, corn based ethanaol has proven to be more of a problem than a solution. First of all, many believe the amount of fossil fuel needed to produce corn-based ethanol approaches or exceeds the energy output of the ethanol produced. Secondly, corn is a food staple and the increase in corn based ethanol production has had a direct effect on both food supplies and food inflation, as anyone who visits a grocery store can attest. That's were Verenium Corporation comes in.

Corn based ethanol has always been seen as a stepping stone to the ultimate goal of producing it from cellulosic ethanol. Cellulolsic ethanol includes corn stover, switch grass, and other forms of biomass. The problem has been that the technology to produce ethanol from these readily available, environmentally friendly sources, has yet to be proven on a commercial scale. That's were Verenium comes in.

Verenium is a company that came about as a result of a merger of two entities in June 2007:

1. Diversa Corporation - a global leader in enzyme technology and
2. Celunol Corporation - a leading developer of cellulosic ethanol process technologies and projects.

The pending energy bill, which passed with enough votes to make it veto proof, has new important incentives to transition our nation from unattractive corn based ethanol to cellulosic ethanol. Do your own DD about VRNM. Here is my short synopsis:

THE GOOD: VRNM has decades of enzyme research and hundreds of millions in accumulated R&D. The justified bad press on corn based ethanol has unjustly negatively effected the stock of VRNM which is developing the attractive cellolosic alternative. The pending 2008 energy bill recognizes the need to move from corn to cellulous and is very favorable in this regard with up to a huge $1.01 tax credit per gallon.

THE BAD: Cost overruns at the company's demonstration plant have put pressure on the company's finances and it will need to raise capital or find a corporate backer.

THE UGLY: The February 2007 convertible offering in conjunction with a call spread on its own stock was an expensive piece of financing sold mostly to hedge funds that short the VRNM stock as a hedge to its long position. As a result the stock price has and will be volatile.

Short Term CATALYST: The passage of the energy bill.

Simply put, the risk/reward profile of VRNM is very high. If VRNM can show in its current demonstration projects that it has viable technology to produce commercial scale cellulosic ethanol, it could become an easy 1o-bagger. If it fails or runs into major roadblocks the risk is your entire investment.

Do your own DD and pass this link on to those who may be interested.

Sirtuin Investor to Expand Coverage

With the acquisition of Sirtis Pharmacueticals by Glaxo, the universe of publicly traded companies strictly focused on sirtuin research has declined by 100% to zero. When I began this blog back in December 2007 , I did so with the intent of following the long term story of sirtuins, primarily from an investment standpoint. I believed that as the sirtuin story played out, the ride would be an exciting and rewarding one for those who hopped on. Well, the ride was certainly rewarding....it just happened to come to an unexpected detour, well before anticipated, with the acquisition of Sirtris by Glaxo.

With all endings come new beginnings. While the sirtuin story is still extremely fascinating, the only pure play investment opportunity in this area has disappeared and the initial focus of the Sirtuin Investor blog no longer makes much sense. However, immortality IS STILL EXPENSIVE and it seems to be getting more expensive each day. Since reveratrol believers still expect to extend their lives, they need to find ways to finance it. I will attempt to find investments that will replace SIRT in my portfolio and share them on this blog. I will not attempt to flood this page with dozens of ideas but focus on a few stocks that have various risk/reward profiles. I keep most of my assets in municipals giving me the luxury of placing a few large high risk/high reward bets. In every case these are just my own personal ideas and readers need to do their own due diligence.

My first stock of focus will be Verenium Corporation, a company focused on cellulosic ethanol. At this time I provide only a link to their home page for those who wish to do their own research. I will follow-up shortly with a blog entry that will share my own views on the merits of this investment.

Poll Closed - 63% Oppose Merger

The unscientific SI poll on whether or not Sirtris should sell the company to GlaxoSmithKline has closed. Of the 44 who voted, 63% where against the merger. It is interesting to note that in such a difficult equity market, a solid majority of those polled would rather forego the sure thing of an 84% premium, in order to take a gamble on the long term prospects of the sirtuin platform.

From the Sirtuin Investor perspective, after reading the entire offer document, it became very clear that Sirtris management did a very thorough job in shopping the company around after Glaxo expressed interest in an acquisition. Up until this point, Sirtris had been seeking a smaller equity investment from several big Pharma companies at a price of $25 per share. After the overture by Glaxo to acquire the entire company, Sirtris hired JP Morgan to entertain other potential offers and provide a fairness opinion. No other suitors emerged and Sirtris did a fine job in procuring a $22.50 cash tender offer price at a time when the shares in the company were selling in the $12 range. An amazing thing about the offer was how well kept a secret it was. There was absolutely no indication in the stock price or volume that any indication of the negotiations had leaked out. Although I've criticized senior management for insider sales at such an early stage of development of the technology, the insider sales continued throughout the period of negotiations at prices well below the final tender offer price.

As a shareholder, as we count down to the ending of Sirtris as an independent public company, I want to congratulate and thank Sirtis senior management for their efforts and wish them success in capitalizing on the amazing potential of the sirtuin platform. As the Sirtuin Investor, I've partially lost my reason for existence with the elimination of the only pure play sirtuin investment available to the public. Now what do I DO?? I'll either need to expand the scope of this blog or put it to rest. Stay tuned.