Q4 2019 Earnings Call
We're ready to deliver.
Now we are ready to deliver now. We're engaged with the demand-side customers for that and we're working on sizing it now, so I don't want to put out any numbers until we've got a good handle on size. We think we can be a pretty significant share of the oils that are used in CBD so you can imagine any any CBD product in the market would benefit from using are squealing a square Lane as the carrier as the as the chassis for formulating. So we think we can have a large market share. We think the Market's pretty significant, but we're trying to size now the down size of that market based on what we're seeing for response and how broad it can be. I I would guess over the next quarter or so. We'll have a better sense of total Market size.
You statements are based on Management's current expectations and actual results and future events. May differ materially due to risks and uncertainties including those details from time to time and filings Emirates makes the security things change commission putting annual reports on form 10-K quarterly reports on form 10-q and current reports on form. 8-k ambushed cameras disclaims any obligation birth date information contained in these forward-looking statements, whether as a result of new information future events, or otherwise, please refer to the Amherst SEC filings for detailed discussion of the relevant risk and uncertainty. I'd like to note that the Roth conference that we are scheduled for then on Monday has been canceled for all companies do to Global circumstances pertaining to covet nineteen cameras will have that scheduled one-on-one meetings with investors via teleconference before we begin today. I'd like to note that included or webcast is a slide presentation will refer to in today's presentation now dead.
Just as a feeling. What is the End Market or value of that? I know you cited a $66 billion dollar total Market in in a few years. What portion of it is applicable. This would be just for in lotions or what it's for anything that's applied on the skin. So it could be for the things that are used to deal with pain chronic pain chronic muscle pain or anything else that's applied on the skin. Not necessarily things that are just for skin care applications.
Call over to John Mello John. Thank you Peter. Good afternoon. And thank you for joining us today joining me today. Are you are to Alvarez our chief operating officer who will share operational performance highlights and key steps we have taken to reduce our cost of goods sold and operating expenses towards achieving cash flow positive operating results. Also, Jonathan Walter off our interim CFO who who will review our financial results before I continue. I'd like to take a moment to sincerely thank Jonathan for his tireless efforts in returning the company to SEC filing compliance this past fall and putting us in a place where we will file our 10-K for 2019 on time his expertise and his stewardship in his life has been highly appreciated and puts cameras on the path for keeping failed to start in the CFO roll next week with a financial reporting controls and procedures in place to take the club.
Okay, and so what proportion what I mean by that is beauty Beauty versus over-the-counter treatments that people might get for chronic pain or other muscle pain.
Right, and I'm also wondering if this use of squalene could be the applicable to pharmaceutical in the other methods as as an as a wage improve deliverability.
We think it can but that's part of the and I don't want to disclose the specifics around the testing but the testing was fairly thorough. This was not just a bench test about what are squealing could do and I think we do see broader application. Our Focus right now is in the current situation and the current pandemic seeing if there's a to accelerate the regulatory to ensure we could have some impact.
I want to finance and I'm sorry to turn this over after my asking questions about the financials you're talking about getting reaching positive even wage the second half now. How long would it take do you think to go to positive earnings? I'm not sure if you've done that calculation yet.
Need to the next level of growth be wish.
Jonathan much luck in his Endeavor and I sincerely appreciate his partnership is mentoring and his time and making our company better.
I'd also like to acknowledge the reality and uncertainty. We all faced with a global fight against the coronavirus. I know this is impacting all of our lives and I greatly appreciate the attention and choice of our shareholders during this challenging time during this time. Our priority has been to health and safety of our teams the customers we serve and the collaborators and partners who make up our supply chain. We have been very fortunate to not have experienced a direct business impact to date. We are monitoring the situation very carefully and it is changing daily life our thoughts prayers and well wishes are with those directly impacted for a speedy recovery. Our business is experiencing a very bit start for 2020 particularly are clean Beauty activity. We deliver a strong fourth-quarter and met our critical targets for 2019. We expect another year of doubling recurring Revenue.
Look, I think based on maintaining the current growth rate and not messing with our portfolio. I would say that we're net income positive in June 2021.
721 okay, and then and then on on in terms of us helping helping us to deliver to develop our models for this year. Do you have a rough estimates for revenues by product as a part of your guidance for this year versus last year? Thank you. We're really not doing that. I think if anything I think I've said publicly a clean Beauty in sales or gross sales would represent about a hundred and thirty million or so and that translates to something north of home. Uh, ninety million in gap Revenue. I think that's about all I've said and we're really not breaking it down any further than that for this year.
With very strong gross margin performance and a significant positive swing to our adjusted adjusted ebitda, which we consider our proxy for operating cash flow. I'll briefly review fourth quarter and 2019 results and then Focus my comments on our clean Beauty performance helped and ingredients activity and not summarize our road ahead before passing the call to Eduardo's now, let me review our business highlights for the fourth quarter.
Great. Thank you very much.
Good luck. Thanks. Thanks friend. Thank you. And the next question comes Philip Schaefer with Scott's Cove management. Yes. I I just have one question. I believe you said outstanding today or 169 million and it's fully diluted shares would be $250 200 million. Is that correct? Its 2550 is what Jonathan put out there keeping in mind that the majority of that are warrants a matter of fact, yes all of that except for fifteen million or warrants and and their warrants. Yeah, and their warrants predominantly owned by insiders just about all of them actually, but that that was my question. If I if the two 50 were outstanding that would require of course, we weren't to be exercised how much cash would the company receive upon the exercise of the warrants to get to 250 Min wage?
Total revenue for the fourth quarter was 40.5 million dollars products and product related. Royalty slash values shared Revenue was 29.2 Million month. We delivered on our key targets for 2019. We guided to 150 million of Revenue and exceeded this target we delivered for your sales rep around $163 million that resulted in a gap Revenue number of 152.6 million.
standing
The guide it at 55 to 60% gross margin at the start of the year and delivered at 56% on the basis of our reported gaap revenue on a gross sales basis. We were near 59% gross. Margin we guided to doubling recurring revenue and we more than doubled for the third consecutive year and are on track to repeat this in 2020. We guided to fifty to sixty million of clean beauty sales and delivered about $55 million. We guided the scaling two to three new molecules down for three new molecules at commercial-scale. Our performance is driven by our role as the number one producer of clean ingredients are Partnerships with Market leaders serve. Hi growth consumer markets and are uniquely differentiated Amorous brands that are delivering what consumers are demanding the result. Is that for 2020? We are entering Arthur's.
Well, here's what I would tell you as of yesterday. Cuz this is a moving Target right as of yesterday in the money warrants would have represented about a hundred million worth of proceeds to the company slightly off than that and that's a moving Target. Right? So where the market goes is any of our guesses, um, and then there's there are a chunk of these that actually expire over the next few months.
And if the using that calculation of the hundred million for the warrants that would bring in a hundred million in proceeds to the company under that situation. How many shares would would be outstanding it would be something less than a 250.
Yeah, it's it would be and this is again from memory. We're looking at somewhere around or less than two hundred million.
This is like one 1 ninety or you mean like when one more yeah more like 195 197 very close to the edge and
consecutive year of
Doubling recurring Revenue which includes all revenue that has a multi-year contract and revenue from our consumer Brands now, I'll Focus my commentary on our two phone business activities of clean Beauty and health and ingredients.
Yep. Sorry, go ahead John go right ahead. So well, I was going to say so then so then if a hundred and if if basically 200 million Shares are outstanding the company would receive a half million cash and if if you get to 250 is there like another is there like another if the stock was up like another $2 or would it home to go up a lot more in order for that additional 15 million of warrants to be to be exercised. Yeah, there they go into slices. There's a slice that I'd say around fiveish and there's a slice that I'd say around 7 and they're pretty much divided evenly how much come in at 5 ish and how much come in around 7 and it's not exactly five and there are some that are dead in the $4 range.
Biossance delivered a record quarter and more than doubled year-over-year sales in the fourth quarter are returned on Advertising dollar invested was at $5.43 for the fourth quarter. Our best quarter to date are clean Academy initiative has become a source of leadership within the beauty industry as the standard for defining clean Beauty and educating consumers consumers and Sephora love biocides the brand received multiple Awards during the year, including digital innovator of the year at WWE women's wear daily, which is the Bible of trend-setting in Beauty and Fashion.
Okay, so then the the the the proceeds to the company if the stock have to be five I you said it would be about half so so half of 50 would be the 26th. So the proceeds to the company would be something like twenty-five million times five, which would be 125 and and $7 * 25 would be would be 175. Is that is that sort of yeah, it's more. I mean if you if you take a look at the slices if all of it converted and all of it were in the money, it would be more like 240 240 million worth of cash.
This is one of many accolades bioscience received that along with consumer and influence love has put the brand on Fast Track growth. We added 50000 you consumers in the fourth quarter and are currently receiving 10,000 new visitors a day at bioscience.
During the year bioscience expanded to multiple countries the bioscience brand now serves consumers and fourteen countries consumers outside North America have been seeking are bioscience products based on the efficacy shared by Word of Mouth media Impressions and hits an influencer activity. This includes the UK. We recently launched bio-science on cult Beauty the destination Beauty platform in the UK for beauty must-haves. And where are where some of our bioscience products immediately sold out in the Sephora bricks-and-mortar Channel bioscience continues to exhibit solid growth at your end. We were in 240 stores within caps out of a total of 495 stores for Sephora North America these stores that showcase the full offering of our bioscience products generate two to two and half times more sales per store than stores.
And and that that does that include the the the first hundred million that you had mentioned that gets you two hundred million.
That is correct it when I said the total it's taken all of it. If it was all in the money versus the hundred or so. It's actually like 120 130 for the for what's in the money now. Okay. So 250. By the way, what's in a money as of yesterday? Sorry. I keep forgetting. It's in the money as of yesterday. Yeah. So then 250 million shares outstanding would result in the company receiving 240,000 of cash, but that wouldn't happen until the sockets to be something like seven or a bit more of course exactly. I and and a chunk of the ones that expire the next couple of months or the ones that are farthest out of the office. You just give you the full picture. Okay? Okay. Okay. That's very helpful. Thank you. Thank you say cave before we take the next question. This is Jonathan. I want to clarify and add some additional information when Randy asked the question. I provided him actually a subset our total net of discount at the end of December is $200 round.
Would just a wall display with a few of our products our productivity at Sephora, which is a measure of how bioscience performs in sales per square foot compared to its. We hit a hundred and 35% in December of 2019 compared to 104% for December of 2018 are correct sales per store are about double the rate of a year ago. We are also significantly increasing the available space to sell and the number of stores with our full offer. Normally within the cosmetics and skin-care markets sales drop following the fourth quarter and they are substantially elevated due to holiday gifting. Our first quarter to date has been out sick. We are now generating 9.2 dollars of revenue for every advertising dollar invested and have reached the store productivity inside Sephora of 205. Yep.
I'm doing now to the nearest tenth two hundred sixty million at the end of this month. It's $195 million, but I had provided was Insider a significant shareholder month. So the total debt is 261 at the end of December and today its $196 million of discount. So you've got a full portfolio both the total. And what it's held by in silence.
All right. Thank you. And we have a follow-up question from Randy Baron with Pinnacle. Yeah, Jonathan. I I appreciate that clarification but to piggyback on Phil's question it it begs the question of what what are the companies Thoughts with the next phase of the capital raised. What do you thinking given where the stock is currently in and down like you're saying today being not a great day given the strength of biossance and how I think a cow when you said it's going to be worth, you know a billion dollars next year if if the current run-rate continue age is that is is selling a piece of that back on the table given that it doesn't seem like you can use your Equity at these prices.
sent
Biossance revenue is currently running at 254% to the first quarter of 2019 and bioscience. Is that over 300% growth took last year biosciences performance is garnering great support for the brand from Sephora Sephora has begun its biggest or expansion to date with 100 stores plans open for 2020 alone. These stores will be smaller and outside traditional malls and in each of them and those plan Beyond this year bioscience will be prominently displayed off driving even greater sales growth with pets. Our baby skin care brand strategies distributed across a range of channels is winning. I'm pleased to report that we recently launched a chance to broaden. Our online channel to pet is on track for around 6 million of Revenue this year making its first full year about 50% better off.
No, no, right. We're not we're not giving up that much value and we agree with you the selling Equity at this price of doesn't make any sense again, we do have that quite a bit of support and we are looking at another asset that we think could be interesting to solve some of the cash picture. But again, it's dead. I want to put it in its in the looking stage. I don't want to I don't want to leave anybody thinking that that's definitely the way we're going to go but it is our optimal solution or optimal solution is there's an asset that that's very interesting that it's come up with a strategic partner. We are in discussions and if we can move that forward that would be part of the answer and then the other part is, you know, we've got a lot of outstanding balance that if we could get a little bit of help could actually help solve the funding needs of the company.
Then our first full year of Revenue would biossance.
Also in clean Beauty our hero ingredient squalene had record volume in 2019 brands are finding that are square Lane is the highest Purity at the best value age, but also that it's improving the efficacy of active ingredients in their formulas. The result is that we have captured a majority position of about sixty percent of the global spoil a Mark. We are successfully expanding the global market in size four square Lane while continuing to grow our share squealing alone as a single ingredient is approaching Thirty million in a sales clean Beauty delivered around $55 million dollars in 2009 sales and is tracking for about $130 million of our sales in 2020. This 2020 gross sales number represents about ninety million of twenty-twenty expected Gap Revenue. The difference is
Do you think that other asset would be resolved one?
Where the other by call it a year, I mean not to put too tight and number. I'm just curious are we getting later? I think mid-year would be what we're working toward so that that is exactly what we're same for. All right, and let me just ask a broad question in the release you talked about how you're providing a secure supply of sustainably-sourced products. One of the things in this coronavirus moments and time that's jumped out at me is Coca-Cola talking about how their supply chain from. Asia has been directly impacted. Where is amorous with the cola players the generally speaking like when a when is it possible that we're going to see you in a soda at some point sooner rather than later. We are in active discussions. I think I've indicated that before and obviously the need job is helping that discussion, but we know no other guidance at this point. Okay, and then last question for me on Lavon.
Between the Gap revenue and the gross sales is the discount to our wholesale Channel most of that is really to Sephora.
Let me take a few minutes to cover our help and ingredients business. Our ingredients are mostly supplied to the flavor and fragrance industry. We have a strong year in 2019. And we expect more than double ingredients sales in 2022 over fifty million dollars in Revenue the 2020 growth to the flavors and fragrance industry is half from continued growth of existing ingredients and the other half from you and gredients that are experiencing there. First full year of sales. We continue to have a strong pipeline of new ingredients in the flavor and fragrance industry and enjoy a deep and strategic relationship with fur Manish and jiiva dine the two leaders in that industry.
Should we expect this kind of four month delay between delivery and payment going forward and and apparently they may be in a fundraiser. Where is that fundraising process? Thanks.
I couldn't speak for them on where is the fundraising process? So I'm not going to talk to that and that's been independent of their ability and their commitment to page. I think the timing is is not inconsistent, right? I think from us achieving something in the lab to providing the data to the data be invalid to them. Then meeting their payment terms is not overnight. So whether it always takes a you know, a long period or not will vary a lot by what the deliverable is, but I think thinking of it the way you just frame is Not Unusual will not be unusual.
in the Health and Wellness
Of our business we are focused on are zero-calorie natural sweetener from sugarcane pure cane and the launch of our cannabinoid activity with our partner Levante. We have also Advanced with a breakthrough solution to address the need to significantly increase the supply of flu vaccines. I will cover this in a few minutes since we launched our sweetener sampled about 180 customers with 48% of this group actively engaged in formulations or purchasing the product. Our best performance to date has been like America where 96% of the sample specs have decided to formulate or start purchasing the product. We are scoring major wins across the Latin American markets including Brazil and expect to remain sold out until late 2021. We are continuing to work with new brands as it takes time for adoption and we are focused on Thursday.
Thank you.
Thank you. And once again, please press * then 1 if you would like to ask you a question.
All right is there is nothing else at the present time? I would like to return to Florida John mellow for any closing comments Ricky. Thank you. Thanks everybody for joining us. I'd like to thank all of you for being on the call and also to and really helping us as we got through 2019. I think we're excited about 20 20. We're also very conscious of a job quickly moving world on a situation. That's not perfectly predictable. We're we're pleased with how our business has been holding up and we're excited to get to a point of money generating some positive cash from the business and really liked the direction that we've been going so far and hope to finish the year where we expect. Thank you and good afternoon to everyone.
Hang out our new Factory before it's built.
The new Factor I'm referring to is the sweetener Factory not our specialty ingredients Factory which we expect to open in the first half of 2021 are other significant market for health and wellness is are cannabinoids development and relationship with Levante this continues to go very well. We are expecting to scale our first two molecules this year working through our partner Vivant. We are very excited about our discovery of squalane as the leading chassis for CBD formulations. We believe this has the opportunity to become the leading oil for topical CBD applications and have been responding to a significant number of inquiries from the market since making this information public. We've you are natural sustainable Square Lane as becoming the platform molecule for the beauty industry and view the CBD opportunity as another example of how powerful this ingredient is to making all formulations.
Thank you. The conference has now concluded. Thank you for attending today's presentation United Airlines.
better for the consumer
in addition to our squealing breakthrough. We've also had some initial insights on CBG as a breakthrough cab annoyed cannabinoid and are currently inactive clinical testing with one of the leading skinlabs labs in the world stay tuned for learning's that could be transformative for our use of cpg in skin care and topical applications. I see PG and for the success of our partnership with Levon as they commercialize these ingredients
In 2019. I was invited to the White House along with other industry leaders to discuss the Strategic role of synthetic biology for the United States.
One of the major Focus areas from several of the government agencies was the significant concern in the White House at the time to the risk of a major flu pandemic and the need to make available a significant volumes of flu vaccines in case of this pandemic after this briefing. I came back and explored with our team what we could do to help solve and support the needs of our government jobs outside of the beauty Market shark liver squalene not squalane, but squalene is used in the pharmaceutical industry for agilent's off couch events are used with vaccines and they helped to essentially turbocharged the human bodies effective response to the medication within the vaccine being administered wage almost think of it like a carrier. It's almost the same example that we discovered that squalane is the best carrier oil for CBD think of squalene as the best phone number.
Carrier for vaccines to the human body. We have been working on a program.
With the infectious diseases Research Institute or Eatery to evaluate the use of our sugarcane squalene for adjuvants Eatery in Prior years as received funding from the Bill and Melinda Gates Foundation where the focus on increasing the availability of vaccines to save lives. This is hugely important in light of the current pandemic and Thursday are engaging the relevant stakeholders to help support our acceleration of scaling and achieving regulatory approvals so that we could meet the short-term needs for significant availability of flu vaccines. We would like to be ready to support the deployment of a new coronavirus vaccine. If and when it becomes available squalene has been used in over a hundred million doses of flu vaccines since 1997. It is one of the best performing a events you can use in delivering a vaccine and is limited in its used due to age.
Let me check availability and limitations of being animal Source sharks or squalene is also very expensive sugarcane based squalene can be 80% lower cost and can be made available than unlimited quantities. When needed the initial test data from Eatery has demonstrated our sugarcane base wage as an adjuvant delivers equal to or better performance than shark based squalene without the potential harmful impurities of the shark based material. We think are Kathleen could have a vital role in Saving Lives just as we did with our anti-material anti-malarial application with artemisinin. This is a very similar approach to the full synthetic biology can play in global Health as it did with our antimalarial treatment and we are focused on making this a reality from a regulatory approval perspective We Belong
This would be treated by the FDA as a biosimilar and our approach would be to fast-track regulatory approval to ensure we can be part of a solution to deploy very fast deploy a vaccine when it's available for the current pandemic.
Let me transition we started the year, which is very strong operational performance and have taken another step to improving our balance sheet since the start of the year. We have successfully raised $57 million dollars mostly from long-term investors.
We continue and and most of that was Equity with a portion of that being warrants converted to equity. We continue to have very strong support from our long-term holders. Some of these long-term holders are on our board and are aware of the traction and and transformative performance. We are delivering across our core markets. We also reduced our debt by about seventy million dollars during lunch. We are doubling down on clean Beauty and sustainable health and ingredients. These are markets where we have significantly Advantage technology platform molecules, and some of the world's leading Brands. These are markets that are resilient from periods of Market recession. We are improving our adjusted ebitda by over 100 million dollars between 2019 and 2020. We expect half of this from cost improvements and reductions and the other half for market growth or sales growth.
the cost reductions
And improvements are about 60% from Improvement and cost of goods mostly from our increasing production at brought this with our partner and major shareholder. DSM is wired will cover them in more detail the other 40% from reduction to Optics. We are already realizing traction on both of these. We are experiencing about an 18 million dollar swing by the first quarter gross margin to the positive from last year and our Optics is slightly better than our plan for the year.
So what are our key targets for 20 21st, we expect 220 million or better in total revenue for the year. We have twenty to forty million outside that is not included in our minimum guidance as we have focused on removing uncertainty from our 2020 targets. We expect our gross margin to be between sixty and seventy percent. We expect to commercialize two to three new molecules. We have not experienced any material direct impact from the coronavirus pandemic off. We did have a key supplier in China that was shut down for a. And is now mostly back to normal we had enough inventory at our CMO for the product from the supplier and it did not impact our business. We are monitoring this carefully as the situation continues to evolve daily. We are excited about a solid year of operating performance combined with a better balance off.
And the accounting issues that we faced in 2019 are behind us. Now. Let me turn to Eduardo Eduardo. Thank you, John and good afternoon everyone off with a review of our fourth quarter results. We delivered and products for a total production of 1878 tons versus the plan of 1400 tons off. This was a new quarterly record. Now, let me share three examples of how we did this.
We set a new squealing production record during the second quarter when we reach 300 tons of production. We continued our process improvements and broke the record and during the fourth quarter when we reach 400 tonnes production.
40 year, we made 1345 tons of screening which was sixty-eight percent improvement over a 2018 volume.
or Hemi squealing
we transferred production from the u.s. To a lower-cost plan in Brazil. And we also improve how we reprocessed a waste stream and both of these factors walk up this reduce our manufacturing unit cost for these products by 25%
Finally, we launched our tenth product. It is a new flavor product delivering the best Purity in the market and which is now well-positioned for scale-up campaign of 90 ton package, which we will do in 2020.
Total we produce 3700 tonnes in 2019. This represents a 90% increase over our 2018 results.
Is resulting resulted in the recurring product revenue for our existing products of 60 million and 19% Margin. This figures include value share name, please.
2018 is the second year in a row with record year-over-year growth ahead of our tires.
If we compare these results to our 2017 production.
In the last two years, we have delivered over two hundred and fifty percent volume growth on a like-for-like basis.
in addition his growth is resilient and recurring
because it comes from existing products with long-term contracts for existing clients and partners.
Let me now spend some time discussing our cost performance.
We improved unit cost for a product in every quarter during 2019 as a result our product gross margin for existing products increase from 3% from the first quarter of the 36 in the last.
You may recall as we setting the third quarter, we focused a lot on unit cost improvements and we can confirm we deliver those results.
We doubled our product margin from the third quarter to the fourth quarter.
I would like to take a few minutes to explain how we deliver these improvements.
John mentioned we first focus on improving and production footprint.
Finish the year with over 95% of our production deployed to our lowest cost location including products.
In the first quarter of 2019 only 70% of our production was based at those locations.
We also implemented significant process improvements. Let me just share an example of that. If you look at the improvements in Hemi squealing hp15 and our sweet life you were able to reduce unit cost for these products by an average of 30% throughout the year.
As I mentioned we deliver 90% volume growth, which has meant larger longer bigger campaigns for most of our products as a result off. We are seeing synergies and economies of scale typical of a growing production business.
most importantly
we know all three of these improvements will serve as a foundation that will continue in 2020 and Beyond.
For the next year, we plan to run 11:00 production campaigns, which will deliver 4200 tons.
And product revenue of about 144 million with 40% gross. Margin again. These figures do include value share of royalties.
We have secured the capacity at this lowest cost facilities for the year and expect that over 95% of the production for 2020 will be at those facilities.
By the end of the 2019 production year we were also able to build about 800 tons of inventory.
Building to see inventory did cost us about $26 in cash. But it also allowed us to get a real fast start to twenty-twenty as John mentioned.
And we are on a pace to sell the rest of these inventory by the second quarter.
We're also accelerating and production scaling. For example, if we look at the new flavor and fragrance products that we introduced in 2019. We expect loss production campaigns for both products.
These campaigns will be about 50 times larger than our initial production campaigns for each during 2019.
In addition as John mentioned we're continuing our growth over pure cane sweetener and in 2020. We are planning a four-fold production increase of those volumes.
And looking into our clean Beauty business squealing production in our first quarter of 2020.
Is going to exceed five hundred metric tons during the quarter and as I just told you this would be another record and 25% more money than what we just reported from for the fourth quarter Beyond this great start and growth. We're also building on the unit cost progress as we did in 2019 teams have concrete plans for cost improvements for for additional products already in place and the results of these actions will help us deliver pass by the second half of 20.
Finally, let me close by looking ahead and summarizing our priorities for 20 21st is competing are flat due to Thursday. Our first meeting and funding activities construction was delayed by about four months progress in twenty-twenty has gone well, and we are doing the Civil work at present with the project.
We are start getting targeting start up during the second quarter of 2021.
second
We will focus on executing 11:00 production campaigns to deliver 2020 production volume.
This will deliver both high growth and the continued performance and unit cost and margin Improvement as I just reported. As I mentioned. We have secured both option capacity we need and these campaigns are based on proven an existing products.
Our teams have high confidence that we will continue to execute against us campaigns with Excellence third. And finally, we would also focus on delivering three new products Thursday. We are on track to execute on the plan to work with Levon and produce to cannot be known molecules in the year. We also plan to introduce the new cosmetic ingredients.
Let me close by saying that with 2019 now behind us. We are very excited to deliver an even better and more successful twenty twenty now. Let me turn the call over to John. Thank you Eduardo as I begin. I'd like to observe that since achieving SEC filing and NASDAQ compliance last fall. We expect of our 10-K timely and by the required deadline of no later than March 16th.
Now for the sake of Simplicity during my review of our fourth quarter results, I will refer mostly to rounded millions of dollars. Let's start our review Page Avenue for the fourth quarter of 2019 was almost forty 1 million compared with approximately $16 for the fourth quarter of 2018.
Product sales were approximately 19 million versus twelve million in the quarter a year ago.
License and royalty revenue of approximately eleven million are directly related to these products sales and the 11 million is substantially higher than the 74,000 report for fourth quarter of 2018.
Grants and collaboration revenue of 11 million was also significantly higher than the four million for the same period of 2018.
Non-gaap, gross profit of twenty three million or 55% of total revenue for the fourth quarter was certainly higher than the four million or 25% of total revenue for the year ago.
This was due largely to hire product sales and overall revenue and product mix as well as improved Manufacturing.