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Metabolix's CEO Discusses Business Update (Transcript)

ADM recently undertook a strategic review of its business investments, and made the decision to terminate their participation in the joint venture. They have always had this right, as we have previously disclosed. We learned of the decision this week and did not expect it. ADM indicated that projected financial returns were too uncertain as the basis for their decision. As a result, ADM will retain its manufacturing plant in Clinton, Iowa.

The Metabolix PHA bioplastics technology works well at commercial scale. In particular, the fermentation scale-up and performance was exceptional, as was feedback from the market. That being said, capital costs were more than anticipated and projected future operating costs, including raw materials costs, were uncertain and as you know, the times for commercializing this new innovative material have been longer than anticipated.

The terms of our agreement with ADM are very clear with regards to the implications of the termination. ADM no longer has the obligation to fund the joint venture, nor supply PHA product. All intellectual property flows back to Metabolix. Metabolix will retain sole rights to all PHA bioplastics technology, including intellectual property rights and trademarks, the Telles joint venture is wound down.

The obligations of the joint venture to pay back the ledger balance, which stood at $425 million as of the end of Q3 2011, are eliminated. Therefore, Metabolix will have no ongoing obligation under the ledger account, which was funded by ADM to finance the Clinton plant and certain Telles operating costs.

Our exclusivity with ADM for PHA bioplastics will be ended and we will now be able to discuss a range of alternative business models with potential partners around the world. Unfortunately, another implication of the termination is that in the very near-term, it is highly unlikely that we will be able to supply our customers with commercial quantities materials due to the lack of a commercial manufacturing asset. We will be working with each of our customers and prospects to manage this transition as effectively as possible.

Read the rest of this transcript for free on seekingalpha.com

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