Cost of product revenues was $0.5 million during the six months ended June 30, 2012 and primarily reflects the cost of inventory shipped to customers and warehousing. Research and development expenses were $11.1 million for the first half of 2012 compared to $12.2 million for the same period in 2011. The six month decrease of $1.1 million is primarily the result of decreased employee compensation and benefit expenses of $0.5 million, net of one-time restructuring expenses of $0.5 million, and a reduction in contract research expenses of $0.6 million, and less frequent biopolymer product trials and outside testing. Selling, general and administrative expenses were $7.8 million for the first six months of 2012 as compared to $8.0 million for the comparable six month period in 2011. The decrease of $0.2 million is primarily the result of decreased employee compensation and benefit expenses of $0.3 million, net of one-time restructuring expenses of $0.4 million.
The Company reported net income of $20.9 million or $0.61 per share for the first half of 2012 compared to a net loss of $19.6 million or $0.69 per share for the first half of 2011.
The Company’s net cash used in operating activities during the first half of 2012 was $18.1 million, which represents an increase in cash usage from $15.3 million for the comparable period in 2011. The $2.8 million increase in net cash usage is primarily attributed to the Company’s payment of $3.0 million to Telles in March of this year to acquire all of the existing inventory from the ended joint venture.
BUSINESS UPDATEIn the first half of 2012, Metabolix engaged in extensive discussions with prospective manufacturing and commercialization partners for biopolymers and focused on evaluating certain manufacturing options and locations worldwide. Today, the Company announced the outcome of this process with the selection of Antibióticos as its manufacturing partner and the signing of a letter of intent. Metabolix expects that Antibióticos will begin producing demonstration quantities of Mirel biopolymer resin in early 2013. The companies intend to complete a contract manufacturing agreement that Metabolix expects will lead to commercial supply later in 2013. In the second quarter of 2012, Metabolix continued the launch of Mirel biopolymers with the sales of inventory to existing customers and supply of product samples to potential customers for new applications. Product sales to European customers of film grade resin accounted for a majority of quarterly sales. Europe represents the largest market for bioplastic materials worldwide. The Company is managing more than 5 million pounds of existing product inventory and expects to bridge core customers to new supply when it becomes available.
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