Metabolix, Inc. (MBLX)
Q2 2010 Earnings Call Transcript
July 28, 2010 4:30 pm ET
James Palczynski – IR, ICR
Richard Eno – President and CEO
Joseph Hill – CFO
Michael Cox – Piper Jaffray
Laurence Alexander – Jefferies
Pamela Bassett – Cantor Fitzgerald
Jeff Osborne – Stifel Nicolaus
Ian Horowitz – Rafferty Capital Market
JinMing Liu – Ardour Capital
Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Metabolix Inc. second quarter 2010 earnings conference call. Today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for your questions. I would now like to turn the conference over to Mr. James Palczynski of ICR. Please go ahead.
Thank you and good afternoon to everyone. Metabolix released second quarter 2010 financial results after the market closed today. If you do not have a copy of the press release, I’d just like to point out that one may be found on the company’s website at www.metabolix.com in the Investor Relations section.
Making today’s presentation will be Richard Eno, President and Chief Executive Officer of Metabolix and Joseph Hill, Chief Financial Officer of the company. They are joined today by Oliver Peoples, the Co-founder of Metabolix and the company's Chief Scientific Officer.
Before we begin formal remarks, I just need to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be put upon them. The company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this conference call. We would refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial condition.
With that out of the way, I’d like to now turn the call over to Rick Eno, President and Chief Executive Officer of Metabolix.
Thank you, James. I’d like to welcome all of you to the second quarter 2010 earnings conference call for Metabolix. Today, I’ll provide you with a review of the Metabolix vision and a broad update of our ongoing activities. Joe will then take you through the financials.
We continue to make good progress on our commercialization and development activities and have maintained a strong financial position. For those of you new to these calls, Metabolix is an innovation-driven bioscience company, which is focused on bringing environmentally-friendly solutions to the plastics, chemicals and energy industries. We are developing and commercializing pathways and products that are intended to lessen the world’s dependence on oil, reduce CO2 emissions relative to traditional materials and address critical solid waste issues.
We are founded on hard science and have exceptional capabilities and plant science in fermentation, microbial and polymer engineering and in product and market development. We currently have three business platforms, first, Mirel, a bio-based and biodegradable plastic currently being commercialized with our partner, Archer Daniels Midland, through a joint venture called Telles; Industrial Chemicals, initially focused on C4 chemicals and crop-based activities, which include our programs in switchgrass, oil seeds and sugarcane.
I’d like to begin with the Telles business, our joint venture for commercializing Mirel. We have made steady progress since our last call. I’ll provide an update on the Clinton plant, the food contact notification process with the FDA, market-related activities and a broad description of our expectations for the coming year. The Clinton, Iowa plant is the production source for Mirel, our first commercial product.
As described in our two previous calls, the initial phase of the plant has been commissioned and is in operation. Product is now in the hands of customers and prospects. The plant has now successfully produced and met the current Telles’ specifications for all of our key product grades, injection molding, film and thermoforming.
The Clinton manufacturing team is now transitioning its focus from establishing initial operations into the long-term process of continuous improvement, improving yield, lowering costs and increasing operating rates. In addition to gains expected from these day-to-day operational improvements, we also have several technology enhancements which are currently in late stage development including next generation microbial streams and recovery technologies. We are moving to implement these enhancements at the Clinton plant to further reduce costs, improve capital efficiency and expand the market potential for Mirel.
I’d now like to provide an update on the FDA process for food contact. During the second quarter, we received approval to sell injection molding resin into food contact markets. This is a significant milestone for the company and enables us to sell into application such as cutlery and injection molding food storage containers.
We’re currently finalizing our approach for our next FDA submittals which will allow us to sell Mirel into thermoforming and film food contact markets. This will enable us to service thermoformed applications such as coffee lids and yoghurt cups and film applications for using food packaging and storage bags.
Preliminary test results are encouraging. We are anticipating these materials to be approved for food contact markets in Q4 of this year or Q1 of next depending on our chosen submittal patent. The FDA submittal process is somewhat iterative. We are seeing continuous improvement in our product formulations and therefore we are examining a few different submittal options.