Metabolix's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Metabolix, Inc. (MBLX)

Q4 2011 Earnings Conference Call

March 6, 2012 4:30 PM ET


James Palczynski – ICR

Rick Eno – President & CEO

Joe Hill – CFO


Jeff Zekauskas – JP Morgan

Mike Ritzenthaler – Piper Jaffray

JinMing Liu – Ardour Capital

Laurence Alexander – Jefferies

Jeff Osborne – Stifel Nicolas



Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Metabolix Incorporated fourth quarter and fiscal year 2011 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 like to turn the conference over to Mr. James Palczynski of ICR. Please go ahead.

James Palczynski

Thank you, operator, and good afternoon, everyone. Metabolix released fourth quarter and year-end 2011 financial results after the market closed today. If you do not yet have a copy, the press release one may be found on the website at in the Investor Relations section. In addition, for today’s call we have several slides that accompany the presentation, and I will note that these are running as part of our webcast, which is also available on our website. These slides will also become available on the Metabolix’s website following today’s call.

Making the presentation today will be Richard Eno, President and Chief Executive Officer of Metabolix; and Joseph Hill, Chief Financial Officer of the company. They are joined by Oliver Peoples, the co-founder of Metabolix and Chief Scientific Officer.

Before we begin our formal remarks, I 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. Investors are also cautioned that statements in the discussion today, which are not strictly historical statements constitute forward-looking statements.

Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including the following: increased risks and uncertainties relating to commercialization of our first and only product, Mirel, due to the termination of the ADM commercial alliance. We relied heavily on ADM for the successful implementation of our biopolymer commercialization; uncertainties relating to our ability to obtain sufficient biopolymer manufacturing and compounding capacity and to obtain raw materials in sufficient quantities or in a timely manner; uncertainties relating to the price of petroleum relative to the biobased feedstocks used to make Mirel and our other products; and other risks and uncertainties detailed in Metabolix's filings with the Securities and Exchange Commission. 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 today’s conference call.

With that, I’d like to turn the call now over to Rick Eno, President and Chief Executive Officer of Metabolix. Rick?

Rick Eno

Thank you, James. I’d like to welcome all of you to the fourth quarter and year-end 2011 earnings conference call for Metabolix. Today, I will provide you with a review of the Metabolix vision, and an update of each of our three platform areas, and then Joe will take you through the financials.

While I understand that for many of our long-term investors, a company overview is unnecessary, many of our newer investors find it valuable. I’ll take about a minute to provide some company context.

Metabolix is an innovation-driven bioscience company, which is focused on bringing sustainable 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 in plant science, in fermentation, microbial and polymer engineering and in product and market development.

We’re leaders in producing and upgrading a broad family of materials called PHAs. PHAs are energy storage molecules found in nature, which have a number of useful properties as plastics and can also serve as a unique source of renewable chemical intermediates. As a result of our capabilities and work in PHAs, we have assembled a strong IP portfolio as an anchor for our commercial initiatives.

We currently have deployed our PHA technology across three business platforms. First, Mirel, a family of biobased and biodegradable polymers; second, Industrial Chemicals, initially focused on C4 and C3 chemicals; and third, crop-based activities, which include our programs in oilseeds, switch grass and sugarcane.

I’d like to begin with Mirel bio-polymers. Today I’m very pleased to announce that we have reached a final agreement with ADM on the winding down of the Telles joint-venture, effective as of today. On the call, I will update you on the agreement as well as the status of the launch of the biopolymers business.

Turning to slide 2 of the accompanying slides, as the result of the termination of the Telles LLC joint venture for PHA bioplastics with ADM, Metabolix retains exclusive rights to all Metabolix PHA technology and associated intellectual property. Metabolix also retains all existing inventory, both PHA product and compounding raw materials, as well as all product approvals, certifications and trademarks, including the trademarks from Mvera.

In addition, Metabolix will get the pilot plant equipment located outside of the Clinton plant. As a result, we now have more than 5 million pounds of inventory to supply core customer needs, a quantity we anticipate being adequate until new production comes online. In addition, we will use the inventory, and as needed the pilot plant to continue product development focused on high value-added applications. In connection with the termination agreement, Metabolix is paying approximately $3 million to ADM.

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