Metabolix's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Metabolix, Inc. (MBLX)

Q1 2012 Earnings Call

April 26, 2012 4:30 PM ET

Executives

Richard Eno – President and CEO

Joseph Hill – CFO

Analysts

Laurence Alexander – Jefferies

Mike Ritzenthaler – Piper Jaffray

JinMing Liu – Ardour Capital

Jeff Zekauskas – JP Morgan

Jeff Osborne – Stifel Nicolaus

Presentation

Operator

Please stand by. We are about to begin. Good afternoon ladies and gentlemen thank you for standing by. Welcome to the Metabolix Inc. First Quarter and Fiscal Year 2012 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 (inaudible) of ICR. Please go ahead.

Unidentified Company Representative

Thank you, and good afternoon, everyone. Metabolix released first quarter 2012 financial results after the market closed today. If you do not have a copy, one may be found on the website at www.metabolix.com in the Investor Relations section. In addition, today we have provided several slides to accompany the presentation. 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 other risks and uncertainties detailed in Metabolix’s filings with the Securities and Exchange Commission including the company’s 10-K filed on March 12, 2012. 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 the conference call.

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

Richard Eno

Thank you Elsenhans. I’d like to welcome all of you to the first quarter 2012 earnings conference call for Metabolix. Today I will provide you with a review of the Metabolix vision, and an update on 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 delivering 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.

On review of the business, I’d like to begin with Mirel bio-polymers. So let’s turn to slide two of the accompanying slides. We are driving the biopolymers business forward across many fronts. In early March, all business operations for our PHA biopolymers platform which transfer to Metabolix.

During the transition, in the first quarter, we provided customers with access to product inventory and began to fill orders from customers. During this period, our teams set up would be appropriate administrative, logistical and financial systems to enable us to take orders, deliver inventory and record sales for Metabolix. After March 6, the settlement date of our relationship with ADM, Metabolix recorded the first sales of Mirel biopolymer on our books.

The revenue recorded in the quarter reflects small orders from existing Mirel biopolymer inventory for a number of customers primarily in the areas of horticulture, aquatic applications, molded bioplastic items. So our sales level reflected about three weeks of activity commencing immediately after the settlement of the Telles determination negotiation with ADM.

I’d like to mention that we are now gaining further visibility on customer orders expected to shift in the second quarter. One area where we expect to be active in the second quarter, is the compostable bag market in Europe. As you know we are been working with European customers to develop and market compostable bags based on our assumptions and we are pleased to say that we have recently resume productive conversations with customers serving this market.

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