The Company anticipates ending 2012 with an annual cash usage from operations run rate of approximately $24 million, excluding any additional partner funding, grant revenue, other sources of income, or additional start-up costs relating to the commercial manufacturing phase at Antibióticos.

Total revenue in the third quarter of 2012 was $0.7 million, compared to $0.5 million for the comparable quarter in 2011. The third quarter revenue consisted primarily of revenue from government grants and product sales. Grant revenue of $0.6 million increased by $0.2 million over the same quarter of 2011, primarily as a result of work performed on the Company’s $6.0 million DOE grant. Biopolymer product orders of $0.7 million were shipped and billed during the Company’s third quarter of 2012, resulting in $0.1 million of revenue that was recognized, and $0.6 million that was deferred to the Company’s fourth quarter as a result of the Company’s product return policy adopted in the quarter ended September 30, 2012. This compares to biopolymer product sales of $0.4 million recorded during the Company’s second quarter of 2012, prior to the adoption of the new product return policy.
               
(dollars in thousands) Q1 Q2 Q3 Q2 to Q3 Change
Orders shipped and billed $ 14 $ 373 $ 691 85%
Deferred for 60 days   -   -   (621)
Revenue recognized $ 14

$

373
$ 70
 

Cost of product revenue was $0.3 million during the quarter ended September 30, 2012 and primarily reflects the cost of product shipped to customers, inventory storage and shipping costs associated with customer sales, and warehouse consolidation activities. Research and development expenses were $4.9 million for the third quarter of 2012 compared to $6.2 million for the same period in 2011. The decrease of $1.3 million is primarily due to a $0.2 million reduction in employee compensation and benefits resulting from the Company’s restructuring in the first quarter of 2012, reductions in the use of external research and development support and consulting of $0.6 million, decreased licensing fees of $0.2 million and a decline in travel related expenses of $0.1 million. Selling, general and administrative expenses were $3.2 million for the third quarter of 2012 as compared to $3.9 million for the comparable quarter in 2011. The decrease of $0.7 million is also primarily attributable to the Company’s restructuring in the first quarter of 2012 that reduced salaries and benefits by $0.5 million during the third quarter of 2012 in comparison to the third quarter of 2011. Travel related and marketing expenses were also down $0.1 million each during the quarter just ended.

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