Metabolix, Inc. (MBLX)

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Metabolix Inc. (MBLX)

Q2 2009 Earnings Call

July 29, 2009; 4:30 pm ET


Richard Eno - President & Chief Executive Officer

Joseph Hill - Chief Financial Officer

Oliver Peoples - Co-founder & Chief Scientific Officer

Anthony Gallo - Investor Relations


Michael Cox - Piper Jaffray

JinMing Liu - Ardour Capital

Pamela Bassett - Cantor Fitzgerald

Laurence Alexander - Jefferies



Good afternoon ladies and gentlemen, thank you for standing by. Welcome to the Metabolix Second quarter 2009 earnings conference. 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 and instructions will be provided at that time.

I would like to turn the conference over to Mr. Anthony P. Gallo, Managing Director of Integrated Corporate Relations. Please go ahead.

Anthony Gallo

Good afternoon everyone. Let me apologize in advance if I’m not been able to clear my background noise.

Metabolix released second quarter 2009 financial results after the close of the market close today. If you do not have a copy one can be found at the website at www.metabolix.com, in the Investor Relations section. Making the presentation today will be Richard Eno, President and Chief Executive Officer of Metabolix; and Joseph Hill, Chief Financial Officer of the company. We are also joined by Oliver Peoples, the co-founder of Metabolix and Chief Scientific Officer.

Once again our formal remarks; I need to remind everyone as part of our discussion today we’ll 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 call. We 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, I’d like to turn the call over to Rick Eno, President and CEO of Metabolix. Rick.

Richard Eno

Thank you, Anthony. I’d like to welcome all of you to the second quarter 2009 earnings conference call for Metabolix. Today I will 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 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’re 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 market development.

We currently have three business platforms; first Mirel, a biobased and biodegradable plastic currently being commercialized with our partner, Archer Daniels Midland, through a joint venture called Telles; second, industrial chemicals, initially focused on C4 chemicals; and third, crop-based activities, which include our programs in switchgrass, oilseeds and sugarcane. In today’s call I will focus primarily on our Telles activities.

This past quarter, we continued to move towards commercialization of the Telles business. I’d like to first update you on the progress of the Clinton plant, the production source for our first commercial product, Mirel. The schedule for the plant remains consistent with the timing outlined in our last call, with production expected to begin in December.

The overall approach to finishing the construction and starting up the facility is proceeding in a parallel process. Specific sections of the plant, such as utilities, fermentation and recovery are being completed by the construction team and sequentially turned over to operations. The operations team then proceeds through a detailed check out and commissioning process, prior to introducing feed.

Utility systems namely power, compressed air, steam and water are currently proceeding through the commissioning process. The back end of the plant consisting of polymer handling equipment is mechanically complete and being prepared for commissioning. ADM expects mechanical completion for the remainder of the plant, namely fermentation and recovery to occur between September and November. Operator training has been completed.

Our start up plans and initial production sites are being finalized with a great deal of detail. We must point out that a new production process of this type will always possess initial start up risks, which could affect the schedule. We of course are working with ADM to minimize these risks.

We are currently maintaining our guidance for the capital cost of the Clinton plant as north of $300 million. It is important to think of this capital investment in the context of growing the Mirel business. Consistent with most process facilities of this type, about two thirds of the Clinton One capital investment will be in the actual processing equipment; in our case fermentation and recovery.

About one third of the capital investment will be in supporting infrastructure and utilities, including, electrical and cooling water services, control rooms, maintenance facilities and basic site development. As we’ve mentioned before, Clinton was selected and laid out with division of a 4X expansion. As such, a good portion of the supporting infrastructure investment to support future expansion is being made in Clinton One.

We expect that the economics of expansion beyond 110 million pounds per year will reap substantial benefits from this Clinton infrastructure. We should also benefit from a more normal environment for the cost of construction materials and labor, than what was experienced while ADM was proceeding with the construction of the majority of the plant.

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