Metabolix, Inc. (MBLX)

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Metabolix, Inc., (MBLX)

Q3 2009 Earnings Call

October 29, 2009 4:30 pm ET


[Laurie Shupe] - Investor Relations

Richard P. Eno - President, Chief Executive Officer, Director

Joseph D. Hill - Chief Financial Officer, Treasurer

Oliver Peoples - Co-founder and Chief Scientific Officer


Michael Cox - Piper Jaffray

Laurence Alexander - Jefferies & Company, Inc.

Jeff Osborne - Thomas Weisel Partners

Pamela Bassett - Cantor Fitzgerald

JinMing Liu - Ardour Capital



Good afternoon ladies and gentlemen my name is and I will be your conference operator today. At this time I would like to welcome everyone to the Metabolix Incorporated Third Quarter 2009 Earnings Conference Call. (Operator Instructions). At this time I would like to turn the conference over to Miss Laurie Shupe. Please go ahead.

Laurie Shupe

Thank you, and good afternoon everyone. Metabolix released third quarter 2009 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.

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, a 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. 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 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 now turn the call over to Rick Eno, President and CEO of Metabolix. Rick.

Rick Eno

Thank you, Laurie. I’d like to welcome all of you to the third quarter 2009 earnings conference call for Metabolix. Today, I will provide you with the 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 in products that are intended to lessen the world’s dependence on oil, reduce the 02 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 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; secondly industrial chemicals initially focused on C4 chemicals and third our crop based activities which include our programs in switchgrass, oilseeds, and sugarcane.

Let me begin with the Telles business. We have made substantial progress since our last call. I would first like to update you on the progress of the Clinton plant, the production source for our first commercial product Mirel. I visited the plant last week and was very pleased with progress. ADM is well into the start up process. There are numerous systems already in operation and the plant is looking more and more like an operating site than a construction project. The schedule for the plant remains consistent with the timing outlined in our last call. Construction of the initial phase of the plant is planned to be completed in November at which point the entire facility will be in the hands of the ADM operations team. The plant will then move into production with initial fermentations conducted in December and recovery operations to immediately follow.

Over the last two months the ADM operations team has been commissioning a range of systems primarily in utilities, fermentation, and polymer offloading. In general, the commissioning process is going quite well.

Well 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 and scale will always possess initial start up risks which could affect the schedule. We of course are working closely with ADM to minimize these risks and as issues are identified we will work together to revolve them.

The highest priorities for the ADM operations team are to execute a very safe start up and to produce high quality a product for Telles customers. ADM has operational staff working around the clock on commissioning activities. It is difficult to provide the precise date of actual on spec production from the site as there will be hundreds of operational decisions to be made over the coming weeks with safety and quality being the primary drivers. We will be providing a detailed update on the Clinton plant operations during our next earnings call.

We are currently maintaining our guidance for the capital costs 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 2/3 of the Clinton 1 capital investment will be in the actual processing equipment, in our case fermentation and recovery. About 1/3 of the capital investment will be in supporting infrastructure and utilities including electrical, cooling water services, control rooms, maintenance facilities, and basic site development. As we have mentioned before Clinton was selected and laid out with the vision of a 4x expansion. As such a good portion of the supporting infrastructure investment to support future expansion is being made with Clinton 1. We expect that the economics of expansion beyond 110 million pounds per year will reach substantial benefits in this Clinton infrastructure.

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