Metabolix, Inc (MBLX)
Q3 2011 Earnings Call
November 1, 2011 04:30 pm ET
Rick Eno - President & CEO
Joe Hill - CFO
JinMing Liu - Ardour Capital
Laurence Alexander - Jefferies
Jeff Osborne - Stifel Nicolas
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I would like to turn the conference over to Ms. [Alison Thompson]. Please go ahead.
Unidentified Company Representative
Thank you and good afternoon, everyone. Metabolix released third quarter 2011 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, 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.
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 turn the call over to Rick Eno, President and CEO of Metabolix. Rick?
Thank you, Alison. I’d like to welcome all of you to the third quarter 2011 earnings conference call for Metabolix. Today, I will provide you with a review of the Metabolix vision, and an update of our ongoing activities. Joe will then take you through the financials.
We continued to make good progress on our commercialization and development activities and have maintained a strong financial position. 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 environmentally friendly 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 unique source of renewable chemical intermediates.
We currently have deployed our PHA technology across three platforms. First, Mirel, a bio-based and biodegradable plastic, currently being commercialized with our partner, Archer Daniels Midland, through a joint venture called Telles. Second, Industrial Chemicals focused on C4 and C3 chemicals, and third, crop-based activities, which include our programs in oilseeds, switchgrass and sugarcane.
I’d like to begin with Telles, our joint venture for commercializing Mirel. We continue to make forward progress in this early growth phase of this business. I’ll review the overall status of the business, primarily addressing market and customer activity as well as a review of our overall growth plans.
In the Telles venture, we are very focused on the successful launch of the Mirel business. The market for bioplastics continues to be very robust and we’ve an ongoing stream of increase. From this high level of interest, we are currently working with about 100 targeted prospects. It’s very encouraging to us that these prospects reflect a very diverse range of applications, which is reflective of the broad, long-term potential for Mirel.
From this diverse interest, we’ve chosen to focus on the areas, which we believe will provide us with the most rapid growth. Consistent with previous calls, these focus areas are primarily in the film markets, which include compost bags, agricultural mulch stones and packaging. This is due to strong market pull for bioplastics in these segments as well as the characteristics of the Mirel offering.
Mirel offers biodegradability in a wide range and environment including marine applications at higher bio based content in (inaudible) products and in some cases to improve the physical properties of the (inaudible). We are still early in the developments of our business, the ongoing orders appear to be validating the morale value proposition and targeted price point.
With regards to the milestone of the first commercial stable Telles which is based upon the sale of $1 million pounds of product making certain quality, customer acceptance, price and order size requirements, we had expected this to occur by year end. Currently we’ve shipped just over 50% of this target.
Moving forward we are seeing increasing order volumes and expect to qualify a million tons to be shipped some time in the 45 to 120 days. The milestone will be followed by approximately 30 days reflecting typical cash collection terms and customer acceptance.