Metabolix, Inc. (MBLX)

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Metabolix Inc. (MBLX)

Q2 2011 Earnings Call

July 27, 2011 4:30 p.m. ET


James [Palzinski] –ICR

Richard P Eno – President and Chief Executive Officer

Joseph Hill – Chief Financial Officer


Mike [Withenthalor] – Piper Jaffray

Jinming Liu – Ardour Capital

Laurence Alexander – Jefferies

Jeff Osborne – Stifel Nicolaus & Co.



Please stand by. Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Metabolix Incorporated Second Quarter 2011 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 Mr. James [Palzinski] of ICR. Please go ahead.

James [Palzinski]

Thank you, operator, and good afternoon, everybody. Metabolix released second 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 Securities and Exchange Commission 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 P. Eno

Thank you, James. I’d like to welcome all of you to the second quarter 2011 earnings conference call for Metabolix. Today, I will provide you with the review of the Metabolix vision, and an update of our on-going 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, but many of our newer investors find it valuable. So 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, fermentation, microbial, and polymer engineering and in product and market development.

We are leaders in producing and upgrading a broad family of materials called FAST. FAST are energy storage molecules found in nature, which have a number of useful properties as plastics and can service the unique source of renewable chemical intermediate.

We currently have deployed our PHA technology across three business platforms. First, Mirel, a bio-based biodegradable plastic, currently being commercialized with our partner, Archer Daniels Midland, through a joint venture called Telles, 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 the Telles business, our joint venture for commercializing Mirel. We continue to make forward progress in this early growth FASTe of the business. I’ll review the overall status of the business, primarily addressing market and customer activity as well as the review of our overall growth plans.

In the Telles venture we are focused on the successful launch of the Mirel business. The market for bioplastics continues to be very robust and we have an ongoing stream inquires. From this high level of interest, we are currently working with about 100 targeted prospects reflecting a broad range of processing technologies and markets.

As you know from our last call, we have primarily focused on shale market, specifically in compost bags, agricultural mulch stones, and packaging. This is due to the strong market pull in these segments both the U.S. and in Europe as well as the uniqueness of the Mirel offering.

Mirel offers biodegradability in a wide range of environments, a higher bio-based content, than incumbent film products and in some cases will improve the physical properties of the film.

While still early in the development of this business, this pull appears to be validating the Mirel value proposition and price point. This quarter we continue to expand the customer base, which is currently split between and Europe and the U.S. The customer base has now grown to over 50 customers with over 15 placing repeat orders.

Repeat orders are a good indicator that a customer development program has or will translate to a success product market launch.

We are still seeing smaller innovative customers move faster than the larger customers, which leads to a somewhat smaller initial order size in what we expect to see in the long-term. Note that we also have a number of potential customers in the development pipeline at a pre-order stage.

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