Metabolix releases 2015 results, announces MOU

On March 29, Metabolix Inc. released 2015 financial results and announced a memorandum of understanding (MOU) with CJ CheilJedang Corp. for a strategic commercial manufacturing arrangement for specialty PHAs, including Metabolix’s newly launched amorphous PHA.

Under the non-binding MOU, the two companies plan to work together to reach definitive agreements under which CJ would fund, construct and operate a 10 kilotonne (22 million pound) PHA production unit at CJ’s Fort Dodge, Iowa, facility. Metabolix would buy the specialty PHAs produced at the plant from CJ and market and sell the material to its commercial customers. According to information released by the companies, they also expect to define a framework for a longer term expansion of the collaboration for larger-scale sale PHA production and related commercial activities.

Metabolix and CJ recently undertook a comprehensive feasibility study and assessment of the Fort Dodge facility. With the successful conclusion of the feasibility study and engineering plans, CJ is finalizing a detailed budget for the capital investment needed to add PHA capacity to the site.

Regarding the company’s 2015 financial results, Joseph Shaulson, president and CEO of Metabolix, called 2015 “an important transition year” for the company. “We completed a comprehensive reshaping and repositioning of the company around a specialties strategy based on our differentiated PHA biopolymer materials," he said. “Throughout the year, we focused on building and advancing the portfolio of customer projects in our target application spaces and executed on a plan to expand pilot production of our new amorphous PHA biopolymer, one of the cornerstones of our specialty products strategy. Toward the end of the year, we began to shift our focus to the transition from pilot scale operations to commercial scale operations. This included an acceleration of efforts to secure an initial tranche of commercial scale production capacity in the range of 10 kilo tonnes (22 million pounds).”

According to Shaulson, Mexabolix expects to work with CJ in the second quarter to complete definitive agreements for the collaboration. “We expect our relationship with CJ to be transformational, as it provides the path forward for Metabolix to move our specialty PHA biopolymer business to commercial scale and position us for longer term growth,” he added. "Of course, the move to commercial scale will require a multifaceted effort in commercial development and biopolymer R&D, supported by our PHA pilot plant. We are seeing traction in commercial development, with initial customer conversions for PHA additives and growth in functional biodegradation. For 2016, we remain focused on converting additional customers, building the commercial development pipeline, running our pilot plant and advancing our specialty PHA biopolymer technology.”

During an investor call, Shaulson elaborated on Metabolix’s future plans. Looking ahead, he said the company is turning its attention to the next step, moving from commercial pilot-scale operations to a commercial-scale specialties business. He said the strategy involves ramping up and running the company’s pilot operation at capacity this year, and using that material to continue to build a base for larger-scale operations. It also involves accelerating efforts to secure a first tranche of commercial-scale capacity, noting the MOU with CJ is an important step in that direction. Longer-term, Shaulson said the company plans to grow its specialty biopolymers business, and envisions adding additional tranches of capacity.

Johan van Walsem, chief operating officer of Metabolix, provided additional details on the Fort Dodge project. He noted the site opened approximately two years ago as part of CJ’s strategy to expand its global microbial fermentation footprint in the U.S. The plant, he said, is part of a 49-acre biorefinery complex served by a corn wet mill operated by Cargill.

Under the planned collaboration with CJ, van Walsem indicated Metabolix will be responsible for commercial development, marketing and sales of the PHA materials. The company will be focused on target application spaces of its PVA and PLA modification, functional biodegradation and paper coating. The PHA production unit could be up and running in 18 to 24 months, he said.

Metabolix reported a net loss from continuing operations of $23.7 million, or 95 cents per share, for 2015, compared to a net loss from continuing operations of $26.8 million, or $2.61 per share, for the prior year. Total revenue was $2.6 million, compared to $2.8 million in 2014.