Metabolix reports PHA biopolymer expansion in year-end results

By Katie Fletcher | March 20, 2015

On March 19, Metabolix Inc. announced financial results for the three months and full year ended Dec. 31, reporting that in late 2014 the company decided to significantly increase the pilot production capacity for Mirel polyhydroxyalkanoate (PHA) biopolymers. “The expansion of capacity within the existing footprint of our contracted recovery facility is well underway,” said Joe Shaulson, president and CEO of Metabolix. “Once these facility modifications are complete, we will begin ramping production to our expanded nameplate capacity of 50,000 pounds per month.”

He added that the expansion effort will accelerate access to amorphous-PHA customer trials and applications. The company estimates $1 million in capital expenditures for expansion of the pilot recovery operation, namely to purchase and install equipment.

The company listed a core set of priorities it has been focused on towards the beginning of the call, including reshaping the company, securing financing, commercial development and business culture, biopolymer production, and biopolymer research and development. “Throughout 2014 we made progress against each of these priorities,” Shaulson said.

Metabolix initiated actions in 2014 to reshape into a specialty biopolymers company. They repositioned PHA biopolymer as performance additives, and also selected several target application spaces. As the year progressed, Metabolix focused on commercializing PHA performance additives for polyvinyl chloride (PVC) compounds and polylactic acid (PLA) modification, as well as a range of applications requiring functional biodegradation.

Johan van Walsem, chief operating officer of Metabolix, said the four key targets for the company’s biopolymers focus performance additive approach are PLA modification, PVC process aids, barrier coatings for paper and functional biodegradation.

The company shared with those on the investor call insight on its exclusive technology and commercial alliance with Honeywell to offer new marine biodegradable PHA biopolymers for use in cosmetics and personal care products marketed under the Honeywell Asensa brand. The company mentioned there is the potential opportunity to address emerging developments in the regulations environment, such as regulations emerging to ban traditional plastic microbeads in personal care products in some states.

During the year, Metabolix restructured its U.S. operations and sold its German subsidiary, Metabolix GmbH, reducing the headcount in its core biopolymers business to about 50 people. In addition, $25 million in equity financing was secured to fund core biopolymer operations and the increase in production capacity. “Together, these actions leave us well positioned to continue executing our strategy and advancing our biopolymers business in 2015,” Shaulson said.

Also mentioned during the investor call, was the company’s decision to stop work on its biobased chemicals program, and its intention to spin out its crop science program, which has historically targeted the production of plastics and chemical intermediates from PHA’s produced directly in plants. The company has been incorporating multigene traits and enhanced carbon capture into plants, which has the potential to significantly increase yield in food, feed and biomass crops, Shaulson mentioned on the call.

The company ended 2014 with $20 million in unrestricted cash and cash equivalents based on cash usage of $24.2 million in 2014. Metabolix expects reductions in cash usage this year due to the discontinuation of its German operations, the restructuring of its U.S. organization and other cost-containment measures, largely offset by increased biopolymer production costs. As a result, Metabolix anticipates approximately $23 million in cash usage for 2015, including the approximate $1 million in capital costs related to the expansion of pilot manufacturing capacity. This is assuming continued funding of the crop science program for the full year.

The year ended with a net loss from continuing operations of $26.8 million, or 44 cents per share, $1.7 million better than the prior year’s net loss from continuing operations of $28.5 million, or 83 cents per share. Metabolix reported a net loss from continuing operations of $5.8 million, or 5 cents per share, for the fourth quarter, compared to a net loss of $8 million, or 23 cents per share, for the same period in 2013.

Total revenue from continuing operations for the full year was $2.8 million, compared to $3.8 million recorded in 2013. The total revenue in the fourth quarter was $900,000, an increase from $700,000 for the comparable quarter in 2013. The fourth quarter revenue consisted primarily of revenue from government grants, with $100,000 in product revenue recognized during the fourth quarter of both 2014 and 2013. Product revenue for the full year in 2014 and 2013 was $500,000. Cost of product revenue for 2014 was $1.5 million, down from $1.9 million in the prior year, primarily due to lower inventory logistics costs.

A majority of the company’s sales in 2013 and 2014 were associated with its German subsidiary, Metabolix GmbH. Shaulson said on the call that product revenue build will take some time to change in strategy. He added that Metabolix will need to convert performance additive customers from development to commercial sales, supported with Telles inventory and the expanded pilot capacity in 2015.