Metabolix, Inc. (NASDAQ:MBLX), an advanced biomaterials company focused on sustainable solutions for the plastics industry, today reported financial results for the three months ended September 30, 2015.
“Throughout 2015, we have been executing a strategic transformation of the Company with a focus on our Mirel® specialty biopolymers business,” said Joseph Shaulson, president and CEO of Metabolix. “This specifically included a goal to expand our pilot capacity and achieve increased visibility and progress in commercial development, allowing us to complete our pivot to the specialties business model and sharpen our focus on moving to commercial scale. For the coming quarters, we are ramping up pilot production to run at nameplate capacity for 2016 and expect to sell a significant portion of the amorphous PHA (a-PHA) material we produce to customers for use in commercial applications. We also plan to use a stream of pilot a-PHA material to continue commercial development work with both existing and prospective customers for our specialty biopolymers. With increasing clarity on customer conversions and confidence in market development, we are accelerating our efforts to secure our first tranche of commercial scale capacity.
“During the quarter, we completed more than 15 customer trials across our target application spaces of PVC processing aids and property modifiers, PLA modification, functional biodegradation and paper coating. Based on this progress, we expect to see additional customer conversions in the fourth quarter of 2015 and early 2016.
“We are continuing to demonstrate to customers the unique benefits our a-PHA materials provide as performance additives in PVC applications. For instance, in flexible PVC flooring applications, we recently completed a series of trials with customers who are approaching initial commercial sales. In one of these projects, our a-PHA is in the late stages of qualification by a major U.S. flooring company for incorporation into the backing of a sustainable flooring product. Another customer in a different vinyl flooring application is completing their evaluation of our a-PHA material. We believe these opportunities have initial sales potential that is significant in the context of our expanded pilot capacity and have long term potential for translation to additional opportunities in PVC flooring. More broadly, we think the value proposition for a-PHA in flexible PVC applications is compelling, and we expect to work with additional customers in this space in 2016.
“We are also working with customers interested in achieving better performance with PLA biopolymers. We see an opportunity developing and are beginning to focus on a-PHA-modified PLA in sustainable, biobased and compostable packaging applications. In addition to conducting trials in film, we recently began working with customers interested in a-PHA-modified PLA for thermoformed transparent ‘clamshells’ used in food service and consumer goods packaging. Recent trials of a-PHA-modified PLA in packaging and non-wovens look promising, and we remain focused on customer conversions in this space driven by the benefits of a-PHA modifiers for PLA.
“During the quarter, Kolar Filtration conducted trials with our denitrification pellets for water treatment applications. Based on the successful completion of the trials as well as a vision for expanding the market for PHA-based denitrification, we signed a global, exclusive distribution agreement with Kolar to market and promote Metabolix PHA-based denitrification pellets for water treatment applications. Our agreement with Kolar streamlines the process for compounding and supplying finished product to established customers focused on ornamental and hobby aquaria, and we expect Kolar to expand the use of PHA-based denitrification into larger scale applications including fresh water ponds, hatcheries and commercial aqua farming.
“We also launched Yield10 Bioscience in the third quarter as a new vehicle for commercializing technologies derived from the extraordinary scientific effort we have directed toward optimizing plant systems. We have seen encouraging early results in model plant systems that we think are transferable to and hold promise for significant yield improvements in commercial food and feed crops. We are reaching out to potential collaborators and investors and are working to secure dedicated funding for Yield10 Bioscience to continue with the development and commercialization of these exciting technologies.
“Securing capital remains a priority for the execution of our business plan. In October, we entered into a $20 million common stock purchase agreement with Aspire Capital. This agreement provides a new tool for accessing capital at our discretion over the next 30 months. We see the Aspire Capital facility as part of our broader approach to financing and believe it adds flexibility to our capital structure to complement other forms of financing that may be required from time to time.
“2015 has been a transformative year for Metabolix. We look forward to 2016 as a building year, during which we expect to lay groundwork for establishing our commercial scale specialty biopolymers business. We are pleased with the progress made in 2015, and are excited to delve into a more commercial scale focused set of priorities for 2016,” said Shaulson.
THIRD QUARTER 2015 FINANCIAL OVERVIEW
Metabolix is managed with an emphasis on cash flow and deploys its financial resources in a disciplined manner to achieve its key strategic objectives. The Company ended the third quarter of 2015 with $17.9 million in unrestricted cash and cash equivalents, and currently has $20 million of availability under the Aspire Capital equity facility.
The Company’s net cash used in operating activities during the third quarter of 2015 was $4.3 million, which was a decrease of $0.5 million from the $4.8 million used for operating activities during the third quarter of 2014. We expect total cash usage for full year 2015 of approximately $23 million, consistent with prior estimates.
On October 7, 2015, the Company entered into a $20 million common stock purchase agreement with Aspire Capital Fund, LLC. Under the terms of the agreement, Aspire Capital committed to purchase up to $20 million of Metabolix’s common stock over a 30 month period. Common stock may be sold from time-to-time at the Company’s option under pricing formulas based on prevailing market prices around the time of each sale. The Company expects to use the Aspire Capital facility to complement, rather than replace, other financing that may be required during the next twelve months to continue its operations and support its capital needs. The timing, structure and vehicles for obtaining future financing are under consideration, and there can be no assurance that such financing efforts will be successful. The Company intends to use any proceeds from sales under the Aspire Capital facility and any future financings for working capital and general corporate purposes, including the continued development of its specialty biopolymers business as the foundation for longer range commercial scale plans and the future growth of its business.
For the third quarter of 2015, the Company reported a net loss from continuing operations of $5.8 million, or $0.22 per share, as compared to a net loss from continuing operations of $6.7 million for the third quarter of 2014.
Total revenue from continuing operations in the third quarter of 2015 was $0.7 million, compared to $0.6 million for the comparable quarter in 2014. The third quarter revenue consisted primarily of revenue from government grants, with $0.2 million in product revenue recognized during the third quarter of 2015 compared to $0.1 million during the third quarter of 2014.
In the third quarter of 2015, research and development expenses for continuing operations were $4.1 million and selling, general and administrative expenses totaled $2.2 million. This compares to $4.1 million of research and development expenses and $2.5 million of selling, general and administrative expenses for the third quarter of 2014.
The Company’s net cash used in operating activities for continuing operations during the third quarter of 2015 was $4.3 million as compared to $4.8 million for the third quarter of 2014.
For the first nine months of 2015, the Company reported a net loss from continuing operations of $17.8 million, or $0.73 per share, compared with a net loss of $21.0 million for the first nine months of 2014.
Total revenue during the first nine months of 2015 was $2.1 million, compared with $1.9 million for the comparable period in 2014. Cost of product revenue was $0.5 million during the nine months ended September 30, 2015, compared with $1.4 million for the comparable period in 2014.
Research and development expenses were $12.3 million during the first nine months of 2015, compared with $13.3 million for the same period in 2014. Selling, general and administrative expenses were $7.1 million for the nine-month period ended September 30, 2015 compared with $8.3 million for the first nine months of 2014.
The Company’s net cash used by continuing operations for operating activities during the first nine months of 2015 was $16.4 million, compared to net cash used by continuing operations for operating activities of $18.2 million for the comparable period in 2014.
In October 2014, in connection with the shift in the Company’s focus to commercializing its PHA performance biopolymers, the Company discontinued the operations of its wholly-owned German subsidiary, Metabolix GmbH, and sold substantially all of the assets of that subsidiary. The Company recorded losses from discontinued operations of $1.2 million and $2.3 million for the three and nine months ended September 30, 2014, respectively.
Conference Call Information
Metabolix management will host a conference call today at 4:30 p.m. (ET) to discuss third quarter results. The Company also will provide an update on the business and answer questions from the analyst community. A live webcast of the call with slides can be accessed through the Company’s website at http://www.metabolix.com in the investor relations section. To participate in the call, dial toll-free 877-709-8150 or 201-689-8354 (international).
To listen to a telephonic replay of the conference call, dial toll-free 877-660-6853 or 201-612-7415 (international) and enter pass code 13623265. The replay will be available beginning at 7:30 p.m. (ET) on Tuesday, November 10, 2015 and will last through 11:59 p.m. (ET) on Monday, November 23, 2015. In addition, the webcast will be archived on the Company’s website in the investor relations section.
Metabolix, Inc. is an innovation-driven specialty materials company focused on delivering high- performance biopolymer solutions to customers in the plastics industry. Metabolix’s Mirel® biopolymers, which are derived from renewable resources, are a family of biobased performance additives and specialty resins based on PHA (polyhydroxyalkanoates). Metabolix’s proprietary biotechnology platform enables the creation of specialty biopolymers for use in a broad range of applications such as construction and packaging materials, as well as industrial, consumer and personal care products.
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