Metabolix, Inc. (NASDAQ: MBLX), an innovation-driven performance biomaterials company, today reported financial results for the three months ended June 30, 2013.
“We made further progress executing our strategy focused on high-value markets and opportunities,” said Richard P. Eno, President and Chief Executive Officer. “In biopolymers, we continue to focus on building the markets for compostable film and bags, performance additives and in key markets requiring functional biodegradation. We are seeing many opportunities where formulations of our PHA materials with other biodegradable polymers can deliver solutions to solve critical customer problems. This quarter, we are pleased to have formalized a collaboration with Samsung Fine Chemicals to focus on expanding the global market for biodegradable polymers. New products we develop through this relationship are expected to benefit the product portfolios of both companies. In addition, we are hearing early positive market feedback on our PVC performance additive products,” said Mr. Eno.
“As a result of this progress, earlier this month we announced the promotion of Johan van Walsem to Chief Operating Officer,” Mr. Eno continued. “We are excited to appoint Johan to this new role, which is focused on growing revenue based on our commercial strategy. Johan’s experience across nearly every aspect of our portfolio will position him to integrate our unique capabilities for maximum commercial impact.”
Mr. Eno continued, “Establishing an ongoing source of PHA supply to integrate with other biodegradable polymers for customer benefit is a key part of our strategy. We continue to develop our supplier relationship with Tianjin GreenBio Materials in China. In Spain, the situation at Antibioticos is becoming clearer and we are actively engaged in an evaluation of options for manufacturing at that site. In addition, we are conducting due diligence on two potential U.S. manufacturing sites.”
“In our biobased chemicals and crop platforms, we continue to achieve our internal technical milestones,” said Mr. Eno. “We had three new patents issued and three allowed during the quarter, spanning each of our three businesses. This intellectual property is an important asset for Metabolix, as it creates potential commercial opportunities for us while strengthening our competitive position. As we move into the second half of 2013, we look forward to executing on our business plan and expanding our presence to meet the growing demand in our high-value markets.”
Second quarter and six month 2013 financial overview
Metabolix manages its finances with an emphasis on cash flow. The Company has maintained this focus and ended the second quarter with $31.7 million in unrestricted cash and investments. The Company’s net cash used for operating activities during the second quarter of 2013 was $5.8 million, which remains consistent with net cash used of $5.9 million for the comparable quarter in 2012. Metabolix continues to have no debt.
Total revenue in the second quarter of 2013 was $1.7 million, compared to $0.9 million for the comparable quarter in 2012. The second quarter revenue consisted primarily of revenue from product sales and work performed on government research grants. Grant revenue of $0.6 million increased by $0.1 million over the same quarter of 2012, primarily as a result of work performed on the Renewable Enhanced Feedstocks for Advanced Biofuels and Bioproducts (“REFABB”) grant awarded by the U.S. Department of Energy. Biopolymer product orders of $0.4 million were shipped and billed during the Company’s second quarter of 2013. Revenue recognition was deferred for the majority of these shipments in accordance with the Company’s policy to defer product revenue for the greater of 60 days or until customer payment. During the second quarter, $0.8 million in product revenue was recognized, primarily from shipments to customers completed during the first quarter of 2013, which is a $0.4 million increase over the comparable quarter of 2012. The Company also recorded $0.2 million of research and development revenue earned under a development arrangement with a third party during the second quarter of 2013.
Cost of product for revenue recognized was $1.2 million during the quarter ended June 30, 2013, compared to $0.4 million for the comparable period in 2012. The increase of $0.8 million was primarily attributable to the cost of inventory associated with revenue recognized during the quarter, current period freight and warehousing costs and a write-off of excess and obsolete inventory.
Research and development expenses were $4.9 million for the second quarter of 2013 compared to $5.0 million for the same period in 2012. Selling, general and administrative expenses were $3.4 million for both the second quarter of 2013 and the second quarter of 2012.
The Company reported a net loss of $7.9 million or $0.23 per share for the second quarters of both 2013 and 2012.
Revenue for the six months ended June 30, 2013 was $3.6 million compared to $40.2 million in the same period of 2012. The year-over-year decrease was primarily related to $38.9 million in deferred revenue which was recognized as a result of the termination of the Telles joint venture in early 2012. Product revenue, grant revenue and research and development revenue increased by $1.2 million, $0.5 million and $0.6 million, respectively, during the first six months of 2013 compared to the first six months of 2012.
Cost of product revenue was $1.8 million during the six months ended June 30, 2013 compared to $0.5 million for the comparable period in 2012. The $1.3 million increase is primarily attributable to the cost of inventory sold during the period and write-offs of excess and obsolete inventory of $0.3 million. Research and development expenses were $9.8 million for the first half of 2013 compared to $11.1 million for the same period in 2012. The decrease of $1.3 million is primarily the result of decreased employee compensation and benefit expenses of $0.9 million. Selling, general and administrative expenses were $6.7 million for the first six months of 2013 as compared to $7.8 million for the comparable six month period in 2012. The decrease of $1.1 million is primarily the result of decreased employee compensation and benefit expenses of $0.5 million and a $0.2 million reduction in consulting expenses as a result of decreased use of consultants to support sales.
The Company reported a net loss of $14.6 million or $0.43 per share for the first half of 2013 compared to net income of $20.9 million or $0.61 per share for the first half of 2012.
The Company’s net cash used in operating activities during the first half of 2013 was $14.3 million, which represents a decrease in cash usage from $18.1 million for the comparable period in 2012. The $3.8 million decrease in net cash usage is primarily attributed to the Company’s payment of $3.0 million to Telles in early 2012 to acquire the inventory from the ended Telles joint venture. The Company currently expects that its cash and investments, together with funds expected to be received from existing government research grants and expected product sales, will be sufficient to meet anticipated cash requirements for the next twelve months. However, any significant costs incurred to establish a commercial biopolymer manufacturing facility will shorten this liquidity horizon and require the Company to seek additional funds in order to continue and advance its operations.
Metabolix, Inc. is an advanced biomaterials company that is well positioned to address growing market demand for sustainable solutions in the plastics, chemicals and energy industries. The Company is developing and commercializing a family of high-performance biopolymers targeted to the markets for film and bag applications, performance additives and functional biodegradation. Metabolix’s biobased chemicals platform is focused on high-value segments and applications using its novel “FAST” recovery process. The Company also is developing a platform for co-producing plastics, chemicals and energy from crops. Metabolix has established an industry-leading intellectual property portfolio that, together with its knowledge of advanced industrial practice, provides a foundation for industry collaborations.
Metabolix, press release, 2013-07-31.