Issue Date: January 23, 2012
Bioplastics Venture Is Off
Metabolix announced on Jan. 12 that the agribusiness giant Archer Daniels Midland will end a joint venture to produce Mirel, Metabolix’ biobased biodegradable plastic, effective Feb. 8. ADM says financial returns from the five-year-old venture, called Telles, were too uncertain.
The breakup is a blow to Metabolix, which saw its stock price drop to $2.64 from $6.00 in after-hours trading following ADM’s announcement. The Telles joint venture operates a fermentation facility in Clinton, Iowa, that has capacity to produce 50,000 tons per year of Mirel, a polyhydroxyalkanoate, or PHA, plastic. The facility is adjacent to an ADM corn-processing plant and was built and owned by ADM. With ADM exiting the venture, Metabolix will lose access to the facility and its corn sugar feedstocks. The intellectual property related to Mirel will revert back to Metabolix.
In an investor call, Metabolix CEO Richard P. Eno said the move was unexpected and that the firm does not yet have a plan to move PHA manufacturing to another facility or partner firm. Telles had 100 contracts for Mirel, which is used in agricultural mulch, biodegradable trash bags, packaging, and consumer plastic products. Metabolix plans to refocus the Mirel business on higher-margin applications.
Metabolix has two other product families in its pipeline. It has been working to adapt its fermentation microbe to produce C4 industrial chemicals, and it’s developing plant crops that produce bioplastics and chemicals in their cells.
J.P. Morgan stock analyst Jeffrey J. Zekauskas tried to put a positive spin on the news. “The dissolution of the joint venture is likely to materially disrupt the production of Mirel biobased plastics,” he wrote in a note to investors. “However, success in finding new business partners or in establishing new research collaborations could lead to value creation and a higher share price.”
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