Metabolix to ship first biodegradable plastic, Mirel

By Jackie Noblett, Mass High Tech, April 9, 2010

For nearly two decades, Oliver Peoples and the Cambridge-based company he founded, Metabolix Inc., have been working on ways to turn crops into biodegradable plastics.

The company, founded in 1992 and public since 2006, bore the brunt of the long, slow and expensive process of industrial biotechnology and clean-technology commercialization. But this month, Metabolix (Nasdaq: MBLX) finally will turn the corner so many of its peer companies have failed to do and begin shipping its first plastic, known as Mirel, from its commercial plant in Clinton, Iowa, to customers and book revenue.

Traversing the chasm between technology and production is supremely difficult in the cleantech field, and for Metabolix it has meant years of losses and the dependence on joint venture agreements with agricultural giants to finance much of its expansion. Executives say the transition to producer from developer is critical for the company to prove to investors and customers the technology is more than a science project.

“The commercialization of Mirel is a huge step for us, for it provides a huge point of credibility that other industrial biotechs are looking for,” said Metabolix President and Chief Executive Richard Eno. “We have now transitioned into an environment that creates a lot more opportunities for us to build on the foundation of Mirel and into other products we’re working on.”

Driving the interest is projections of a sizable market for the materials to be used in anything from plastic bags to yogurt cups. Sales of biodegradable and bio-based plastics could reach $1.7 billion to $2.4 billion by 2012, according to a report by investment bank Jefferies & Co.

Metabolix’s history is not drastically different from other biotechs in the ethanol, chemical and materials industries — using major advances in genetic engineering made in the 1970s and 1980s and combining it with chemistry and materials science. But what makes Metabolix unique is not that it is making biodegradable plastics, but trying to create a single polymer that can withstand heat and cold, can be injection-molded into pens and can be in contact with food.

“What we’re making is a new polymer that has never been made before,” Eno said. “When you’re putting a new material out there, there are various tests and other processes that take time.”

“I think the benefit is once you’re there, it’s an enduring thing,” he added.

That’s if you actually get to the end goal. Metabolix’s ability to go commercial arguably would not have been possible without a joint venture forged in 2006 with Decatur, Ill.-based Archer Daniels Midland Co., one of the world’s largest producers of corn-based ethanol.

ADM essentially fronted the cost of building Metabolix’s Clinton plant to the tune of well over $300 million as well as access to the corn sugar feedstock that is used to make Mirel. In return, Metabolix provides research and development as well as marketing and product development services to the venture.

Eno says the partnership enabled Metabolix to get over the hurdle of fronting the money for a plant, something the early-stage company could not do on its own.

Last year, the 100-employee company generated $1.6 million in revenue from grant funding and payments from ADM, posted a net loss of $38 million. Meanwhile, the company’s stock has surged since February, trading near $13 per share from a 52-week low of about $6.