Metabolix to wind down bioplastics business; rejects Cellulac’s offer to merge

US-based Metabolix is implementing a strategic restructuring under which Yield10 Bioscience will become its core business with a focus on developing disruptive technologies for improvements in crop yield to enhance global food security. Thus, it will eliminate approximately 45 positions in its biopolymer operations, and will pursue the sale of its biopolymers business assets. The immediate reduction in force represents approximately 50% of the Company's current workforce.

After the restructuring and wind-down of the biopolymers operation, the company's annual cash burn rate is expected to be in the range of US$5 million compared to approximately US$25 million prior to the restructuring. Consistent with its new strategy, the company plans to rebrand itself as Yield10 Bioscience in the coming months.

Already this May, Metabolix had announced that it was exploring strategic alternatives for its speciality biopolymers business and for its Yield10 crop science programme. The reasons given were outside strategic interest in its biopolymers business, and a challenging financing environment.

In response to that announcement, UK-based biochemicals investment technology company Cellulac made a formal proposal to merge both companies. The proposal meant Cellulac would contribute industrial scale production assets with biochemical and biopolymer capacity, independently valued at up to US$40 million. In addition, terms for a manufacturers licensing agreement of the combined Metabolix and Cellulac biopolymer assets with access to debt and equity funding from Cellulac assets and shareholders for a commercially focused growth strategy of the enlarged entity.

According to Gerard Brandon, CEO of Cellulac, “The Board of Directors of Metabolix decided the US$40 million merger offer was not important enough to inform shareholders. A merger with Cellulac, based on the biopolymer intellectual property and associated institutional knowledge, would reduce Metabolix development overheads to a more manageable level where manufacturing license fees and future royalties would transform Metabolix, for the first time in 24 years, into a profitable part of an enlarged biobased company. Synergies would contribute shared management and development costs across a larger corporate group, multiple revenue streams comprising of production equipment installations, recurring revenue from biochemical production, manufacturing product licensing agreements, process licensing with biopolymer off-take agreements worth US$38 million already in place.”

Brandon also says that by declining the offer from Cellulac, the current management and Metabolix Board demonstrate “a complete lack of business acumen or commercial vision.”

Meanwhile, Joseph Shaulson, President/CEO of Metabolix said the “dramatic restructuring and an unfortunate but necessary step” to bring the company forward with a new strategy based on what the company believes are the “most exciting and promising technologies in its portfolio.”

Metabolix posted a loss of US$24 million in 2015 and a 7% decline in sales.

Thus, Metabolix is holding its biopolymer assets for sale and may sell or license all or portions of its biopolymer inventory, equipment and intellectual property in connection with its on-going financing efforts and the implementation of its new strategy.

It also says that if it is not successful, it “will be forced to wind down its remaining operations, including the Yield10 programme, and pursue options for liquidating the company's remaining assets, including intellectual property and equipment.”

In plants, Yield10 is working on new approaches to improve fundamental elements of plant metabolism to deliver increases in crop yield through enhanced photosynthetic efficiency and directed carbon utilisation, with the programme applicable to food and feed crops. In the near term, Yield10 is focusing its efforts on canola, soybean and corn—working independently and seeking agricultural industry partners to validate and commercialise new traits and identify gene editing targets in these key crops.