Tired of paddling against the current and running out of money, the owners of Metabolix are selling its bioplastic business to CJ CheilJedang Corp. for $10 million. The first $2 million of the purchase price was paid by CJ on execution of a letter of intent and the remaining balance is payable on closing of the transaction, which is expected in mid-September. The company announced last month plans to ditch the bioplastics business.
Metabolix will transfer to CJ a portfolio of intellectual property including the platform microbial strains used to produce fermentation-based products, as well as patent rights covering the production and use of Mirel PHA biopolymers. CJ will also acquire laboratory equipment associated with the biopolymers business. The arrangement is also expected to include a sublease to CJ of a portion of Metabolix’s Woburn, Mass., facility.
“We believe this transaction will help put the Company on a more stable footing and enable us to move forward with our plan to make Yield10 Bioscience our core business,” said Joseph Shaulson, CEO of Metabolix. Metabolix anticipates a staff of approximately 20 with an annual net cash burn rate in the range of $5 million once it has completed its transition and related restructuring. The company plans to rebrand itself as Yield10 Bioscience.
It was a bumpy ride for Metabolix. Researchers Oliver Peoples and Anthony Sinskey co-founded Metabolix in 1992 after work at MIT that identified ways to engineer biodegradable polyhydroxyalkanoates (PHAs) out of plants and bacteria. In 2006, Metabolix and Archer Daniels Midland Company (ADM) entered into a strategic alliance to manufacture and commercialize Mirel PHAs and built a significant manufacturing plant in Clinton, Iowa. The material was pricy and the market for biodegradable plastics did not develop as expected. ADM dropped out and closed the plant in 2012. Metabolix’s stock plunged after the announcement. Share prices went from a peak of $32.52 in 2011 to 39 cents today.
Metabolix struggled to find alternate manufacturing and began to focus on specialty applications such as PVC and PLA modification.
CJ Cheil Jedang was founded 1953 as a sugar and flour manufacturer and was originally part of Samsung Group. It’s not clear if CJ sees the fit as a packaging supplier or as a companion to sugar production. The purchase price is certainly a bargain. Metabolix’s total R&D expenses just in the past five years were almost $100 million.