Metabolix, a struggling developer of innovative bioplastics, is receiving a lifeline from a Korean manufacturer that is building a 10,000 tons per year plant in Fort Dodge, Iowa to produce the company’s proprietary PHAs (polyhydroxyalkanoates).
Under a memorandum of understanding (MOU), Metabolix will buy specialty PHAs from CJ CheilJedang Corp., and then sell the materials to its customers. The companies also expect to define a framework for longer term expansion of the collaboration for larger scale PHA production and related commercial activities.
“The MOU with CJ provides a path to establishing the first tranche of commercial production capacity for our specialty PHA biopolymer materials,” said Joseph Shaulson, CEO of Metabolix. “In addition to the significant investment in manufacturing at Fort Dodge, CJ brings impressive engineering capabilities and operating expertise that will be critical to the success of this project.”
“Metabolix’s specialty PHA materials are well aligned technically and commercially with our strategic plan to diversify the products and as CJ’s first biopolymer product, a-PHAs will be a stepping stone for further expansion of the biochemical portfolio,” said Hang Duk Roh, head of CJ CheilJedang BIO. “The shift Metabolix has made to focus on a-PHA as a performance additive as well as other specialty applications of PHAs is very promising.”
Metabolix initially planned large-scale production of PHAs as a biodegradable packaging material as part of a joint venture with Archer Daniels Midland. The six-years-old JV, called Telles, was terminated by ADM in 2012 because of poor sales and high capital costs. Mirel PHA was significantly more expensive than fossil fuel-based packaging plastics, such as polyethylene.
Corporate research efforts shifted to ways to use the company’s PHAs as a polymer modifier, a move that has paid off for PVC and PLA applications. In 2015, Metabolix launched a-PHA (amorphous PHA) pilot production.
CJ BIO operates world-scale fermentation facilities in the United States, China, Indonesia, Malaysia and Brazil. CJ CheilJedang is a Korean-based food, feed, and bioscience company, and a subsidiary of the CJ Group.
The manufacturing agreement is a positive development for Metabolix, which still faces some financial issues. The following statement was included in its just-released 10-K annual report: “The company held unrestricted cash and cash equivalents of approximately $12.3 million at December 31, 2015. Our present capital resources are not sufficient to fund our planned operations for a twelve-month period, and therefore, raise substantial doubt about our ability to continue as a going concern. Our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2015 with respect to this uncertainty.”
The company’s stock was trading at around $2 per share this morning, down from a high of $167 in 2007.