Metabolix: A Struggling Synthetic Biology Stock

Ever since the first artificial life was created using synthetic biology, the technology is seen to hold great potential with promises of everything from genetically engineered plants and animals, to customized microorganisms that can be programmed to produce high-value chemicals from basic feedstocks. While synthetic biology darling Intrexon’s stock continues to reach new highs, not all companies are enjoying the same levels of success. In a past article, we highlighted three companies (Gevo, Solazyme, and Amyris) that haven’t been so kind to investors as they struggle to commercialize their technologies. One other company, Metabolix (NASDAQ:MBLX), is also experiencing some growing pains with an application of synthetic biology that looks to produce PHA biopolymers using a microbial fermentation process.

Founded in 1992, Metabolix has an accumulated deficit of $162 million, in other words, they’ve spent that amount of money so far and still haven’t managed to successfully commercialize a product in a manner that manifests itself in significant revenues. Since MBLX’s IPO in November of 2006, shares have tanked -96% giving the Company a market cap of $69 million today. To put that into perspective, this would imply that at one time MBLX had a $1.7 billion market cap. In May of this year, they issued a 6 to 1 stock split, no doubt in an attempt to make sure the share price maintains a sufficient value such that they can continue to trade on NASDAQ. Revenues for the last quarter totaled $645,000 which was slightly better than the same quarter in the year prior.

PHA polymers are bio-derived and bio-degradable making them a double whammy when it comes to an environmentally friendly plastic substitute. Through a microbial fermentation process, MBLX can produce PHA polymers within microbial cells and then harvest them. MBLX has been able to develop an industrial strain of cells which can efficiently transform natural sugars into two PHA polymer product lines:

Metabolix_Biopolymers

The Company has taken a new strategic focus on biopolymers and intends to discontinue their focus on chemicals and crops. In March of this year, MBLX announced an alliance with Honeywell to offer new marine biodegradable biopolymers for use in cosmetics and personal care products. In June of this year, they closed a $15 million equity private placement along with $15.6 million in additional proceeds that could be realized if investors exercise 4-year warrants included in the package at a strike price of $3.98.

As Intrexon continues to enjoy success in the equities market, more investors will become interested in synthetic biology and want to know about other companies besides Intrexon which offer exposure to this promising theme like Codexis. Unfortunately for companies like Metabolix, Gevo, Solazyme, and Amyris, they’ve already burnt investors’ fingers and will have a hard time convincing the market that they “have it figured out” this time around. With oil continuing to hit new lows, cost becomes much more of an issue when evaluating plastic substitutes. It can’t be cheap to scale the MBLX platform. With MBLX having a full line of products available, is this a question of not being able to scale production or not having buyers who are interested in buying at current price points?

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