In Massachusetts we have had more signs of the pivoting underway in the advanced bioeconomy with the news that Metabolix is changing its name to Yield10 Bioscience and will focus on developing disruptive technologies for step-change improvements to crop yield to enhance global food security.
The company is hard at work re-thinking how it talks about its past as a developer of renewable chemicals. These days, you’ll find Yield10 chatting up its “extensive track record of innovation based around optimizing the flow of carbon intermediates in living systems.”
And it’s true, at one time Yield10 was “a planned spinout that will commercialize crop science innovations that Metabolix and its partners have developed over the last 10+ years. Target crops will include key row crops (corn, soybean, canola, sugarcane, sorghum, alfalfa) as well as industrial and energy crops (e.g. Camelina and switchgrass). The increased fixed carbon will be directed to products of interest through Yield10’s advanced metabolic engineering capabilities.”
The spin-out was announced back in 2015. Then, the spin-out became the company, in a shift the company originally signalled last October in a presentation to investors. And now the shift is complete.
So, this is quite a bit about Yield10. But it really is more about the jettisoning of the old Metabolix. Having readied an additional raft to launch from the Metabolix mothership, everyone has decided to jump on the raft and let the mothership sink. With the loss of 50 souls, since last October, the company signalled that it would downsize from a staff of 70 to around 20 and aim for a reduction in the annual cash burn from $25 million to $5 million.
But, better to save the few than for all to perish, right? And there appears to be only so many “days at sea” rations available for the survivors until Yield10 reaches the safe shores of the Kingdom of Cashpositive.
The focal point? Optimizing carbon metabolism to direct more carbon to seed production. That means developing new plant traits and Yield10 is talking ip “several yield traits it has developed in crops such as Camelina, canola, soybean and corn.”
Now, you might wonder exactly how much food security there is to be gained by optimizing camelina, since it produces a non-edible oil — but camelina can be grown successfully in rotation with wheat, and wheat growers could use some improvements in their economics, as no grain has seen a shift of more acreage to soy and corn in recent years.
As far as soy and corn — they are generally more directly related to feed security than food security, since most of soy and corn production goes into the animal feed system — but there’s the global trade in corn starch for ethanol, or corn sugars for a variety of sweeteners and for fermentation into a range of chemicals, the likes of which Metabolix used to develop.
Yes, they were a corn play in years gone by — corn sugars fermented into PHA as a promising bioplastics platform. That was the original target, and the subject of a critical partnership with ADM — the loss of which a few years back struck a blow at Metabolix’ path to PHA world dominance from which it never quite recovered. Metabolix was working to target application spaces for PHA for PVC and PLA modification, functional biodegradation, and paper coating.
The Metabolix backstory
It wasn’t all that long ago that Metabolix was still slogging away at the PHA opportunity. It had been a struggle to replace the value of the ADM partnership, but Metabolix had worked valiantly at it. In December 2013 we reported that Metabolix launched Mvera B5011, a new film grade resin that allows for production of compostable, and highly transparent, film and bags.
Last April, we reported that Metabolix signed a Memorandum of Understanding to produce specialty PHAs with CJ CheilJedang Corporation at a 10 kiloton PHA production unit at CJ’s Fort Dodge, Iowa facility. And, last spring, Metabolix and CJ said that they expected to expand their collaboration into the long-term with a larger scale PHA production facility.
The company’s CEO, Joseph Shaulson, was ebullient.
“The MOU with CJ provides a path to establishing the first tranche of commercial production capacity for our specialty PHA biopolymer materials,” he said. “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. We look forward to completing the definitive manufacturing agreements and beginning construction on the project in the coming months.”
That was then, this is now. Shaulson exited. The biopolymer operations, including pilot manufacturing, were wound down. Residual biopolymer IP and assets sold to CJ CheilJedang for a total purchase price of $10M. Headcount was slashed to 29 by October and Metabolix’ cash on hand of $9.7 million was expected to last “into 2017”.
Chief science officer Oliver Peeples is now the company CEO. He’s ebullient.
“We are excited to launch our new corporate identity reflecting a new strategic direction for our business in agricultural bioscience,” said Oliver Peoples, Ph.D., president and CEO of Yield10 Bioscience. “We believe 2017 will be an exciting year for Yield10 as we make progress with our lead yield traits in major food crops and continue to leverage breakthrough science to discover and develop new traits for important feed and food crops to build value for our shareholders.”
Chemicals vs other biotechnology product sets
It reminds us that the drop in global oil prices has hit biomaterials and renewable chemicals far tougher than it hit renewable fuels. There is no Renewable Plastics Standard to guarantee a level of market access and adoption to assure the success of renewable chemical molecules of promise, even if they also reduce dependence on foreign oil. Renewable fuels have a measure of protection in mandated volumes, but renewable chemicals have been almost perfectly exposed to the market.
In fact, it may be the only truly laissez-faire sector out there anywhere near the world of petroleum, which benefits from accelerated depreciation in the upstream exploration area as well as the favorable tax treatment available through Master Limited Partnerships (MLPs), which are only available to fossil fuels.
And here’s the old saw in the business of chemicals and fuels: when your business model is running out of steam, go upstream. Companies that historically were founded around refining — such as Standard Oil — long-ago found that there’s good money to be made in exploration and production.
The rocky road for independent trait companies
Now, trait development is to crop yield as fracking is to oil & gas yield — getting more out of the same underlying resource, by squeezing more drops of product out. Many are active in the field — some with conspicuously more success than others. Ceres ultimately sold out to Land O’Lakes last year after its trait development program took longer and cost more than expected. Mendel Biotechnology sold out to Koch Industries in 2014 after a long set of collaborations with Monsanto, Bayer, and a big collab with BP to develop miscanthus for cellulosic fuels. But companies like Chromatin and NexSteppe have been doing especially well in the world of sorghum, and have remained independent.
Nutrition is the word.
Back in the 1970s, Grease was the word. Today, it’s nutrition. Want to raise money? Nutrition. Want to avoid the fuel vs fuel controversy? Nutrition. Want to sound like you’re doing something that’s really really current and important using a lot of the same technology you were using to make something else? Nutrition, nutrition, nutrition.
Where to find them on NASDAQ.
They were MBLX. Now, they are YTEN. And you can learn more about the switch at the company website, which is now here.
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