Yield10 Bioscience Inc (YTEN) 2010 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Metabolix Inc. Second Quarter 2010 Earnings Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for your questions.

I would now like to turn the conference over to Mr. James Palczynski of ICR. Please, go ahead.

Thank you, and good afternoon to everyone. Metabolix released second quarter 2010 financial results after the market close today. If you do not have a copy of the press release, I'd just like to point out that one may be found on the Company's website at www.metabolix.com in the Investor Relations section.

Making today's presentation will be Richard Eno, President and Chief Executive Officer of Metabolix and Joseph Hill, Chief Financial Officer of the Company. They are joined today by Oliver Peoples, a co-founder of Metabolix and the company's Chief Scientific Officer.

Before we begin formal remarks, I just need to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be put upon them.

The Company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this conference call. We would refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial condition.

And with that out of the way, I'd like to now turn the call over to Rick Eno, President and Chief Executive Officer of Metabolix.

Thank you, James. I'd like to welcome all of you to the second quarter 2010 earnings conference call for Metabolix. Today, I'll provide you with a review of the Metabolix vision and a broad update of our ongoing activities. Joe will then take you through the financials.

We continue to make good progress on our commercialization and development activities and have maintained a strong financial position. For those of you new to these calls, Metabolix is an innovation-driven bioscience company which is focused on bringing environmentally-friendly solutions to the plastics, chemicals and energy industries. We are developing and commercializing pathways and products that are intended to lessen the world's dependence on oil, reduce CO2 emissions relative to traditional materials and address critical solid waste issues.

We are founded on hard science and have exceptional capabilities in plant science, in fermentation, microbial and polymer engineering and in product and market development. We currently have three business platforms; first, Mirel, a bio-based and biodegradable plastic currently being commercialized with our partner, Archer Daniels Midland, through a joint venture called Telles; Industrial Chemicals, initially focused on C4 chemicals and crop-based activities, which include our programs in switchgrass, oilseeds and sugarcane.

I'd like to begin with the Telles business, our joint venture for commercializing Mirel. We have made steady progress since our last call. I'll provide an update on the Clinton plant, the food contact notification process with the FDA, market-related activities and a broad description of our expectations for the coming year.

The Clinton, Iowa plant is the production source for Mirel, our first commercial product. As described in our two previous calls, the initial phase for the plant has been commissioned and is in operation. Product is now in the hands of customers and prospects. The plant has now successfully produced and met the current Telles specifications for all of our key product grades, injection molding, sheet, film and thermoforming.

The Clinton manufacturing team is now transitioning its focus from establishing initial operations into the long-term process of continuous improvement; improving yields, lowering costs and increasing operating rates.

In addition to gains expected from these day-to-day operational improvements, we also have several technology enhancements which are currently in late stage development, including next generation microbial streams and recovery technologies. We are moving to implement these enhancements at the Clinton plant to further reduce costs, improve capital efficiency and expand the market potential for Mirel.

I'd now like to provide an update on the FDA process for food contact. During the second quarter, we received approval to sell injection molding resins into food contact markets. This is a significant milestone for the Company, and enables us to sell into applications such as cutlery and injection-molded food storage containers. We're currently finalizing our approach for our next FDA submittals, which will allow us to sell Mirel into thermoforming and film food contact markets. This will enable us to service thermoformed applications such as coffee lids and yogurt cups and film applications for use in food packaging and storage bags.

Preliminary test results are encouraging. We are anticipating these materials to be approved for food contact markets in Q4 of this year or Q1 of next, depending on our chosen submittal patent. The FDA submittal process is somewhat iterative. We are seeing continuous improvement in our product formulations and therefore, we are examining a few different submittal options. Moving forward, we expect ongoing notifications to the FDA as new Mirel grades are developed and the technology continues to advance.

With regards to our market development activities, we remain focused on six specific segments, where the combination of Mirel's properties result in a particularly compelling and unique offering. As a reminder, these segments are packaging, compostable bags, consumer products focused on cosmetics, gift cards and other products you would commonly find on the retail shelves, business equipment, agriculture and horticulture and marine and aquatic applications.

Mirel is a superior bioplastic, combining the widest range of biodegradability with bio-based sourcing and excellent property performance characteristics. The inherent biodegradability of Mirel is providing the foundation for creating entirely new products and applications, a number of which already in active development.

Now, with the Clinton plant in operation, we are moving forward with the commercialization of our pipeline, focusing on the ramp-up of sales and driving towards our plant expansion. This will be the result of choosing the right customers and converting this demand into sales contracts.

The pace of sales growth is also dependent on our ability to manage the development process for new applications, which is typically nine to 15 months long. In the last month, we have substantially accelerated our product development trials at our targeted customers. We are now moving a large number of potential customers through the development process.

Let me now describe the key steps for customer development, so that you can get a better understanding of the Clinton ramp-up process. The first stage of customer development is the product definition stage. In this stage, the supplier-customer relationship is established and an initial product concept is defined, for example, a biodegradable pen or agricultural mulch film system.

Once the customer appears to have a viable and attractive market and product concept, significant quantities of technical data are then shared to ensure Mirel will meet the desired product requirement. Basic commercial terms are discussed, including price and volume potential, and this stage of commercial development typically takes one to two months. At this stage, we often screen out smaller or less attractive opportunities to help us focus on the top priority developments.

The second stage of customer development is the product prototyping and test marketing stage. In this stage, actual product prototypes made from Mirel are produced in a series of trials. These trials are aimed to optimize the performance of the ultimate product relative to customer needs. Characteristics which could be optimized could include the rate of biodegradation of the product, the stiffness of the product or perhaps the product color.

This stage also includes test marketing, usually with prototype products to ensure that the Mirel product meets the ultimate requirements of the end customer. This stage typically requires six to 12 months, depending on the application. We focus significant efforts on reducing the time spent in this stage.

The third stage requires about one to two months, and defines the final specifications required by the customer and the sales agreement. Our contracts with our customers can be complex with purchase in sale, intellectual property and co-branding agreements. Quite often, these agreements are multi-year in nature.

As I mentioned, we characterize this overall process as requiring nine to 15 months activity, although there are cases where it is shorter and others where it is longer. We are intensely focused on each critical step with our chosen customers in order to minimize commercialization time and accelerate plant ramp-up.

With that description, I'm pleased to report that over the last quarter, we have added new customers to the Telles business. We will not be disclosing these customers for competitive reasons, but I can share that they are primarily focused on the marine and aquatic segment, where Mirel's biodegradation characteristics offer exceptional value. In the future, we will be adding more customers and we'll disclose these to you as appropriate. With regards to the overall Clinton plant ramp-up schedule, we anticipate providing initial guidance to you during our Q3 earnings call, currently targeted for early November.

Looking forward as we described in our previous call, you should think about 2010 as a transition year as the Telles business goes commercial and 2011 as a year when a significant number of current customer efforts will materialize as new contracts. It will be an exciting year for Telles and the Mirel brand and we look forward to keeping you up-to-date on our progress.

Let me now move on to the other Metabolix's platforms. These are our Industrial Chemicals and Crop programs. These represent meaningful value creation opportunities for us beyond the Telles venture. For Industrial Chemicals, in C4 chemicals, we continued our work on optimizing the fermentation process and have made significant strides in the development of a very efficient recovery process. As outlined in earlier calls, our initial focus is on the C4 specialty market, including the pyrrolidones, and we continue exploratory partner discussions. Initial feedback has been positive.

We are now working with collaborators to scale up our process and anticipate having products samples to potential customers in Q1 of 2011. We are also developing a number of options primarily through toll manufacturing to commercialize this business. With further information from the ongoing technology scale-up and initial customer feedback early next year, we will then be in a better position to provide a perspective on a time line for commercialization.

For the moment, I'll say that we are very pleased with our progress thus far. We continue to broaden our development work outside this initial opportunity as we flesh out our industrial chemicals platform to include C3 and C5 alternatives to other chemical families.

Our third Metabolix platform is our crop-based activities, including our programs in oilseeds, switchgrass and sugarcane. All in all, we are excited about this platform as we can see the pathways we're developing ultimately replacing capital-intensive operations such as oil and gas exploration and production, refining, olefins and polymerization by producing polymer directly in crops. Our crop programs offer numerous options to produce low-cost chemicals, plastic and fuels in a very sustainable manner.

I'd now like to provide update on our oilseeds activities. This quarter we formed Metabolix Oilseed Inc., a Canadian subsidiary, and we are relocating our development activities from St. Louis, Missouri to Saskatoon in the province of Saskatchewan, Canada. Saskatoon is the geographic center for numerous oilseeds activities and offers extensive research facilities and supporting infrastructure. We have received outstanding support and advice from the provincial and local governments during our relocation process.

Now, let me provide some information on our targeted oilseeds corp. We are focused on Camelina, an oilseed crop from the mustard family. Camelina performs well on marginal non-irrigated land. In North America, Camelina typically grows well in the Northern Rockies, the states of Washington, Oregon, Montana and Idaho to the Northern Canadian plains. It is also grown internationally in Germany, Poland and Russia.

While Camelina is amenable to approximately 50 million acres of arable land in North America, which is currently planted in wheat, soybeans, sunflower seed and other oilseeds, including Camelina, we believe a reasonable target area encompasses about 13 million acres, typically on land which is marginal for wheat. Consistent with our ongoing discussions with regulatory agencies, we are investigating business model options for approximately 1 million acres of our oilseed crop. Initially, we would like to develop a full proof of concept on approximately 50,000 acres.

Limited culinary use makes Camelina a sustainable energy feedstock separate from the food chain. Other attractive characteristics of Camelina include low fertilizer and input requirements, good weed resistance and a short growing season, typically between 85 and 100 days. There was also substantial development work ongoing to develop Camelina as a source of renewable aviation jet fuel.

Camelina is a very good candidate as a production vehicle for our PHA polymers. Let me provide you with a few metrics. We plan to produce PHA polymers in the oilseed itself. Camelina delivers approximately 1,000 to 2,000 pounds per acre of oilseeds and we are targeting between 10% and 20% PHA in the seed by weight.

Our analysis shows the overall potential cost of PHA production from Camelina to be less than that of polyethylene or polypropylene. The expression of PHA polymers will be incremental to other materials derived from the seed and we expect significant added value to existing industrial products.

As a further step in commercializing our oilseeds business, I am pleased to report that we have received regulatory approval and are in the process of completing our first field trial of PHA-producing Camelina. This trial is being conducted in Idaho, and early indications are that it has gone rather well. We will have a better understanding of the results from this trial later this year. We have applied for a second Camelina field trial to be conducted in the fall of this year.

In terms of overall timing for commercialization of our crop programs, we are comfortable with our previous estimates of having commercially viable crops in field trials within two years. We are pleased with our technical progress in our crop programs, and will communicate additional milestones to you when reached.

In summary, this quarter, we continued to move forward very effectively across all three of our platforms. In Telles, we received the first of what I expect will be a number of FDA approvals and the ramp up of the Mirel business is moving along well. Product is in the hands of customers and prospects and we are moving a number of prospects through the development cycle.

In Industrial Chemicals, we are encouraged by initial market feedback on our Specialty C4 program and we will have samples to potential customers early next year. In Crops, we have our targeted oilseeds crop, Camelina, currently in the field, and we're seeing continued progress across our other two commercial crop targets, switchgrass and sugarcane. We are very enthused about the potential for the Company.

I will now turn the call over to Joe for a review of the financial results for the quarter.

Thanks, Rick, and thank you to everyone for joining us today. I would like to reiterate that we are all very excited for both the ongoing progress in our Mirel joint venture and on the development of the industrial chemical and crop based pathways. As we get closer to realization on these platforms, the energy and drive at Metabolix is only increasing.

I'd like to quickly review our financial results for the second quarter ended June 30, 2010. As always, we have continued to manage our finances with an emphasis on strict cash flow management. That's reflected in our cash balance as of the end of the second quarter, which stood at $77.1 million. For the second quarter of 2010, we used $7.4 million in cash for operations. This compares favorably to the $9.4 million we utilized in the first quarter, but is up as planned from the year-ago second quarter level of $4 million.

This increase versus the year-ago period was primarily due to a decrease in ADM support payments. Through the first six months of 2010 ending June 30, net cash used in operating activities was $16.8 million, as compared to net cash used of $12.6 million for the comparable period of 2009.

This year-over-year increase in cash usage for the first six months of 2010 is primarily attributed to decreased cash receipts in 2010 over 2009. This decrease in cash receipts for the first six months of 2010 is the result of timing of pre-commercial cost-sharing payments received from ADM, the decrease in funds received from investment income and lower grant revenue.

Let me now give you some additional detail on the Company's financial results for the second quarter of 2010 ending June 30. Total revenue for the second quarter was $109,000 versus $348,000 in the year-ago second quarter. This shift was due primarily to a reduction in grant revenue versus the prior year's period. Total revenue for the six months ending June 30 was $289,000 versus 609,000 for the year-ago period. Total operating expenses for the quarter ended June 30, 2010 were $9.7 million, a decrease of $575,000 relative to the comparable quarter in 2009.

Research and development expenses in the quarter were $485,000 lower than in the prior year period. This is primarily the result of efficiency gained by a repurposing of our pilot manufacturing facility. We are now able to receive, test and sample product directly from Clinton. The pace of our R&D spend with regard to scientific development remained similar to last year, as we continued to work on new technologies to enhance Clinton, our C4 development initiative and on our crop-based science activities.

SG&A expenses for the quarter were roughly even to last year, coming in at $3.8 million, versus $3.9 million in Q2 2009. Through the first six months of this year, total operating expenses were $19.7 million, which is running pretty much in line with the first six months of 2009. Our net loss for the second quarter was $9.5 million or $0.36 per share. This was consistent with our plan and compares to a net loss of $9.7 million or $0.42 per share in last year's second quarter.

GAAP net loss for the six months ended June 30, 2010 was $19.3 million or $0.73 per share, compared to $18.8 million or $0.82 per share in the same period of 2009. This increase in net loss is mostly driven by lower grant revenue, along lower investment income.

As I mentioned, we continue to have very strong balance sheet with cash and cash equivalents at June 30 of $77.1 million and we continue to have no debt. We continue to believe that we have adequate financing to support our development activities for at least the next two years. We are very confident that Metabolix is on a solid path, both with Mirel as well as through the opportunities presented by our other pathways to create a great deal of value for the market and for our shareholders.

Thank you ,and I believe we're now prepared to take questions.

Thank you. The question-and-answer session will be conducted electronically.

(Operator Instructions)

We'll take our first question from Michael Cox with Piper Jaffray.

Thanks a lot and congratulations on the FDA approval in the quarter.

Thank you, Michael.

My first question is on the use of -- or the cash burn, I guess. As we look at the back half of the year, should we expect any major change from the trend we saw in the first half of the year?

There shouldn't be a significant change in the cash burn for the rest of this year. Remember, we have about $10 million per quarter of operating expenses. About a little less than $5 million of that per quarter is related to sales and marketing efforts and product development efforts on behalf of Telles. And towards the end of this year, when we reach the technical milestone of the first commercial sale, those expenses will shift over to Telles and the Metabolix cash burn will actually decrease after that point.

Okay. Great. Thanks. And now that the facility is up and running and you're getting good progress there. Have you given any more thought to Clinton 2? I know it may be a little preliminary, but given the lead time, have you sized up what that might look like?

Yes. Good question, Michael. I have had -- Metabolix and ADM have obviously ongoing discussions about Clinton 2 and have a team up and working on this right now. And I'll provide just a structure of how we're thinking about it for you.

There really are four sub-teams working together to understand what we can potentially and ADM can potentially do with this asset in terms of ultimate capacity and what the prospects are for expansion and how we would choose to expand it. Those four teams are on obviously a commercial team, which is looking at the market, the mix of grades we need and the ramp up, which we as we said in the prepared remarks, we'll provide some more color on later this year.

There is obviously -- probably most importantly, the operational team that looks at anything we're doing with the plant in the context of operability and safety. A project team which is looking at it from build-ability and how were we most efficient in terms of spending the capital and a process team, which looks at the technology and as I mentioned in the call, we have a series of new strains and alternative recovery technologies that are we're moving along very rapidly.

So, there's clearly a lot going on and we've got an integrated team looking at these different characteristics. There will be tests, I am sure, done on the Clinton plant over the coming year to understand how we can push bits of equipment and where we need to make investments in the long haul. But the effort's up and running.

We're getting a lot of experience in the market right now and the operations teams at the Clinton plant is getting a lot of experience and doing quite well in terms of producing what the Telles business needs. So a little premature, as you hinted at, for a conclusion, but rest assured, we've got a structure, we're looking at it and we're working through it. And I think it will be a very effective exercise.

Okay. That's encouraging.

Why don't we move on? Why don't we move on to the next one, just so we can keep the questions going. Let's move to the next question. Please?

We'll take our next question from Laurence Alexander with Jefferies.

Good afternoon.

Laurence.

I guess a couple of questions. First, with the -- on the new product applications that you are working on, how are doing on foam? Do you have any patents yet or you made any progress on that?

I think that we have -- we have patents on foam, but we continue -- it's one of our developmental products. It's not at the commercial state yet. But as we've pointed out, it's one of the applications we see as a real win for Mirel in the long term and we continue to move ahead in the developments. And when we hit certain milestones, we will certainly communicate them.

And how many fermenters you currently have operational?

Yes, we are not disclosing that, Laurence. We are basically -- the message has been that the capacity of the plant is certainly sufficient to meet the demand in the market.

Okay.

So, why don't we move on to next question? Laurence, I'd like to just kind of move on, so we can get kind of everyone have a chance to ask questions. So why don't we move back down in the queue and move to the next set of questions, please?

We'll go next to Pamela Bassett with Cantor Fitzgerald.

Hi, everyone. Thanks for taking the questions. Regarding the C4 chemicals, we talk about two things, customer overlap or synergies with Mirel as well as the implications of moving forward with a toll manufacturing business model rather than a partner or should or I not be thinking those as separate activities?

Okay. Thanks, Pamela. First, on customer overlap with Mirel, if you think about the pyrrolidone family, which is our specialty C4 area of focus and there some variations, most of those end uses tend to have to do with things such as personal care products, hairsprays, performance solvents, engineering resins in some regards, agricultural chemicals. So it's a very, very different customer mix for the most part than Mirel.

That's not to say there may be a cosmetic customer overlap, but it's a very different dynamic. For C4 chemicals, we're working with an intermediate for ingredients used in, say, a hairspray, for Mirel, it would be a package. So really, the development processes and the customer processes are quite distinct and separate. So I think that's a pretty important distinction.

In term of the implications of total processing, as I mentioned, we are looking at a number of options for scaling the C4 chemicals program. The nice thing about toll manufacturing is that our process is fermentation-based and if we find the right asset, we're able to scale it quite quickly, thereby saving the development time and the capital expense of actually constructing a fermentation facility.

And so we are looking at a range of options, but at least the thought, at least initially, internally is, the speed to market is going to be faster, given that we could likely use some fairly fungible assets for the production. And now we are doing -- going through the same thought process for the recovery for C4 chemicals.

Okay. And just a quick follow-up. Are you thinking about partnering the C4 program?

Right now, we are focused on it ourself. We are looking at options. We are getting experience with the scale of the technology. We are getting feedback from the market. But right now, we are able to really just -- we're just getting experience on it, scaling it up. But when it comes time to actually scale to world scale volumes, we'd have to think about the nature of partnership and the type of partnership. That being said, there are some tolling options which would allow us to do that quickly and it would be more of a transactional relationship than any form of equity relationship, if we chose that pathway.

Okay. Why don't we move to the next question?

(Operator Instructions)

We'll take our next question from Jeff Osborne with Stifel Nicolaus.

Hi. Good afternoon. Congratulations on the progress you made. Just two quick ones, one for Joe. Could you mention what the ledger balance was at the end of the quarter? And then one for Rick, I know you can't give the metrics about what you'll be seeing next quarter as it relates to the guidance on the Clinton facility. But could you just talk about what variables you'll actually be providing, in terms of selling price, volume? How should we be thinking about, what you'll be actually giving us next quarter? Thank you.

Yes. The ledger balance as of June 30 was $388 million.

Great.

And, Jeff, Rick here. A little early to know exactly what we will be giving you but our clear intent is to provide you, having had some operating experience and market feedback, with a view so you can start to calibrate the ramp-up of the plant and what it means for the various models out there. But a little early -- premature to really talk about exactly what those metrics will be and certain of those metrics, we clearly have to work with ADM to be on the same page about what we provide. But that's a process that's ongoing.

Okay. And just to confirm, as of June 30, you haven't reached that full commercialization phase of selling the 1 million cumulative pounds as of yet, correct?

Yes. That's right. As we said before, we are expecting that to happen towards the end of this year.

Very good. Thanks much.

Move on to the next question, if there are any.

We'll go to Ian Horowitz with Rafferty Capital Markets.

Hi. Good afternoon, guys.

Ian.

Joe, just two quick questions usually -- I am sorry, Rick, actually. Usually you talk about you gave us an update on the plant-based polymer yield progress, just wondering if there is anything new to update on that front? That will be my first.

Okay. On that we -- I think on a previous call, we talked recently about some gains in switchgrass. We have not communicated any new yield targets this quarter. But I think we tried to outline to you why we are excited about Camelina and some of the parameters for the business model of Camelina. And there, we are looking for a commercial business being in the 10% to 20% PHA polymer in the oilseed itself.

So in the future, you can expect some metrics out relative to that range, but that gives you a sense of how to think about that, how to model it and as we move forward and get some experience from these field trials, which are seemingly going rather well, we can report that about how we are doing versus that range.

Is the Camelina kind of going to be the first -- the leading effort here, or will you still be pursuing kind of those switchgrass efforts alongside the--?

No, we are pursuing all three oilseeds, which is Camelina, switchgrass and sugarcane and we are getting substantial synergies between the three programs. Camelina will be first, given it has the shortest growing cycle between 85 and 100 days, so we are able to churn through experiments very quickly there. And what we are learning there is being applied when appropriate to the biomass crops.

So we are seeing that -- we are moving ahead in all of them, but you're exactly right, Ian, we think in the crop programs, from what we can see now, Camelina will be the first one to reach commercial status.

And then real quickly, you usually -- you've talked on recent calls about market assessments, overall volume opportunities, are you kind of -- you're not going to do that any more because we're getting more closer towards commercial conversations? Is that correct?

I mean, we've provided -- make sure I understand the question, but we've provided the addressable demand across the segments.

Yes, right.

And that hasn't really changed. I mean, there's more than enough demand out there for the capacity of the plant. And with the foam developments that were asked earlier in this call and additional food contact, that just gets larger. And eventually, it gets to as such -- not as much of a meaningful metric anymore, because it's just so much larger than the scale of the original plant. But that addressable market is there. Demand seems very strong, and we're continuing to expand that addressable market through our development work in foam, nonwovens and other applications as well.

Okay. Great. Thanks a lot.

Thank you.

We'll go next to Michael Cox with Piper Jaffray.

Thanks, guys. Just wanted a quick follow-up, if I could. In the customer development discussion, Rick, that you went through, the three stages, you talked about having a discussion around market size as well as price in that first stage. I'd be curious when the price component is then fixed? Would that be in the final stage -- the third stage in your -- by the timeline you guys are working with customers on?

Yes. That's exactly right. You interpreted that right. In the first stage, what we're trying to do there is really to align expectations around the price of the material, which then, we didn't put it in the prepared remarks this time, but it's still the same as previous calls, 2.25 to 2.75 a pound. In some cases, we're seeing substantially higher pricing.

But the first conversation is just to make sure that ourselves and the potential customer are on the same page. But the third stage, which is actually the final specs and sales agreement, that's when -- that's the actual establishment of the contractual price. And hopefully, through the customer management process and interaction throughout the development cycle, there are no changes there. Our team has managed that quite well. But you are exactly right, when the contract's signed is when your final price is established.

Okay. Thank you very much.

And we'll go next to JinMing Liu with Ardour Capital.

Hi, Rick.

Hi, JinMing.

Hi. I have a question regarding your oilseeds program. Camelina, I know is a good feedstock for biodiesel production and the other type of biofuels. But as we know, there are other oilseeds plants out there like jatropha, which people initially claim that can grow fast and that have a very high yield on minimal maintenance, minimal fertilizer, but they turn out not so true here. So, I want to clarify a few numbers you mentioned. So the 1,000 -- 2,000 pounds of oilseed yield is based on what condition?

It's the typical range one sees for Camelina.

Okay. It's basically without PHA gene insertion?

That's right. Typically, what you see for Camelina. That's right.

Yes. What is the yield after you all put your Camelina gene -- I mean, PHA genes into Camelina. do you have done that number?

Yes. We are not -- that still is a something that will be assessed through the whole field trial process. Our objective, of course, is to maintain the high yield of oil and the oilseed yield per acre, while still expressing PHAs in there, and there are a lot of tricks our crop team is utilizing to be able to actually do that.

So I think that's a little early, JinMing, and that's part of what goes on in the field trial process to optimize all that. But the early indications -- we are still very excited about Camelina and we like what we see.

Okay. Just quick, another question regarding your -- the commercial sales milestone. Basically, that requires 1 million pounds product shipped and the (inaudible). So what is the hold-up here? Do you -- whether you do not have, you haven't produced enough PHA or your customers haven't being able to finish pass for these or they have other problems?

Well, there is no problem at all. It's a contractual milestone which has a number of characteristics associated with it, including the size of shipment, spec, return periods and we are moving towards that and we've got a large number of customers moving to the cycle. And it's been a very good startup of the plant, with a very thoughtful approach to make sure we are not running ahead of the ability of the operations team to produce.

So we are pretty comfortable with where we are, and know it's a contractual milestone they we're moving towards. But I would not look at any problems there, because the technology is performing quite well. So we are pretty good with that.

I think that's -- is that about the time we have? I think, JinMing, that is about the time we have.

Just to wrap up, we appreciate all of you taking the time to join us on the call today. We feel we are making great progress and particularly across all three platforms, the Mirel platform, Industrial Chemicals and Crops. And we are going to keep you up to date with major milestones as they occur and provide a full thorough update during our next quarter's earning call, currently scheduled for November. So thank you very much, and appreciate the interest in Metabolix.

And that does conclude today's call. We thank you all for your participation.