Yield10 Bioscience Inc (YTEN) 2010 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Metabolix, Inc. Third Quarter 2010 Earnings Conference Call. Today's call is being recorded.

(Operator Instructions)

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

Thank you, and good afternoon to everyone. The Metabolix released third quarter 2010 financial results after the market closed today. If you do not have a copy of the press release, one may be found on the website at www.metabolix.com in the Investor Relations section.

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

Before the Company begins formal remarks, I need to remind everyone that part of the 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 on 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 refer all of you to our recent filings with the Securities and Exchange Commission for a more detailed discussion of the risks that could impact our future operating results and financial condition.

With that, I'd like to turn the call over to Rick Eno, president and chief executive officer of Metabolix. Rick?

Thank you, James.

I would like to welcome all of you to the third quarter 2010 earnings conference call for Metabolix. Today I will provide you with a review of the Metabolix vision and an 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're 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, though a joint venture called Telles, industrial chemicals, initially focused on C4 chemicals, and crop-based activities, which include our programs in oilseeds, switchgrass and sugarcane.

I'd like to begin with the Telles business, our joint venture for commercializing Mirel. We continue to make good progress in this early growth phase of the business. I will review our assessment of the overall market, where we are as a business, including recent accomplishments, and our current plans and expected timing to sell out Clinton 1.

The market for bioplastics and biomaterials continues to be very robust. This is driven by a high degree of interest by consumers and brand owners in renewable materials and some of the benefits that they provide. As an example, just in the last 10 days at major trade shows we received over 300 new leads from potential customers that wished to create products with Mirel.

In addition, a number of external parties have recently projected bioplastic market growth rates at between 15% and 30% per year over the next five to ten years. We are pleased to be well positioned in such a rapidly growing market. We're confident there is sufficient customer interest to sell out Clinton 1 and form the basis for a plant expansion decision.

Now I will provide you with an overview of where we are with regards to serving this large market opportunity by commercializing our bioplastic Mirel. I will focus on our progress over the last quarter.

As you know, ADM's Clinton, Iowa polymer plant, the supply source for Mirel bioplastic, is up and running. ADM, with Metabolix support, is in the process of improving yields, reducing costs and increasing capacity. This will be an ongoing process and inherent in how we operate the business. We expect the plant will have capacity available ahead of market demand until the 110 million pound per year nameplate design is reached.

We have now moved eight compounded product grades to commercial status since the Clinton startup. These are four different injection molding grades, two film grades, one sheet grade and one thermoforming grade. This required us to take Clinton material, which is produced to our quality standards, in the second quarter of this year and scale up the necessary formulation and compounding operations for each grade and build appropriate inventory to begin to supply the market.

With the exception of two additional compounded film grades, which are currently being optimized at world scale levels, this process is sufficiently complete and we can now supply potential customers out of inventory. This allows us to provide customers the assurance of supply and will help to accelerate the development of new customers.

Also, as announced in late October, we launched a food contact compliant thermoforming resin. This is at the more favorable end of our earlier guidance of having this grade launched in Q4 of this year or Q1 of next year. This clearance allows us to sell our thermoforming grade of Mirel into food contact markets such as coffee cup lids, yogurt cups and food service trays.

This is a significant milestone for the Company. And coupled with our injection molding clearance from may of this year, significantly broadens the potential for Mirel in food contact markets.

Our next major milestone for food contact resin is for Mirel film, which will enable us to sell into food contact applications such as food storage wrap and bags. We expect the food contact process for film to be completed in 2011.

With regards to customers, since our last call we've received orders from three new customers. While these are relatively small in volume, they signal increasing interest with and comfort in using Mirel. On an application basis, these customers serve the marine and aquatic markets and provide sheet product for gift and credit cards.

Over the next few months we expect to be able to announce a number of customers by name who'll be launching commercial products based on Mirel. These will be drawn from a series of accounts in the later stages of the commercialization process deep into product testing. Examples of applications that are moving towards commercial agreements include agricultural film, compost bags, retail bags, thermoform trays for food and nonfood uses, toys, portion cups and cup lids.

Mirel offers our customers the ability to develop innovative new products. This quarter Ball Horticulture, one of our early adopting customers, won a greener packaging award for its unique SoilWrap product, which is based on Mirel. In seeking product alternatives, Mirel was looking for a bioplastic resin that responded to the need to reduce landfill waste, maintained its performance integrity through the production cycle to the retail shelf, and met environmental certification standards. Mirel was the only bio-based biodegradable offering that met all of their business needs.

In addition, our customer Papermate just won two awards for its Papermate green pen and pencil from the Canadian Office Products Association. Its awards had to do with innovative product design and marketing excellence. This is just the beginning of what I expect to be many awards that our customers receive based on using Mirel as a key enabling product.

I'd now like to discuss our expected ramp-up of the Telles business. We anticipate reaching the 110 million pound per year capacity limit by mid 2013. We obviously will be striving to achieve this milestone sooner. Given the early stage of the business, we had to weigh a number of factors as we defined the timing of this important milestone.

Let me begin with the drivers we considered that could lead to a more rapid sales growth rate. These include, first, the market for bioplastics is growing quite rapidly. This is spurring a lot of interest in the sector. A very large number of product marketers are currently examining how bioplastics can best be incorporated in to their product liens.

As a result, we continue to expect a very high level of customer interest in Mirel. Currently we are taking a very large number of leads and focused on about 100 defined customer applications which are in active development. We will continue to actively manage and high-grade this portfolio relative to margin and commercialization speed as we manage the Telles business.

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

In addition, customers who seek bio-based content, greenhouse gas reduction or integration with composting or anaerobic digestion systems can use Mirel to help them meet their goals as well.

Third, we have new developmental grades such as paper coating and foam, which will likely be additive to our existing product mix as we work to sell out Clinton 1.

And finally, we expect an ongoing acceleration of the pace of commercialization. This is due to both the improvement of our internal processes, such as technical support and supply chain functions, as well as customers getting more familiar with the Mirel product and our capacities as a supplier.

These factors lead us to be able to manage a larger pipeline of potential customers, as well as increasing the effectiveness of our lead qualification process. While these factors could lead us to expect a very rapid sellout of the plant, we've identified several factors that result in us being more cautious in our outlook.

First, a customer base in particular the large brand owners, are conservative about the introduction of new materials. They tend to have long complex supply chains and require substantial lead times for new product introductions. This tends to lengthen their product commercialization timelines.

Second, given that we are a new supplier to the market, customers want to confirm our own reliability and consistency prior to committing to large supply contracts. In essence, customers are conducting their own due diligence on us to be sure that our supply chains are in place. We are being very deliberate to place the appropriate processes and systems in place so that we can demonstrate the capabilities of a top tier supplier.

And third, our experience in the plastics industry also suggests that there'll be some attrition of our pipeline over the course of a 9 to 15-month period that is typically required for new application development. We obviously have sufficient interest to replace these applications, but in doing so, we restart the development process with a new customer.

Over time, as customers get more experience with Mirel's product attributes and become increasingly comfortable with Telles as a supplier, we'd expect these dampening factors to mitigate. But given where we are today, you should plan on the facility reaching the 110 million pound per year milestone by mid 2013.

With regards to 2010, our initial ramp to the milestone where the joint venture moves into the defined commercial phase will be slower than we planned by about three months. We expect this commercialization phase to occur early next year. This is due to some of the conservative factors I outlined a moment ago, such as the need to sell out of inventory rather than direct supply from the plant, as well as some additional work we decided to undertake in August and September to optimize our compounded product blends as they were scaled up to commercial status. These specific issues are now behind us.

Finally, the last point I would like to cover on the business update is pricing. Our pricing guidance of $2.25 to $2.75 per pound is still valid, and we continue to get higher pricing in certain niches. As we have described in our previous calls, you should think about 2010 as a transition year as the Telles business goes commercial, and 2011 as a year where a significant number of current customer efforts will materialize as new contracts.

We will provide regular updates on our quarterly calls to let you know how we are tracking against the expectation to sell out the plant by mid 2013 at our targeted price point guidance. It is our aspiration to outperform this timeline.

Let me now move to the other Metabolix platforms. These are our industrial chemicals and crop programs. These represent meaningful value creation opportunities for us beyond the Telles joint venture. We are pleased with our progress in these two platforms and have added three senior leaders to help us accelerate commercialization.

[Sharie Fitzgerald] as director of our crop regulatory efforts, Max Senechal as director of strategy, and Siva Sivasubramanian as director of process development. These individuals report to Johan van Welsem and collectively will help drive the commercialization of our chemicals and crops programs. We're excited about their joining Metabolix and are already seeing significant contributions from each.

Moving to industrial 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 [pyrrolidines], and we continue exploratory partner discussions. Consistent with our guidance provided in our last call, we will have samples to potential customers in Q1 of next year.

This past quarter we successfully completed our first large scale fermentation run of the technology. This trial demonstrated the scale-up of the technology by a factor of 250. The performance of our strain was essentially as we had predicted. We are currently recovering the product to ship to customers and we are very pleased with the scale-up of the technology thus far. We continue to broaden our development work outside the C4 chemicals opportunity as we flesh out our industrial chemicals platform to include C3 and C5 alternatives to other chemical families, as well as alternative recovery schemes.

Our third Metabolix platform is our crop-based activity, including our programs in oilseeds, switchgrass and sugarcane. All in all, we are excited about this platform, as we can see the pathways we are 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, plastics and fuels in a very sustainable manner.

As discussed in our last call, we have completed the first field trial of our oilseeds program with our targeted crop [chemolina]. The objective of the field trial work is to fine-tune our gene systems to maximize PHA yields while maintaining healthy, robust plants. We are also gaining data that will help define our regulatory approval strategy.

While our analysis of the field trial is continuing, we are pleased to see that the best plants were healthy and delivering PHA in the oilseeds of 7% to 8%. While below our targeted commercial range of 10% to 20%, we were pleased to have shown such high levels in our initial field trial. Our second field trial was approved this past quarter, and we are currently finalizing preparations in the field for planting the crop.

So, in summary, during this quarter we continued to move forward very effectively across all three of our platforms. In Telles we continued to make steady progress in building the foundation for the Mirel business, and we can see sufficient demand and a path for selling out Clinton 1.

In industrial chemicals we successfully scaled up our fermentation process and plan to have samples to potential customers early ext year. And in our crop-based businesses we have our targeted oilseeds crop chemolina in its second field trial, 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'll now turn the call over to Joe for a review of our financial results for the quarter.

Thanks, Rick, and thank you to everybody for joining us today. As Rick detailed, we've made excellent progress on our scientific initiatives and moved well down the path toward larger scale production on Clinton 1. The identification of an appropriate timeline for the sellout of the Clinton 1 facility is important, both in terms of providing some visibility on the income that will flow through Telles and to facilitate the planning process for expansion. We're very confident that the demand for Mirel is strong and that the price we've set is achievable.

I'd like to quickly review our financial results for the third quarter ended September 30th, 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 third quarter, which was $69.9 million. For the third quarter of 2010 we used $7.1 million of cash for operations. This compares favorably to the $7.4 million we utilized in the second quarter of 2010 and the year-ago third quarter level of $7.3 million.

Through the first nine months of 2010 ending September 30th, net cash used in operating activities was $23.9 million as compared to net cash used of $19.9 million for the comparable period of 2009. The year-over-year increase in cash usage for the first nine months of 2010 is primarily attributed to decreased cash receipts as a result of the conclusion in 2009 of quarterly support payments received from ADM, a decrease in funds received from an investment income, and lower grant revenue due to the expiration of the Integrated Bioengineered Chemicals grant that expired in the fourth quarter of 2009.

Total revenue for the third quarter was $46,000 versus $611,000 in the year-ago third quarter. This shift was due primarily to a reduction in grant revenue versus the prior year's period. Total revenue for the nine months ending September 30th, 2010 was $300,000 compared to $1.2 million in the same period of 2009, and the year-over-year decrease was primarily related to lower grant revenue.

Research and development expenses for the quarter were $267,000 lower than in the prior year period. This is a result of efficiency gained by a repurposing of our pilot manufacturing facility. We're now able to receive test and sample product directly from Clinton. The pace of our R&D spend with regard to scientific development remains similar to last year, as we continue to work on new technologies to enhance Clinton, our C4 development initiative and our plant science activities.

SG&A expenses for the quarter were roughly even to last year, coming in at $4.2 million versus $4 million in Q3 2009. Through the first nine months of this year, total operating expenses were $29.8 million as compared to $30.1 million for the comparable period in 2009.

Our net loss for the third quarter was $10 million, or $0.37 per share. This was consistent with our plan and compares to a net loss of $9.4 million, or $0.41 per share, in last year's third quarter.

GAAP net loss for the nine months ended September 30th, 2010 was $29.3 million, or $1.10 per share, compared to $28.2 million, or $1.23 per share, in the same period. This increase in net loss is mostly driven by lower grant revenue, along with lower investment income.

As I mentioned, our cash level at September 4=30th was $69.9 million, and we continue to have no debt. We continue be believe that we have adequate financing to fully support our development activities for at least the next two years.

We're very confident that Metabolix is on a solid path 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 some questions.

Thank you. (Operator Instructions). Our first question today comes from Laurence Alexander from Jefferies.

Good afternoon. This is [Lucy Watson] on for Laurence today.

Hello, Lucy.

Hi, Rick. My first question is I guess regarding your narrowed down list or focus list of 100 customer leads. Are those customers all currently trialing product or close to?

Yes, Lucy, that's a good question. The commercialization process is a constant triage process of taking a large amount of interest and moving it down to a manageable number of leads in which to deal with. And we're working with about 100 now. Those are all either in the queue to get product or are getting it now.

So those are starting to move down what we've described in previous calls as the 9 to 15-month or so development cycle. So and some are at the closing end of that cycle, and some are more on the early end of that cycle right now. But the intent is that all of those will get commercial product to trial very soon or have received it already.

Okay. And I guess regarding the longevity or the repetitiveness of customer orders once you do become fully commercial, are these customers mostly -- have you focused on how the duration of business that you expect to do with them or is it more on an order by order basis?

There's a range. The initial -- outside of earlier customers we had from our previous pilot activity, the initial customers tend to be order by order. But we are working right now on a number of customers. And our preferred customers are those that have four to five-year durations in terms of volume expectations for each year over the next four to five years.

So the vast majority of the portfolio I see, as we move towards selling out Clinton 1, will consist of those customers with multiyear expectations for volume rather than orders. So that's the preferred customers. And most of the larger customers actually think that way, too, because they put a significant amount of their resources to move Mirel into their applications. And it's a multiyear commitment.

Okay. And just one more, if I may. How do you think about operating leverage or incremental margins as you scale up Clinton 1?

Could you just be a bit more clear on what you mean by operating leverage and incremental margin, we'll be happy to answer it.

Or, I guess, have you framed your thoughts on fixed cost absorption and how that might change results for Telles as you scale up through 2013?

Yes, I guess the -- obviously the fixed costs decline substantially as we grow, thereby improving margins for the business. And as we've pointed out in earlier calls, because the Clinton site is configured to enable an expansion beyond 110 million pounds, we're pleased to be in a location where we actually can spread those fixed costs even further.

And with [captive sugar] coming next door, it puts us in a fairly strong competitive position to continue to get captive integrated economics as well as to spread those fixed costs out. So outside of that, Lucy, we haven't defined much more in specific about it, but you're right that we expect to see continued fixed cost dilutions as we scale. And that, I'd like to point out, goes beyond the 110 million pound a year level.

Okay, thank you.

We'll go next to Scott Reynolds with Stifel Nicolaus.

Hi, guys. So, just a point of clarification. You're expecting to be commercial in 2011. That's fine. And then the plant, you're expecting to ramp up productions through 2013?

Yes, let me clarify. By commercial, what we mean by that is there's a specific milestone in our relationship with Archer Daniels Midland that's called the commercial phase. And at that point, the joint venture becomes live and it has to do with volume shipped at specifications and customer payment terms. We expect that point in time to occur now early next year.

And we're already in the process of bringing new customers on board and ramping up the plant, and we're expecting the plant to reach its nameplate 110 million pound per year capacity level by mid 2013. And we're working to see if we can accelerate that.

Okay. What would you expect the timing of that ramp to be? Should we -- is there any numbers that you can give us for 2011?

No, we'll be updating you periodically on the sellout date. And as we get more clarity on the customers and their time, we'll be certainly providing greater clarity on year end goals. But we're not quite ready to do that yet. I would say that we do expect a consistent period of acceleration as we move forward as more and more customers are getting familiar with Mirel and our processes for serving them and supplying them rapidly getting honed.

So right now, I think, for modeling purposes, look at mid 2013 sellout. And over time we'll start to guide you a bit more on the shape of the point of the curve from now to then. But I think from a valuation perspective, that should help quite a bit in terms of your modeling.

Okay. And previously we had talked about an SG&A reduction when the plant goes commercial. Can you remind us what that would be on an annual basis?

On an annual basis, that's about $18 million that Metabolix is currently spending for sales and marketing and product development on behalf of the joint venture. So once we get into this commercial phase of the contract that Rick just described, those expenses will shift over to the joint venture and Metabolix will not be paying for those.

Okay. Thank you.

Our next question comes from Ian Horowitz with Rafferty Capital Markets.

Hi, guys.

Hi, Ian.

Hi, Ian.

Is it correct to assume that the inventories [will continue] to build over this fourth and first quarter so that you'll be selling out of inventory as you move into the commercial space? Or are you kind of where you're at?

Yes, we'll be -- we'll be continuing to accelerate. We'll have inventory targets that we will anticipate holding as the business grows. And those numbers will track with the growth of the business. So you can expect to see inventory increasing.

And I think the key issue as it's related to ramping up the commercialization of the business is to actually have demonstrated quantities of our grades in inventory so prospective customers could get assurance of a supply. But we're in the process of executing an inventory plan which will result in growing inventory over the coming year or two.

Is there an expected days in inventory that we should be kind of using or modeling?

No, I don't think you need to be modeling some expected days in inventory here, especially as we're getting to full capacity. I don't think it's going to be meaningful enough to a valuation of models to have to carry significant inventory.

But I think it'd be on the order of three months type thing looking ahead. But I think Joe's right, I'm not sure it's going to affect it. But three-month look ahead would be something to consider in terms of an inventory level.

But if you've been -- I wasn't really kind of thinking from an accounting standpoint as much from a timing standpoint. If you've been building all through this quarter and we have somewhere between, call it two to four months left until the commercial phase, should we be -- will you continue to be building inventory into that process or are you kind of ramping up to get ready for commercial phase or is that kind of --

I guess if you're questioning [inaudible] we have sufficient inventory for most of our grades right now to effectively move customers forward. Gut as this business grows, just the nature of running it and maintaining controls on it would require that inventory level will grow over time.

Sure. And then if we look backward from mid '13, I would assume you're going to try to have the -- any new capacity, if it's decided upon kind of seamless enough and running by then, can you kind of get us back to where we should expect to start hearing conversations or discussions around the second train of capacity?

Yes. And as we mentioned in the last call, I believe, is we've got both ourselves working with ADM, have people looking very hard at that right now. We're looking at the type of technology and the footprint we would like to see for an expansion. We are starting to look at what is required to implement new technology we have on the drawing board. And we're trying to be sure that as the capacity expansion is warranted, we've done the appropriate homework so we're able to anticipate that.

Those conversations are going on right now. There's a lot of analysis going on. And as we are ramping up, we'll continue to determine when the appropriate time is for a major expansion. But even more likely, I would expect in that 2013 timeframe some incremental capacity expansions in order to stay ahead of the market growth and to make sure we have capacity in place to grow with our customers. But that work is continuing right now and consists of technology, manufacturing and commercial inputs to make sure we're making the right decisions.

So, I guess, can you give me an understanding or give us an understanding of kind of a timeframe you would need to do a major expansion, kind of a whole new train of capacity, how much time that requires shovel in the ground to up and running versus kind of a modular expansion?

Yes, I think shovel in the ground, up and running is probably some two years and change, and a little bit of time ahead of that for permitting. What I was referring to is more the -- that would be what would be required for a substantial expansion. And obviously we're looking at the timelines for that and how to think about that.

But there are also, I expect, to be a number of things we can do on an incremental basis to get 20%, 30%, 40% more capacity out of the plant would be what I'd be hoping for as well. And we'd look at the economics of both those choices and determine -- and hopefully the incremental expansions are much more timely and shorter duration to put into play.

Right. I guess that's the second part of my question, what is that duration for a smaller 20%, 30% expansion?

Well, I think there'd probably be -- the key thing in both of these is the permitting process you have to go through, which could take some six months. And that requires putting a pretty detailed design down. I hazard to make a guess right now in terms of what a shorter duration expansion could be because it dictates very -- dictated very much in exactly what equipment it is.

If we can get some high productivity microbial strains in there and come up with different ways to operate recovery, it could take very little time. If it requires new bits of equipment, it may take 9 to 12 months. But it really is, Ian, a bit early to speculate on that. But rest assured we have people looking hard at every aspect of it right now.

And last question and I'll get back in queue, Rick, you kind of went through the potential product announcements kind of quickly and I kind of lost track of them. I remember toys and bags. Can you just run through that list again?

Absolutely. What we have as we're moving ahead, we have a number of customers approaching the final stage of their product development activities, the product testing. And we expect over the next few months a number of these to come to announcements.

The type of applications, to get you a feeling of where we're getting the traction, where we're getting high degrees of interest at this early stage of the business, agricultural film, that would be mulch film for both industrial and retail uses, compost bags, retail bags, thermoform trays for both food uses based on our food compliant thermoforming grade and nonfood applications for shipping equipment, toys, portion cups, and cup lids are the places that are moving quite far down the development cycle right now.

That was helpful. Okay, thank you. I'll get back in queue.

Thanks, Ian.

Our next question will come from JinMing Liu with Ardour Capital.

Thanks for taking my questions.

Hello, JinMing.

Yes. First, just a maintenance question. How much is the ledger balance?

The ledger balance, JinMing, is $396 million.

$396 million, okay. And the -- Rick, you mentioned before that you may want to use [tolling service] to produce specialty C4 chemicals. And the -- have you checked how much those tolling service will cost?

Yes, JinMing, we have. And a good point, that we're looking at all different options for scaling up C4s. We've actually -- we're quite pleased with the performance and basically its total operations that we ran our intermediate scale trial this past quarter. And we looked at the costs and trying to ensure that the costs of the tolling services allow us to continue to maintain a very profitable business. But we're looking at that versus other options as well.

That concludes the question and answer session for today. At this time I would like to turn the conference back over to Rick Eno for any additional or closing remarks today.

Good, thank you very much. Appreciate the interest in Metabolix and appreciate all of you joining us on this call. We really are excited about the opportunity to serve this bioplastics market. As I mentioned earlier in the call, everywhere we look this is an exciting market. External parties have identified very rapid growth in it. And we're seeing it with our own activities.

We've gone through the point of getting inventory in place. We've got a number of customers moving down to become real paying, long duration customers for Telles, and we're excited about that. We're also pleased with progress in our chemicals, as well as our crop program.

So we appreciate your interest in Metabolix and we look forward to keeping you up to date in our previous -- of our activities, I'm sorry, in our coming calls. So we look forward to that and we appreciate your interest. Thank you very much.

Ladies and gentlemen, that does conclude today's conference. Thank you for your participation.