- Based on Metabolix's financials - they only can survive a few months without a round of financing, fundraising or buyout.
- Each passing day, the ability to raise money in the public markets is impossible with shares trading < $1.00/share.
- "Newly" appointed CEO Joe Shaulson has done nothing but a few conference presentations, but has promised at least one leg of the financing needed to keep the company going will come by June 30, 2014.
You don't need a financial degree or even know how to read a balance sheet in order to know that Metabolix is in trouble financially. The company states very early on the most recent 10-Q that they need money:
As of March 31, 2014, the Company held unrestricted cash, cash equivalents and investments of $10,418. The Company’s present capital resources are not sufficient to fund its planned operations for a twelve month period, and therefore, raise substantial doubt about its ability to continue as a going concern. The Company will, during 2014, require significant additional financing to continue to fund its operations and to support its capital needs. (March 2014 10-Q)So the company needs money. They can't raise any funds via the public markets because investors have little confidence in the companies existing & future product line. The company can't go to a bank, mainly because they have very little sales or revenue from an existing product line to borrow against (see below).
Three Months Ended
Research and development revenue
License fee and royalty revenue
Costs and expenses:
Cost of product revenue
Research and development
Selling, general, and administrative
Total costs and expenses
Loss from operations
Metabolix needs a believer .... with lots of money. If Metabolix was a young tech company with an iPhone app, finding $50,000,000 dollars of investment money might not be that difficult. Instead, this is a mature company that has never proven it can bring a product to market that makes significant revenue or a profit. Finding believers with lots of money is rather difficult when your are Metabolix.
CEO Joe Shaulson has been on the job long enough now that he should be well oiled up with excuses why Metabolix continues a free fall into bankruptcy. While he did avoid specifics on a fundraising effort (probably because there is no progress) - he did set a date when investors could expect to hear about financing the operations going forward in the latest call to investors.
So yes, I mean our plan – right now, our focus is balanced between financing and operations. I’m looking forward to the point in time where the balance shifts more to the operations than where it’s been for the past couple of months. But I would say that our plan to complete at least the first phase of financing by the end of June and we would expect to have a full set of information for investors about what that financing looks like when we announce it. And to complete it by the end of June, it means we’d have to announce it by the end of June.
- CEO Joe Shaulson (Q1 2014 Conference Call)So Joe couldn't have been more clear. While it's clear Metabolix's cash was going to be near empty by the end of June, Shaulson is setting a self imposed deadline to get something done. Way to go out on a limb Joe! My guess is that he has a 'backup' financing plan he knows he can put together at the last moment, but he's giving himself until June to see if he can't find something more attractive.
Any guesses on my part on who would want to finance this company would be more hopes & dreams than anything based on actually facts or solid business strategy. The company (as of May 2014) has a book value of $0.38 - that includes $0.30/share in cash ... which is scheduled to run dry by the end of the year. Metabolix is not an attractive buy-out candidate. The company doesn't have a noticeable balance sheet value for intellectual property, patents or proprietary materials. The odds of a buyout, partnership or white knight don't seem likely for Metabolix considering they don't possess any proprietary that another company would want for anything but pennies on the dollar.
What do I think will happen by the end of June?
Personally I see some kind of reverse-split/fundraiser. The ownership of the company is spread out evenly enough that it'd be surprising if someone tried to put the breaks on anything that helped the company survive another few years. In the next 18 - 36 months, I see Metabolix burning off any cash they manage to raise by June.