CASES
Metabolix, Inc.
Class Period: Mar 10, 2010 to Jan 12, 2012
Lead Plaintiff Deadline: Apr 17, 2012 + Deadline passed
Summary of Case:
A securities class action has been filed against Metabolix, Inc. ("Metabolix") on behalf of persons who purchased or otherwise acquired the common stock of Metabolix between March 10, 2010 and January 12, 2012. The case has been filed in the USDC District of Massachusetts.
The complaint alleges that in July 2006, Metbolix entered into a Commercial Alliance Agreement with the Archer-Daniels-Midland Company ("ADM"), the world's largest processors of soybeans, corn, wheat and cocoa, to facilitate a large-scale commercialization of Metabolix's signature bioplastics. Per the agreement, the Company and ADM would establish a fifty-fifty joint venture and sales company, Telles LLC ("Telles"), to market and sell Metabolix's polyhydroxyalkanoate ("PHA") bioplastics product under the brand name "Mirel." Telles was to be Metabolix's main focus and platform. Just five-months after entering into the Telles joint venture, Metabolix became a public company though a successful initial public offering ("IPO") on November 9, 2006 of 6.8 million shares of common stock at $14.00 per share.
ADM completed construction of the initial phase of the Commercial Manufacturing Facility in 2009 and the facility began manufacturing Mirel in early 2010. As early as March 10, 2010, Metabolix leadership promised investors that Telles would reach the Commercial Phase as early as the second half of 2010 and that Mirel was a commercially viable product that would offer value to Metabolix and its shareholders. Having missed that deadline, in early 2011, Metabolix moved back the date it expected Telles to reach its crucial benchmark, but still assured its shareholders that it was on track to reach the Commercial Phase by mid-year 2011. Telles, however, never became a commercially viable venture in 2011, and, ADM announced that it was withdrawing from the joint venture in January 2012.
In a complete turn of events, on January 12, 2012, Metabolix issued a press release and filed a Form 8-K, which announced that ADM had given notice of termination of the Telles joint venture. Feigning complete shock, Metabolix called the termination "a setback." The next day, Metabolix shares declined approximately 57%, to reach a multi-year low of $2.54. ADM disclosed it terminated the Telles joint venture because there was uncertainty about projected costs and the rate of market adoption. ADM made its decision after looking for "areas that were not delivering sufficient results now or are not expected to deliver sufficient results within a reasonable time frame." Metabolix Loses ADM as Partner, THE WALL STREET JOURNAL, Jan. 12, 2012. As a result of the Telles termination, ADM reported an asset impairment charge of $352 million based on costs associated with the project.
During the Class Period, Defendants repeatedly misled investors to believe that Telles would reach its production goals and that Mirel would become a commercially viable product despite the fact that it knew Telles would never meet its goals and that the Company's capital expenditures were prohibitive of Telles's profitability and returns to Metabolix's shareholders.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.