For half of his life and all of his 25-year career as a bioengineer, Oliver P. Peoples has wanted to prove two things: that he could reengineer plants to grow biodegradable plastic in their cells and that he could make a lot of money doing it. On the first goal, Peoples has had astonishing success. His Cambridge (Mass.) company, Metabolix, Enhanced Coverage LinkingMetabolix, -Search using: News, Most Recent 60 Days has harnessed the complex genetics of plant-cell metabolism and collected hundreds of patents on a process for manufacturing "bioplastics" in large vats of microbes. A $200million factory is under construction and could start producing MetabolixEnhanced Coverage LinkingMetabolix -Search using: News, Most Recent 60 Days 's bioplastic, called Mirel, early next year. But Peoples' second mission, amassing wealth for himself and his investors, is glaringly incomplete. Mauled in the bear market and pounded by manufacturing delays, MetabolixEnhanced Coverage LinkingMetabolix -Search using: News, Most Recent 60 Days 's shares have spiraled down from a peak of 28 last November to around 11 in recent weeks. The company is now in a crucible every struggling biotech encounters. As it awaits commercial production, it is burning through cash. And it must carefully pick the right customers to showcase Mirel's wide range of applications, from gift cards and cosmetics cases to plastic bags and computer parts. Despite the intense pressure, the tall, Scottish-born biologist barely registers concern. Moving with calm determination among cell cultures and seedlings in the company's 13,000-square-foot lab and greenhouse, Peoples, 50, explains why he and his backers are unperturbed by the low share price. As oil prices spike up, so does the cost of plastic materials, virtually all of which are petroleum-based. In addition, consumer groups and environmentalists around the world are in an uproar over the billions of tons of plastic waste that get dumped at sea or buried in landfills and over the health effects of related toxins. Almost 30million tons a year of plastic solid waste is dumped into the U.S., and about 5% is recycled. These trends fuel demand for novel bioplastics that aren't linked to pricey fossil fuels and don't harm the environment. Peoples says the stock market hasn't recognized these forces; it's simply running away from risk. "When you're a small-cap company, the risk profile is higher, so you get a disproportionate share of the downturn," he says, a faint accent evident in his measured diction. Peoples may find it easy to stick to his guns because the world's top suppliers of plastics and their customers have all recognized the larger trends. DuPont fired up its first biomaterials plant in 2006, selling more than a $100million worth of products in the past year, including its bioplastic called Sorona. Starting in 2009, Cargill's NatureWorks unit hopes to ship 140,000metric tons a year of a bioplastic called Ingeo, for use in fresh food containers and textiles, among other things. Brazilian petrochemical giant Braskem is spending $300million on a factory for sugarcane-based bioplastics, while Toray Industries of Japan is making plastics from fermented plant starches and sugars. There's also a host of U.S. startups with names such as Novomer and Cereplast that make plastics from wheat, tapioca, potatoes, soy, and more. "We've gone from being mad scientists to being visionaries," says Frederic Scheer, CEO of Cereplast, based in Hawthorne, Calif. GORGING ON GLUCOSE All these materials are green in the sense that they reduce dependence on fossil fuels. But while rival bioplastics must be incinerated or composted at high temperatures, Mirel will decompose if it is simply tossed in a home compost heap or dumped at sea. "Mirel is the one that works in all environments," says Joseph P. Greene, a professor in mechanical engineering and manufacturing at California State University at Chico, who was hired by the state to find the best bioplastic on the market. "It breaks down nicely with food or yard waste. Boom, 180 days later and it's nice brown dirt." What's more, the manufacturer determines how fast the plastic biodegrades into harmless plant materials and the conditions under which that happens. About 50 potential customers, including Target, Revlon, Hewlett-Packard, medical supply company Labcon, and the U.S. military, are testing Mirel in more than 70 different products. "We have to do something [because] most plastic just ends up in a bad place," says Jim Happ, president of Labcon, which is testing Mirel to replace some 3million pounds of plastic it uses each year in 800 products for hospital labs. "We love their polymer," says JoAnn Ratto, an engineer at a U.S. Army research center in Natick, Mass., which is evaluating Mirel as a liner for waste bags that are thrown overboard by naval ships. "We can't get enough of it." Mirel is made in large vats of genetically modified microbes. They gorge on glucose from corn, then convert the sugar into fatty globules, which make up more than 80% of the cells by weight. These are harvested, dried, and turned into pellets. It all sounds painless enough, but getting the microbes to comply requires marvels of genetic engineering. Peoples is an unlikely miracle worker. He grew up poor in Slamannan, a remote, windswept coal mining town between Glasgow and Edinburgh. His father died when he was 16, leaving little for his family of 11 children. "Olly" was spared a life in the mines by the attention of his high school chemistry teacher, who helped him get into the prestigious University of Aberdeen. After he earned his PhD in molecular biology in 1983, he landed a postgrad spot at the Massachusetts Institute of Technology. Pulling himself out of poverty and cultivating a competitive streak at MIT prepared him for the life of an entrepreneur, says Pamela Bassett, a Cantor Fitzgerald analyst in New York. "Most scientists want to publish, especially if you're at MIT," she says. "Olly wants to commercialize." With a background in biochemistry, Peoples sensed early on that genetic engineering would open up whole new commercial landscapes. Most of his lab mates were interested in medical biotech, and several started companies that hit the jackpot, with lush buyouts by drug giants. Peoples yearned for a similar fate. But unlike many of his peers, he bypassed medicine and plunged into industrial applications. MIT filed for patents on his work in 1987, and by the time they were approved four years later, Peoples had negotiated exclusive licenses and mapped out a business plan for a new company. Metabolix Enhanced Coverage LinkingMetabolix -Search using: News, Most Recent 60 Days was launched in June, 1992. Perfecting his recipe for bioplastics proved harder than Peoples thought. And when he brought his business plan to Dow Chemical, DuPont, and others, they rolled their eyes. "We've been laughed out the door more than once," says Peoples. "We thought the sky would open and money would pour down from the heavens. But the reception was underwhelming." To stay afloat, the company went through 11 rounds of financing, plus an initial public offering in November, 2006. All the while, researchers struggled to raise the plastic content in cells. BECOMING AN EXTRAVAGANCE The breakthrough came in 2004, when Peoples finally hit the plastic yield target. "Biodegradable plastics had a lot of catching up to do, but the science has provided the means to go from research to industrial-grade applications and make it profitable," says Carmen Scholz, a chemistry professor at the University of Alabama in Huntsville who studies such materials. "If it weren't profitable, no one would lay a hand on it." Total global production of bioplastics is still minuscule. All the manufacturers combined will generate only about 1million tons a year by 2010, analysts say, compared with 500million tons a year of the petro-based variety. But these ordinary plastics, which account for up to 10% of total U.S. oil consumption, are quickly becoming an extravagance at $138 for a barrel of crude. A switch to bioplastics not only would help reduce oil dependence but also could save companies and consumers serious money. With Dow Chemical hiking the price of its plastic products by up to 20% on June1, some types of bioplastics from Cereplast and others already cost less. If oil stays high, bioplastics could capture 20% of the global plastics market in as little as five years, predicts Jeff Bishop, an independent analyst at Beacon Equity Research in San Francisco. "It's a no-brainer where customers are going to gravitate," he says. John Pierce, DuPont's head of biosciences, calls bioplastics "an opportunity we measure in the billions of dollars." Mirel is aimed at the premium niche. It will cost more than $2 a pound, vs. under a dollar for commodity bioplastics. And it has some serious backing. Around 2004, with the jump in yields from the company's cell cultures, food and chemical companies suddenly began returning Peoples' phone calls. Metabolix Enhanced Coverage LinkingMetabolix -Search using: News, Most Recent 60 Days negotiated a partnership with agribusiness giant Archer Daniels Midland, which wanted to supply feedstock for cell cultures. Peoples doggedly held out for a 50/50 split of future revenues. As part of the joint venture, ADM pledged in 2007 to build a $200million factory in Clinton, Iowa. It will crank out 55,000tons of Mirel a year starting in early 2009. John D. Rice, ADM's vice-president in charge of the partnership, says: "Our hope and dream is for it to be very successful." Having proved his science is valid, Peoples wants to scale up production of Mirel without relying on food crops such as corn. Funded by the U.S. Energy Dept., he's trying to bioengineer switchgrass and other plants to produce the plastic in their leaves. If he can pull it off, Metabolix Enhanced Coverage LinkingMetabolix -Search using: News, Most Recent 60 Days could reap billions of pounds of bioplastics on just a fraction of the acreage currently given over to corn. It'll be a challenge, but Peoples, ever the scientist, says: "The stuff that is easy to do is not that interesting." Links A Plastic Pacific Google "garbage island" and check out a growing ecological catastrophe called the Great Pacific Garbage Patch. Featured on CNN, it's a "massive stew of unwanted waste" twice the size of Texas in a remote area of the Pacific, northeast of Hawaii. The fast-growing patch was discovered in 1997 by Captain Charles Moore, who founded the nonprofit Algalita Marine Research Foundation in Long Beach, Calif. He reckons bits of plastic now outnumber plankton in many parts of world's seas. THE BIRTH OF BIOPLASTICS How the biotech sector and the chemicals industry converged to create earth-friendly materials 1939 DuPont introduces the world to nylon at the New York World's Fair 1941 Danish scientists coin the term "genetic engineering" 1946 Tupperware revolutionizes food storage 1953 James Watson and Francis Crick reveal the structure of DNA 1967 The Graduate sums up the future in a word: Plastics 1974 Oil shocks pummel DuPont's profits; company funnels R&D into biotech 1977 Genentech produces human proteins in bacteria 1989 Microbes used to clean Exxon Valdez oil spill 1990 Mobil is sued for falsely advertising that Hefty bags biodegrade 1992 Metabolix is incorporated 1998 Monsanto pulls the plug on its first attempt at bioplastic 2005 EU bans plastic toys containing toxic petrochemicals 2006 U.S. uses 17 million barrels of oil for plastic water bottles 2007 Metabolix strikes a deal with ADM to build a full-scale bioplastics plant 2008 Oil prices hit high of $138. Governments curb plastic bag and bottle useBusiness Week
