Lynne Brum - VP, Planning & Corporate Communications Oliver Peoples - President & CEO Kristi Snell - VP of Research & CSO

Greetings and welcome to the Third Quarter Financial Results Conference Call for the Metabolix's Yield10 Bioscience. During the call, participants will be in listen-only mode. The presenters will address questions submitted by shareholders as part of the formal presentation. [Operator Instructions] As a reminder this conference call is being recorded. I would now like to turn the conference over to your host, Metabolix Yield10 Vice President of Planning and Corporate Communications, Ms. Lynne Brum.

Great, thank you, Tim and good afternoon, everyone. Welcome to Metabolix Yield10 Bioscience third quarter 2016 conference call. Joining me on the call today are President and CEO, Dr. Olly Peoples; Vice President of Research and Chief Scientific Officer, Dr. Kristi Snell; and Chief Accounting Officer, Chuck Haaser. Earlier this afternoon, we issued our third quarter 2016 news release. This release, as well as slides to accompany this presentation are available on the Investor Relations section of website metabolix.com. Let's now turn to Slide 2; please note that as part of our discussion today, management will be making forward-looking statements. These statements are not guarantees of future performance and therefore you should not place undue reliance on them. Investors are also cautioned that statements that are not strictly historical constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause the actual results to differ materially from those anticipated. These risks include risks and uncertainties detailed in Metabolix's filings with the SEC, including the company's most recent 10-K and 10-Q. 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. I'll now turn to call over to Olly Peoples.

Thanks, Lynne, and hello, everyone. Please turn to Slide 3, it will cover a few financial highlights. Starting with the balance sheet; we added third quarter with a $9.8 million of cash. We expect that cash-on-hand together with revenue expected under current government grants will support our operations into the fourth quarter 2017. We will continue to identify ways to access capital through the financial markets and/or generate revenue through grants and collaborations. On the expense side, we will also stay focused on continuing to identify ways to manage our expense base. On our P&L, let's review the financial results that are part of continuing operations where the operating results capture a crop science related activities, as well as administrative and infrastructure support for the Yield10 business going forward. We reported a net loss for continuing operations of $1.5 million for third quarter of 2016 or $0.05 per share. This reduction in net loss in third quarter reflects a dramatic change in our expense structures compared to recent quarters when we are operating our biopolymers business. In fourth quarter, we expected our expense profile will continue to improve and we will be at our target financial filed entering January 2017. The restructuring of the business is substantially complete. We sold our Biopharma assets and including IP equipment and inventory to CLJ [ph] for $10 million and completed the transfer of assets in September. I'll note that as part of this agreement, CJ sublease one-third of the space in our Woburn facility. This sublease to CJ will enable us to reduce lease costs associated with Woburn going forward. In the third quarter we do just headcount to approximately 29 as we worked on the physical transition of assets, and with that activity wrapping up, we are on-track to meet our target for approximately 20 employees in fourth quarter. In third quarter, we paid out $800,000 in cash, issued 275,000 shares of common stock and transferred seven biopolymer related equipment and in connection with winding down biopolymer operations. We estimate that we will payout $2.5 million in additional and remaining reconstruction cost, our restructuring cost, including amounts accrued as of September 30, 2016 through May 2018. So with the sales of biopolymer assets, as well as the restructuring of the business, we estimate that the annual net cash usage to initially operate Yield10 will be approximately $5 million to $6 million including -- excluding cash restructuring costs. We believe that with this profile we can create and build value in Yield10 while managing with a lean organizational footprint. For more details on our financial results, please refer to the earnings release. Now let's turn to Slide 4; the Yield10 Bioscience business is based on an impressive 20-year history of biotechnology innovation and development. During that time the company established a tremendous biotechnology and intellectual property portfolio with over 350 patents covering a wide range of areas; science and technology innovation has been our course. Over the last two years we developed a new strategy to take our crop science programs forward and announced the Yield10 Bioscience business last September. Consistent with that we began to extend the intellectual property portfolio and have 10 patent applications in prosecution related to the core mission of developing step change yield rates for major food and seed crops. Our initial development targets include canola, soybean and corn. We believe if we are successful in demonstrating step changes in yield for these crops, the path to Yield10 capturing value is relatively straightforward. As you will see in the next step changes in crop yield are crucial under development of technologies to enhance global agricultural production and address global food security, the mission of Yield10. Now I'll turn to Slide 5, Yield10 is targeting critical unmet agriculture based on the future of disconnect between agricultural supply, and the growing global population. With the global population expected to exceed 9.6 billion people by 2050. There is a need to increase global food production by around 70% in this time period. This will need to be achieved in the face of increased pressure on land and water resources in addition to increasingly variable weather patterns. Solving this problem is a major global challenge requiring new crop innovation and technologies at a time when the sector is undergoing its own restructuring. Now turn to Slide 6; crop yield is increasingly a topic of interest in the media, including a recent article in the New York Times comparing GMO crops versus traditional breeding methods and their impact on crop yield and food production. There's a link to the full article on the slides. We all know that GMO crops isn't a mode of subject. However, there are two clear messages in this article. First, the GMO crops are unsafe to eat, are largely unsubstantiated. No longer surprising giving the 20-year history of safe use and no scientific evidence to the contrary as described in recent studies by the National Academy of Science. Second, the debate in the article of whether or not GMO crops have increased yield to a greater degree than traditional breeding doesn't actually matter with regard to global food security. Neither approach has so far accelerated crop yield increases which is critical going forward. Now I'll turn to Slide 7. The chart in this slide is from a highly cited scientific study on the challenges we faced with crop yields. Each crop is shown as a different colored line. The third line show the current yield trajectory based on current technology and historical experience. For corn and soybean, the current GMO traits are already factored in. The dotted lines project yield increases needed to meet the demands of the growing global population. So the problem to be solved is the gap between the dash and field lines for each crop, the yield gap. Simply to provide an idea of what level of step changes in here will be necessary to fill the yield gap for a single crop we use corn sketch on the chart. Roughly speaking, it would take a step yield increase of around 17% over the next five years to move corn yield to the point where it would be feasible to get corn on-track to close the gap through subsequent breeding by 2050. A 17% percent increase is approximately 28 bushels per acre, a very large increase in a sector where one to two bushel increase is difficult progress. The yearly disruptive new approaches and technologies are needed. Please turn to Slide 8; increase in inherent crop yield is a complex two-step carbon optimization problem. Harvested seed is, for the most part, carbon from CO2 from the air with oxygen from water plus nitrogen and phosphate which come mostly from fertilizer. Crops can be divided into two main categories based on their photosynthesis system. We see three photosynthesis crops account for around 70% of food production and include canola, soybean, wheat and rice. Rice is the staple food for over half of the global population. C4 crops evolved after CC crops and are inherently higher yielding and in the process of evolution addressed some of the C3 crops photosynthesis limitations. We believe key yield breakthroughs will come by labelling crops to fundamentally fix and capture more carbon combined with targeting the additional carbon [ph]. Now I'll turn to Slide 9, Yield10 is in the business of building plants to achieve steep change increases in the yield of major food and seed crops. For the last two years, we have been developing approaches to creating a new paradigm for crop development which we will continue to refine as we progress towards our goal. There are three elements to our strategy to enable Yield10 to meet our yield goals and demonstrate value creation for our shareholders and partners; discovery, translation, and demonstration. We have added the translation activity to bridge the current gap which could be years between research results in the laboratory and data from field trials. In major crops, this is where the commercial value is demonstrated. It's a simple concept really, the sooner you know something is going to work in the field or not, the better. Merging the discovery and translation elements is in our longer term plans but further accelerate timelines. As we make progress in each area, we expect to inform our investors about the critical scientific problems we are working on, where we are consulting them, what does this discoveries mean in terms of the yield potential, and key field data proof points as they are achieved. The first key element [ph] is discovery. Here we have developed two platforms to identify genes or gene combinations enabling scientific breakthroughs with the structured yield potential. The smart carbon grid for cross platform is based on our 30-years of experience optimizing the flow of carbon and living systems and leverages microbial genes to eliminate the known bottlenecks in plant food services and can be carried at metabolism. As on a side, the current GMO crop industry is based on using microbial genes in plants. The T3 platform is an advanced bioinformatics system, we use to identify five powerful crop global regulator genes or master switches to achieve step change increases for photosynthesis and biomass production. Based on these two platforms Yield10 has a strong pipeline of opportunities in hand and ten patent applications and prosecution. We believe having a strong pipeline, our multiple shots on goal is very important given the challenging problem we are working to address. The second key element is translation; and here we have established a system we call fast field testing to accelerate these discoveries into early field results to develop proof points and enable further optimization. We will describe this system in more detail later in the call. The third, and ultimately most important key element is demonstration of the value of our discoveries in major food and seed crops; specifically canola, soybean and corn; this of course has the longest timelines. Yield10 is fundamentally a crop science and innovation company, and we recognize the importance of building the presence of Yield10 science and technology, not only with investors but also more broadly within the Ag sector. So we are going to provide a more detailed overview of one of our current lead face [ph]. The particular crop yield bottleneck in addresses which crops it applies to and the progress we are making. So with that I would like to turn the call over to Dr. Kristi Snell, our Chief Scientific Officer. Kristi?

Thanks, Olly and hello everyone. Please turn to Slide number 10. One of our targets for increasing carbon fixation and yield in plants is to reduce the wasteful process called photorespiration. This is a well-known and well-studied process that reduces the efficiency of photosynthesis in C3 crops which include, for example, soybean, rice, wheat, canola and potato. When the photosynthetic enzyme called Rubisco fixes or captures carbon dioxide, molecules are produced through a series of metabolic steps called the Kelvin cycle that are eventually converted to sugar and other molecules required for plant growth. However, the Rubisco enzyme has a wasteful side reaction where about 25% of the time it fixes oxygen instead of carbon dioxide. This produces a toxic molecule that must be removed through a process called photorespiration. During the course of this process, the plant uses up valuable energy and some of the carbon is lost as carbon dioxide. This is a major bottleneck for yield in C3 crops including canola, soybean, wheat and rice. A number of plants such as corn and sugar cane have the more highly evolved C4 photosynthetic system; it means plants have the ability to reduce photorespiration by sequestering the Rubisco reaction in cells where the levels with carbon dioxide are high and the levels of oxygen or low. Because of this compartmentalization, crops with C4 photosynthesis can be upto four to five times higher yielding than crops with C3 photosynthesis under normal planting conditions. The key take home message is that evolution has demonstrated that there are biological solutions to this problem. Please turn to Slide number 11; the critical importance of yield laws in C3 crops due to photorespiration was recently quantified in a paper in the annual reviews of plant biology. The authors estimated that yield in U.S. soybean crops is reduced by 36% and the yield in U.S. wheat crops is reduced by 20% by photorespiration. They also estimated that achieving a 5% reduction of photorespiration in soybean and wheat in the U.S. would add about $500 million per year of value. Some models suggest that photosynthesis could improve by 12% to 55% in the absence of photorespiration. So it's really not surprising that photorespiration has been a major topic in plant science and that researchers have employed multiple strategies and attempts to reduce food respiration in C3 plants and efforts to improve yield. Please turn to Slide number 12; predicting photorespiration is one of the key targets of our Smart Carbon Grid Discovery Platform. This platform is an innovative systems based approach to boost yield by increasing the amount of carbon fixed by photosynthesis and targeting the increased carbon to harvestable seed [ph]. One of our traits C3003 has been shown to enhance carbon fixation in seed yield in our model oil seed crop Camelina; and our current hypothesis is that it reduces photorespiration. C3003 is a scientific discovery made in one of our academic collaboration funded by ARPA-E, a division of the Department of Energy. While our collaborator continues to work on unravelling the mechanism of this trait, current data suggests C3003 is a very unique gene that reduces photorespiration in an unexpected manner that is very different from the approaches attempted by other researchers. We are excited about the prospects of C3003 in reducing the well-known yield losses that occur through photorespiration and are currently studying C3003's effect in the food crops rice, canola, and soybean. We know that increasing seed yield is a complex problem that will likely require multiple traits to increase carbon fixation at the front-end and deliver the increased carbon -- increased fixed carbon to the seed on the back-end of the process. Bottlenecks downstream of photosynthesis will likely prevent all of the fixed carbon from reaching the seed. We're already seeing evidence of this since we know that in high-yielding plants expressing C3003, the expression of other genes including our C3004 traits changed. The C3004 trait helps remove a natural plant mechanism to shutdown increased carbon flow to seed, essentially allowing a shift of carbon partitioning from biomass production to seed. It is well known that the flow of carbon in plants is tightly controlled and C3004 removes one of these control points. Turning to Slide number 13; one of the challenges the industry has faced over the years is the translation of early crop science discovery into value generating traits. This is in part because most of the plants used for discovery have not been suitable for studies in the field, so long timelines to progress early discoveries into major crops and generate field data adds to the challenge. For these reasons we are putting in place a process we call Fast Field Testing based on our camelina oilseed platform. We believe that overtime this will become an invaluable tool in the trait discovery translation/demonstration effort. Camelina is an industrial oil seed crop well suited to field trials and is a good model for canola and soybean. It is also very fast to modify and develop genetically stable seeds sufficient for planting. Ideally we will be able to go from idea to field planning in about twelve months. Our process is to identify trait genes as interesting camelina and immediately put them into canola and soybean where the timelines to field data are much longer. We can then progress a fast field testing in camelina, generate field data and perform a complete molecular analysis of plant material from the field. Results and data from the camelina fasts field testing of the trait will guide our decisions on whether to continue further development of the trait in canola and soybean. We started developing this process with four different traits; C3003, C3004, C3005 and C3006; and performed fast field testing with these traits during the 2016 growing season at two separate geographic locations. The C3003 trait is also progressing in parallel in canola, soybean and rice. All of these traits are yield traits that were developed in ARPA-E funded research programs by either our academic collaborators or by researchers at Metabolix. We were also able to secure funding from ARPA-E to test these yield traits side-by-side using FAST field testing process. Key plant growth parameters were monitored including stand establishment, time to flowering, and time to maturity. Seeds from both geographic locations has been harvested and we are deep in the process of characterizing the seed including measuring harvested seed size and oil content. Once the measurements are completed results from the trial will be analyzed and these will guide the next round of field testing. With that I'll turn the call back to Olly.

Thanks, Kristi. Let's turn to Slide 14; based on the two discovery platforms we have strong pipelines of traits. [We really have] [ph] many opportunities but limited resources so we don’t plan to progress all traits or working all crops. Our plan is to focus on driving key proof points with each seed trait where we see the potential for step change yield outcomes. We will continue a lower level of effort to progress additional traits leveraging third-party service providers as we continue to develop the platforms and pipeline. We believe traits on this table which we have validated at the discovery level may enable collaboration or licensing opportunities. We see this as a way to generate revenue in a year term to support progress on the key mission. An area of particular third party interest is a 21 transcription factor genes we have demonstrated are down-regulated in the high carbon fixing plants. Down-regulated genes are particularly amenable to genome editing approaches using for example the CRISPR/cas9 system which has considerable interest in the sector. I’ll turn to Slide 15. While were going through the process of developing the strategy for Yield 10 we continue to push our lead trait C3003 through the development pipeline to accelerate the timelines to the key demonstration phase in the major food/seed crops; canola and soybean. As Kristi mentioned, we were able to execute our first, our pilot fast field testing study with a number of traits at different stages of development. We already have second and third generation versions of the C3003 trait progressing in camelina and plan to get field test data from these next year. More importantly, we have the C3003 trait progressing canola, soybean and rice. We expect to begin getting early canola field data for this trait in 2017 with soybean field data at the fall in 2018-2019. It's worth noting that we have the opportunity for four years of fast field testing data using the camelina system before we would get the first soybean data. So we believe that overtime this will become an invaluable tool in the trait discovery translation effort. The key objective for us with this process is to de-risk each trait by demonstrating their value in major crops. As a particular trait is de-risked, there is a potential for net collection point in value; if we can establish a strong correlation between the results from the camelina system with future field data from canola and soybean, then we may be able to leverage this to enter a partnership and licensing discussion earlier while capturing a higher share of the upside value. Now I'll turn to Slide 16; fundamentally enhancing crop yields is not only critical for global food security but also has economic potential sufficient to reward all stakeholders in the value chain. As an example, if you consider soybean in the U.S. a yield in piece of 10 bushels per acre on 84 million acres planted last year, at an average price of $10 per bushel; it's $8.4 billion in value creation. So yes, field test objective is very challenging but it is more than matched by the potential for value creation. As in aside [ph], when you were formulating the Yield10 business, we derived a name Yield10 based on targeting a yield increase of ten bushels per acre in soybeans and canola in North America which creates an annual added value of $10 billion, hence the name Yield10. Now turn to Slide 17; in terms of upcoming milestones, we will continue to work with our leading application mix to access break-through crop science enabling us to focus our efforts in translating those technologies into major crops. We expect to complete and report the observations and data from our fast field testing activity and leverage those results to inform progress on the canola and soybean transformation project. In 2017, we have additional lines to progress through this process. Securing Ag industry collaborations is something we will continue to work on. We plan to be flexible on how we capture value, recognizing the natural tension between the validation of our efforts through airlift strategic partnerships while retaining control of our timelines and destiny to maximize value for our shareholders. A number of the traits we are working on are based on exciting discoveries from a very complex crop engineering at the leading edge of what is being previously attempted. We expect much of this work will be published in academic journals. Some of you may have noted the recent press announcements on the license agreements we entered into with academic institutions. This is an effort we want to continue as we work to strengthen their intellectual property portfolio. And with that I'd like to turn the call back over to Lynne for questions.

Thanks, Olly. And now we'll cover few questions. The first question is; recently Metabolix filed Form-4s in connection with stock option awards made to the management team. Some of the reforms referenced a plan to hold a special shareholder meeting. Can you describe what's going on? And I will take this question today. As is highlighted on this call, we're making many steps to manage our cash as we operate at the Yield10. And we are deliberately managing with a lean organizational footprint; one of the things we're doing is suspending our cash bonus program for 2016. Therefore, as we operate under Yield10 Bioscience model, we will use more equity-based compensation in order to attract, incentivize, motivate and retain talent and therefore less cash going forward. Therefore, it recently granted stock options to our executive team and other Yield10 employees. In connection with this change in compensation structure, the Board approved amendments to the company's 2014 stock option and incentive plan increasing the number of shares of common stock authorized for issuance under that plan. They also approved amendment to increase the maximum award of stock that can be granted to any one individual. In December we expect to hold a special stockholder meeting to vote on the amendment to the stock option plan. So shareholders can expect to receive proxy cards in late November for the special meeting. Now we have a second question which goes to Olly. Metabolix's top four officers and ex-CEO have all been awarded options ranging from $0.5 million to $1.75 million. Do all these options immediately vest upon a change of control scenario?

So you may have seen these option awards reported in recent Form-4s and our 8-K filing with the SEC. Our executive employment and severance agreements provide for accelerated vesting [ph] in the case of a termination of employment around the time the change of control. This is often referred to as a double trigger provision; meaning that in order for the acceleration to occur, there must be both, a change of control and a termination of employment. In addition, to our stock plan provides an unchanged of control situation unless outstanding options are assumed to be continued or substitute a larger granted [ph]. The outstanding options including options held by continuing employees will be become fully exercisable at the time of the transaction. The details of the provisions are included in our stock option plan and executive employee agreements that are on file with the SEC.

Great, thanks Olly. The next question goes to Kristi. Can you explain what yield traits are?

Yes. The food and seed crops we've mentioned are based on plants that have a certain set of characteristics or traits that can include, for example, how much seed or biomass they will produce under typical field conditions. Introducing new traits brings a new capability to the plant. These traits might enable the plant to resist fungus or certain insects or to produce an oil with a certain fatty acid content. New traits can be introduced through conventional plant breeding, moving genes from one organism to another through genetic engineering or more recently through genome editing where precise genetic additions or deletions can be introduced into the plant. Historically crop yield has been addressed by adding traits that control weeds or pests attempting to limit crop loss that may otherwise occur. At Yield10, we are focused on identifying new yield traits that will bring step change improvements to crop yield by enabling crops to fix and capture more carbon and then target that additional carbon to the seed.

Great, thanks Kristi. And our last question goes to Olly. What is the timing for the rebranding and name change for Yield10?

So we are truly excited about the transformation of business into Yield10 in the mission of using break-through science to address the global need to our food security, it's a motivating one, not only for me but for the whole Yield10 team. As the presentation today indicates, we are now fully operating internally as Yield10 Bioscience and have aligned all of our objective and activities around Yield10 goals. We will be taking steps in weeks ahead with an external branding as we officially change the company name to Yield10 Bioscience Inc., launch our new website and change your ticker symbol to YTEN.

Great, thank you, Olly. And now we'll just wrap up the call. Q -: :

So thanks for joining us on the call tonight. Thank you to our colleagues who have worked so hard to launch Yield10, and thanks as well to our stockholders. We will work hard to continue earning your support and we look forward to talking with you again on our next call. Good night.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful rest of your day.