Cibus, Inc. (CBUS) Earnings Call Transcript & Summary

Thanks, and good afternoon. I'm Bill Koschak, serving as Calyxt's Chief Financial Officer. I appreciate your time in joining this conference call and webcast covering Calyxt's Third Quarter '22 Financial Results and Corporate Update. Joining me is our President and Chief Executive Officer, Michael A. Carr. A press release with the details of these results went out after the market closed today, and you can find it on our company's website, calyxt.com. Before we begin this conference call, I'd like everyone to keep in mind that anything said today during the call and webcast — including remarks regarding upcoming financial outcomes, upcoming operational targets, and the outlook for our industry — constitutes forward-looking information and may be affected by various risks and uncertainties that could lead actual outcomes to vary significantly from what we describe here. To review the risks involved, please see the SEC filings from Calyxt; in these comments we also address adjusted net loss along with adjusted net loss per share. Each of those is a non-GAAP financial measure. Additional details about those non-GAAP financial measures can be found in Calyxt's press release and its SEC filings, both of which are available on our site, calyxt.com. These non-GAAP figures ought to be viewed alongside GAAP financial measures, not as a replacement for results reported under GAAP. And lastly, a webcast of this call is being provided. You can find the webcast link within the Investor Relations portion of calyxt.com. Right now, I'd like to hand things over to Michael so he can give his opening remarks. Michael?

Thanks, Bill, and I appreciate everyone being with us today for Calyxt's call covering financial results and a corporate update. Before I hand things over to Bill for the financial portion, I'd like to take you through what we've accomplished in recent months. Even with the capital markets and broader economy presenting obstacles unlike anything we've seen, and the liquidity strain that created for our company, we've still achieved meaningful advances on many fronts, spanning business development, licensing, infrastructure partnership, and moving forward the chemistries we're developing — in particular, our successful engineering of a critical ingredient found in personal care products and vaccines, plus our acceptance into a significant manufacturing initiative sponsored by the Department of Defense, which creates a path for Calyxt to access federal grants. On October 25, we shared that we'd reached considerable technical progress by producing squalene successfully with a Calyxt-engineered Plant Cell Matrix. Squalene matters as a key ingredient across many personal care products and vaccine adjuvants, including multiple strains of flu and COVID-19 vaccines. Since it has traditionally come from shark liver, plenty of companies needing this ingredient for their products are already looking for alternative squalene sources that offer a more sustainable approach. As demand grows for natural ingredients in cosmetics and the need accelerates to create more vaccines that effectively boost immune response, the worldwide squalene market offers a sizable and expanding opportunity. On top of that, producing squalene confirms the potential of our platform to engineer plant metabolism for generating novel, high-value plant-based chemistries used in our customers' materials and products across the end markets of cosmeceuticals, nutraceuticals, and pharmaceuticals. During the third quarter of 2022, we obtained 37 new chemistries from prospective customers for evaluation, which brought the cumulative count of chemistries evaluated for development with our PlantSpring platform and for production in our BioFactory to 132. Out of those 132 chemistries, 43 have satisfied our target product profile criteria and are now undergoing further evaluation and discussion with potential customers. The evaluated chemistries also include a number that potential customers flagged as having been tried unsuccessfully by other players in the synthetic biology industry. Our existing customer projects under development are still on track. We're continuing to move ahead with the pilot project for a major consumer packaged goods company, with delivery of the plant-based chemistry anticipated by early 2023. That delivery could potentially result in a development agreement covering this chemistry and possibly others. In a similar vein, development of our soybean-based palm oil alternative plant trait keeps moving forward, and we anticipate reaching the first $100,000 milestone payment as soon as the fourth quarter of 2022. The project as a whole is slated for completion in the first quarter of 2024, at which point the second milestone payment of $100,000 would become due. We also announced and signed an agreement with Evologic Technologies, our first infrastructure partner, aimed at further developing and scaling our PCM technology platform. This deal backs the ongoing expansion of our capabilities in plant-based synthetic biology, and it's going to drive our strategy for scaling quickly. It also strengthens our capacity to serve the rising demand for sustainable, high-quality ingredients in the cosmeceutical, nutraceutical, and pharmaceutical sectors. Evologic provides contract development and manufacturing services built on its proprietary bioprocesses platform and technology, and that supports businesses such as ours that bring distinctive, sustainable bioproducts to market. We expect to send Evologic our first PCM — the one that will yield an engineered plant-based chemistry squalene — for scale-up during Q4 of 2022. I'd also like to mention that we've accepted membership in BioMADE, which is a manufacturing innovation initiative sponsored by the Department of Defense, or DoD. Through this, Calyxt now belongs to a network made up of synthetic biology firms, among them Ginkgo Bioworks and Amyris, along with leading academic institutions, not-for-profits focused on research, and U.S. government agencies committed to innovating and expanding the bioeconomy. Being a member also lets us pursue federal government grants to push forward research into plant-based biomanufacturing. We're extremely happy to join this organization and to have the chance to further research for the DoD in plant-based sustainable solutions. It was a genuinely productive quarter, and our team keeps delivering significant progress even with difficult global macroeconomic conditions and unmatched headwinds in the capital markets. At the close of September, our Board of Directors said it is reviewing the complete range of possible strategic alternatives and that it must bring on Canaccord Genuity as an adviser. That work is still underway, and it shows Calyxt's dedication to maximizing value for shareholders. We firmly believe in what our technology can achieve. The strides we've taken on many fronts during the last several months show our momentum and offer meaningful validation of our efforts. Now I'd like to hand the call to Bill, who will walk through our financial results for the third quarter. Bill?

Thanks, Michael. We put out a press release earlier today that covers the financial results for our third quarter of '22. This afternoon we also submitted our Form 10-Q for that quarter. If you'd like more specifics on our third quarter '22 financials, the press release or our SEC filings are the places to look. Let me offer a few remarks regarding our cash position and how much cash we're burning. As of September 30, 2022, we closed the quarter holding $7.2 million in cash and cash equivalents. Effective deployment of our cash resources remains a priority at Calyxt, and while we work toward our near-term milestones, we've brought costs down, which has given us the lowest burn rate the company has experienced in recent years. During the third quarter of 2022, our cash burn came to $4.7 million — that's $1.2 million below what we saw in the second quarter of 2022. I'm happy to share that early in November, Calyxt arrived at a settlement with a technology vendor of ours over claims of intellectual property infringement. Under the terms of that settlement, Calyxt is set to get $750,000 at the point when an amended master services agreement, or MSA, is executed, plus an additional $750,000 no later than January 31, 2023. We expect the MSA to be executed during the fourth quarter of 2022. On top of that, Calyxt will get reductions in contractual payments across a span of time. Thanks to the results of our ongoing cost-saving initiatives — which take in discretionary steps within management's control as well as the legal settlement — we now have cash runway reaching into the second quarter of 2023. That projection counts only committed customer cash stemming from development agreements along with technology and plant trait licensing. So with that in mind, the cash runway might stretch into later periods; beyond that, on October 3, 2022, we signed an amendment to our open market sale agreement with Jefferies, which lets us — capped at a maximum sale of up to 1/3 of Calyxt's public float during any 12-month period — offer and sell as many as 15,661,000 shares of our common stock. Starting from October 3, Calyxt has issued 2.0 million shares of its common stock, which brought in $0.1 million of proceeds after offering fees and expenses. Because those shares were issued, Cellectis — formerly Calyxt's majority shareholder — now holds an ownership percentage of 49.1%, and that opens the door for us to go after additional government grant programs as another financing source. That wraps up our call for today. Should you have any more questions, don't hesitate to reach out to us or to our Investor Relations firm, Argot Partners, and we'll gladly assist. Thanks for being with us on today's call.

Thank you very much for your participation. You may now disconnect your lines.