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

Thanks, and good afternoon, everyone. We appreciate your time in joining the Cibus Fourth Quarter 2024 Financial Results and Business Update Conference Call and Webcast. With me today is Peter Beetham, our Co-founder, Interim Chief Executive Officer, President, and COO. Greg Gocal, our Chief Scientific Officer, will also be joining for the Q&A portion of today's call. Before we get started, I want to remind everyone that statements made during this call and webcast, including those about future financial results, future operational goals, and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described. For a list of associated risks, please refer to Cibus SEC filings. This conference call is being webcast. To assist you in your analysis of our business, the webcast link, along with our press release and corporate presentation, are available on the Investor Relations section of cibus.com. With that, I'd now like to turn the call over to Peter.

Thank you, Carlo, and good afternoon to all of you. Ahead of getting into our results and the business update, I want to say something about the leadership change we announced recently. As someone who co-founded Cibus alongside Rory Riggs, who serves as our Chairman, and Greg Gocal, our Chief Scientific Officer, and who held the President and COO roles starting in 2021 plus the CEO position for the seven years before that, I remain deeply devoted to our mission and vision. For any company, a leadership transition can be a moment of real significance. Our strategic direction stays on course. I'd also like to recognize Rory's steadfast commitment to Cibus, which has extended across more than 20 years from the time it was formed. Rory played a vital part in constructing Cibus, putting capital behind our strategy, and advancing its technologies to reach their current state: a state-of-the-art agricultural company ready to reshape how crop traits are developed and commercialized. As he has emphasized before, Cibus sits at a crucial inflection point as our transformation continues from a company that develops agricultural traits into one that commercializes them. In gene-edited productivity traits, Cibus holds a leading position, tackling major productivity and sustainability problems for farmers, including diseases and pests, which the United Nations calculates cost roughly $300 billion worldwide each year. It's important to note that Cibus isn't a seed company; instead, we're a technology company that employs gene editing to create traits and license them to seed companies, receiving annual royalties on seed sales in return. One crucial way our technology stands apart from existing modern plant breeding methods such as GMO is that traits produced through our Rapid Trait Development System, or RTDS, cannot be distinguished from traits produced through conventional breeding approaches. In fact, in pending EU legislation—which I'll discuss further later, since there was some recent excellent news regarding its progress—the wording they use is "conventional-like." In contrast to GMO-based methods that insert foreign DNA, our gene editing method enables us to make accurate modifications of a kind that might arise in nature. From a regulatory standpoint this difference matters greatly, since it means that across many markets our products face regulation comparable to conventional breeding, which greatly widens our worldwide addressable market relative to GMO traits that contended with major regulatory hurdles globally for close to 30 years; we think our business model will generate a possible long-term revenue stream rooted in the cost savings farmers can achieve by applying particular crop traits. As I take on this broader role, the momentum building throughout our key markets fills me with energy. The opportunities around our gene-edited traits aren't something that will arrive years from now; they are taking shape at this very moment. Commercial interest in our herbicide tolerance traits for rice is emerging across markets such as the United States, Uruguay, Colombia, Brazil, and Asia, which points to considerable future royalty potential. With our traits entering customer germplasm and field trials delivering encouraging results, and with a more harmonized global regulatory landscape for gene-edited traits, I believe we're positioned to secure substantial value for our shareholders. What I want to stress here is that what sets Cibus apart is our own RTDS gene editing technology. With it, we can modify a customer's elite germplasm and hand it back carrying a chosen trait in fewer than 12 months, which gives trait development and commercialization a timeline-driven, predictable framework the likes of which agriculture has never encountered. That's where the real worth of our standardized platform shows up: we deliver traits quickly that assist farmers in tackling their toughest productivity problems, while putting Cibus in position to seize meaningful commercial value via yearly royalties on a per-acre basis. Now I'll walk through a few of our recent wins and the progress made over the last year. Let's begin with rice. Momentum on our rice platform keeps building in a big way. During December, we confirmed our partnership with RTEK Corporation Limited and Albar LLC to supply the herbicide clethodim as part of a new and exciting weed management offering for U.S. rice growers who use our HT3 trait; this partnership plays a key role in our efforts to commercialize our herbicide-resistant rice trait as we keep working with U.S. rice seed customers. Counting our agreement with Fedearroz, we now hold agreements with four leading rice seed companies across North and Latin America, accounting for roughly 40% of the rice acres we estimate to be accessible in those regions. Importantly, germplasm has come in from every one of those customers, a vital milestone in the commercialization process. On top of that, we wrapped up a successful set of U.S. field trials using one rice customer's varieties that carry our HT3 trait, which highlights the encouraging and ongoing headway we're making toward commercialization. Also, last summer, we obtained initial field trial results for stacked gene-edited herbicide tolerance traits in rice. As we said at that time, we think this is the first field trial involving a stacked gene-edited herbicide tolerance trait in rice — or, for that matter, in any major crop — aimed at improving weed management, a breakthrough that sets our offering even further apart and promises substantial value for farmers. As we've laid out, we believe our capacity to add traits and enhance existing ones in a timeline-driven, predictable manner opens the door for plant breeders to speed their best genetics toward commercial seed production and sales to farmers. Turning to canola. Cibus has created productivity traits for pod shatter reduction, or PSR, in canola and winter oilseed rape, which reinforces the sheath that forms part of the pod surrounding the canola seeds. That sheath matters for protecting the pods, boosting shatter tolerance when high winds and extreme weather strike and threaten to cause yield loss. Cibus keeps making solid headway on its advanced productivity traits for canola and winter oilseed rape; those are sclerotinia resistance and HT2, delivering white mold disease resistance and broadleaf weed herbicide tolerance, respectively. I'll go into greater detail on these shortly. As we've mentioned before, Cibus serves 10 customers for its developed and advanced traits in canola and winter oilseed rape, and six of those continue working alongside the company to move forward its developed PSR trait across roughly 7 million acres that customers can access, even with a commercial landscape that keeps shifting. Now I want to discuss our advanced traits. Our disease resistance program has seen major progress. Back in November, we shared news of a collaboration with Biographica, a U.K.-based leader in AI and machine learning for gene discovery, centered on advanced disease resistance in oilseed rape and canola. Through this partnership, BioGraphica's proprietary AI platform works alongside Cibus's own computational biology team to find and rank entirely novel genetic targets for gene editing. It's a real point of pride to team up with one of the leaders in the AI space whose technology can help decode crop genetics. Let me now turn to what I consider one of our more important advances in the last year. We've also shared the significant results achieved over the past several months in developing multiple modes of action for traits conferring resistance to white mold, or sclerotinia. White mold is a devastating and widespread disease that can substantially impact farmers' crop yields. Just as antiviral cocktails are used to treat diseases like HIV in people, creating multiple independent modes of action for plant disease is expected to make durable disease resistance possible. By that, I mean resistance that lasts.

Like we’ve said before, creating this characteristic in a single crop such as canola shows the way we’d introduce disease resistance into additional crops such as soybean; that’s a strong illustration of a trait spanning multiple crops that will tackle and assist in solving a serious disease cutting into yield across more than 100 million acres of crops. During November, we finished edits in canola for the fourth mode of action for sclerotinia resistance, and we anticipate controlled environment assay results in the first quarter of 2025. This effort rests on our other work involving additional modes of action, which keep moving forward. For example, we obtained field trial results for the second mode of action in canola that demonstrated better disease resistance, and the first bioassay results for our third mode of action indicated better resistance. What stands out is how fast the Cibus team put together these third mode of action plans. Going forward, we anticipate continuing to identify, assess, and test further modes of action to back a trait that is durable and suitable for customers throughout every growing region; that matters because gene editing done in such a time-bound and predictable manner can deliver these multiplex traits in cases where traditional approaches such as advanced breeding, GMO included, have failed to do so. In my view, this methodical, multi-pronged strategy demonstrates our dedication to creating sturdy traits that provide a focused answer to real-world problems confronting farmers today. Let me now move to our soybean platform. A major milestone for us in January 2025 was the successful editing of soybean cells for our HT2 traits, reaching editing rates high enough to allow broader development of our soybean platform; we’re still enthusiastic about our soybean platform since it puts us in position to keep pursuing the HT2 and other traits such as white mold resistance in soybean. These traits by themselves let us ultimately reach a sizable market estimated at 125 million accessible soybean acres. As we’ve observed with our canola traits, being able to carry our technologies into several crops increases our market potential and revenue opportunities. As shown earlier, with possible annual trait royalties per acre falling between $10-$15, that amounts to a big market opportunity for Cibus to build on. We’ll keep working hard toward a completely operational soybean platform. Soybean gene editing of complex traits such as white mold resistance is a field of work with significant commercial appeal, and we’re pushing hard to move our talks forward with existing and potential partners. Now, let me switch to the thrilling news regarding global regulatory matters; this past week, we welcomed the announcement of the EU Council’s negotiation mandate on regulating plants produced through new genomic techniques, or NGTs. This significant step lets the Council take part in three-way discussions, called a trilogue discussion, with the EU Parliament and the European Commission in order to settle the legislation’s final text before final adoption. A key point here is that the legislation the EU is working on will be pivotal in bringing regulatory approaches for gene editing into alignment worldwide. Once that EU legislation is in place, the majority of gene-edited plants would face oversight comparable to that applied to conventional breeding methods, and that would mean gene-edited products — including the ones Cibus is working on — could enter the European market for the very first time. In addition to that encouraging European development, we're also announcing today that our planned field trials for our advanced rice traits have received approval from the California Rice Commission, something that has never happened before in California. For our rice traits, this marks a significant step forward in a major U.S. market. Taken together with the earlier European developments, this momentum shows a worldwide trend toward regulating gene-editing technologies in a manner similar to products created through conventional breeding. Across Europe, North America, Latin America, and portions of Asia, these regulatory strides substantially boost the commercial potential of our trait pipeline and will act as key catalysts for our crop trait development business; given all that, our position with customers is very strong, allowing us to move quickly as the regulatory landscape keeps evolving toward worldwide uptake of gene-edited solutions. Turning now to sustainable ingredients. Our five trait, three crop pipeline remains the main priority, but we're also continuing to make headway on our sustainable ingredients program. Good progress is being made on the project funded by our large multinational CPG partner. What we're aiming for together centers on sustainable, low-carbon ingredients — an exciting nearby opportunity involving crops that builds on our core gene editing expertise. As large global corporations look for ingredients whose production, use, or disposal doesn't harm the environment, our technologies provide distinctive answers that assist them in pushing forward their sustainability goals. Related to our sustainable ingredients program, Cibus has separately been working on biofragrances for the CPG industry, drawing on its proprietary yeast fermentation system; that process likewise aligns with our mission of delivering natural, sustainable alternatives to the fragrance market. As we look toward 2025, there are a number of key milestones we're concentrating on: the anticipated finalization of the text of EU legislation covering new genomic techniques, or NGTs; ongoing work toward a soybean platform that is operational; continued U.K. field trials of our developed PSR trait; targeted efforts on PSR and sclerotinia alongside our North American customers, now that we hold positive data across various modes of action for disease resistance; we also intend to run field trials this summer in North America for sclerotinia resistance in canola, covering the third mode of action as well as our first stacked disease resistance trait in controlled environment rooms. From controlled environment testing for the fourth mode of action in canola, we anticipate results during the first quarter of 2025. Initial field trial data for our HT2 trait in canola is likewise expected in the third quarter of 2025. Last of all, we're pleased about the progress of our biofragrance work, where we anticipate nominal revenues later this year. I'd like to stress that although our resources are being directed toward nearer-term commercial possibilities involving advanced and developed traits, we aren't putting any kind of ceiling on what we might pursue. Every one of those possibilities — sustainable ingredients, earlier successes with wheat, specialty crops such as peanut, plus our efforts around nutrient use efficiency — amounts to progress where we hold a distinctive edge to capture value. Having said that, I'll pass things along to Carlo for the financial portion. Carlo. Thanks, Peter. Turning to our fourth-quarter financials, cash and cash equivalents stood at $14.4 million on December 31, 2024, factoring in the $21.6 million in net proceeds that have come in so far during 2025 from the January registered direct offering, along with what cost-saving initiatives contributed. Before accounting for any possible financing transactions Cibus is currently pursuing, Cibus anticipates that its current cash and cash equivalents will support planned operating expenses as well as capital expenditure needs through late in the third quarter of 2025. Now on to our income statements. For the fourth quarter of 2024, R&D expense came to $12.4 million, versus $14.2 million during the same period a year earlier. That $1.8 million decline stemmed mainly from reduced non-cash stock compensation expense and from the strategic realignment and reduction in force we announced in the fourth quarter of 2023, which brought about lower personnel costs and supplies.

SG&A expense came in at $6.8 million for Q4 of 2024, which matched the $6.8 million recorded during the same quarter a year earlier. We posted a net loss of $25.8 million in the fourth quarter of 2024, versus a net loss of $277.2 million in the comparable prior-year period. That earlier period carried a non-cash goodwill impairment charge amounting to $249 million. Once you set that charge aside, we're happy to report that our net loss improved by roughly $2 million on a year-over-year basis, thanks to the cost-cutting steps we put in place during the quarter. If you want additional details about the Q4 and full-year 2024 numbers, those are available in our press release and SEC filings—that concludes the financial portion of today's call. Peter, I'll turn things over to you at this point so you can share your closing thoughts. Thanks, Carlo. For everyone here at Cibus, this has genuinely been a thrilling 12 months. As we've discussed, the last year was a turning point for Cibus in many ways; we made significant strides across our core platforms and traits, particularly rice and sclerotinia resistance, and we continue to advance toward having a soybean platform in operation. The worldwide regulatory environment continues to trend positively, and we expect that this will keep motivating our customers to take up our technologies. There's enormous potential for agriculture's future in our gene editing technologies and in how we focus on productivity traits, because they enable crops to adjust more effectively to a changing climate and to the shifting demands of a worldwide food supply chain. With global agriculture facing challenges unlike anything before, our RTDS technologies may assist the industry in responding swiftly and reliably in ways that conventional breeding, or GMO methods, are just unable to match. Let me emphasize once again that the possibilities for our gene-edited traits are not something that will arrive years from now. They are taking shape at this very moment. Everyone in this sector understands that agriculture operates on lengthy time horizons, yet our view is that we're nearing the moment when the growth curve bends sharply upward and the real upside begins. Customer germplasm now carries our traits, field trials are producing encouraging data, and crops incorporating those traits are already advancing toward market launch — all of which puts us in a strong position to realize substantial value as the regulatory landscape keeps improving through the back half of this decade. We appreciate the time and interest you've given us. We eagerly anticipate bringing you another update next quarter, as we keep reaching our milestones and pushing our mission forward; that wraps up what we wanted to share. Operator, please open the line for questions.

Good afternoon. Could you perhaps begin by breaking down a bit what the EU ruling signifies regarding the steps or schedule for you to get commercial items with a client in Europe? Also, might you describe how shifts in the regulatory environment during the past 18 months have altered customer appetite for exploring different revenue models with you, to motivate you to expand quicker or act sooner? Is there anything they expect from you in order to have those kinds of talks?

Many thanks for that, Laurence. I truly value that this matters greatly to our operations, and I believe I cannot downplay how significant the European regulatory process is. What took place on March 14 involved the EU Council spending recent months striving to grasp how to push forward the EU trilog talks. This is really about finalizing the wording of the new genomic techniques. As I noted in my comments, the outcome permits them to enhance the ultimate passage of the text that the Parliament endorsed last year. What matters most to grasp there is that the Parliament has already cast its vote. Aside from a handful of amendments the EU Council has now approved through their talks, the text remains unchanged. The effects of this reach beyond Europe. There are consequences for trade and cultivation, and numerous jurisdictions globally turn to the EU for direction on how emerging technologies—here, new genomic methods such as gene editing—will progress within many seed firms' breeding initiatives worldwide. We recognize that many of our clients have awaited this to speed up their efforts. Keeping in mind that with a plant breeding initiative, you want to ensure a distinct route to cultivation, and similarly, some of the biggest grain trading firms globally seek its direction on commerce. I think one cannot downplay how crucial this is for the entire gene editing sector we exist in at present. I'll invite Greg to offer a few more thoughts.

Right. Thanks, Peter. Appreciate the question, Lawrence. Keep in mind that Cibus operates in a way that's non-transgenic, both in how we work and in what we deliver — so non-GMO and much like conventional, as the legislation sets out. It doesn't matter if we're working on productivity traits — those five traits across three crops — or if we're working on additional edits aimed at sustainable ingredients; every one of those things, plus a clear route through the grain trade, genuinely helps us get where we're going.

And then, as a second point, could you say something about how much the present version of the EU legislation permits folks to obtain patents on genetic modifications? Looking at it from your angle — regarding the conversations you have with customers, and regarding how quickly demand gets pulled through — does it work out better or worse if those alterations can be patented or cannot?

The positive part — I appreciate that, Laurence, since I believe that is a genuinely solid follow-up query — is that patenting was among the amendments that came up for discussion. Here is an unambiguous signal from the Council: they regard this as transparency. Their push is that when a seed company brings a product to market, you should be transparent regarding the patents sitting behind it. That differs somewhat from their initial starting point. The positive part from our standpoint is that I believe they landed in a really robust place, ensuring transparency existed so the European seed sector could comply with IP coverage, meaning intellectual property coverage. I think the position they ultimately reached is quite strong.

Yeah, thanks. Appreciate it. That was really good.

Hi there. Good afternoon. So, for my first question: with the advances we're seeing on HT2 greenhouse data as it moves into the field, on fermentation, on biofragrance products, and on the third mode of action for white mold and canola, have any of the commercialization dates for the products in your investor deck shifted versus last quarter? Is everything still on schedule?

Austin, I appreciate the question. Let me zero in on the first portion of what you asked regarding the HT2 trait. The field trials taking place this summer will matter a great deal when it comes to confirming that we remain on schedule. The central takeaway from everything discussed today is that we are staying on track. When you consider what Laurence raised earlier about the European regulatory situation, one reason it matters so much is that many of our customers are speeding up their thinking about how to bring products to market as quickly as they can. As we broaden our work across various modes of action for sclerotinia, or white mold resistance, there's strong enthusiasm for significantly speeding up much of that effort in our canola program as well as our winter oilseed rape program; this carries real significance here for both HT2 and sclerotinia tolerance in canola and winter oilseed rape. I'll stop there and see whether Greg wants to add anything.

Right. I believe you've hit all the points. The team's performance over the past 12 months and across the most recent quarter has us genuinely enthusiastic — particularly when it comes to the advanced traits we've developed for sclerotinia resistance and HT2.

Okay, one more question on top of that. My understanding is that an increase is anticipated by you either during Q3 or before it — but when it comes to the cash balance you have right now along with your burn, do you see those sitting at levels adequate enough that every one of the traits currently in development can be moved forward?

Yeah, thanks for that, Austin. I believe it's clear we're putting in a lot of effort to hit each of the milestones I laid out during our remarks. A great deal of this is moving along quite nicely, and we'll strive to satisfy our cash needs. I'll pass it over to Carlo for some further thoughts.

Yes. Thanks, Peter. The one item I'd want to verify from the close of the year, with structured financing acknowledged in January, is more than $20 million. Once you consider that, and then see that our burn is being cut significantly this year, we feel sure we're able to progress well right through to late in quarter three and can accomplish everything we must do and also want to do.

Excellent. Thanks for the details. I'll pass it back there.

Thanks, Austin.

Hey, good afternoon, and thanks for taking my questions. This is somewhat tied to what was asked before. Regarding the sustainable ingredient business, my understanding is that you anticipate some initial, modest revenues from it. Should we look for substantial revenues in 2026, whether from biofragrance or perhaps from one of the partner-based revenue streams?