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

Thanks so much, and welcome, everyone. We appreciate your time in joining this call and webcast covering Cibus' business update along with its financial results for the first quarter of 2025. Joining me on the line is Peter Beetham — Co-Founder, Interim Chief Executive Officer, President and COO — and Greg Gocal, who serves as our Chief Scientific Officer, will be with us as well to take part in the Q&A portion. Prior to getting started, a quick reminder: any statements shared during this call and webcast — including those about upcoming financial outcomes, future operational targets, and industry outlook — are forward-looking and could be impacted by various risks and uncertainties, which might lead actual results to diverge materially from what gets described here. For a list of the related risks, please look at Cibus SEC filings. A webcast is being made of this conference call. To help with your analysis of our business, you can find the webcast link, our press release, and the corporate presentation in the Investor Relations area of cibus.com. With that said, Peter, I'll hand things over to you.

Thank you, Carlo, and hello to everyone this afternoon. In our view, the opening quarter of 2025 keeps providing unmistakable proof that our commercial approach is sound and that the RTDS technology platform holds transformative promise. The press releases we issued for Q1 have affirmed that we can produce results that are both time bound and predictable. That fact, together with regulatory rulings that have been favorable, is finding traction on many fronts — broadening and drawing commercial attention from a number of customers we already have, while also bringing in numerous potential partners who are new to us. Within the agricultural sector, Cibus occupies a distinctive place at a pivotal moment. Through our proprietary RTDS gene editing method, a fresh paradigm for trait development has been set, one that is time bound and predictable, which lets us modify the elite germplasm of our customers and give it back carrying particular traits in fewer than 12 months. This standardized platform is increasingly viewed as a foundational advance that connects with agriculture's key plant breeding programs. For the seed industry, such programs serve as the engine room of genetic innovation. We think agriculture has never witnessed anything like this, and it establishes a reliable model for trait development and commercialization in gene editing that is drawing a strong response from our customers, our partners, and, more widely, throughout the entire industry. Especially heartening is the way our time bound and predictable message is pulling in considerable fresh interest for development projects, above all in disease resistance traits. We keep demonstrating substantial progress with confirmed edits for various modes of action within the disease trait category, which is distinctive and extremely valuable across multiple crops in worldwide markets. This market validation confirms our strategic path and the value proposition of our technology as we concentrate on hitting our key milestones for 2025. I'll begin with Rice. Across 2024, we built a solid foundation for our Rice platform, obtaining agreements with 4 major IC companies, which account for roughly 40% of the accessible rice acres we estimate across North and Latin America. As we move toward commercialization, that momentum keeps growing. It carries over from last year's field trials, in which we reached a milestone with field trial results for stacked gene-edited herbicide tolerance traits in rice; this March, we broadened this opportunity for additional stacked HT traits in rice, with trials scheduled for the 2025 season. The trials from last year mark the first known instance of using stacked gene-edited herbicide tolerance traits in rice for better weed management — a major breakthrough that sets our offering further apart and promises meaningful value for farmers; this matters especially given the worldwide demand for weed management solutions that let rice farmers handle these difficulties more efficiently; we are working diligently to move partnerships forward for exactly that purpose. One strong illustration of our work is the strategic collaboration we have with RTDC Corporation Limited and Albaugh LLC to supply the herbicide Clethodim as part of our weed management solution for U.S. rice farmers who use the HT-3 trait, as a way to advance our commercialization strategy. Given that our registration pipeline is aligned, we are still set to reach the commercial launch we expect in 2027. What we're witnessing across Latin America is especially encouraging, since growers in those countries have not traditionally had access to sophisticated weed control options for rice. That creates a game-changing opening for the farmers there as well as for Cibus, an innovator bringing higher-value offerings to the market; beyond that, we anticipate kicking off our inaugural trait validation trials in Latin America in the latter part of this year, and we expect an initial trait delivery to a Latin American customer before the year is out. The larger takeaway is obvious. Our approach to commercializing rice is moving ahead as planned, with traits placed into the germplasm of several customers suited to a range of geographies. For Cibus, that adds up to a considerable market opening as we get closer to commercialization. Let me shift now to what we're doing on disease resistance. When it comes to disease for us, that means Sclerotinia, also called White Mold; this effort remains a leading example of how far we've come, extending the breakthrough results we had in 2024, when we completed edits in canola covering 4 distinct modes of action for resistance to Sclerotinia and saw encouraging field trial outcomes for our second mode of action. We have kept pushing this essential platform forward; in March 2025, we reported favorable greenhouse results for canola plants carrying a third mode of action against Sclerotinia; that marks an important step in our layered strategy for building durable disease resistance, much the way antiviral drug combinations provide long-lasting protection against human diseases such as HIV. Farmers can now benefit from our canola Sclerotinia resistance trait, which delivers several modes of action for durable resistance, helping them boost yields and cut input expenses by relying less on fungicides. This matters greatly because Sclerotinia, or white mold, is a fungal pathogen responsible for serious disease in oilseed crops and most legumes, cutting canola yields between 7% and 15%, while at the level of an individual plant, yield losses can reach as much as 50% per infection. We are getting ready to run field trials this summer in North America for our third and fourth modes of action in canola, and we'll also test our first stacked disease resistance trait in controlled environment growth chambers. Let me move on now to the Soybean platform. In January, our Soybean platform hit an important milestone when we effectively edited a Soybean cell for our HT2 trait, reaching editing rates that allow broader platform development; that accomplishment is a crucial advance for our Soybean strategy and puts us in position to keep working toward both the HT2 traits and white mold resistance in soybeans. This could open the door to a sizable market, estimated at 125 million accessible acres, with annual trait royalties per acre possibly falling between $10 and $15. Even as we keep working hard to bring the Soybean platform fully online, the progress made earlier this year confirms both our approach and our technical abilities. Later this year, we expect to complete HT2 edits in soybean plants, extending the successful cell edits we achieved earlier this year. We remain hard at work trying to get a Soybean platform completely up and running. Editing soybean genes for complicated characteristics such as white mold resistance is still something with considerable commercial appeal, and talks keep moving forward with both existing and potential partners who see worth in how we develop traits — an approach that is time bound and predictable. That leads me to our Sustainable Ingredients program. Under that program, we have moved our bio-based fermentation and biofragrance products ahead, and we now expect to sign commercialization agreements with consumer packaged goods partners during this year. In the quarter, we finished the first stage of scale up on 2 biofragrance products. This meaningful step confirms what we expect — again bringing in nominal revenues from this program later in 2025. Beyond that, our project funded by a partner, a large multinational CPG company, is likewise moving along nicely. That effort draws on our core crop gene editing abilities to create sustainable, low-carbon ingredients, which helps major global companies push their sustainability goals forward. Now let's move to regulatory. On that side, we hit a number of historic milestones during the quarter, which reinforced our path to commercialization. In February, the Rice Certification Committee of the California Rice Commission gave the green light to our field research proposal — the first ever authorization to plant gene-edited rice in California.

Additionally, in a development dated March 14 of this year, support was extended by EU member states toward the EU Council's negotiating mandates regarding rules for regulating plants developed via new genomic techniques, known as NGTs. This paves the way for three-way discussions—often called trilogues—among the EU Parliament, EU Commission, and EU Council, with the goal of getting legislation finalized. Then, during April 2025, a conclusion was reached by Ecuador's Ministry of Agriculture and Livestock: the HT1 and HT3 rice traits from Cibus are equivalent to those produced through conventional breeding. Given that Ecuador prohibits outright any commercial planting of transgenic or GMO crops, this determination carried real weight for our RTDS technologies. This ruling makes it official: rice plants that have Cibus' HT1 and HT3 traits are now cleared to proceed toward registration and commercialization in Ecuador, in line with what LOASFAS — the provisions on organic production, greater agrobiodiversity in seeds, and sustainable agriculture promotion — sets out. Then just two weeks back, we were glad to report that for two of our canola disease resistance trait products still in development, USDA-APHIS issued a non-regulated determination; that favorable status verifies our traits fall outside the definition of a regulated article, which means product development can keep going in the U.S. without the constraints that apply to regulated articles. That label from the USDA carries a lot of weight. It gives us yet another stamp of approval for our RTDS technology platform, which introduces precise genetic modifications while avoiding the insertion of recombinant DNA. For years now, the United States has been out front in updating its regulatory approach, and this decision is just the latest example of how those frameworks have shifted — and continue shifting — to accommodate what gene editing technologies can deliver. Taken together, these regulatory shifts happening in various parts of the world meaningfully expand the business potential tied to our trait pipeline, and they act as key drivers for the crop trait development side of our business. With that said, let's turn our attention to what 2025 holds. There are a number of key milestones we're keeping our eye on, and at the same time we're working to make our operations as efficient as possible. We're broadening our commercial ties with rice seed companies throughout North and South America. In Latin America, we're running the first trait validation trials, and customers should receive the initial traits by the end of the year. We have field trials underway for Sclerotinia resistance in canola covering the third and fourth modes of action, along with trials in controlled environment growth chambers of our first stacked disease resistance trait. We're also gathering initial field trial data for our HT2 trait in canola. Beyond that, we're continuing to build toward an operational Soybean platform, and we're making progress on our biofragrance work, with normal revenues anticipated later this year. While we work toward those strategic goals, we're putting all our attention on running things more efficiently and bringing our cash burn down substantially during 2025. Our method for allocating resources stays disciplined: money goes first to near-term commercial chances tied to traits that are already developed or advanced, and at the same time we keep enough financial room to carry out our strategic goals and stretch out our runway. That mix of growing the business while staying fiscally careful puts us in position to maximize shareholder value as we near important commercial milestones. Our gene editing techniques, together with the focus we place on productivity traits, hold enormous promise for agriculture in the years ahead — helping plants cope better with a changing climate and with the shifting demands coming from a global food supply chain. Our achievements during this quarter and throughout the last year make clear that possibilities tied to our gene edited traits aren't some far-off prospect; they are taking shape and growing right now. Our traits are entering customer germplasm, delivering encouraging outcomes in field trials, and a more aligned worldwide regulatory landscape for gene edited traits is coming into being. That puts us in a distinctive spot across the agricultural gene editing sector to secure meaningful value for shareholders. With that said, I'll turn things over to Carlo for the financial portion. Carlo?

Thanks, Peter. Let's turn to the numbers from Q1. As of March 31, 2025, we held $23.6 million in cash and cash equivalents. When you factor in the $21.4 million in net proceeds that came in during 2025 from the registered direct offering we completed in January, along with the effects of the cost-saving measures we've put in place, and setting aside any possible financing deals that Cibus is currently working on, our expectation at Cibus is that the cash and cash equivalents we have on hand will be enough to cover planned operating expenses and capital expenditure requirements through the third quarter of 2025. Now on to the income statement. For Q1 2025, revenue came in at $1 million, which is $489,000 higher than the $545,000 recorded in the same period last year, driven by more activity on projects funded by partners. R&D expense totaled $11.8 million in Q1 2025, versus $12 million a year earlier. That drop stems mainly from our cost reduction initiatives. SG&A expense came to $9.9 million in Q1 2025, compared with $7 million in the prior year period. This rise is mostly attributable to a $3 million litigation accrual, partly offset by a reduction tied to cost reduction initiatives. We posted a net loss of $49.4 million in Q1 2025, versus a net loss of $27 million a year earlier. The bigger net loss was driven mainly by the $21 million noncash neutral impairment taken in Q1 2025, whereas no such charge existed in the prior year period. Excluding that goodwill impairment, net loss stood at $28.4 million. For more specifics on our Q1 2025 financials, please see our press release and our filings with the SEC. That wraps up the financial portion of our discussion. Peter, I'll hand it back to you for your closing remarks.

Carlo, thanks. Q1 of 2025 has shown unmistakable proof that our commercial approach works and that the RTDS technology platform holds transformative promise. Our time bound, predictable method for developing traits, as I've said, is landing very well with customers and partners — drawing meaningful commercial interest throughout our Rice, Canola and Soybean platforms, and there we think additional development program backing will come our way; that comes as regulatory momentum builds around the world, among it the favorable USDA-APHIS designation granted to our Canola disease resistance traits a mere 2 weeks back. With our rice traits entering customer germplasm and our disease resistance program delivering outstanding results through multiple modes of action, we sit at a pivotal inflection point where seed genetics now brings wide-ranging innovation to global seed markets. While staying sharply focused on streamlining operations and cutting cash burn across 2025 through 2026, we keep pushing forward our highest-value commercial opportunities, which will fuel long-term shareholder value. So with that, I appreciate your attention and interest; we're eager to bring you up to date on our ongoing progress next quarter. That wraps up our remarks. Operator, please open the call for questions. Thank you.

I suppose I have 3 or 4 items, if that's alright. To start, could you simply take us through the cash burn as well as the increase in SG&A during Q1 — sort of what your perspectives are on each of those, and how we ought to think about them across the rest of the year?

Thank you, Laurence. That one I'll pass over to Carlo to respond to. Thanks.

Yes, thanks Peter. That’s a solid question. Regarding the cash burn for quarter 1: like we mentioned during earlier presentations, after a planned decrease last year, we dropped substantially. At this point, we’re at roughly $4.4 million gross. That was deliberately planned and carried out well. What you’re seeing in quarter 1 within SG&A is a litigation accrual we recorded; that’s the reason the figure is elevated versus the quarter in the prior period. But if you truly examine it from a cash standpoint, we came down.

All right, that's great. Now regarding the talks on EU regulations, have the people you're in touch with over in Europe provided any indication of a sensible timeline for those three-party negotiations to come together around a final tax?

Thanks for that, Laurence. I'd like to go a bit deeper on this, since, as I believe I said, it came out of the EU Council's vote in March and is genuinely a landmark moment for the gene editing sector as a whole. We're extremely thrilled by it, because gene editing is at last getting acknowledged as what they refer to as conventional-like. In other words, it's basically impossible to tell apart from something that happens in nature or from programs that breed plants. As this moves along, the parliament actually put the text on the table last year and affirmed the text would stay the same. After that, when the amendments were worked through, it went to the EU Council vote, which came out favorable in March. Since then, they've moved into what's known as the trialogue — that's three-way talks involving the parliament, the commission and the council within the EU. And as recently as yesterday, word reached us that they've lined up a large number of meetings from now until the close of June in order to finish that trialogue. What that signals is that they're moving toward a final text; it might get pushed back, but our belief is it will take place inside 6 months. The wonderful part of that is that during the 12 months following it, we'll have the secondary legislation needed to advance with gene edited products, for both cultivation and trade in — with the EU, which, once more, as we mentioned in a few of our earlier comments about regulatory matters, is harmonizing around the world; so as you can tell from our press release, quite a few items are dedicated to regulatory, since we're witnessing tremendous harmonization and, as a result, an obvious route for us toward commercialization.

My apologies — please continue.

No, I simply wanted to be sure that my response to your question was a good one.

Yeah. No, no, that's fine. Then could you simply go through two final items. First, at what point do your trait products reach commercial launch? What are the working capital or cash flow effects prior to receiving incoming cash from your customers? And second, regarding biofragrance, could you provide some idea of the possible scale? How quickly might it ramp, and what are customers saying to you? And if they receive what they're seeking and are excited about your results, your product, what would that mean for your working capital requirements and the need to have the appropriate kind of technical support and quality assurance personnel to back them?

So I'll begin with the initial portion of your question. So thanks, Laurence. I believe that as we move ahead with our traits, especially in rice, we're quite enthusiastic about rice. It's among our strategic priorities that we've been heavily concentrated on during the past couple of years, and we've seen strong demand and achievement with the two herbicide tolerant traits in rice, including a very positive outcome from the Ecuador regulatory very recently. So the transfer point with materials after they're edited in rice we don't really take a significant hit on our cash at all. We assist our customers from a stewardship perspective, ensuring the traits are managed properly, that there's some genotyping and some — ultimately, we will let them return to us in their breeding program to do some genotyping, but it's not a significant hit whatsoever; so that's the initial portion of your question. And then the latter portion concerned biofragrance. Biofragrance, what we're hearing from potential partners on this is there's substantial demand and the ramp can be extremely fast since it's a fermentation product; so as we've said, we have nominal revenues here in '25, building in '26. What's fascinating about this space is it truly is companies seeking bio-based products. So they're very thrilled about the chance for us to supply fragrances that they have needed to source via either a very costly natural process or synthetics; and it's mostly been synthetics. And so we see the ramp could expand very rapidly in this area across the 26 to 28 years. Greg, if you have anything to add?

Yeah, I'll jump in here. The way we're handling biofragrances really sets us apart. With those initial 2 molecules, we've shown both how well it works and how much enthusiasm this platform draws, and we anticipate that will spark additional interest down the line from many different customers.

Laurence, let me jump in for a moment. My background is in seed companies, and what's great about this business—this royalty business—is that our partners handle the inventory build, the seed companies do it, not Cibus, and that part I really like. So that working capital need doesn't sit with us. It sits with them.

Austin, good afternoon. During the second quarter, in Canola, what are you anticipating from the fourth mode of action field trials? And from your perspective, what would count as a favorable result?

thanks, Austin. Naturally, this is a question I'll hand over to Greg to address. Appreciate it.

Absolutely, Austin — thank you. When it comes to Sclerotinia resistance, our strategy involves several mechanisms of action, and the goal there is to tackle the various ways this pathogen engages with the plant. The fourth mechanism of action, in particular, targets one specific avenue through which the pathogen communicates with the plant. What we anticipate is this: first, if field trials prove successful — meaning treated material gets infected by the pathogen while edited material shows greater resistance compared to that treated material — that outcome would push us toward the following phase, which involves pairing this mechanism of action with additional mechanisms of action demonstrating comparable effectiveness. Right now, that includes what we've already talked about for mechanism of action 2, plus the promising results we've observed under controlled conditions for mechanism of action 3.

Austin, I just have a brief follow-up on the Sustainable Ingredients opportunity with that big goods customer. Can you tell us whether you expect revenue from it to start in '25 or '26, or has that moved since what you said last quarter?