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

Thanks so much, and welcome — hope your afternoon is going well. We appreciate everyone spending time with us today on this call and webcast covering Cibus's financial results for the second quarter of 2025 along with our business update. Joining me on the line is Peter Beetham, who is a Co-Founder and serves as Interim Chief Executive Officer, President, and COO, and also with us is Greg Gocal, a Co-Founder and our Chief Scientific Officer. Prior to getting started, please note that anything we say during this call and webcast — including comments about upcoming financial outcomes, future operational targets, and what we expect for the industry — counts as forward-looking and could be affected by various risks and uncertainties that might make actual outcomes differ substantially from what gets described here. For a listing of the related risks, take a look at Cibus's SEC filings; we are streaming this conference call over the web. You can find the webcast link, plus our press release and corporate presentation, in the Investor Relations area of cibus.com so you have what you need to analyze our business. With all of that covered, I'll hand things over now to Peter.

Thank you, Carlo, and good afternoon, everyone. To open today's call, I want to acknowledge that all of us at Cibus stay sharply committed to bringing in the near-term revenues we've set as our target. What our second quarter shows is ongoing progress against our commercial goals, with obvious momentum across our priority programs in rice as well as in sustainable ingredients funded and/or backed by partners, such as biofragrances, which put Cibus in position to start recording its first revenue during 2026. With each passing quarter, we move nearer to that crucial first revenue milestone thanks to concrete commercial headway, among it successful field trials, achieved milestones, regulatory approvals, and direct engagement with customers. How we get to revenue is really quite straightforward. Let me lay out in even greater detail the goal we're pursuing. Taken alone, our HT1 and HT3 rice herbicide tolerance traits represent over $200 million in potential annual royalty income throughout our first target regions in the United States and Latin America. Initial launches for those traits are still on track, aimed first at Latin America beginning in 2027 and then expanding to the United States in 2028, which would generate early royalty revenue and set the stage for further opportunities in the vast global rice feed market. This is no distant aspiration. Rather, it captures where our near-term commercial prospects actually stand. In our view, we are creating a new industrial plant breeding platform. Traits of ours are moving into customer germplasm; field trials are producing positive results, and we're seeing a global regulatory environment that grows more accepting, creating openings for customer engagement and market penetration that previously were simply unavailable. As we move toward generating revenue, we apply a disciplined, strategic method for allocating capital that gets the most out of our near-term commercial opportunities while safeguarding the considerable value built up throughout our wider trait portfolio. The streamlined operational focus announced just this July directs our resources toward our rice herbicide tolerance traits and our partner-funded and/or supported sustainable ingredients programs, biofragrances included; these stand as our closest-term revenue drivers, offering the clearest and most efficient route to market. This measured focus is meant to bring our yearly cash usage down to roughly a net $30 million by 2026, lengthening our runway while putting us in position to seize the sizable revenue opportunity in front of us. Even so, we have put substantial resources and expertise into building an opportunity pipeline of traits and programs that takes in extremely valuable productivity traits spanning multiple crops. Until our capital resources are adequate to efficiently back more robust development work, we are actively seeking partner-funded projects for these traits. Now I'll spend a few moments covering our priority programs and recent regulatory developments, then hand things to Greg, who will go into greater detail on our opportunity pipeline traits and programs. Beginning with our rice platform, our top-priority pipeline trait and the basis for near-term revenue generation, we keep making considerable headway on trait integration, field trials, and registration work, and each of those remains on track for our targeted commercial timelines. During this period, we hit an important milestone as well: finishing edits and supplying stacked traits that include our HT3 trait to a second partner here in the U.S. The momentum behind our customer activity keeps growing in a major way. Not long ago, we entered into an agreement with Semilano, a rice seed company based in Colombia serving Latin America, which makes our fifth customer across the Americas. Deeper reach into Latin America is especially thrilling, spanning both big and small players, since these markets have traditionally gone without access to sophisticated weed management options in rice, which amounts to a transformative chance for Cibus to generate value for farmers in these key regions through our gene-edited HT traits. What's driving this commercial demand is our standardized platform. It allows us to modify customers' elite germ plasm and return it with particular traits in about 12 to 15 months. That's a real breakthrough, and it sits right where agriculture's essential plant breeding programs meet — programs that, as I've said before, act as the engine room for genetic innovation in the seed business. Seed companies come to us because they recognize this creates a reliable model for trait development the likes of which the seed industry has never seen. It shows they understand that our fast trait development system moves gene-edited traits into their top genetics more rapidly than today's trait integration does. Rice field trial programs are progressing on schedule across all of our customers, and we continue to push forward on trait registration work, which is critical to our planned launch in Latin America during 2027 and 2028, along with subsequent commercialization in the U.S. set for 2028. In addition, we expect to begin our first trait validation trials in Latin America before this year is over, and we look for initial HT traits to reach Latin American customers by the end of the year. Our sustainable ingredients program, funded and backed by partners, continues to serve as an additional near-term driver of revenue opportunities. We remain on schedule to begin generating nominal revenue from our biofragrance offerings in the latter part of this year, with a planned commercial scale-up building through 2026; this quarter, we completed the initial scale-up phase for 2 biofragrance products, which supports our confidence in earning revenue from this initiative. Our biofragrance efforts continue to hit development targets and demonstrate how adaptable our foundational strengths are in delivering value outside of our crop productivity traits. The compelling aspect of this space is the significant demand for bio-based goods that we observe coming from the consumer packaged goods sector. There's a lot of interest from the industry in what we can offer when it comes to fragrances and other goods that, in the past, they could only obtain either via costly natural methods or through synthetics. Over the coming years, we anticipate that revenue growth in this segment will pick up speed, which should help offset near-term costs while we move our rice traits closer to commercialization. Turning now to the regulatory side. We keep witnessing growing embrace of gene editing technologies, and that shift is reshaping the commercial environment and the range of possibilities for companies like Cibus that bring innovation to market. Although this year's EU trialogue talks ran past the original June 30 deadline, I'd like to stress that the process hasn't ground to a halt despite the delay — it's still moving, and customers stay involved and enthusiastic about what lies ahead. Trialogue is an extremely iterative exercise, with in-depth committee work streams plus bargaining between the parliament, the commission, and each member state. Those talks are moving forward actively, and our expectation is a resolution inside the coming 6 months. Once that happens, it will mark a phenomenal milestone for the industry — one where Cibus holds a distinctive edge thanks to its favorable regulatory history and commercially ready traits. Fresh energy has come from the handover of the EU Council presidency from Poland to Denmark, since Danish officials can plainly see exactly which outstanding items still need to be settled. Taken together with our just-announced favorable determination in Ecuador, approvals continuing to come through in North and South America, and steady regulatory clarity in India along with parts of Asia, this regulatory headway is laying the groundwork for marketing our traits worldwide. Such regulatory progress spanning numerous regions meaningfully boosts the commercial potential of our trait pipeline and acts as a key catalyst for our business. With that said, I'll hand the call to Greg now so he can walk through our opportunity pipeline traits and programs. Greg?

Thanks, Peter. Before I go deeper into the sizeable pipeline of opportunities we have, I want to voice my own support for how wide-ranging the gene editing toolkit is that our great team here at Cibus has built. Having spent my career as a plant biologist, with more than 25 years working in gene editing development, I remain struck by the strides we keep making at Cibus in the editing frequency that underpins our gene editing work at the cellular level; those strides open the door to commercial possibilities for the traits that matter most in the most elite seeds our partners hold. I want to expand on the substantial trait opportunity pipeline that Peter referenced earlier — specifically, what we're seeing in our productivity traits portfolio and the partner interest that stretches across a number of programs. While our strategic focus remains on the priority drivers of near-term revenue, the value we've created throughout our broader trait portfolio continues to generate significant commercial possibilities, and we're in a strong position to pursue those through partnerships. Let me briefly run through several concrete examples of the progress and partner interest we're observing, starting with our canola programs. In our HT2 field trials, early results have been encouraging — they confirm the trait's tolerance profile as well as its efficacy in the field. The encouraging results we've seen in field trials have generated real interest among possible partners. They recognize the considerable business potential of advanced herbicide tolerance in the worldwide canola sector. Remember, what we're discussing here is HT2 Edits, our second-generation offering — a prime example of how our tech can evolve and improve trait creation. Our canola Sclerotinia resistance initiative is equally impressive and continues to attract considerable attention. What draws prospective partners in particular is our layered strategy for lasting disease resistance — one that addresses a chronic and expensive problem for canola while giving growers a more sustainable option. Beyond canola, our soybean platform could well be our biggest long-term prospect. Earlier this year, we managed to edit soybean cells for our HT2 trait, and that marked a first move toward showing proof of concept for what could become a market with roughly 125 million accessible acres, where annual trait royalties might run between $10 and $15 per acre. Given how large that opportunity is and the technical strides we've made, we've been having serious conversations about partnerships. On a more recent note, our altered lignin alfalfa program has reached a commercial milestone. The FDA finished its review of our altered lignin alfalfa trait last month, which opens the door to commercialization in the U.S. The seed company we work with is now in a position to bring the first commercially available gene-edited alfalfa varieties to the U.S. For growers, commercial-scale seed supplies are now on hand in 2 first variety options. The benefit of this trait is significant: livestock may digest it more easily, and farmers gain more leeway on when to harvest, which in effect yields alfalfa of higher value from the very same fields using identical inputs. While this specific collaboration probably won't generate substantial income relative to the initiatives we rank highest, such as rice and biofragrances, it remains an excellent example of our approach — partnering with established seed businesses to move our traits to market without waste and build dependable income channels for Cibus. The common thread running through each of these programs is the solid groundwork we've laid via our development work, which includes continuing greenhouse and field trials along with the recent USDA AFIS regulatory designations that classified several Cibus traits as not regulated. Taken together, that momentum and our proven technical strengths put us in a very strong position to bring on partners capable of supplying both capital and market access for these valuable productivity traits; this strategy of leaning on partnerships fits hand in glove with the capital discipline approach Peter described, letting us move these high-value assets forward while staying sharply focused on executing against our priority revenue drivers. With that said, I'll pass things over to Carlo for the financial update. Carlo?

Thanks, Greg. Now turning to the numbers for Q2. As of June 30, 2025, cash and cash equivalents stood at $36.5 million. When we factor in the $27.5 million in gross proceeds from our June public offering, plus the effects of cost-saving measures we've put in place, we believe our current cash and cash equivalents will be enough to cover planned operating expenses and capital expenditure needs through the second quarter of 2026. Now on to operating results. Second quarter revenue came in at $933,000, up from $838,000 during the same period last year, driven by higher activity in programs funded by our partners. R&D expense for Q2 was $12.2 million, versus $13 million a year earlier. That $800,000 drop stems mainly from cost reduction efforts we've rolled out under our streamlined operational focus. SG&A expenses totaled $6.6 million in the second quarter, compared with $9.3 million in the prior-year period. The $2.7 million reduction is largely attributable to cost reduction initiatives. Net loss for Q2 was $26.6 million, compared to $28.5 million in the year-ago period. As Peter noted, our attention is on controlling cash use as we move toward generating revenue. After the quarter closed, we disclosed a reduction in force, a key step in carrying out our streamlined business focus. We anticipate this rift will lead to roughly $0.5 million in one-time charges during the third quarter; nevertheless, the RF, together with other efforts, should bring our yearly net cash usage down to about $30 million by 2026. This disciplined stance on capital allocation lengthens our cash runway while putting us in position to seize the substantial revenue opportunity in front of us, with initial revenues starting in 2026 and meaningful commercial expansion after that. With that financial overview complete, I'll hand things back to Peter for closing remarks.

I appreciate that, Carlo. Thinking about what we accomplished during this quarter and what lies ahead, I have a great deal of confidence that the plan we're carrying out is one that will generate value for our shareholders over the long haul. Over the last 3 months, the team has had to make certain hard calls, and I want to acknowledge everyone across the organization for the difference their work has made. Those choices were not easy, yet they have put us in a position to remain sharply focused on the commercial road ahead as we chase our long-term strategy. To us, this represents a normal step in the development of our company, since conversations with our partners now center more on delivering traits within a set timeframe and with predictability. As I said earlier, better genetics serve as the engine room behind advances in seed genetics, creating genuine value for farmers, for the seed companies we work with, and for Cibus shareholders. The key point is that traits are entering customer germ plasm; positive field trial results keep coming in, and the regulatory landscape keeps growing more favorable, which is unlocking opportunities in markets around the world. Agriculture's gene editing revolution is underway right now, and Cibus stands at the leading edge of that shift, with a clear route to roughly $200 million in possible yearly royalty revenue from our rice traits by themselves, alongside the first biofragrance revenues starting next fiscal year and substantial growth as we move along our rice commercial launch timeline. As I have said on several occasions, we stay sharply focused on our central priorities: moving our rice herbicide tolerance traits toward commercialization, expanding our partner-funded and supported sustainable ingredients program, and constructing the operational groundwork for durable revenue and cash flow generation that will seize considerable value once our market opportunities come to fruition. We feel certain that eventually, gene editing possibilities will reach many of the world's key food crops. Alongside that, and with AI arriving along with tools such as gene editing to deliver on complex traits, we indeed foresee growing trait development categories emerging, such as nutrient use efficiency, NUE, plus the thrilling prospects of nonallergenic crops; and with that brief glimpse ahead, I thank you all for your attention and interest, and we look forward to bringing you up to date on our continued progress next quarter. Operator, we're now ready to take questions.

To start off, I'd like to ask about the germ plasm transfer we saw during this quarter. So is this a customer that's already begun field trials with Rice-HT3 on their own? Or does this give us a fresh set of company-specific field trials? And after that, I have a few follow-ups.

Thanks, Matt. Peter here. I truly appreciate that question. To frame this properly, I'd say it's a wonderful illustration of the reason rice gets us so enthusiastic. I think we've now reached the commercial path alongside 6 customers, and being able to perform edits and return material to customers is something that makes us quite proud, and I believe that will genuinely position us well going forward. More precisely, though, when it comes to what you asked, I'm going to pass this to Greg, since he has been deeply involved in getting these lines delivered back to one of our current Rice customers.

Appreciate that, Peter, and Matt, thanks for asking. So this is a fresh account we're shipping back to for the United States, and we're shipping back several lines featuring our HT3 trait. So we're genuinely thrilled, given what they can do with it in field trials down the road.

Then I also picked up on something from the start of this call — you brought up the first revenue expected in 2026. Does that capture the biofragrance shifting out of 4Q'25 and into 1Q'26 for those earliest nominal revenues?

Appreciate it, Matt. Allow me to go a bit deeper there, since this is one part of our business where, once again, we genuinely can't wait to book our first revenues, and the thing we've been concentrating on hardest — as you'll keep hearing more about with Cibus — is that near-term revenue gets our absolute focus; so when it comes to the biofragrances, like you've been told, we enjoyed a great deal of success during the last quarter as we began scaling up; and on every front, the scale-up milestones have all been hit. Where we stand today, and where we'll stand as this year wraps up, has us genuinely thrilled. Some nominal revenues remain in our view for this year while we scale up, as certain early product goes back out to customers. Then '26 arrives, and that's the point where full commercial runs truly begin for the biofragrances sitting in our pipeline. From that stage onward, it really accelerates past that.

And every dollar from biofragrance sales comes in as royalty, just like the other revenue streams you might generate down the line, right?

That's right. What I'd say is, on the nominal revenues at the outset, we're passing along a portion of the scale-up material, which is terrific. So that piece, in essence, isn't a royalty; however, come next year, we'll transition into the royalty-based business model.

Let me kick things off with my first question. Regarding the negotiations to get gene editing approved within the EU, what have you been told by Danish officials and the European Parliament are the upcoming steps or obstacles?

Austin, I appreciate that question; Peter here. I'll begin, and I'll also let Greg jump in. But as I mentioned during our prepared remarks, acceptance from EU regulators is a piece of worldwide harmonization; that has genuinely converted what used to be headwinds into tailwinds. I can't emphasize this enough; it's truly the reason gene editing is taking place right now, and it gives us a clear route for commercializing numerous traits. So clearly, we monitor this intently. And as the trialogue proceeds, it's an extremely iterative affair. You have quite a few detailed committee work streams involving the council, the Parliament, and the commission. As for your question about the Danish, what we've been told by both the Polish and the Danish is that they are truly focused on the significant amendments that were put forward last year in parliament. What they're examining is how to put the legislation into effect and arrive at the final text. So a portion of that concerns figuring out how to carry that out across all the various countries. So a few of the questions that have been raised, along with the visibility surrounding them, involve labeling and patenting — those are 2 of the main topics they've talked about; and I believe the positive news for everyone of us in the technology sector is that this is genuinely being dealt with very cautiously and tied to the European Patent Office; so we have confidence that within the next 6 months, these will reach a favorable resolution, and we'll get a final text by the conclusion of this year.

I'll just expand a bit on what Peter said. Keep in mind that for the past 2 years, we've had field trials running in the U.K. with our pod shatter resistance trait. What you've witnessed there is a shift from legislation being approved to that legislation being put into practice over the last couple of years, bringing things to the point where, before long, you'll be able to plant and grow edited crops in the U.K. with no restrictions at all, and that's what we expect moving forward, once final text exists in the EU and it's implemented throughout all 27 countries; so, thanks for the question, Austin.

And one more question, if I may. Where do things stand right now with the winter oilseed gray field trials being run in the U.K.? Also, how long will it take to assess what comes out of them?

Well, we're nearing the close of field season number two. That means harvest should take place in August, and at that point we'll have a clear picture of how effective the traits proved to be this year. Still, what we observed a year ago has us enthusiastic, since for the material that went into the ground, the findings are coming out comparable now.