Yield10 Bioscience announces fourth quarter and full year 2017 financial results
Mar. 12, 2018
“In 2017, our team delivered a series of achievements reflecting our commitment to build Yield10 into a leader in agricultural innovation based on the development of novel crop yield traits,” said Oliver P. Peoples, Ph.D., President and Chief Executive Officer of Yield10. “Recent highlights among our achievements for the year include the completion of successful field tests for our novel yield trait gene C3003 in Canada; signing a research license with Monsanto Company for evaluation of C3003 in soybean; designing new pathways for oil biosynthesis using genome editing technology in oilseed crops; and strengthening our balance sheet following the completion of a public offering in December.”
“We expect the momentum to continue in 2018, as permitting is currently underway for field tests of C3003 planned to begin at sites in Canada in the second quarter. These field tests are designed to evaluate versions of C3003 in Camelina, canola and soybean. We seek to advance research around traits and combinations of traits accessible through genome editing as an innovative approach to boosting oil content in specialty oilseed crops. Yield10 also plans to make further investments in our technology platform and capabilities to drive new discoveries and identification of novel traits and trait stacks to improve crop performance. We will also focus on signing licenses and establishing collaborations with industry players to expand the evaluation of our traits in food and feed crops.”
Non-Exclusive Research License with Monsanto Company
In December 2017, Yield10 announced that it has granted a non-exclusive research license to Monsanto Company to evaluate its novel C3003 and C3004 yield traits in soybean. Under the license, Monsanto plans to research both traits within its soybean pipeline as a strategy to improve plant yields. Derived from algae, C3003 represents the lead plant trait in Yield10’s portfolio of traits in development. C3004, another trait, is believed to play a role in carbon partitioning. Monsanto plans to conduct research with C3003 and C3004 individually and in combination to evaluate the effectiveness of this trait stack.
December 2017 Underwritten Public Offering
On December 21, 2017, the Company announced the closing of an underwritten public offering, with net proceeds of approximately $13.1 million after deducting underwriting discounts and commissions and other estimated offering expenses, including full exercise of the underwriters' overallotment option. In the transaction, the Company issued and sold 4,667,000 Class A Units, priced at $2.25 per unit, with each unit consisting of one share of common stock; a five-year warrant to purchase one share of common stock at an exercise price of $2.25 per share; a nine-month warrant to purchase 0.5 share of common stock at an exercise price of $2.25 per share; and 3,987 Class B Units, priced at $1,000 per unit, with each unit consisting of one share of Series A preferred stock convertible into 445 shares of common stock at a conversion price of $2.25; five-year warrants to purchase 445 shares of common stock with an exercise price of $2.25 per share; and nine-month warrants to purchase 223 shares of common stock with an exercise price of $2.25 per share.
As of March 5, 2018, holders of 3,879 (97%) shares out of the 3,987 initially issued shares of Series A preferred stock have elected to convert their shares into 1,724,000 shares of common stock. Following such conversions, 9,865,355 shares of common stock and 108 (3%) shares of Series A preferred stock remain outstanding.
FULL YEAR AND FOURTH QUARTER 2017 FINANCIAL OVERVIEW
Yield10 Bioscience is managed with an emphasis on cash flow and deploys its financial resources in a disciplined manner to achieve its key strategic objectives. The Company ended 2017 with $14.5 million in unrestricted cash and cash equivalents. The Company’s net cash used in operating activities during 2017 was $8.2 million, which was a decrease of $6.2 million from the $14.4 million used for operating activities during 2016. The decrease in net cash used for operating activities during the year ended December 31, 2017 was primarily a result of the Company's strategic decision to discontinue its biopolymer operations and initiate a strategic restructuring during the third quarter of 2016. The restructuring included a significant reduction in the Company's workforce, termination of long-term biopolymer manufacturing agreements and a general reduction in operating costs across many categories related to the former biopolymer operations. During 2017, the Company experienced a full year of cost reductions associated with the restructuring, partially offset by certain restructuring payments that carried over into 2017, such as manufacturing contract termination costs and employee severance.
The Company anticipates net cash usage of approximately $8.5 million to $9.0 million during 2018, including anticipated payments of $0.5 million during the first half of 2018 for final restructuring costs. During the three months ended December 31, 2017, the Company completed a public offering of its securities and raised net proceeds from the transaction of approximately $13.1 million, net of offering costs. As a result of raising these additional funds, the Company anticipates that its current cash resources will be sufficient to fund operations and meet its obligations for at least the next twelve months.
For the year ending December 31, 2017, the Company reported a net loss applicable to common shareholders from continuing operations of $10.8 million, or $3.29 per share. This loss includes a $1.4 million adjustment related to the accounting for a deemed dividend from a beneficial conversion feature recorded in connection with the Series A convertible preferred stock issued in the December 2017 financing. The Company reported a net loss from continuing operations of $9.2 million, or $3.30 per share, for 2016.
Total research grant revenue from continuing operations for the full year 2017 was $0.9 million, compared to $1.2 million recorded in the prior year. Research and development expenses for continuing operations were $4.6 million in 2017, compared to $5.7 million for 2016. General and administrative expenses for continuing operations were $5.6 million and $5.7 million for the years ended December 31, 2017 and 2016, respectively.
The Company reported a net loss applicable to common shareholders from continuing operations of $4.0 million, or $0.99 per share, for the fourth quarter of 2017, compared to a net loss of $1.6 million, or $0.56 per share, for the fourth quarter of 2016.
Total research grant revenue in the fourth quarter of 2017 was $0.1 million, compared to $0.3 million for the comparable quarter in 2016.
In the fourth quarter of 2017, research and development expenses were $1.2 million, and general and administrative expenses totaled $1.4 million. This compares to $1.1 million of research and development expenses and $0.8 million of general and administrative expenses in the fourth quarter of 2016.
In July 2016, the Board of Directors of the Company approved a strategic restructuring plan under which Yield10 Bioscience became the Company's core business. As a result of this strategic shift, the Company sold its biopolymer intellectual property along with certain equipment and inventory during its third quarter of 2016 for approximately $10.0 million in a transaction that met the requirements for discontinued operations reporting. The Company's condensed consolidated statements of operations for the three and twelve months ended December 31, 2016 have therefore been prepared to reflect the Company's former biopolymer operations as a discontinued operation. Since none of the sold intellectual property was previously capitalized, the gain on the sale of these assets contributed to the Company reporting net income and net income per share from discontinued operations of $1.6 million and $0.57, respectively, for the year ended December 31, 2016. The Company did not have further involvement in the operations of the discontinued biopolymer business during 2017.