Yield10 Bioscience, Inc. (NASDAQ:YTEN), an agricultural bioscience company which uses its “Trait Factory” to develop high value seed traits for the agriculture and food industries, today reported financial results for the three and six months ended June 30, 2019.
"We have focused on executing against our business strategy and have made considerable progress positioning Yield10 for multiple proof points and catalysts in 2019,” said Oliver Peoples, Ph.D., president and chief executive officer of Yield10 Bioscience. “With our 2019 field tests underway and the deployment of our novel yield traits in progress in crops including canola, soybean and corn, we expect to generate proof points including agronomic, yield, oil content and other biochemical data throughout the rest of 2019.”
“We continue to invest in the development of our GRAIN technology platform to drive new insights based on the role of metabolic pathways, leading to the identification of novel plant and microbial gene targets that demonstrate promising activities. Our focus is to engineer better plants to improve crop performance, improve nutritional content and produce new products using crops as a low-cost production system. We have generated significant new intellectual property in 2019 including the filing of new patents relating to the discovery of new gene targets using our GRAIN platform, the use of combinations of novel traits to boost oil content in crops, and the use of our Camelina platform to produce PHA biomaterials. Our novel 'Trait Factory' approach, including the generation of proof points in key crops and the expansion of our intellectual property portfolio, is driving collaborative opportunities for Yield10 with the objective of forming revenue generating partnerships to create a path to commercialization for our traits,” Dr. Peoples concluded.
Recent Progress to Achieve 2019 Milestones
Generate Proof Points on Novel Yield Traits in Key Crops. Yield10 completed planting of the Company's 2019 Field Tests to evaluate several yield and crop performance traits. Key studies include the evaluation of second generation C3003 in canola, as well as the evaluation of C3004 and certain CRISPR genome edited traits in field tests in Camelina. Harvest of the test fields is expected in third quarter 2019, which will enable the collection and evaluation of agronomic, seed yield, oil content and other data from the studies by year end 2019 or early 2020.
Broaden its Intellectual Property Portfolio. Yield10 has filed four new patent applications during 2019, bringing the portfolio to 21 issued patents and pending applications. Recently, a U.S. patent was granted on C3003 and Yield10 received a Notice of Allowance from the U.S. PTO for claims relating to C4001. Earlier this year, Yield10 signed an exclusive global license with the University of Missouri related to a patent application covering additional advanced technology to boost oil content in crops.
Communicate its Scientific Innovations. Yield10 attended the 3rdPrecision CRISPR & NBT AgBio Congress in June and focused its presentation on its proprietary GRAIN platform. The presentation described several traits identified by Yield10 using GRAIN and highlighted a case study demonstrating the use of the GRAIN platform to identify and rank potential regulatory genes predicted to affect yield and/or oil content in an oilseed crop. In August, Yield10 presented at the Plant Biology 2019 conference (ASPB) in a presentation that highlighted recent efforts by Yield10 to boost seed oil content using CRISPR genome edited Camelina and highlighted greenhouse data showing that traits can be deployed to increase oil content in seed. A poster was also presented at the ASPB meeting showcasing the use of the GRAIN platform to identify genome editing targets using metabolism to rationally mine genomics data.
Form Revenue Generating License Agreements and Collaborations. Yield10 continues to monitor the progress of Bayer and Forage Genetics as they deploy and test certain traits in soybean and forage sorghum, respectively, under non-exclusive research licenses from Yield10. Yield10 is also actively engaged in discussions with third parties interested in the Company’s traits for deployment in a variety of commercially important crops.
Manage its Financial Profile and Strengthen the Balance Sheet. Yield10’s financial results for the six month period ended June 30, 2019 are on track with internal forecasts and the guidance range, reflecting a level of investment in research and development consistent with achieving the Company’s objectives for 2019. The Company is committed to strengthening its balance sheet and generating a series of proof points to build value for Yield10 in 2019 and beyond.
SECOND QUARTER 2019 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 the second quarter of 2019 with $4.3 million in unrestricted cash, cash equivalents and short-term investments. The Company continues to anticipate total net cash usage in a range of approximately $9.0 million to $9.5 million during 2019.
The Company's present capital resources will not be sufficient to fund its planned operations for the next twelve months and therefore raises substantial doubt about its ability to continue as a going concern. The Company's ability to continue operations after its current cash resources are exhausted depends on its ability to obtain additional financing, including public or private equity financing, secured or unsecured debt financing, and receipt of additional government research grants, as well as licensing or other collaborative arrangements.
The Company’s net cash used by operating activities during the second quarter of 2019 was $1.8 million, a decrease of $0.1 million from the $1.9 million used in operating activities during the second quarter of 2018.
For the second quarter ending June 30, 2019, the Company reported a net operating loss of $1.9 million, or $0.15 per share, which is $0.5 million lower than the net operating loss of $2.4 million, or $0.24 per share, reported for the same period of 2018.
Total research grant revenue for the second quarter of 2019 was $0.3 million and consistent with the $0.3 million recorded in the second quarter of 2018. Research and development expenses were $1.2 million and $1.3 million for the second quarters of 2019 and 2018, respectively. General and administrative expenses declined by $0.5 million from $1.5 million in the second quarter of 2018 to $1.0 million for the second quarter of 2019, and is primarily the result of lower compensation and benefit expenses, including stock-based compensation and employee bonus expenses, and lower professional fees for legal, audit and patent processing charges.
The Company's 2018 condensed consolidated financial statements included in this press release have been adjusted to reflect the Company's adoption of Accounting Standards Update No. 2016-02 ("Topic 842"), Leases, on January 1, 2019. The effect of the new standard is material to the Company's financial statements. As permitted by Topic 842, the Company elected to modify its 2018 comparative financial statements to incorporate the new lease accounting guidance in order to ensure comparability between all financial periods being presented.