Cibus reports fourth quarter financial results and provides business update

Cibus, Inc. (Nasdaq: CBUS) (the "Company"), a leading agricultural biotechnology company that uses proprietary gene editing technologies to develop plant traits (or specific genetic characteristics) in seeds, announced its financial results for the quarter ended December 31, 2023, and provided a business update. 

Management Commentary

"2023 was a pivotal year for Cibus, both in terms of our evolution as a public company following the merger with Calyxt and the implementation of our commercial strategy as we transformed from our research and development origins," stated Rory Riggs, Co-Founder, Chairman, and CEO of Cibus. "The centerpiece of our commercialization goals are the commercial advancement of each of our three developed traits — Pod Shatter Reduction in Canola, and our two herbicide tolerance traits in Rice, HT1 and HT3. We've made significant progress on the commercial front with several advancements of these developed traits, including transfers to customers. We also continued the progression of our advanced traits — Sclerotinia resistance, and our HT2 trait in Canola and Winter Oilseed Rape — and our efforts to extend our proprietary RTDS platform to the world's major crops. Furthermore, we celebrated a key catalyst for our industry in February when the EU Parliament voted to advance new regulations that, when adopted, will treat the applications of gene editing technology like ours in a similar fashion as conventional hybridization techniques that have been in existence for centuries. This vote was a significant milestone for our entire industry and is a crucial step that will help Cibus usher in the gene editing era."

Mr. Riggs added, "At Cibus, we are building a leading agricultural biotech company that uses proprietary gene editing technologies to develop complex plant traits in customers' seeds to address farmers' most pressing productivity and yield challenges. We develop these productivity traits using our gene editing platform – the Rapid Trait Development System™ or RTDS, which is the core technology driving our Trait Machine™ process. Our technologies enable us to efficiently and directly edit traits into our customers' elite germplasm and form the cornerstone of our strategy to revolutionize the speed, precision, scale and range of new trait development. This is how we are leading the charge into the gene editing era. The incredible commercial momentum we have achieved so far is as strong an endorsement of our technology as it is of our ability to partner with the breeding operations of some of the largest seed companies in the world. We truly believe Cibus is at the forefront of agriculture's analog to digital moment and we are excited about our continued commercial progress in the months and quarters to come."

Commercial Progress

Progress of Cibus' Three Developed Traits – Launching with Customers¹

• Pod Shatter Reduction (PSR) in Canola and Winter Oilseed Rape (WOSR)

• 10 seed company customers have entered into agreements to have Cibus' PSR productivity trait edited into their elite germplasm for commercialization

• Successful ongoing field trial results demonstrated a high level of PSR in seed developer genetics and achievement of the Cibus Powered™2 PSR standard

• Commenced PSR field trials for WOSR in the UK with results expected in late 2024, starting our commercialization efforts in Europe

• Herbicide Tolerance (HT1 and HT3) in Rice

• Three major Rice seed companies, including Nutrien and Interoc, have entered into agreements to have Cibus' HT traits edited traits in their elite germplasm for commercialization

• Signed collaboration agreements with multiple seed companies in North and South America to launch Cibus' HT traits in the US and Latin America, and also intend to explore new differentiated Rice traits

• Completed first transfers of customer's elite germplasm containing HT1 and HT3 productivity traits with more trait additions in progress

• Successful ongoing field trial results demonstrated a high level of HT in seed company genetics

• Expect to expand our current field testing of HT1 and HT3 in Rice to Latin America

Progress of Cibus' Two Advanced Productivity Traits - Sclerotinia Resistance and Herbicide Tolerance (HT2)

• Sclerotinia Resistance

• Successful greenhouse data for the first two modes of action

• Expect greenhouse results for a third mode of action in 2024

• Developing plan to integrate Sclerotinia resistance into Canola and Soybean once the Soybean platform is developed

• Herbicide Tolerance (HT2)

• Completed successful edits of HT2 in Canola in 2023

• Expect greenhouse results in 2024

Progress on Platform Development

• Wheat Platform

• Major breakthrough with world's first successful regeneration of Wheat plants from single cells demonstrates continued success in developing scalable high-throughput breeding platforms that can operate as extensions of seed company breeding programs

• Wheat platform opens the potential to develop various productivity and sustainability traits to address the most significant challenges faced by farmers globally

• Soybean Platform

• Expect Soybean platform to be operational in 2024

• Development of the Soybean platform is a key moment for the development of Cibus' sustainable ingredients business

Corporate and Industry Progress

• Significant milestone in advancing EU gene editing regulations

• On February 7, 2024, the EU Parliament voted to support a new proposal for the regulation of new genomic techniques (NGTs), which now moves to negotiations with the Council of the EU and the European Commission

• Proposal is expected to place Cibus' RTDS in a NGT1 category where it would be regulated similarly to conventional breeding

• When adopted, this milestone would mark the opening of the market to new seed technologies and starts the gene editing era in the EU

• Opened Dedicated, High-throughput Gene Editing Facility for Trait Production

• Supports vision to change the precision, speed, and scale, and range of Cibus' growing RTDS crop and trait development pipeline

• Represents the industry's first semi-automated gene editing trait production system that provides a timebound, predictable, and reproducible breeding system for the editing of commercial plants

• Raised $20.3 million of gross proceeds in December 2023

• Cibus intends to use the net proceeds to fund further development of new and existing seed productivity traits, including in Canola and Rice, Trait Machine process maintenance, research and development, working capital, and general corporate purposes

¹ See "About the Cibus Trait Machine™ process and Rapid Trait Development System™" for information regarding our initial customer relationships.

² Cibus Powered™ is the internal Cibus trait standard that ensures each Cibus trait meets minimum efficacy and quality assurance commercial requirements.

Expected 2024 Milestones

Cibus has several important development and commercial milestone targets for 2024:

• Developed Productivity Traits:

• Expect 8 of 10 PSR customers in Canola to have their elite germplasm edited with Cibus' trait either transferred to the customer or ready to be transferred to the customer by year end 2024

• The transfer of an edited germplasm containing a Cibus trait to customers enables the start of a commercialization process

• Expand customer base with existing developed productivity traits

• Advanced Productivity Traits:

• Expect greenhouse results for a third mode of action for Sclerotinia resistance

• Expect greenhouse results for HT2

• Platform Development:

• Soybean single-cell regeneration platform will be operational and have initial editing completed

• Expect to demonstrate initial edits toward developing productivity traits for Wheat

• Sustainable Ingredient Development:

• Complete editing discovery efforts for alternative oils for CPG industry

Fourth Quarter 2023 Financial Results

• Cash position: Cash and cash equivalents as of December 31, 2023, was $32.7 million. The Company believes cash and cash equivalents will enable Cibus to fund planned operating expenses and capital expenditure requirements into early in the third quarter of 2024.

• Research and development (R&D) Expense: R&D expense was $14.2 million for the quarter ended December 31, 2023, compared to $2.3 million in the year-ago period. The increase of $11.9 million is primarily related to increased lab supply and facility expenses, an increase in employee headcount, and an increase in stock-based compensation expense for restricted stock award grants.

• Selling, general, and administrative (SG&A) expense: SG&A expense was $6.8 million for the quarter ended December 31, 2023, compared to $1.0 million in the year-ago period. The increase of $5.8 million is primarily related to an increase in headcount, increased consulting and legal fees, and an increase in stock-based compensation expense for restricted stock award grants.

• Goodwill and intangible assets impairment: Goodwill and intangible assets impairment was $249.4 million for the quarter ended December 31, 2023. The non-cash expense is due to the impairment of goodwill and in-process R&D indefinite-lived intangible assets acquired in the merger with Cibus Global, LLC completed on May 31, 2023. The Company evaluates the carrying value of goodwill and indefinite-lived intangible assets for impairment annually as of November 1 each year. The annual assessment resulted in a partial goodwill impairment of $150.4 million and a full impairment of the in-process R&D indefinite-lived intangible assets of $99.0 million.

• Royalty liability interest expense - related parties: Royalty liability interest expense - related parties was $8.1 million for the quarter ended December 31, 2023. This is a non-cash expense.

• Non-operating income (expenses): Non-operating income (expenses) was income of $0.1 million for the quarter ended December 31, 2023, compared to income of $0.5 million in the year-ago period. The decrease of $0.4 million in non-operating income is due to $0.8 million received in the fourth quarter of 2022 related to a settlement with one of its technology vendors regarding alleged intellectual property infringement partially offset by a $0.4 million of merger transaction costs in the fourth quarter of 2022.

• Net loss: Net loss was $277.2 million for the quarter ended December 31, 2023, compared to $2.8 million in the year-ago period. The increase of $274.4 million in net loss was driven by the $249.4 million non-cash goodwill and intangible assets impairment. The remaining increase in net loss is described above.

• Net loss per share of Class A common stock: Net loss per share of Class A common stock was $12.59 for the quarter ended December 31, 2023, compared to $2.93 in the year-ago period. The increase of $9.66 in net loss per share of Class A common stock is primarily driven by the non-cash goodwill and intangible assets impairment which accounted for approximately $11.32 in net loss per share of Class A common stock. This is partially offset by a year-over-year increase in weighted average shares outstanding.