Cibus reports Q1 2024 results, eyes soybean market

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 March 31, 2024, and provided a business update. 

Management Commentary

"We are off to a great start in 2024 with the commercialization of our platform, technology and products," stated Rory Riggs, Co-Founder, Chairman, and CEO of Cibus. "In the first quarter, we signed three agreements for Rice across North and Latin America. Latin America is an important market for Rice production and we now have agreements for commercial development with two of the largest Rice seed companies in the region, including Interoc S.A. In North America, we signed a broad agreement with Loveland Products Inc., a subsidiary of Nutrien Ltd., pursuant to which we will work toward commercializing herbicide tolerance in Rice. We are also excited about our Wheat platform development, which we believe is the world's first successful regeneration of a wheat plant from single cells – marking a major breakthrough for Cibus and for the seed industry."

Mr. Riggs continued, "On the regulatory front, in February the EU Parliament voted to support proposed regulation of gene edited products similarly to conventional breeding, which was a watershed moment for the industry given the EU's stringent regulations around GMO traits. The important shift in sentiment builds upon global momentum in many major countries including the United States, Brazil, Argentina and the United Kingdom, establishing a supportive regulatory position in many of the major global agricultural communities."

Mr. Riggs concluded, "The combination of our product development and advancement toward scalable commercialization advances our vision to become the leader in agricultural gene editing, working alongside seed companies to help farmers address their sustainability, productivity and environmental challenges at a fraction of the time and cost of conventional breeding or GMO methods. These developments combined with the favorable advancements in the global regulatory landscape have Cibus well positioned to make a measurable impact on the industry."

Commercial Progress

Cibus' Three Developed Traits Progress – Launching with Customers

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

• Continued progress in working with customers toward commercializing PSR in Canola

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

• Herbicide Tolerance (HT1 and HT3) in Rice

• Signed collaboration agreements in Rice for HT1 and HT3 traits, including Loveland Products, Inc., a subsidiary of Nutrien Ltd., and Interoc S.A., market leaders in the US and Latin America, respectively.

• Cibus now has agreements with four major Rice seed companies to have Cibus' HT traits placed in their elite germplasm for commercialization

• Cibus believes that these four Rice customers, taken together, represent approximately 40% of the Company's estimated accessible Rice acres across North and Latin America (i.e., acres that would be potentially accessible to Cibus' HT1 and HT3 traits).

• Leading North American customer commenced 2024 growing season with its first Rice HT trait trials planted in the US with their germplasm

  
  

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

• Sclerotinia Resistance

• Successful greenhouse results received in Canola for the first two modes of action

• Expect to have greenhouse results for the third mode of action for Sclerotinia in 2024

• Developing plan to integrate Sclerotinia resistance in Soybean following the development of the Soybean platform

• Herbicide Tolerance (HT2)

• Following successful completion of edits of HT2 in Canola, currently anticipate greenhouse results in 2024

Progress on Platform Development

• Wheat Platform

• Major breakthrough: successfully completed the world's first 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

• Entering into initial discussions with potential seed partners for traits

• 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, allowing for penetration of this large addressable market

• Development of the Soybean platform is a key point of inflection for Cibus' productivity trait and sustainable ingredients business

Corporate and Industry Progress

• Significant milestone in advancing global gene editing regulations

• European Union: 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

• EU proposal is expected to place Cibus' RTDS in a NGT 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

• Other global markets: The movement of other countries approving gene editing as similar to conventional breeding techniques continues to expand as momentum builds globally

• Appoints Jason Stokes as Chief Legal Officer, General Counsel and Corporate Secretary

• Accomplished corporate and business legal executive with extensive governance, securities, finance, and M&A experience across private and public companies

• Rounding out the management team with this role is vitally important as the Company advances its commercial strategy

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

• Expect to collect HT3 field testing data for Rice in Latin America

• 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:

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

• Expect to initiate the first edits toward developing traits for Wheat

• Expect to enter into initial development/commercial agreements related to Wheat

• Sustainable Ingredient Development:

• Continue progress to develop sustainable low carbon ingredients or materials for the consumer packaged goods industry that do not negatively impact the environment during production, use, or disposal

First Quarter 2024 Financial Results

As a reminder, the business combination of Cibus, Inc. (formerly known as Calyxt, Inc. prior to the business combination) (Legacy Calyxt) and Cibus Global, LLC was completed on May 31, 2023, thus all of the 2023 information provided in the Financial Results, Condensed Consolidated Statements of Operations, and Condensed Consolidated Statements of Cash Flows is that of Legacy Calyxt only. Year-over-year comparisons are not comparable as 2024 includes the combined company whereas 2023 only includes Legacy Calyxt.

• Cash position: Cash and cash equivalents as of March 31, 2024, was $24.5 million. Taking into account the impact of implemented cost saving initiatives and without giving effect to potential financing transactions that Cibus is pursuing, Cibus expects that existing cash and cash equivalents will fund planned operating expenses and capital expenditure requirements into the third quarter of 2024.

  
  

• Research and development (R&D) Expense: R&D expense was $12.0 million for the quarter ended March 31, 2024, compared to $2.2 million in the year-ago period. The increase of $9.8 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 $7.0 million for the quarter ended March 31, 2024, compared to $2.3 million in the year-ago period. The increase of $4.7 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.

  
  

• Royalty liability interest expense - related parties: Royalty liability interest expense - related parties was $8.3 million for the quarter ended March 31, 2024. This is a non-cash expense.

  
  

• Non-operating income (expense): Non-operating income (expense) was expense of $0.4 million for the quarter ended March 31, 2024, compared to expense of $0.9 million in the year-ago period. The decrease of $0.5 million in non-operating expense is driven by the fair value adjustment of the liability classified common warrants.

  
  

• Net loss: Net loss was $27.0 million for the quarter ended March 31, 2024, compared to $5.4 million in the year-ago period.

  
  

• Net loss per share of Class A common stock: Net loss per share of Class A common stock was $1.12 for the quarter ended March 31, 2024, compared to $5.46 in the year-ago period.