Yield10 Bioscience, Inc. (Nasdaq:YTEN) ("Yield10" or the "Company"), an agricultural bioscience company, reported financial results for the fourth quarter and full year ended December 31, 2022.
″Yield10 is building a diverse Camelina products business based on our differentiated technology capabilities in this promising crop,″ said Oliver Peoples, Ph.D., President and Chief Executive Officer of Yield10 Bioscience. ″We made significant progress in 2022 to position Yield10 to accomplish our objectives of commercializing elite Camelina as a platform crop to produce low-carbon intensity feedstock oil for biofuels, omega-3 oil for the food and feed markets, and to produce biodegradable PHA bioplastics in the longer term.
″Our commercialization plans this year include an emphasis on the biofuels market to address the growing global demand for new sources of low-carbon intensity feedstock oil. We are developing relationships with oilseed crushers, biofuel refiners, and biofuel end-users, where our goal is to develop a network of alliances to drive the commercialization of Camelina while supporting our capital-light business model. Recent MOUs with Mitsubishi Corporation and American Airlines, as well as the signing of a regional agreement for Camelina grain offtake with a third party crusher/refiner customer, illustrate the direction we are taking to bring this alternative oil feedstock to the biofuel market.
″Even as we build seed inventory to increase seed supply for grower contracts for our current spring and winter Camelina varieties for grain production, we are rapidly advancing the next generation of these Camelina varieties engineered for herbicide tolerance to provide farmers with effective weed control for this crop for the first time. We are on track developing spring and winter herbicide tolerant elite Camelina varieties well-suited for cover cropping and integration into the crop rotations in our launch geography. In 2023, we will continue to develop our lead herbicide tolerant Camelina varieties and begin producing seed inventory to support grower contracts and the expansion of planted acreage in future growing seasons. Feedback from growers has indicated that these new products have the potential to accelerate adoption of our Camelina varieties on their farms leading to adoption on large scale acreage.
″In 2022, we extended our collaboration with Rothamsted Research with a priority of completing the development of an elite Camelina variety that produces the EPA fatty acid component of omega-3 and will be co-deployed with our advanced technology for herbicide tolerance. In 2023 we plan to accelerate the development of advanced EPA omega-3 Camelina. We are also continuing to advance our research program aimed at optimizing PHA yield in Camelina seed to supply the growing demand for biodegradable zero waste plastic packaging.″
″We look forward to the opportunity to achieve our goals and build value in our Camelina products business in 2023,″ said Dr. Peoples.
Recent progress by Yield10 is underscored by the key milestones achieved during 2022 and is setting the direction for the Company’s business strategy in 2023, including:
Building the supply chain for biofuels: In 2022, Yield10 conducted extensive discussions with players across the biofuel supply chain including oil crushers, biofuel refiners, and biofuel end-users. In these discussions, Camelina is viewed as an attractive crop to produce feedstock oil for use in transportation and sustainable aviation biofuels. In 2023, Yield10 is pursuing strategic alliances that could enable larger investment into the development of new Camelina varieties, as the Company builds out the elements of a supply chain to deliver feedstock oil to customers for transportation biofuel. This approach is reflected in Yield10's recent announcements detailing its MOUs with Mitsubishi Corporation and American Airlines for potential collaborations around developing Camelina as a low-carbon feedstock oil for biofuels, including sustainable aviation fuel ("SAF"). In addition, Yield10 recently signed a regional collaboration and offtake agreement which will allow both companies to create a regional supply chain while also ramping up acres over the next few years.
Engaging with farmers to grow Camelina: Yield10 began introducing its Camelina varieties to farmers in the U.S. and Canada in 2022, securing growers to plant its first winter Camelina varieties with individual farmers planting at a scale of up to 160 acres. Yield10 is also building commercial inventory of Camelina seed for planting in the U.S. and Canada and is currently working to contract additional acres with growers for planting in spring and fall 2023. This activity would provide Yield10 with a stream of grain product revenue as it is introducing new farmers to the crop and annually expanding the number of acres under contract.
Controlling weeds is critical to large-scale production of Camelina: Yield10 researchers are executing a program to deploy herbicide tolerance (HT) technology in Camelina to enable robust broad-leaf weed control and to tolerate the effects of other herbicide residues sometimes present in soil. Yield10 tested herbicide tolerant candidate Camelina lines in the field in two cycles in spring 2022 and winter 2022/2023 with excellent results, paving the way for the development of the commercial launch plan for these new varieties. The Company plans further field testing and seed scale-up of commercial quality HT Camelina lines in 2023, to advance development of stacked herbicide tolerant lines, and to accelerate regulatory and registration efforts.
Developing Camelina as a platform to produce high-value omega-3 oil: Camelina is an excellent platform for producing omega-3 oils as a sustainable alternative to the stagnating harvest of ocean fish. In 2022, a patent application filed by Rothamsted Research was published describing significant improvements to the technology for using Camelina as a production platform to make the omega-3 fatty acid EPA for human use as a nutraceutical, pharmaceutical or food additive. Under its collaboration with Rothamsted, Yield10 is advancing development of Camelina lines to produce the EPA component of omega-3 and expects to engage in commercial discussions with potential customers for this high-value specialty oil in 2023.
FULL YEAR AND FOURTH QUARTER 2022 FINANCIAL OVERVIEW
Yield10 is managed with an emphasis on cash flow and deploys its financial resources in a disciplined manner to achieve its key strategic objectives.
Yield10 used $11.4 million in cash for its operating activities during the year ended December 31, 2022 in comparison to $9.3 million used for operating activities during the year ended December 31, 2021. The Company ended 2022 with $4.3 million in unrestricted cash and investments in comparison to a balance in unrestricted cash and cash equivalents of $16.0 million as of December 31, 2021. The Company anticipates total net cash usage during the year ended December 31, 2023 will increase to a range of $13.0 - $14.0 million, primarily as it continues its efforts to develop and commercialize its elite Camelina plant varieties for the biofuel, omega-3 food and feed and PHA bioplastic markets. The increased cash usage for operating activities will support seed scale-up and other pre-commercial Camelina production activities, employee compensation and benefits from recent and future personnel hiring, and further expansion of the Company's crop trial programs.
Research grant revenue for the year ended December 31, 2022 was $0.5 million in comparison to grant revenue of $0.6 million recorded in the previous year. Research and development expense was $7.8 million during the year ended December 31, 2022, an increase of $1.6 million, in comparison to $6.2 million recorded during the year ended December 31, 2021. The year-over-year increase was primarily due to expenses associated with pre-commercial Camelina seed production, higher employee compensation expense resulting from new hires, and expanded crop trial and third-party research service costs. General and administrative expenses were slightly higher at $6.2 million during the year ended December 31, 2022, in comparison to $6.1 million during the previous year.
Yield10 reported a net loss from operations of $13.5 million for the full year 2022, as compared to a net loss from operations of $11.7 million in 2021. For the year ended December 31, 2022, the Company reported a net loss after taxes of $13.6 million, or $2.76 per share, in comparison to a net loss after taxes of $11.0 million, or $2.33 per share, during the year ended December 31, 2021.
Research grant revenues were $0.1 million during the Company's fourth quarter of 2022 in comparison to $0.2 million during the fourth quarter of 2021. Research and development expense increased by $0.3 million from $1.6 million in the fourth quarter of 2021 to $1.9 million in the fourth quarter of 2022. General and administrative expenses decreased by $0.1 million to $1.4 million during the fourth quarter of 2022, from $1.5 million during the fourth quarter of 2021. Yield10 reported a loss after taxes of $3.3 million for the fourth quarter of 2022, or $0.67 per share, compared to a loss after taxes of $3.0 million, or $0.61 per share, in the fourth quarter of 2021.
Other Income (Expense)
Included within other income (expense) during the Company's year ended December 31, 2021, is an investment gain of $0.7 million within other income (expense) from its 2002 investment in Tepha, Inc. ("Tepha") a related party, and was the result of Tepha's acquisition by Becton Dickinson in July 2021.
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