Cibus reports second quarter financial results and provides first half business update

Date:08-12-2024

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 June 30, 2024, and provided a business update for the first half of 2024. 

Management Commentary

″The past six months have been some of the most important in our history, marked by the successful progress of many commercial, trait and platform development milestone achievements, and critical developments in the regulatory environment for gene editing technologies,″ stated Rory Riggs, Co-Founder, Chairman, and CEO of Cibus. ″This quarter, we successfully completed our edit for a third mode of action for our Sclerotinia resistance trait and our initial edit for a multi-crop Nutrient Use Efficiency trait – marking solid progress toward the development of our pipeline of gene edited traits. We have also gained significant momentum this year in Rice, our first grain platform, with an additional collaboration for our herbicide tolerance traits with FEDEARROZ, one of the largest rice seed companies in Latin America. We now have collaboration agreements with four major rice seed companies in North America and Latin America. These agreements position us well to be a leader in licensing a new generation of gene edited herbicide tolerance traits in Rice.″

Mr. Riggs continued, ″Our progress is underpinned by our proprietary gene editing platform, which represents a paradigm shift in breeding complex traits, built on over 25 years of rigorous research and development and backed by our extensive patent portfolio. Unlike traditional GMO breeding, our Trait Machine process can produce specific genetic traits that are indistinguishable from traits of conventional breeding, with greater accuracy in materially less time and cost. Although we are still waiting for final agreement and approval in the EU, the recent progress in 2024 with the UK approval to enable development and marketing of gene edited crops in England, the favorable European Union parliament vote on its position on New Genomic Techniques, and approval in Canada of updated feed guidelines that will regulate Cibus' gene editing technologies similar to conventional breeding, is further confirmation of the global movement to regulate traits from our Trait Machine process similar to traits from conventional breeding.″

Mr. Riggs concluded, ″As you can see from our milestone achievements and year-to-date progress, this year has been about our continued transformation from an R&D-focused company to the first commercial stage gene editing company in agriculture. Our focus is on developing traits with specific genetic attributes to drive productivity. The development of new proprietary traits, the scaling of our Trait Machine process, coupled with increasing global regulatory support, is setting the stage for this new industry of gene edited traits."

Commercial Progress

Progress of Cibus' Three Developed Traits – Transferring Traits to Customers¹

• Herbicide Tolerance (HT1 and HT3) in Rice

• Including an additional agreement with FEDEARROZ in the second quarter, Cibus now has agreements with four major Rice seed companies in North and South America 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).

• 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 2024, starting Cibus’ commercialization efforts for WOSR in Europe.

Progress of Cibus' Three Advanced Traits and Sustainable Ingredients

• Sclerotinia Resistance

• Successfully made edits in Canola for the third mode of action for its White Mold (Sclerotinia) resistance trait, an important milestone for providing durable resistance to White Mold disease in Canola and subsequently other crops, including Soybean.

• Now that editing is confirmed for the third mode of action, the plants will be evaluated in a controlled environment with results expected later this year.

• As a reminder, Sclerotinia is a multi-crop trait, meaning that the efficacy achieved in Canola can be translated to other crops, including Soybean, and eventually, the Company will have the opportunity to earn royalties across multiple crops for the same trait.

• Herbicide Tolerance (HT2)

• Successful completion of edits for HT2 in Canola.

• Nutrient Use Efficiency (NUE)

• Successful initial editing in Canola for its Nutrient Use Efficiency (NUE) trait, believed to be the first NUE gene edits in a major crop in North America.

• NUE traits are part of a very large category of traits relevant globally to all crops that can make fertilizer use more efficient, without compromising the yield that farmers expect.

• Cibus' editing of its NUE trait in Canola is Cibus' first entry into the NUE field.

• This NUE trait is Cibus' first use of its Trait Machine process to operationalize a third party developed trait, demonstrating the Company’s ability as a development partner to take third party identified gene targets and successfully make edits in Cibus' platforms to develop a trait.

• Sustainable Ingredients

• Material increase in funding for its sustainable ingredients effort in 2024 and 2025.

Progress within Crop Platforms

• Wheat Platform (Operational)

• Successfully achieved major breakthrough of operationalizing Cibus' Wheat platform, which is one of the world's two major grain crops.

• Cibus is actively engaged in initial discussions with potential seed company partners.

• Soybean Platform (Advanced)

• Expect Soybean platform to be operational in 2024, allowing for penetration of this large market of over 200 million addressable acres.

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

Corporate and Industry Progress

• Expansion of IP coverage for plant gene editing and traits

• In the first six months of 2024, Cibus received additional patents across 10 plant gene editing and trait families, further strengthening the Company’s IP portfolio in its Pod Shatter Reduction, Herbicide Tolerance, High Fiber Wheat, and Improved Quality Alfalfa trait families.

• The IP expansion covers gene editing, productivity traits and quality traits that strengthen Cibus’ patent coverage in geographies including, but not limited to, Europe, Asia, Latin America, and North America.

• Canada added to growing list of countries regulating Cibus’ gene editing technologies similar to conventional breeding

• In May 2024, the Canadian Food Inspection Agency (CFIA), Animal Feed Division published updated feed guidelines confirming that CFIA will regulate products from gene editing like those developed through conventional breeding.

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

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

Expected Milestones

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

• Developed Productivity Traits:

• Continue expansion of the customer base for Cibus’ herbicide tolerance platform in Rice

• Expect our first European field trial results for PSR in WOSR in 2024

• Expect field trial results in Canola (Spring Oilseed Rape) in 2024

• Advanced Productivity Traits:

• Complete editing and expect greenhouse results for a third mode of action for Sclerotinia resistance

• Complete editing and expect greenhouse results for HT2

• Platform Development:

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

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

• Expect to initiate the first edits toward developing traits for 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

• Launch first sustainable ingredient in 2025

Second 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 the first five months 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 for the first five months.

• Cash position: Cash and cash equivalents as of June 30, 2024, was $30.0 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 fourth quarter of 2024.

  
  

• Research and development (R&D) Expense: R&D expense was $13.0 million for the quarter ended June 30, 2024, compared to $8.4 million in the year-ago period. The increase of $4.6 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. These expenses were partially offset by $1.3 million in one-time expenses due to the closing of the Merger Transactions in the year-ago period.

  
  

• Selling, general, and administrative (SG&A) expense: SG&A expense was $9.3 million for the quarter ended June 30, 2024, compared to $11.1 million in the year-ago period. The decrease of $1.8 million is primarily related to $6.5 million in one-time expenses due to the closing of the Merger Transactions in the year-ago period. This decrease is offset by 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 $8.7 million for the quarter ended June 30, 2024, compared to $2.6 million in the year-ago period. The increase of $6.1 million is the result of two additional months in the second quarter of 2024 vs the second quarter of 2023. This is a non-cash expense.

  
  

• Non-operating income, net: Non-operating income, net was $1.6 million for the quarter ended June 30, 2024, compared to $1.3 million in the year-ago period. The increase of $0.3 million is driven by the fair value adjustment of the liability classified common warrants.

  
  

• Net loss: Net loss was $28.5 million for the quarter ended June 30, 2024, compared to $20.5 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 $1.14 for the quarter ended June 30, 2024, compared to $3.05 in the year-ago period.