Financial Data and Key Metrics Changes - R&D expense increased to $8.4 million for Q2 2023 from $3.2 million in the prior year, primarily due to higher lab supply costs, increased headcount, and stock-based compensation related to the acquisition [6] - Net loss for Q2 2023 was $20.5 million, compared to a net loss of $2.5 million in the same period last year, with net loss per share of Class A common stock at $2.74 versus $2.66 [7][15] - Cash and cash equivalents as of June 30, 2023, were $50.9 million, expected to fund operations into Q1 2024 [14] Business Line Data and Key Metrics Changes - SG&A expense rose to $11.1 million for Q2 2023 from $3.6 million in the previous year, attributed to increased headcount, consulting, legal fees, and stock-based compensation [18] - The merger with Calyxt reflects a transition from legacy operations to combined business operations, impacting financial results [2][4] Market Data and Key Metrics Changes - The company has successfully returned three developed traits to customers, including pod shatter reduction in canola and herbicide tolerance in rice, with expectations for five more canola transfers in 2023 [24] - The company is entering breeding collaborations with major seed companies, including Bayer, to test and validate its Trait Machine process [26] Company Strategy and Development Direction - The merger is seen as a pivotal moment for the company, transitioning from R&D to a commercial entity, with 2023 identified as an inflection year [22] - The company aims to develop advanced traits that can be commercialized quickly, leveraging its Trait Machine technology to enhance productivity in agriculture [33][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the regulatory landscape, noting that many markets are moving towards legislation that would regulate gene-edited traits similarly to conventional breeding [47] - The company anticipates that its first royalties from customers will begin to appear in 2025 to 2026, following the completion of necessary validations and registrations [85][106] Other Important Information - The company has a pipeline of six traits, with three developed and in the market, and two in advanced stages of development [75] - The company is focused on complex traits that involve multiple edits, which are difficult to achieve through conventional breeding methods [45] Q&A Session Summary Question: What is the expected cash burn trend? - The operating burn is currently about $6.5 million per month, expected to trend up to $7 million by the end of the year [104][105] Question: What is the timeline for cash revenues from trait transfers? - It is expected to take 2 to 3 years after transferring traits to customers for revenues to start appearing [106] Question: How does the company plan to handle royalties from gene-edited traits? - Royalties will be collected at the end of the planting season, with expectations for first royalties to appear in 2025 to 2026 [84][85] Question: What is HT2 and its significance? - HT2 represents a new mode of action for herbicide tolerance, providing broader weed control options for farmers [91] Question: Are there concerns about saving seeds and royalty collection? - The company does not have concerns about seed saving as customers manage that aspect effectively [92] Question: What are the synergies expected from crop-to-crop learnings? - The company anticipates that learnings from canola and rice will facilitate the introduction of traits into soybean, enhancing collaboration opportunities [95][99]
Cibus(CBUS) - 2023 Q2 - Earnings Call Transcript