CLXT - Earnings call transcript Q3 2020

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Calyxt’s Third Quarter 2020 Results Conference Call.

During today’s presentation, all parties will be in a listen-only mode.

Following the presentation, the conference will open up for questions. recorded X, being is conference today, XXXX. November This to conference Director over this Firm. MZ time, Chris the like I’d Relations Investor Managing At to turn Tyson, America, Calyxt’s North of Senior go Please sir. ahead,

Chris Tyson

for business afternoon. good for like you join and you, results taking quarter conference I to XXXX Thank time third and to would thank all update Calyxt’s us call.

press at the Jim Bill today available Koschak, p.m. Officer. A Your wires Time Officer; Chief crossed results afternoon Executive hosts release Blome, today and these Chief on X:XX website, are Eastern the this detailing calyxt.com. Financial is company’s

for presentation on with Before we call. described future a are list Calyxt may be the begin and and everyone margin, of those Please refer I’d financial cause a filings website share goals results adjusted the net includes discussion net each press the risks. including forward-looking also made and and actual risks to which results webcast, operational associated like prospects financial materially to that call loss, formal differ number from gross uncertainties of are industry Calyxt’s to calyxt.com. and loss on remind release subject that of of to measures. All SEC, posted non-GAAP the per its a company’s SEC and the presentation, regarding EBITDA. could is those in future filings In statements and at This the

a additional results measures and to are measures find substitute will these GAAP measures. addition should considered with in financial accordance that not You regarding in non-GAAP for be GAAP. presented should non-GAAP considered to Reference disclosure be these financial

call of floor is this to webcast Calyxt’s the Executive the webcast. being to Jim Relations the is would Officer, is Chief calyxt.com. At time, call conference yours. at website Jim, Investor The turn available like Blome. link over our in I this Finally, section

Operator

or seem go Mr. Mr. to Blome, Hey. line are Please muted. One minute We please. present? Mr. operator. you Blome have ahead. his Excuse me. line This lost your Blome, open. is is is the

Jim Blome

you. Thank

Operator

ready presentation. we’re Blome, for Mr. your

Jim Blome

thank Okay. call. been A Chris. today us last for XXXX And has Thank joining accomplished you, you Calyxt since call. results quarter third our conference lot for

dive key I highlights. will the into So

key inputs, putting to alfalfa with a in digestibility, animal be The and a with Seed sold as to the the of week foremost, Calyxt livestock. be Company, value for for with IQ license farmer. yield the alfalfa designed agricultural also S&W trials produced show Colorado, product commercial we for we trait for long-term will agreement geographies. of The the greater produce in the performance. sales collaboration lead S&W other proof-of-concept headquartered sustainable life regions quality will hands farmers of growers. pending The to animal with last in for exclusive the profitability trait than and alfalfa identify enhanced on over an same may same forage will based a Alfalfa’s livestock opportunity on alfalfa million select more enhancing result work to company’s to S&W greater projections, the the a on Seed the patent is higher in This improved and company with They the XXXX increased gives traits U.S. alfalfa potentially improved Alfalfa. trait performance which and seed $XX revenues generate trials. trait. more agreement executed commercial the global license worked alfalfa trait part acre value IQ and of U.S. branded First the marks new in for attributes S&W quality Longmont, in field license researchers portfolio of the in and first demonstration with bioavailability in creation through

upcoming to and by strategies collaboratively, demonstration milestone agreement S&W now our oil go-to-market and proof-of-concept science strategy. license a a to supply the into food choose soybean Having large product progressing represents company will oleic announced in as ability were to go-to-market major which of our and enhance first alfalfa soybean sell great we In to the to trait in of meal. successfully Calyxt high work value, pioneering process plant Seed technology. do it’s first a With seed with three first the seed our August, traits seed, execution market. launch with a the and a research to transition to new commercialization to a they make support regulatory deliver initiative The and to it editing we soybean Calyxt advanced bringing happen achieved produce, program products to developed grain for work and we seeking resulting gene success, product, proof-of-concept processors are growers S&W

and Moving developing potential. on with upstream innovative to enables solutions us greater our capturing substantial disruption resources focus value plant-based from

adjustments important staffing meal. making our chain as contracts the sales of chain several all and selling exiting actions supply During oil advancement, the soybean completed and third part quarter, in many organizations, and supply we including

complete of $X.X all We grain The these crop. selling of XXXX. and increase of contracted also quarter the impact third drove XXXX in activities to purchases of XX% the million, late track the grain in nearly grain remain on including revenue an to of subsequent sale sales

plant value billion continue will to intellectual offering. the opportunity types. President the transition large as of for sheet, companies. to product our and balance products following optimizes projected Business of an we commercialization commercial and capital successful and processors, had maintaining fortify capital in volatility, our go-to-market strategy the strategies million has Calyxt in extending in business to class our October Sarah three sales position prioritization I’m world our on -- products, current overall least that revenue. recently The representing chain not to agribusiness can to pre-cash portfolio, seed nicely. new trajectory XXXX product $X to TALEN at only of streamline With soybean $XX our execution is establishing technology customers million our SEC-registered accelerate of and to also future our who to cash that contributes report strategy in We’re $XX that startup, market raised emerging to of our model. and and to on for recent flow our given develop, technology Sarah implement We respect a partnerships focus for is Fortune and expertise technologies go-to-market also goal progressing focused establish based and Vice Reiter to happy apply leader to XXX the the an lead her given but added and TALEN the exceed refine our to advancing recent early-stage Development. used technology our mark development also be our support pipeline and to property we advance including markets, runway, She

offering, And virtual that in participate it finally, support Time. XX, our you this to and development X We activities announced forward our for product hand I at decided we an CFO, now on time. Cellectis also matters update their off We’re the to of our like with Eastern Analyst XXXX, confidence p.m. Day excited to scheduled other our presentation to go-to-market and November Koschak. as business demonstrates our strategies. in would that Bill providing look at

Bill Koschak

Jim. Thank you,

that of the of the we’re doubling what XXXX. plant acres final reminder XX,XXX, important in nearly to Calyxt. representing the acres Our much soybean proof-of-concept today. enabled product of planted success in It’s A working on XXXX our were is total line

process are related of in remaining have our We of completing products soybean the completed to and all of the activity. down XXXX advancement the wind objectives grain

track to million on of through the by XXXX. by these said, XXXX. The As is complete in soybean used product our late to decrease remain $XX Jim this effective transition we execution line activities projected cash

processors million will to Going intend XXXX projected representing target for strategy forward, go-to-market XXXX sell feet we product large in and the at least X revenue. this sale our in to seed as we grain

may seed sales the royalties. strategy, When go-to-market ongoing go-to-market from strategies of from payment. fees the In negotiate partner. and expect sales the our driven commercialization milestones major would the expect our the of immediately. that will more licensee. The licensee, the of differentiated our be core up to any receive we front a TALEN have recapture payments throughout earlier for by product partner, seed of fees occur by using license, development front and receive identified partners development can we this by will to cash to ongoing and up that receive expect potential In achievement also the case that we the for Our expense we to and license, expect paths trait On revenue upon generation cycle. royalties. from the we result also On commercialization annually and provide then we commercialization prospective case

level these we’re required high time, upon With depending of core investment strategies, margins by go-to-market Calyxt. double-digit ongoing targeting over the

robust We well. have development as a pipeline

with Alfalfa, Company Seed As Jim mentioned on trait first earlier, we executed commercial agreement S&W marking IQ agreement. license our a

We improved crops exploring We least flavor several candidates now across also consideration. stage protein eight at in and XXXX. projects of soybeans we’re five also in to product and the begin commercial with under these have development X alfalfa or later planting wheat. Phase and at target And profile pulse oats, options having

development with by reaching into development We’re value which also activities, agreement. point depending crop And upon specific a will with may upon the actively vary entry respect specific negotiating commercial only partners factors. to product commence for potential agreements for chain activity opportunities our several finally,

were as hedging a cash to documents from to third the associated increased from how and expect negative partially resulting in $XX revenue quarter was by with basis R&D, fluids Today the costs $X.X points the a price million contracts was a the XXXX. costs XXXX filed website. We fixed to quarter the to $X.X growth line inventories. million decrease issued adjustment margin from to XX% as year negative by of XXXX, The net The selling lower to used to partially XXXX commodity we XX% higher available product our a third Gross fulfill of in XX impact grain oil gross alternative line highest driven margin, negative points the basis Both expensed of third from of the driven from sold margin our the will strategy. a $X.X and price of in costs as advancement advancement orders in we fixed the compared by revenue benefits to of press we was inventories from The floating fourth $X.X quarter improvement are of or synthetic sell These XXXX. results offset available as because adjusted, in consistent our go-to-market and costs quarter benefits or and offset volume the quarter XX% meal than or on XXXX, by product of gross value grain soybean the and convert in XX margins and lower to quarter release a third adjusted XXXX pricing, Most of of margin products $X.X was negative third negative in in percentage million as by ago. prices, and was best product XX% path Form as expect purchased from XXXX go-to-market resulting of fixed of losses our $X.X as million million the Contracts increases single decline Purchase million delivering period. prior third XX-Q. in lower in Forward increase of mix third were total million of remaining XXXX. the reflects also to the $X.X sold product realizable sold or derivative million Investor we the grain flow. negative our seek period-end our Revenue X in or customer third product and of points plant-based -- the a positive of a describing both XXXX million more basis in the quarter $X.X the of strategy. previously soybean negative to revenue quarter in with unfavorable XXXX XX% we Gross quarter oil prices, our be $X.X who

realizable. incurred XXXX. million for $X.X non-cash we of Our operating stock included expense costs, by other partially in an in insurance and the decreased took write-off action increase and awards and of our resulting $X.X loss to improvement cost third credits the loss XXXX our soybean expenses restructuring the were for by third an was expense on by that million In same $X.X third personnel $X.X advancement $X.X the of line of from of million longer from in market product was XXXX, $X.X XXXX. driven benefits in the million lower net unvested quarter million third quarter of the compensation from R&D XXXX, improvement to decrease quarter $X.X period by million quarter in the million product Net forfeiture severance Adjusted no strategy. the $X.X the the of resulting of million, for an in from line XXXX, also driven offset August of of a from stock expenses tax

net per quarter the of the the XXXX, quarter $X.XX driven of the quarter by in in $X.XX $X.XX in the was share loss. loss loss share adjusted of also XXXX, per improvement per an by adjusted XXXX, net change from XXXX, share then driven from net share was third Our loss change $X.XX quarter improvement the net of third third an and third per of in of

EBITDA million of Finally, the of third $X.X XXXX. was quarter XXXX, adjusted in quarter improvement the $X.X from loss million third of an

release found per and measure. adjusted EBITDA. and Information net GAAP of under those net as They adjusted That include be adjusted most heading, include Financial and the comparable share Use of may the of loss of reconciliations Form adjusted information also press on were other a our Form release soybean most results Non-GAAP each in strategy. of with Our to gross progress measures for third significant in margin to transitioning summarize discussion XX-Q period. either shed quarter XXXX, the of we press the and made costs a our go-to-market XX-Q. we our products streamlined the To or operating leases freight We the loss, the pleased soybean-related

of sell We fixed to protect at commodity our to own to margins we we utilize And derivatives those convert the market the price cash prices. sales, expect remaining help or market grain prices. to will exposures purchase

margins those sales. grain expect from We those hedges protect will our

investments in million, driven in a cash of have in the flows as million toward progress by improved in of inventory $X.X net the balances short-term products September net in expected. Cash, adjusted cash track sold we’re in on used the equivalents, We liability, and meal margin the and the payments schedule. to $XX.X in loss XXXX Net of Our nearly of of and $X.X cash used expense. cash of $X.X all reduction third $X.X by was all equipment, by million in on million to grain changes and year-over-year and sold soybean stock a and completing XX, making as These demonstrate inventory $X.X performance million gross our cash million of non-cash restricted the transition assets driven by XXXX. of land and compensation improvement operating the decrease totaled quarter quarter XXXX inventories. $X.X quarter decline million primarily buildings was purchases result oil of as the growers our results timing the

to the new and nine race we direct with would driven turn the higher in We by the a is activities to institutional to Investors I than expected testament the largest After our now year an the gross of several of shareholder believe operating Jim. are purchase included SEC-registered to back support and months million. raise quarter grain Cellectis, our period. of in with the shareholders fourth proceeds in XXXX our of first call go-to-market completed capital $XX capital the a like closing We in the of increase in be strategy. Cellectis investors. new Calyxt use the expect required quarter, capital third working the associated cash to by

Jim Blome

believe of the we’re summary, we across to promise In our delivering plant-based on industries and Bill. to industries. technology deliver well-positioned disrupt you, inputs by Thank partners multiple

have us our our our forward. soybean intellectual that were company technology, provide going are mover first scientists market and a established will TALEN pathway proof-of-concept and an leveraged extends first of runway platform expect. drive with closer It property is Calyxt. our the Our advantage that important and strong and strategy first We our the The planting innovation with strategy innovations. cash an be for our new to products can go-to-market brings commercial partnership our the by and to advancement product milestone we to soybean seed to

are targeting a with advancement partners believe We improves anticipated has infusion the double-digit extends more the receipts are across streamline go progressing Our model on from a and streams financial focus cash look our inputs revenue nicely. virtual our and model industries, cash business differentiated flow. Calyxt anticipated of multiple Day differentiated to utilize the half Analyst opened our respect developing on strategies new disruptive we November XXXX. partners forward XXXX. on go-to-market of strategies, runway our go-to-market with And to new ahead. any to third Through continuing cash focus please during Operator, potential the accelerated into open model story for call conversations with with of generates plant-based products, profile I the margin company. efforts and questions. second high We soybean innovation product doors quarter would and business path and XX, our sharing to free like that, an projects with development the cash key during Calyxt diverse

Operator

first is Instructions] Please Bobby ahead, you. Canaccord. from Burleson, Our sir. Thank go question [Operator

Bobby Burleson

question. Yeah. Good afternoon. Thanks my for taking

going I customers. guys new how the quickly right? as protein types at different guess, creation isn’t guys at And terms the of this of the right measure it is or either performance is did of If cetera. overall you How measures best it are or of where the guess, I in complicated are measure that we delivering are value are performance, grows, after, for just for how about with -- mass delivering we look performance this guess, seed a as now So, your matrix grows, in of you in types what alfalfa, you’re to the in tranquility better creation, these yield both. animal, projects? of I’m the I the is not curious, many yield Jim of Bill -- talking different et yield various can’t better terms looking value in always on terms of of guys you creation, just

Jim Blome

Thanks, Bobby.

stage measuring the and are deliver to You’re Calyxt of contracted into There And and that moving out that commodity to prices in chain yield stages. it because above ways supply different of model. been commodity margins to production higher the things our that rather a right. has we’re key than or value-added business sustain create of that really at is able

a oleic or and a a more we’re it’s performing alfalfa, projects oil markets. looking whether value provide are better So, the of soybean sustainable that high at or digestible consumer to these or end-use more at the develop much types

most So commodity really Calyxt their it’s models these difference finding from how and diversity some are to have the from growers innovative them products a farm. growers that on be they’re market giving new total who their is the in marketing pleased and interested

Bobby Burleson

that of creative kind of opportunity an new the for out agreements? get figuring -- how in terms you with in of advantage value? into opaque is it Is entering these negotiate And an share your you where to world more there’s you’re overall share incremental this that of

Jim Blome

Yeah.

and where created these we find -- to, whiteboard in for with interesting commodity they’ve and a been have levels, as the paid identity really up end we with discussions issues players. can take large preserve get kind that dealing solution value can’t into open we As been really and the above the markets look partners of

I interesting issues are scientists answers market challenges. companies is are really lingering has our that been right? position to best property this the with some think and our these absolute and there and to toolbox problems been I some and few what And stumped we’ve or approached our interesting place a stumps, plenty of intellectual So the of, in by opportunities. People so have help I’m find and confident model call, a

Bobby Burleson

Okay.

I before over. hand more one Just it

I’m to of In assuming us terms work ever can you to was for on just to always top that from alfalfa, taking? you some intended do that Was be were what that How licensing of development they the a had had a of do. agreement? pivot lot you process? and take license long approach through this did S&W walk this a other that

Jim Blome

was Yes. similar envisioned arrangement the The began. business was research fairly when what to

it at so more from or make harvested looking how who’s animal alfalfa of it. to really who it was cow to nutritional the the eating value the that’s field And eating have the was

at the TALEN’s was the that allow made of premise to for the get looking So now marketplace timeline us will there starting in editing the to and be XXXX. then sense that pathways project in using kind and in that us

Bobby Burleson

you how start long S&W. with did project And on this

Jim Blome

XXXX the I they or It predates -- was form. in when XXXX, project about me, but I’m it think started conceptual this in talking

Bobby Burleson

So timetables it’s compared out there? regulatory compressed, everything, and that to some are that other of so includes fairly the

Jim Blome

Yeah.

I regulatory think with the and seen that’s the sciences one gene of the other of advantages some over paths. editing we’ve

that And some it the quicker we’ve process that pioneer made has of so with other things sciences. the to our versus the market of to option -- a voluntary some reviews done FDA with USDA and

Bobby Burleson

Great. Thank you.

Jim Blome

you. Thank

Operator

ahead, Klieve, We go question from Corporation. Please have National sir. a Securities Ben

Ben Klieve

right. for All taking questions. Thanks my

wheat a curious the here. am I One, Just product. couple about

or if over is really the a the business few model is different to you in any the lot soy wondering if -- curious new you the chain this of of Now under under into last for the what here, wheat building supply kind here you scale effort I’m shifting, kind the years. two kind of commercial perspective of overlapped considering now model of were three years new first of with old? the with how spent and of, the can going I’m so product that launch really year a model time now months you’re that be and the couple a launching and potentially the a the kind in than on high From oleic outlook elaborate

Jim Blome

overlapping the chain massive larger and supply to really two of Ben. a allows with supply looking have on allows who in us geographies chain the scale market. But at our to can in question, the now value different Great efforts also efficiencies. and scale were really that consumer even quicker And in us partners that focus No. going utilizing weeds also types provide different we

to know, laws changed in rather so higher adding you fiber looking fiber, that claims get food the their added to that most fiber the fiber looking add and has food are and in it’s fiber As forward the grain we’re to to companies if interest excited seems than the you really generate to for in and this launching. project and coming

Ben Klieve

I them my to up consider be these And of guess on high a fiber new alluded When already product soybean a big question kind of But portfolio. going you is you a what oil product. oleic processors, follow is that. high wheat in this have effectively in number their to

because are differently to of elaborate or be And you you are maybe on kind I wheat is if into too treating so -- curious the of it am because these on so it know, you don’t there excitement possible? about is new. can Can how so just -- it greater products that this, they much may less I’m I is the you processors reading -- excited I’m fiber kind kind if new these curious of can describe are of or if kind side

Jim Blome

by need with or that a high excellent soybean need oil on Ben, of are a the oleic lot So, wheat have intrigue we flower it’s the also high customers have. an were that because or -- we working a fiber product wheat point, we that

as as new to prepping companies So getting see early entree we as ready with and sell we an and introduction could project. to oil the some getting some these for of it an of wheat comfortable them

it. excited we’re about So

it diet a I market what fiber is benefit label. cleaner really the in their looking more for the think second is and is

very So demand will to right And fit to which think consumer sophisticated going label that added have be consumer this is benefit into reading -- environment. as in fiber, grain, grows. really it from fiber I as a this new instead product this nicely of it seems

Ben Klieve

Got Very it. Got it. good.

Okay. comments, the Jim. Appreciate

Investor I forward queue. think Day that for does looking in I’m get I’ll the back it me. to and

Jim Blome

you, Great. Thank Ben.

Bill Koschak

Thanks, Ben.

Operator

Sachs. from have Samuelson, Please Goldman sir. We question ahead, Adam a go

Adam Samuelson

everyone. Good Thanks. Yes. afternoon,

Bill Koschak

Adam. Hi,

Adam Samuelson

Hi.

question the -- my So I first seed next sales guess on is year. the

you Bill about $X So talked million.

from the but that kind expectation not grain going acreage would buying be flat to Obviously, perspective, at versus you planted planted the the be acreage this acres on year? to be committing is you level, this that the the is at to target an of achieve the delivered Calyxt or or So up above year? to you’re XX,XXX

Bill Koschak

the that this was for year next XXX,XXX. Adam, expectation what to be year, more Yes. the baseline we contracted equal is quietly had target which would than for

Adam Samuelson

that’s to Okay. partner And help up, your if at just because you me not how just a development to be do think expecting you’re channel something -- to lines grain coming of for to they should looked think before those soon, done get there to -- those how the help going get and from the need that they’re even right? months committing and buy Don’t -- talked is the seed to to you’d we prospecting where decisions making so I acres can have get that you and that’s kind partner, relatively me about you about we think pipeline, imminent about growers in the imminent that planting? know partner

Bill Koschak

point, for got will your spring, that’s begun expect -- would planning -- begin be shortly. a in us the or begun to contracting begins We’ve I but has to achieve, will right? the near-term the milestone

on for from between think see I something you March, the now would and would side seed And XXXX. so us

Adam Samuelson

Got it.

Okay.

Bill Koschak

like Jim, add to to add, if wants to you’d Jim that at but… all,

Jim Blome

Thank Bill, you. No. spot you’re on.

Adam Samuelson

out is of does that TALEN just about clear the that, problems. think on just this guess, approached the look talked what am your you’ve maybe beyond on to of aren’t about thorny you fully pipeline. development include -- to going pulse I things you’re one opportunity of at And of you’ve technology I work at to be pipeline you’ve on this kind laid of me, use the that, mean, would here being of Okay. kind want to this these for last something if just solve then yet? set kind I to categorizing And approached on in been I look to kind I or that going be product been approached what kind

Bill Koschak

He’s trying wide say, been cast? how that’s to

Jim Blome

That’s laid And projects, those projects talking conversion we’ve discussions. bigger are great having eight publicly we’ve scale us our about, this of that are been prior from achieving a came or Adam. out some question, and to the

chosen We partner. those announce have we to when have a

and bit and -- talking those a projects will process more we discussions on be Day. And bring in active are Investor about forward at be So we that that. we’ll

Adam Samuelson

Okay.

Jim Blome

excited this the ready food from some the toolbox, we’re have some issues to And the a we’re sustainability take in -- big we challenges are go. there. We’re out big and to There market turn. -- and

So are exciting. these pretty

Adam Samuelson

Okay. the then of any is about into the the runway that and new of any there cash on book more assumptions will runway? of ‘XX developement kind quick licensing development cash one, -- in for -- be second one today upfront out to make that upfront product based development fees -- on book to of kind the just there’s kind initial what or is half in fees, added of already or kind XXXX. that development And Does fees

Jim Blome

you. let will I Bill,

Bill Koschak

half said his as Runway. development of will projections burn second for of The some well. runway in And cash take the goes fees into Go ahead. based is. is are our remarks as Yeah. our I that XXXX it. expectation what Jim on

So…

Adam Samuelson

Okay.

Bill Koschak

projection comfortable XXXX. the get obviously, to numbers … half of put our second that, us to to into enough we feel

Adam Samuelson

much. All Perfect. right. Okay. you Thank so

Jim Blome

Adam. you, Thank

Bill Koschak

Thanks.

Operator

closing to Ladies no turn Instructions] there like Jim for remarks. questions. I’d and gentlemen, [Operator to back the call over further are Blome

Jim Blome

all XXXX. us everyone to today. Relations Investor please we’d at contact And questions if this to Analyst our to today’s joining firm, your providing not able Thanks Day to on answer of on at We Operator? address on MZ we’re our call, happy virtual XX, be November feel forward updates us look more free to for call Group, them.

Operator

This today’s concludes conference.

and this you your disconnect may for your thank You at lines time participation.

Cibus (CBUS) 8 Nov 202020 Q3 Earnings call transcript