Cibus, Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Calyxt's first quarter 2020 results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star key followed by the number one on your touch phone. If you would like to withdraw your question, please press the star key followed by the number two If you are using speaker equipment, please lift the handset before making your selection. The conference is being recorded today, May 7, 2020. At this time, I would now like to turn the conference over to Chris Tyson, Managing Director of MZ North America, Calyxt's investor relations firm. Please go ahead, sir.

Thank you, and good morning. I would like to thank you all for taking time to join us for Calyxt First Quarter 2020 Business Update and Results Conference Call. Your hosts today are Jim Bloom, Chief Executive Officer, Bill Kosciuk, Chief Financial Officer, Keith Blanks, Senior Vice President of Sales and Marketing, and Travis Ray, Chief Technology Officer. A press release detailing these results crossed the wires this morning at 8 o'clock Eastern today and is available on the company's website, Calyx.com. Before we begin the formal presentation, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated risks. This presentation also includes a discussion of adjusted EBITDA and gross margin as adjusted. Both are non-GAAP financial measures. In Calyxt press release and its filings with the SEC, each of which is posted on the Calyxt website at Calyxt.com. You will find additional disclosure regarding these non-GAAP measures. Reference to these non-GAAP financial measures should be considered in addition to GAAP financial measures. It should not be considered a substitute for results that are presented in accordance with GAAP. Finally, this conference call is being webcast. The webcast link is available in the investor relations section of our website at Calyxt.com. At this time, I would like to turn the call over to Calyxt's Chief Executive Officer, Jim Bloom. Jim, the floor is yours.

Thank you, Chris, and thank you for joining us today for Calyxt's first quarter 2020 results conference call. Before I begin our first quarter review, including how Calyxt is navigating through the current COVID-19 crisis, I would first like to give everyone a quick primer on our business. As the foundation built in 2019, has positioned Calyxt for success in 2020 and beyond. Calyxt is a technology company delivering plant-based solutions that are healthy and sustainable. We are the first company in the world to bring a gene-edited food product to market, and we intend to bring additional products to market focused on two important pillars. The first pillar is health and wellness, where examples of product concepts we are working on include projects that are heart healthy, anti-inflammatory, Higher in Fiber, Better Tasting, or Higher Protein. The second pillar is sustainability. We're bringing products to market that offer sustainability benefits, including the potential to replace imported oils that may be driving deforestation and other climate change, replacing fossil fuels with plant-based solutions, and enabling differentiated production per acre to improve biodiversity. We believe this differentiates us from most of our competitors. We accomplish these objectives through our accelerated plant breeding technology called TALEN. Developed in part by Calyxt co-founder and chief science officer Dr. Dan Voitas, TALEN is an advanced breeding technology that allows for precision targeting of existing genes within a plant's genome. Our scientists can select for desired characteristics accelerated breeding in a fraction of time used in traditional methods, and it mimics how plants could develop in nature. We can assess the viability of a trait in less than two years, with as little as three more years needed to reach commercialization. We have a robust development pipeline with 18 products at various stages of development, including several in both soybeans and hemp, and projects in other crops, including wheat, Alfalfa, Oats, and others. We intend to bring these products to market through collaboration or joint ventures with partners where we leverage our science and their commercial expertise to commercialize the product concept. This is an asset-light approach that is expected to result in non-dilutive financing for the company and a high-margin recurring revenue stream as projects are commercialized. We can also bring products to market through an integrated business model where we leverage third-party assets in the agricultural supply chain to process grains and sell the resulting products into the marketplace. However, this model requires more capital and is lower margin than the collaboration and joint venture model. Moving on to the first quarter of 2020 results. The COVID-19 pandemic has caused an unprecedented global crisis. I'm very proud of the dedication and resilience of the Calyxt team and of the actions we have taken in response to the COVID-19 pandemic to protect our employees and our business, including having all workers who are able to work remotely do so since early in the crisis. Most of our laboratory workers remain onsite at our headquarters. Protecting our scientists and their projects is critical to our future, and thus far, we have handled the transition without disruption. I really appreciate the actions of our team to help ensure we stay safe and on track. We had a strong start to the year and continued to execute on our business initiatives. During the first quarter, we began to see the impacts of COVID-19 pandemic across the country and its impact on the economy. The COVID-19 pandemic has had significant adverse impact on the food industry, especially in food service, which has substantially reduced food industry demand for vegetable oils. We have experienced lower demand for Ohio Lake soybean oil, corresponding to the overall lowering of demand for all vegetable oils. We have seen the impact of the COVID-19 pandemic on the protein supply chain, which is likely to have an impact on the demand for Ohio Lake soybean meal, and the price we may realize. In response to the changing demand, pricing pressure and uncertainty among our customers and target customers caught by the COVID-19 pandemic, we have adjusted our short-term crush strategy and have canceled crushes scheduled for late May, June and July 2020. This change is expected to shift product sales efforts into the second half of 2020 when potentially customer demand may partially recover depending on the timing and the extent of the resumption of normal operating activities among our customers. As a result of the COVID-19 pandemic, we have suspended our 2020 guidance for revenue and gross margin as adjusted. and have developed plans to reduce expenses over the remainder of the year. We received a Small Business Administration's Paycheck Protection Program loan of $1.5 million in April, recognizing that we are a small, early-stage enterprise with a single product that burns a significant amount of cash annually. In these unprecedented times, our access to capital has been impacted. We also compete with organizations that are much larger and better capitalized, and to protect our team, we opted to take and expect to keep the loan proceeds. We will determine in the future whether we request forgiveness of any of the loan. We are pursuing sources of cash through high margin collaboration agreements and licensing opportunities and are reviewing all other cash flows. As a result of these actions, We updated our 2020 cash usage to between $30 million and $34 million and updated our cash runway to late 2021. We continue to evaluate additional strategies to further reduce our cash usage. We provided excellent service to our world-class customers who represent a substantial portion of our 2020 oil revenue. Deliveries of oil to our major industrial customer continue uninterrupted. We continue to sample and test our high oleic soybean oil with large consumer packaged good companies. Our 2020 contracted acres achieved our 100,000 acre target and we sold out of seed for the 2020 crop. We are launching our five new seed varieties and expanding the states where we grow to five. We launched our e-commerce platform in April. This platform, which we are using as a pilot and can easily be leveraged across other products, provides us with several benefits, including enabling consumers to purchase our oil directly any time of the day and obtain real-time feedback about the product. It is also an efficient way for us to distribute samples to influencers, growers, and investors, and is in response to demand for our product from people who know about Calyxt and what it has done. We did not enter this pilot with the expectations of building a consumer brand or making a significant investment and as a result do not expect significant revenues from the platform. We invite you to sample the oil at calino.com. On the technology front, we continue to build out and improve our gene editing technology suite. We licensed a brand new breakthrough from the University of Minnesota, invented in Calyxt co-founder Dr. Dan Voitas' lab, that will enable us to significantly reduce the time needed to develop traits in certain crops. I'm pleased with the four product candidate advancements in our development process in the quarter. especially considering the unique nature of each. Our innovative technology, continuous improvement, and robust scientific team of experts are what allows us to maintain a competitive edge and our head start in the gene editing space. In the near term, we expect to launch our first hemp product, improved plants to address key problems facing hemp growers, marking the launch of our second commercial product, We expect the velocity of our revenue opportunities to accelerate as we build up a robust portfolio of commercial products, addressing several different markets. For our efforts to secure new collaboration agreements with industry partners, we aim to sign multiple new agreements this year. We expect collaboration agreements to provide us with cash milestone payments to further support our liquidity and our vision that Calyxt is an innovation With this, I'd like to hand the call over to Chief Technology Officer, Dr. Travis Frye, for an update on innovation in our product pipeline.