Cibus, Inc.

Good day and welcome to the CBIS Third Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Carlo Bruce, Chief Financial Officer. Please go ahead.

Carlo Bruce Thank you and good afternoon. I would like to thank you for taking time to join us for CBIS Third Quarter 2024 Financial Results and Business Update Conference Call and Webcast. Presenting with me today is Rory Riggs, our Co-Founder, Chief Executive Officer and Chairman, and Peter Beetham, Co-Founder, President, and Chief Operating Officer. Before we begin the call, 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 CBIS SEC filings for a list of associated risks. This conference call is being webcast. The webcast link, along with our press release and corporate presentation, are available on the investor relations section of CBIS.com to assist you in your analysis of our business. With that, I would now like to turn the call over to Mr. Ricks. Go ahead, Rory.

Thanks, Carlo, and good afternoon, everyone. Before I begin, I'd like to recognize Carlo's participation on today's call as our chief financial officer. Carlo has stepped in for Wade King following Wade's leave of absence. Although Carlo is new to the investment community, he is a skilled financial leader who brings nearly 14 years of experience at CBUS alone and decades in a variety of roles, including his role as head of finance for the EMEA region and CFO for Netherlands and Belgium at Syngenta. as well as his work in audit during his early years at Deloitte. We are grateful for his ability to seamlessly step in for Wade and look forward to his contributions as a member of our executive team as we look ahead to the future as a commercial enterprise. With that, I'd like to begin today's call with a high-level update on our business activities this quarter and year-to-date. Following my remarks, Peter will provide more detail on our recent developments and how we are progressing within our crop platforms. Carla will then conclude with a financial discussion. As we reflect on the first nine months of 2024, it's clear that this has been a transformative period for CBIS as we evolved from an R&D-based business to the first commercial gene-editing company in the industry. This continued transformation from an R&D-focused company to the first commercial-stage gene editing company was central to the streamlining of our organization to more efficiently focus our efforts on executing on our product launches with our herbicide-resistant traits in rice and traits for pod chowder reduction in canola, while maintaining the ability to capitalize on our positive progress in developing our soybean platform and advancing our traits for sclerotinia resistance and herbicide tolerance, our H2 trait. Our evolution has been achieved through a series of successful milestones associated with three cornerstones of our business. The first cornerstone is the completion of our trait machine process, an industrial technology breeding platform that creates a time-bound and predictable trait development process. The second cornerstone is operationalizing or scaling the trait machine platform to develop a multi-trait pipeline with the goal of commercializing plant traits with multiple customers and with multiple crops. Our third cornerstone is represented by our ongoing collaborations with major seed company customers with the goal to develop, to license, and to commercialize these traits in their seeds for trade fees or royalties. These three cornerstones are the foundation of this new technology business in agriculture for the development of productivity traits, or traits that make farming more productive, economical, and sustainable. Our first cornerstone is the trade machine process. It is a paradigm shift in the breeding of complex traits. For each of our crop platforms in canola and rice, and for each of our traits for these crops, we can now complete our edits in a customer's elite germplasm and regenerate the edited germplasm to a plant within just 12 months. This breakthrough in speed and predictability of technology-based breeding is foundational to developing each trait and to accelerate the timetable to commercialization for each trait once developed. We believe that this timetable will also accrue to our soybean platform. A predictable timetable for integrating our traits into a customer's germplasm is a key part of the commercialization of a customer trait, which begins with the receipt of a customer's germplasm. Evidence of our ability to use the trait machine process to edit and deliver to the greenhouse in a time-bound and predictable fashion can be seen in our recent announcement of successful greenhouse data for our HT2 trait in canola. It took less than 12 months from edit to greenhouse results for this trait. We have also announced successful edits in our disease program with which we also expect greenhouse results within 12 months of the edit. We now have a pipeline of five different traits. For each of these traits, we have completed edits and have had either successful field trials or expected greenhouse results for each of those traits. Our ability to develop so many traits within a compressed timeframe is a testament of the efficiency we develop with the trait machine process. Our second cornerstone is operationalizing or scaling our trait machine process to develop a pipeline of traits. This is also a paradigm shift in breeding new traits. Our ability to industrialize the transfer of traits and the development of new traits shows the power of our trait machine process to shorten the development timeline, commercialization timeline, and the cost of developing new traits. The third quarter was a great quarter to show our ability to scale our trait machine process as an ongoing production system with multiple different crops and multiple traits. In rice, we now have multiple customers, each having multiple lines. The initial edit happened within a 12-month framework, and we expect the gene edit of the HT3 trait in multiple customer lines will all occur within this 12-month production target. In winter oilseed rape, with multiple customer germplasms, we completed the first field trials for a pod chatter reduction trait. These trials were completed in the elite germplasm of several customers. These edits were completed in the greenhouse within a 12-month timeframe. In addition, we had the first successful field trial with stacked gene-edited traits using our HD1 and HD3 traits in rice. We expect to develop a family of stacked herbicide-tolerant traits for our customers in rice. This ability to efficiently develop a family of stacked traits is a key strength of the trait machine process. It's expected that our sclerotinia-resistant disease trait in canola will consist of multiple modes of action, which will be combined to form our sclerotinia-resistant product. It's expected that we will offer multiple gene-edited herbicide traits across the entire industry. We expect that these traits for sclerotinia-resistant will have a similar scale opportunity in soybean. We expect that our technology will be able to attain this scale in a similar time-bound and predictable manner. This is what we mean by operationalizing the trade machine process. Our third cornerstone is our collaboration with major seed company customers with the goal to develop, to license, and to commercialize these trades in their seeds for trade fees or royalties. This is an important validation of our technology as a commercial platform. The development of gene editing as an extension of the breeding programs for our seed company customers is a key part of the development of this new gene editing trait industry. This cornerstone is about the use of the trait machine process as the key engine for the commercialization of our traits across multiple crops, multiple traits, and multiple customer lines in an efficient, time-bound, and predictable manner. This is the underlying framework and validation of our commercial process model for gene editing and agriculture. The speed of our trait machine process will enable materially faster commercialization timelines for new traits, as well as updates for new traits once launched. This momentum with existing customers with the goal of commercializing our traits in different customer germplasm in different crops continued in the third quarter. We have now established collaborations with major seed companies in each of our platforms. In each case, we have received the elite germplasm of each customer for a specific crop. Each of these collaborations with seed companies are being made with the goal to develop, license, and commercialize a trait in their germplasm for trade fees. For soybean, the goal right now is to develop the trait machine crop platform. In rice, Each of our collaborations were made with the goal of developing our herbicide-resistant trait in their germplasm for commercialization. In the U.S., we also signed an important agreement with ABA and RTDC to continue our collaboration for supplying colostrum herbicide to support the expected launch of our custom-tolerant rice trait, our HT3 trait, to our U.S. rice seed customers, utilizing ABA's herbicide registration, and crop protection expertise. This partnership is a key part of the ongoing commercialization of herbicide-tolerant traits as an economic partnership between the seed company, the chemical company, and the trait company. Our ongoing field trials for our pod shatter reduction trait in canola and winter royal seed rape in customer germplasm are also key elements of the commercialization of our pod shatter trait with seed company customers. In soybean, our initial platform is being developed with GDM germplasm. This was established with the goal to develop a platform for the development and commercialization of selected traits in soybean, like our HC2 trait and our trait for sclerotinia. The ongoing work with our traits and customers germplasm as part of their commercialization program is a model for how this new gene editing industry operates. As we enter the last quarter this year, we're excited about the technological and commercial base we have built to establish the first commercial trade business. Through each cornerstone of our model, we are differentiating and establishing ourselves as an important element within the seed and trade industry that is able to drive value for our seed customers and the grower community. Now, Peter would like to provide some more background on our commercial activities and technological updates. Peter?

Thank you, Rory, and good afternoon to everyone. The last quarter and the first nine months of this year have highlighted our strong advances in gene editing globally for important traits and important crops. As Rory mentioned, our SEVIS team is focused on our product launches. We are streamlining our processes as we leverage efficiencies and synergies for our semi-automated trait development process. We are ending the year well positioned to achieve several important milestones. Before I summarize our advancements, I want to highlight the critical importance of our leadership in the agricultural gene editing industry. Just this past week in Iowa, at the World Food Prize keynote address by Dr. Dong Yu, the Food and Agriculture Organization of the United Nations Director General, he identified some of the immediate challenges we face with rising food insecurity. And he clearly advocated for how important gene editing will be to solving these challenges. To quote Dr. Dongyu, gene editing technology accelerates the breeding process significantly. It's faster than traditional breeding methods. It improves resistance to pests, diseases, and environmental stressors. This includes tolerance to high temperatures, droughts, floods, and salinity, among others. For us at Cebus, it is abundantly clear that there is a global movement and a call to action for gene editing to be incorporated into seed company breeding programs. Cebus has been developing the fundamentals of gene editing from the ground up for over two decades. We are well positioned to capture this moment as we continue our transition to a commercial stage gene editing company. As we explained in our last quarterly update, this past year has been an expansion of our rice seed company customer base. Today, I'd like to use our rice platform as a case study to demonstrate what's possible with gene editing in agriculture and how SEBAS is leading this effort. Rice is one of the world's most important food crops. But historically, it has not benefited from the best non-selective herbicide tolerance traits due to the limitations of conventional breeding and GMO technologies. This is but one example where our gene editing capabilities come into play. Our rice platform journey began with recognizing a critical need. Rice farmers globally, and especially in Latin America, were struggling with weed management and in some cases spend over $120 per acre on herbicides and their application. Without effective weed management solutions, farmers are sacrificing yield and grain quality, leading to reduced profits. To address this, we leveraged our trait machine process to develop our herbicide tolerance traits, HT1 and HT3, which allow rice plants to survive herbicide application and provide the potential to reduce weed management costs significantly. With these developed traits, we then moved edited plants into field trials to demonstrate the effectiveness of our traits. You can see striking photos on our website showing treated rice field trials where elite genetics of rice with our gene edited traits thrive after herbicide application. while the unedited crops are devastated. Importantly for farmers, these trials have also shown excellent control of weeds that are impacting yield and quality. And as Rory shared, our next step has been the first ever development of stacked gene-edited herbicide-tolerant traits in rice, where we observed positive field trial results, furthering the promise of enhanced weed management options for farmers. These impressive results have led to commercial agreements with four major rice seed companies in North and South America. We've received germplasm from each customer and are now incorporating our traits into their elite germplasm. In addition, we signed an agreement to continue our collaboration with Orbar LLC, an RTDC company, for supplying clethodum herbicide to support SEVIS's expected launch of its clethodum, what we call HT3 trait, in the U.S., marking an important milestone in the commercial development of HT3 in the U.S. We are working with our U.S. and Latin American customers to launch these traits in 2027 or 2028. We see an opportunity to potentially access approximately 9 million seeded rice acres, which we estimate represents a market opportunity of approximately $200 million in potential annual royalties. We are now also looking to expand our rice trace into Asia. This is an enormous long-term opportunity starting in 2030 that even without including China could generate additional annual royalties of approximately $150 million. This rice case study demonstrates why and how CBIS is leading the gene editing effort in agriculture. We're addressing Critical farmer needs using our trait machine process to develop traits quickly and cost-effectively, addressing problems that conventional breeding and GMO technologies couldn't solve. Our ability to state multiple traits is expected to provide comprehensive solutions for farmers, while our non-GMO approach is gaining regulatory acceptance globally, opening markets previously closed to older technologies like transgenic biotechnologies. The fact that we're attracting major seed companies as partners affirms our technology and approach. The success we're seeing in rice highlights the commercial potential of our trade development process across multiple crops. We're not just developing individual traits, but pioneering a new paradigm in agricultural innovation. Now moving to canola and winter oilseed right briefly, as Rory had already highlighted, that we have made significant strides in both our developed and advanced traits. As mentioned, for pod shadow reduction PSR, we've completed initial successful field trials for winter oilseed rape in the UK. And more specifically, we have already completed planting of our expanded next set of European field trials with results expected in the fall of 2025. We also continue to work closely with our North American customers for our initial commercial launch of PSR in 2026. This work includes confirming key specifications for PSR and the other agronomic or trait characteristics from our seed company customers for hybrid seed launch. While we are streamlining to focus our herbicide tolerance in rice, our PSR trait work and our soybean platform, we are maintaining our ability to continue progress in other areas. This includes ongoing progression of our advanced traits which have started in canola, including initial editing, greenhouse results, and field trials. For our HD2 trait, we confirmed second-generation edits and initial data showing canola with improved herbicide tolerances compared to our first-generation HD2. This advanced traits potential multi-crop applicability means that HD2 could potentially be the first gene-edited trait to achieve 100 million acres of yearly use, representing one of our largest opportunities as we aim to earn royalties across multiple crops for the same trade. In addition to HC2 in canola, we have made substantial progress with our sclerotinia resistance trade, achieving multiple important milestones year-to-date. We have now done edits in three modes of action. Let me take a moment to provide context of why multiple modes of action are critical for crops to have disease resistance. Diseases like sclerotinia, also known as white mold, can evolve quickly. And sclerotinia has complex life cycles. So providing crops with multiple ways to defend themselves against disease, the defenses that we call modes of action, is critical to address the evolving disease and environment. the best resistance known as durable resistance, which is achieved using multiple modes of action. So for CEBIS, our gene editing strategies provide an opportunity to provide this durable resistance for multiple crops. While our progress with our advanced tracing canola is exciting on its own, the advancements we've made in traits like sclerotinia resistance and HC2 are laying crucial groundwork for our expansion into other crops, including specifically our ant anticipated development of our soybean platform. This advanced platform, one of the most challenging endeavors in plant biology, is expected to be operational by the end of 2024. We have already improved the editing efficiency in soybean cells. We've anticipated completing additional editing and achieving regeneration capabilities within this timeframe, representing a key inflection point that will enable us to enter what we believe is a soybean market opportunity of over 200 million addressable acres. Beyond market size, the soybean platform will further serve as one of the foundations for our sustainable ingredients business, where we continue to pursue partner-funded collaborations. These achievements across our crop platforms and trade pipeline showcase our ability to develop complex, multi-crop traits addressing significant global agricultural challenges. We're not just meeting our milestones. We're pioneering a more sustainable and productive future for global agriculture. And with that, I'll hand over to Carlo for a financial update. Carlo?

Thank you, Peter. Looking at our financials for the third quarter, cash and cash equivalents were $28.8 million as of September 30, 2024. Taking into account the impact of cost-saving initiatives once fully implemented, which we estimate will reduce our monthly cash usage by approximately 20%, CBIS expects that existing cash and cash equivalents will fund planned operating expenses and capital expenditure requirements through the first quarter of 2025. Moving to our income statement. R&D expense was 13 million for the third quarter of 2024. compared to 17.5 million in the year-ago period. The decrease of 4.5 million was primarily due to lower non-cash stock compensation expense and the strategic realignment and reduction in force announced during the fourth quarter of 2023, which delivered decreases in personnel costs and supplies. SG&A expense was $7.7 million for the third quarter of 2024 compared to $8.8 million in the year-ago period. The decrease of $1.1 million was primarily due to lower non-cash stock compensation expense. Non-cash items were $1.2 million for the third quarter of 2024 compared to $9 million last year. The decrease was primarily related to the fair value adjustment of the liability classified common warrants in the third quarter Net loss was 201.5 million for the third quarter of 2024 compared to net loss of 34.5 million in the year-ago period. The increase in net loss was due to the impairment of goodwill resulting from a fair value assessment based on the decline of the stock price performed in the third quarter of 2024. Net loss excluding goodwill was 20 million for the third quarter of 2024 compared to net loss of 34.5 million in the year-ago period, representing an improvement of $14.5 million year-over-year. For additional details about the financials for the third quarter of 2024, please refer to our press release and findings with the SEC. That concludes our financial discussion. Rory, now back to you for your closing remarks.

Thanks, Carla and Peter, for those updates. As we've discussed, the third quarter has been pivotal for CBIS in a number of ways. The strides we're making in rice combined with the advancements in our trade pipeline, particularly in canola and the groundwork we're laying for soybeans, really showcase the breadth and depth of our capabilities. We're not just developing individual traits. We're building a comprehensive trade development platform that has potential to transform multiple aspects of agriculture. So thanks so much for your attention and interest. We're looking forward to updating you again next quarter as we continue to hit our milestones and advance our mission. This concludes our remarks. Operator, could you open the call for questions?

Absolutely. We will now begin the question and answer session. If you'd like to ask a question, please press star then 1 on your telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Today's first question comes from Lawrence Alexander at Jefferies. Please go ahead.

Good afternoon. Can you, maybe just to start, can you just do a walk around the state of legislative or policy support for gene editing? You know, what's happened in Europe, you know, kind of with the discussion around rights, you know, the degree, you know, kind of the, you know, is the right policy in place in China? Does anything need to be changed? And just give a quick lay of the land.

Thanks. I totally appreciate that, Stevie. In the Americas, we're pretty well set in the major countries we're launching in. In Europe, the legislation passed, but they haven't been able to get something called a tripartite agreement. And the expectations are they have presidents every quarter, and they're going to have a new president from Poland in January. And all talk is that the new president is ready to move on this for Hungary as president this year. So we're seeing very confident Europe's going to move and Asia. Peter, do you want to? It changed all the time, but I think China's allowing its own form, Peter.

Yeah, let me add a little bit to that, Lawrence. Thanks so much for the question. You know, the regulatory frameworks around the world are harmonizing. There's no doubt. Just to confirm with what Rory said about the Americas, both North and South America are harmonizing a lot of their regulatory policies. You know, it is happening in Asia as well. You know, we're... continuing to see positive movement in China and gene editing is seen as indistinguishable from what occurs in traditional breeding programs, which is really important. And I think the other side of it that Roy also mentioned, just to confirm that Europe, you know, early next year, we see a change in the EU Council presidency. And from all accounts, that's going to be a very positive movement in that process and legislation completion in Europe, which is exciting for all of us.

And the only add to that is that for rice, which is our first big launch, all the countries we're launching in right away are all approved for us. And we're pretty excited about that.

Great. And then can you just remind on a timeline for kind of when you should be seeing kind of rice commercial revenues flow through the P&L and Maybe just, I guess, rice and soy would be the two I'm most curious about today. But also, to what extent the gene editing platform is becoming something where partners might give you seed to put their modifications into the seed rather than your own traits? And when would that start to show up as a revenue opportunity?

That's great. And it's working on two points. I'll give a little to Peter. We just put a new deck out on the website, which gives you the expected launch date for each of our traits and expected market. So we decided this quarter to make it public. And in rice, the deal we did with Alba was really important because that starts the clock for herbicide traits. So in rice, we need herbicide field trials and launch. And so our expectation now that in 26, 27 in Latin America, you'll start to see some launches. And then in Europe, in the United States, it's a little bit longer because of the EPA and the work of the process. But within 27, 28 is where we expect the U.S. to launch. Peter?

Yeah, just to add to that, Lawrence, you know, what's exciting for us is that the field testing this past summer and the summer before that, you know, have really allowed us to, to look at the specifications around what we need for the herbicide tolerance traits in rice. And I can't stress enough how exciting it is to have Holbar join us for the registration work for clethodum, which is such a great herbicide. Just to add a little bit to that, because clethodum is a really important grass herbicide that is really key to killing some of the most troublesome weeds for rice farmers in the US and in Latin America. One of them is called red rice. And so it's a cousin of rice. And it's become resistant to a lot of the herbicides that are currently used. So they can't get rid of it. They can't kill it. And so that causes reduced yield. It reduces quality. And so the ability to use cleft them to spray over the top of the rice crop allows you to eliminate the red rice and have your crop, you know, go to full yield. And I think that's an exciting option for weed management solutions for rice farmers, you know, in North and South America. So for us, you know, we're on track for that commercial launch of 27, 28. And, you know, we're excited to see that agreement go forward and... the field trials returning the results that we expect.

Great. Last one. Go ahead.

As you were saying, canola, we do think in the U.S., we expect 26. In Europe, for the rest of that, we need them to vote yes behind that period. And soybean, we do still expect in this quarter to have the – first proof of a platform. And then from that, we have GDM and other customers who are going to start putting the trades in and launch. It'll take a couple of years. But we do expect to have the approval to start working towards it.

And then just lastly, just in terms of like a way to maybe help ground how differentiated your solution is, can you talk about the degree to which customers are willing to or reaching out to discuss maybe paying you more for the field trials to help you scale up your field trials as opposed to taking a slightly lower longer-term royalty. Second would be how much of your bandwidth is currently being used, and depending on how much, if your customers were all enthusiastic, how much more could they ask you to do? Can you just help us on those two fronts?

It's pretty exciting. I'll start and then Peter finishes. With each of these, we are starting to edit all the crops. This time frame we're doing is breeding takes longer. When they do it, they end up giving you a seed that you can then plant in. We're giving them back their germplasm with the traits in it. That's what we think is going to be the system in rice. Then in the other countries, especially in soybean, we see people saying... You know, we have other ideas. Couldn't we work with you on that? And for all of our partners, I think they're all looking at us to say if you can make these timelines. And so that means that what we said in our talk was that two of our traits in soybean, we've made the edits, they're going to the greenhouse, and we fully expect to have the result from that edit within 12 months of the edit, which is pretty cool. Is that helpful, Peter?

Yeah, let me add a little bit to that because I think Lawrence's question – is really important because it really speaks to the time that we need to get from an edited germplasm into the field and to launch. And I think, you know, working with seed companies now, our customers and partners, we continue to get more demand. We continue to get a lot of interest from seed companies because of the speed. And I think that they've recognised that if you can do that within 12 months and get it back to them in a really timely fashion, it fits into their breeding programs. But also then we work closely with them for doing some of the field evaluation work as soon as the edits are done. And so that, again, as we move forward and with our customers, they get that experience with us and they also get to see us delivering products in a really time-bound and predictable manner, not just a few elite genetics, but a broader base of genetics that will go into their breeding program. And I can't stress this enough, Morris, because this is a really different paradigm. We're really educating people around why gene editing is so differentiated from traditional breeding and GMO technologies. GMO technologies took a long time They were event-driven science. And the ability to generate materials in elite genetics directly, the way we do it through our single-cell methods and get it back to the customer quickly, really changes the paradigm of when you're doing those field work together and validating it to get the launch. I've gone a little bit broader, but hopefully that's helped to answer that question.

Maybe just if I can just ask one last one then is to what extent if you look at the total field trial validation licensing costs that a crop would entail to somebody from development to commercial sale to the farmer, it sounds as if there's – can you give a sense of roughly how much that cost is being shouldered by your partners? Or is it like a 50-50 split? Is it 70-30? Are they putting it all on you because you still have to prove yourselves? Can you just give a sense for like how the total cost pie is being split?

We've been pretty open that for the first edits that we've been doing for the customers and the follow-on edits, you know, they're all going to, the whole point of this is, you may have five or six lines in rice you want done, or in soybean, they have so many different areas, and they'll pay for each other at that point. And so we put it in there and prove we can do it, and everybody's expecting, and all of our discussions have been to have it be a profitable business where we're changing their time and cost to be able to get this trade in their crops. Is that helpful?

So that's the goal, but are they doing that now, or is that the goal?

They're not doing it now. Right now we're in rice. So these are the first ones in rice. So rice will be the good experiment for that. So in rice we're starting to have that.

Probably by 2026 we should see it flip to being a profitable cost-sharing business.

That's the right way to think about it. Great way to think about it. And it just means that the editing part of the business will pay for itself. And that doesn't count for the royalties you get for the trade itself. But you're totally right. Our expectation is the editing part of this business will be a for-profit enterprise and allow you to really – Even do things earlier on, right? That we've got this so well down that you should be able to really, you know, you heard us say, we'd like for people to think of us as an extension of their operations and to be able to speed up and make their things more efficient from cost and time.

Got it. Okay, great. Thank you.

Thank you.

And our next question today comes from Austin Muller at Canaccord. Please go ahead.

Hi, good evening, Peter and Rory. Just my first question here, can you talk about the timelines and analytical process involved in evaluating the winter UK field trial results and the greenhouse results for Sclerotinia resistance in the third mode of action?

That's an excellent question. It's clearly one for Peter. Peter?

Thanks, Rory. Thanks, Austin. Let me start with Sclerotinia. I'll go to the other trialing. But the sclerotinia, you know, we are beyond excited about the fact that we can bring different modes of action. You know, this is, as I mentioned in the remarks, that, you know, durable resistance is all about having multiple modes of action. So our field testing has spent, you know, we've spent quite a bit of time validating exactly how we evaluate the different edits and the different modes of action. So this past year, we're excited to see really good sclerotinia infection. I don't think farmers were excited about that, but through our trialling purposes, that was great. So we can see the differentiation between the edited and non-edited versions of our mode of action too. We're also seeing... The mode of action three for us is going to be greenhouse results in the fourth quarter of this year. So that's where we are with the sclerotinia. When it comes to the work that we're doing in the UK, again, we're working closely with our customer and partners in Europe. And in the UK, we've done our first season of trials And the PSR test had some really positive results, which was fantastic. So one of the things about the winter oilseed rape, as it's called in Europe, is there's a quick turnaround. So within three or four weeks, we had to make some decisions. And it was very easy when we saw our partners, Genetics, with the edits, be performing at a very strong level of pod shatter reduction results. that we were able to replant those and we'll have another full season of testing. You need to continue to have more testing to validate the traits and so customers can get to see it in their own genetics. It's an exciting moment for us.

That's helpful. And just to follow up, are there any updates on sustainable ingredients and fragrances in the timeline there?

No. Thank you, Peter. We're very encouraged. It's going to be extended in the next year, and we've made really good progress. And our expectations is that with the finishing of the soybean platform, that we'll start to see results that we can announce within a year and next year. So we're really excited about where it's going. We're doing a really good job on the edits required for these things and the work. We need soybean done so we can show it to you in soybean.

Excellent. I'll pass it back. Thank you.

Thank you. And our final question today comes from Matthew Venzia with Alliance Global Partners. Please go ahead.

Hey, guys. Thank you for taking my questions. Firstly, I just wanted to ask about your 12-month germplasm to greenhouse and whether the evidence for that coming in HC2 in canola, whether that confirms your three- to five-year estimate for germplasm receipt to final product. And to that point, if you could speak a little bit to the benefits and drawbacks of – I know you mentioned it briefly – protoplast regeneration as the mode for industrializing the gene editing process. Peter, do you want to go?

Yeah, thanks. Thanks, Matt. I think that's, again, if you think back of the last nine months and what we've achieved, it is, to my mind, one of the real breakthroughs that we've had at the company. We've talked about our trait machine and beginning that operational process. You know, some of the key technical breakthroughs you think about are the huge improvements in editing efficiency. You know, that creates precision with our production. And, you know, what that means is that for customers, it gets their seeds back in their hands quickly. And so that's a speed to market. It also allows you to get multiple genetics back to different customers. And so that efficiency of being time-bound... and predictable really is contrast to what I mentioned before about, you know, traditional breeding and GMO technologies. And so the ability to deliver that back to customers allows you to think through, you know, when you think that time period of three to five years, it really allows you, with the customer, to get to those launches very quickly. I know we're talking about... weed management HD2 in North America by 2028. You know, that's fantastic when you think about the process where we can start with customer genetics and get it to them in that sort of timeframe.

And one thing that, Peter, one of the things that makes us so exciting is I think the team didn't realize how accurate and precise and time-bound they thought their work was going to be. And so for many of these traits, if you get it right, We're going to show greenhouse results, and that's going to be within a year. And so the timeframe, it sort of confirms that three to five is within a reach and also gives the idea how fast you can do it, especially if you're working with customers. That's why we're so excited about this.

Great. Thank you. And then just to follow up in that same vein, can you just compare and contrast protoplast regeneration to other forms and modes of regeneration that other competitors are using and how the trait machine differentiates itself from a process like what's going on at Pairwise.

Cool, Peter. As you guessed, I'd throw this off to you.

Yeah.

Sorry, Matt. I think you had that embedded in your first question, and I apologize I didn't get to it. No, no worries. The protoplast system, you know, you've heard through our remarks and our other, you know, edits and multiple genes and multiple crops and that's a lot of multiples but it's when you have a single cell the ability if you have a single cell method you can deliver your reagents to make to make the edits it allows you a lot of flexibility to actually do these very complex edits that we need for you know traits like disease resistance and so It really does differentiate because, one, you can do the complexity within a single cell. And what's been great about the work we've done here at SEVIS is the efficiency of, once you do that, of getting back to a fully regenerated plant in a really quick timeframe. We've applied that to canola with lots of different traits now, and we've also done it in so many different genetics And so we've now transitioned that to rice. We've done it in rice before. We're building the soybean platform. But it really differentiates from what other people are doing by not going through a single-cell method. And their timelines are longer because of that. The differentiation is that they have to go through a segregation step genetically to get rid of some of the reagents that they've inserted into their genomes. of their seeds, and we don't do that. So not only is it faster and more efficient and you're able to do more complex traits, the regulatory analysis of that and the framework around the world, we have a clearer path. Hopefully that answers the question for you.

Very helpful. Thank you, Peter. And then just finally, is there going to be a company, should we expect a company in the same vein as ALBA that we would expect to come in to establish herbicide labeling for the Latin America region, or is that not necessary with ALBA at this point?

Peter, go ahead.

You go, Peter. Matt, that's exactly right. We will have, you know, we've got a strong relationship with ALBA. And they're a global company, so we can go forward with other countries. Our first agreement is with the U.S., and then we have agreements in place where we know we can extend that. Perfect.

All right. Thank you, guys. Latin America does not have the same EPA, I think.

No. Cool.

Thanks for those questions. I appreciate it. Thanks, Murray.

Thank you. And this concludes our question and answer session. I'd like to turn the conference back over to Mr. Riggs for closing remarks.

Thanks, everybody, for listening. As you can tell, we're really excited about where we've gotten to. And we had a lot of milestones to get through to this point, and we're hitting our milestones, which is pretty cool. But some of these things, like The efficiency and the accuracy in time, I don't think we thought we were going to be able to quantify as much as it is now. So we think this is a very good quarter, and we really look for having even a bigger announcement with the next quarter. So thanks.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful evening.