Calyxt, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Calix, Inc. First Quarter 2021 Earnings 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 1 followed by the 4 on your touch-tone phone. If you would like to withdraw your question, please press the 1 followed by the 3. If you are using speaker equipment, please lift the handset before making your selection. This conference is being recorded today. May 6, 2021. At this time, I would like to turn the conference over to Chris Tyson, Executive Vice President of MD North America, Calix Investor Relations Firm. Please go ahead, sir.

Thank you, and good afternoon. I would like to thank you all for taking time to join us for Calix's first quarter 2021 financial results conference call. Your hosts today are Bill Koschak, Chief Financial Officer, Dr. Eve Rebay, Executive Chair of the Board. A press release detailing these results crossed the wires after market closed today and is available on the company's website, calix.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 gross margin, net loss, net loss per share, and EBITDA. All are non-GAAP financial measures. In Calix Press Release and its filings with the SEC, each of which is posted on the company's website at calix.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 and 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 calix.com. At this time, I would like to turn the call over to Calix Chief Financial Officer, Bill Koshek.

Thank you, Chris, and thank you for joining us today for our first quarter conference call. The first four months of 2021 included several accomplishments by our great team of scientists, combined with continued execution of the transition of our soybean product line. I'd like to begin by congratulating Sarah Ryder on her promotion to Chief Business Officer. She has made great contributions since she joined Calix in October 2020. Well done, Sarah, and I look forward to working with you in this expanded role. Initial testing of our next generation premium high oleic, low linoleic soybean oil, TRAIT, has exceeded industry performance targets expected in the premium oil segment. This achievement is a significant improvement from our first soybean product. Preliminary composition analysis indicates that our next generation soybean trait is expected to have among the highest levels of heart-healthy oleic acid and ultra-low levels of linoleic acid of any premium oil, substantially on par with high oleic sunflower oil. We are excited by these results, and expect high performance in terms of desirable fatty acid profile, improved stability, increased shelf life, and reduced polymerization. This trait should be ready for commercial planting as soon as 2023. For commercialization, we are seeking to partner with elite soybean companies to introduce this trait to their premium seeds as a compelling alternative to commodity soybean and other premium oils. Our scientists have transformed the hemp genomes. demonstrating the ability to engineer hemp in a manner that can be used to unlock capabilities in order to selectively breed and deliver improvements in hemp traits. Historically, hemp has been a particularly difficult crop to transform. It is non-domesticated and poorly adapted for broad acre production. The new hemp transformation technology we developed is enabling our team to overcome the technical hurdles presented by hemp. Using our transformation tools, will enable hemp breeders and scientists to select plant characteristics that may contribute to the establishment of hemp as a modern, stable, and valuable broad-acre crop. We expect this accomplishment to accelerate hemp development. By modernizing the hemp crop, we can now deliver traits that benefit both growers and consumers who are increasingly looking for plant-based and sustainable foods, materials, pharmaceuticals, nutraceuticals, and more. First of these traits is expected to be available for commercial planting as soon as 2023. Also, shortly after quarter end, we executed a new seed sale agreement with an affiliate of a grain customer of ours. And as of today, we have sold more than 50% of the 2020 grain crop to ADM, with the remaining grain projectively sold to ADM throughout 2021. And finally, during the first quarter, we also made initial appointments of world-renowned plant biochemistry experts to our scientific advisory board. The SAB reports to our board of directors and is chaired by our co-founder, Dan Voitas. Other appointees include Ann Osborne from the John Innes Center, Elizabeth Statley, an associate professor of chemical engineering at Stanford, and Paul Bernasconi, a former head of molecular biology at BASF. SAV will focus on identification of high-value plant-derived products for development and commercialization using our proprietary innovation SIP platform. We have eight projects in later stage development, including two in Phase 3. We are targeting having at least five product candidates available to begin commercial planting between now and the end of 2024. During the quarter, we stopped development of our improved oil HOLL product. which was being developed with a target of higher HOL oil content. This product was being developed to reduce our cost per pound of oil under our prior go-to-market strategy. We also determined to pursue trade development and licensing arrangements as our baseline go-to-market strategy. While we opportunistically engage in alternative arrangements, our intention is to license all products under development as trade. We intend to move our current Hyalaic soybean product to this go-to-market strategy in 2022, and are currently in discussions with potential licensors. This transition further reduces the capital requirements for these products and is expected to drive high-margin royalty revenue streams when those traits are commercialized by the licensors in future years. Today, we issued a press release describing our first quarter 2021 results, and we also filed our Form 10-Q this evening. Revenue was $4.4 million in the first quarter of 2021, an increase of $2 million or 85% from the first quarter of 2020. Increase was driven by sales of a portion of the 2020 grain crop as compared to the first quarter of 2020 when we were selling soybean oil and meal. As of March 31st, 2021, we had sold over 50% of the 2020 grain crop. Gross margin was a negative 2.3 million or negative 53% in the first quarter of 2021 compared to negative 1.5 million or negative 63% in the first quarter of 2020. Adjusted gross margin, a non-GAAP measure, was negative 1.3 million, or negative 31%, in the first quarter of 2021, compared to negative 1.2 million, or negative 49%, in the first quarter of 2020. The improvement on a percentage basis was driven by benefits resulting from the advancement of our soybean product line go-to-market strategy. Total operating expenses were 7.3 million in the first quarter of 2021, a decrease of $1.8 million, or 20%, from $9.1 million in the first quarter of 2020. The decrease was driven by lower personnel costs as a result of cost reductions following the advancement of a go-to-market strategy for our soybean product line, as well as other reductions in cash expenses from the first quarter of 2020. Net loss was $10 million in the first quarter of 2021, an improvement of $1 million, or 9%, from the first quarter of 2020. Net loss per share was 27 cents in the first quarter of 2021, an improvement of 7 cents per share, or 21%, from the first quarter of 2020. Adjusted net loss was $8.8 million in the first quarter of 2021, an improvement of $2 million, or 18%, from the first quarter of 2020. The improvement in adjusted net loss was driven by the improvement in adjusted gross margin and cost reductions from the advancement of our soybean product line go-to-market strategy, and other reductions in operating expenses. Adjusted net loss per share was 24 cents in the first quarter of 2021, an improvement of 9 cents per share or 27% from the first quarter of 2020. The improvement in adjusted net loss per share was driven by the change in adjusted net loss. Adjusted EBITDA loss was 6.8 million in the first quarter of 2021, an improvement of 1.4 million or 17% from the first quarter of 2020. The change was driven by the improvement in adjusted gross margin and cost reductions from the advancement of our soybean product line go-to-market strategy and other reductions in operating expenses. Our earnings materials, which are posted on our website, provide important context about the non-GAAP measures we report and include reconciliations of these measures to the most comparable GAAP measure. Net cash used in the first quarter of 2021 improved by $50.3 million compared to the first quarter of 2020. The improvement was driven by changes in purchases and sales of short-term investments of $47.3 million and a $2.8 million improvement in net cash used by operating activities, primarily the result of improvements in net loss and working capital. In the first quarter of 2020, we invested cash in cash improvements and short-term investments to diversify our counterparty credit risk. From a cash perspective, the first quarter of 2021 was highlighted by the significant progress we made selling grains, managing grower deliveries to best match demand, and reducing our operating expenses below last year and staying on track to achieve our cash operating expense annual target of $25 million or less. We believe these actions will be enough to fund our operations for at least the next 12 months and into the second half of 2022. Subsequent to the quarter end, we were notified by the Small Business Administration that the full amount of our Paycheck Protection Program loan had been forgiven. We expect to record income in the second quarter of 2021 for the full amount of the loan and the associated accrued interest. I'd now like to turn the call over to Dr. Yves Roubet, our executive chair, for his concluding remarks. Yves?