Calyxt, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to CAELIC's fourth quarter and full year 2021 earnings conference results conference call and webcast. 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 one key on your touchtone telephone. If you'd like to withdraw your questions, please press the star key followed by the two key. If you are using speaker equipment, please lift the handset before making your selections. This conference is being recorded today, March 3rd, 2022. And at this time, I'd like to turn the conference call over to Bill Koschak, Calix Chief Financial Officer. Please go ahead, sir.

Thank you, and good afternoon. This is Bill Koschak, the Chief Financial Officer of Calix. I would like to thank you for taking the time to join us for Calix's fourth quarter and full year 2021 earnings results conference call and webcast. Presenting with me today is Michael A. Carr, our President and Chief Executive Officer. A press release detailing these results crossed the wire after today's market close and is available on our 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 net loss, and adjusted net loss per share. Both 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 financial measures. References to these non-GAAP financial measures should be considered in addition to the GAAP financial measures and should not be considered a substitute for results that are presented in accordance with GAAP. Lastly, this conference call is being webcast. The webcast link is available in the investor relations section of calix.com. At this time, I'd like to turn the call over to Michael for his opening remarks. Michael?

Thank you, Bill, and thank you for joining us on our call today. We are leading a plant-based revolution and are committed to bringing the bioproduction capabilities of plants to innovators of today. As I look forward, we are moving into the growth and scaling phases of our organization's development. We have a differentiated platform, a unique production capability, and a financial model that is differentiated from other synthetic biology companies. I look forward to sharing more about these points on our call today. 2021 was transformational for Calix. I'd like to take the opportunity to step back and review the substantial progress we've made in our transition from an agriculture business to a synthetic biology company in a short period of time. We are taking our existing technology, people, and know-how and redirecting this formidable collective asset in ways that realizes the company's full potential. The simple vision was the basis of our new strategic initiative, which was announced in October. That initiative is to leverage our core expertise and expand our offerings to provide innovative, high value, and sustainably produced plant-based chemistries to a wider group of end markets in a diversified base of customers. We understood that the best use of our technology and talent and strongest potential to realize our company's value lies in offering SynBio solutions to major industries around the world who urgently need new ways to produce products that meet their corporate sustainability goals. This opportunity is enormous for Calix. As you may recall, KALIC develops high-value plant-based chemistries for customers, leveraging the integration of our proprietary PlantSpring technology platform and our biofactory production system. PlantSpring is built on experience of more than a decade of engineering plant metabolism. An experience base built with our proprietary systems, our tools and technologies, our extensive portfolio of intellectual property, and an expanding set of artificial intelligence and machine learning, or AIML, capabilities. This platform delivers innovation through an efficient process from laboratory to pilot, enabling Helix to take a customer's plant-based chemistry needs through our design, engineering, and verification development process. These plant spring-derived compounds are then produced through our proprietary biofactory. The biofactory harnesses the potential of plant cells in a multicellular matrix structure, our proprietary plant cell matrix, or PCM. The PCMs are combined with growth media for production within a bioreactor. Its plant-based foundation, the use of our PCMs, its ability to produce complex plant-based chemistries, and its modular nature and geographic flexibility differentiates the biofactory from other production systems used in the SynBio and plant-based industries today. In light of Calix's iterative AI ML capabilities to augment both plant spring development and biofactory production, the company is positioned to be a supplier of unique chemistries that are likely unable to be produced in more traditional SynBio production processes. This strategy represented a change in our focus from agriculture to large innovative end markets, including cosmeceuticals, nutraceuticals, and pharmaceuticals. All have high demand for plant-based chemistries to replace less sustainable materials and inputs in their products or processes. This is a significant growth opportunity for Calix. Notably, our approach to the biofactory business model is customer focused and demand driven. We use a set of criteria to evaluate opportunities that includes consideration of factors such as the plant-based chemistry, our potential customer needs, and how well our biofactory can produce it, the size of the customer's demand pool, the speed of the customer's adoption, and our financial returns. This approach helps ensure that we select the compounds from customers that drive the greatest potential for success for both our customers and calyx at this stage of our business. We are targeting to have two to four plant-based chemistries in development by the end of 2022. With respect to our commercial production, we expect to operate the biofactory in an asset-light manner to help mitigate the risk of achieving production at scale. We can do this by either using third-party infrastructure partners for at-scale biofactory production, or because of its modular nature, we could also locate a unit in a customer's facility. Further, our business model has potential for cash flow throughout our targeted 36-month development period with additional product-related revenue and cash flows to follow. We have positioned Calix for growth and scale by focusing on two main areas, advancing our technology and putting the right people in place to set us up for success. Since the start of the fourth quarter of 2021, I'm pleased to share that we've achieved several important milestones. We reported additional milestones in the commissioning of our biofactory production system. This includes commissioning our initial pilot biofactory, which was achieved on schedule and marks an important initial step towards achieving at-scale commercial production. We continued to collect and analyze data from this pilot facility and have begun to deploy additional AIML resources to the pilot facility, which are expected to drive future decisions and help improve test cycles and development timelines. We also reported significant progress in sustainable discovery and development of plant-based molecules in our biofactory. Results from our targeted metabolomics analysis indicated more than 15,000 chemical signatures. These signatures included both known and as yet uncharacterized molecules and building block precursors, which are chemical compounds involved in chemical reactions that produce other compounds. These chemical signatures form a baseline library available for K-Leaks to produce valuable compounds within our proprietary plant-based biofactory production system and likely represents a fraction of the total plant-based chemistries our system is capable of performing. We invested in new hires who are key to the growth of our business. We onboarded our new SVP of business development, Jerry Nuovo. Jerry brings more than 30 years of experience in the specialty chemicals and biotechnology industries and diverse experience building multimillion-dollar income streams in the cosmeceuticals and market, including personal care and home care. Dr. Vijay Gulapalli joined Calix as Vice President, AIML and Data Science. Vijay brings nearly 25 years of experience in developing solutions for businesses across diverse industries, utilizing his experience in data technology and AIML. In addition, Pete Ball joined as technology licensing leader. Pete has nearly 35 years of legal and technology licensing experience and will focus on advancing our licensing activities in platform technology, including IP related to gene editing in plants and our portfolio of crop innovations. We also welcome Dr. Seth Dobrin, Global Chief Artificial Intelligence Officer at IBM, to our Scientific Advisory Board. Seth brings extensive leadership experience and a track record of transforming companies through data and AI. His depth of experience bringing AI-based business solutions to major global corporations will be valuable as we continue to develop and augment the AI ML capabilities of our PlatSpring platform and BioFract reproduction system. We continue to advance our discussion with new potential customers in the cosmeceutical, nutraceutical, and pharmaceutical industries, which are large and innovative industries that represent significant growth opportunities for Calix. From the start of our announcement back in October of our new strategic initiative into SynBio, we were pleased with the breadth of interest from large companies in our target industries. Since then, we've engaged with a wider breadth of companies while making meaningful advancements with a select group of potential customers toward the signing of contracts to engage our services and, ultimately, new revenue. On the topic of financials, last month, Calix successfully closed an underwritten SEC-registered offering with gross proceeds of approximately $10.9 million before deducting the underwriting fees and other offering expenses. This raise strengthens Calix's financial position as we work to grow our business and realize its value. The fundamental underpinning of our strategic initiative into SynBio is our conviction that the future of industry depends on the sustainable production of chemistries that are plant-based. Halyx has a unique opportunity to revolutionize how the world uses plants. Our focus is on innovating where the consuming of finite resources and the sustainability of our planet intersect. The global economy today is not sustainable, as evidenced by such metrics as carbon pollution, water scarcity, and soil erosion. Many corporations and consumers are shifting their focus to products that are sustainable and contain environmentally friendly plant-based chemistries. More than 20% of the world's largest 2000 companies have committed to carbon neutrality. We believe that in order to achieve this goal, these companies will need to incorporate plant-based solutions into their businesses. Calix and our proprietary plant spring technology platform and biofactory production system are distinctly qualified to meet this demand. In a world seeking to evolve to more sustainable solutions, plants are very diverse and uniquely capable of producing many chemistries that cannot be produced through other means, including microbial fermentation. Nearly 80% of classified natural compounds come from plants, and some estimates represent that more than 1 million compounds are yet to be discovered. Leveraging known compounds and discovering new ones are opportunities for our company. Plants are central to our Plattspring technology platform and biofactory production system. Our scientists are experts at engineering plant metabolism and have demonstrated this capability many times over across multiple plant species. This expertise creates a unique perspective on the power of plants and how they can be used to shape our future and gives calyx of expertise advantage over others. We currently apply AI ML in the early stage of our development process, and over time, we expect to expand these capabilities further into that process by adapting knowledge gained from past activity with predictive analytics to rapidly prototype and provide feedback, accelerate the time to complete the development cycle, and help mitigate the risk associated with commercial scaling. For production, our biofactory utilizes a multicellular plant cell matrix structure, or PCM. The PCM structures are placed inside the bioreactor and growth media bathes the PCM structures to provide them with nutrition. This differentiates Calix process from other methods that require complete submersion of cells and growth media. The biofactory is modular and is designed to be able to continuously produce plant-based chemistries, offering us flexibility when producing chemistries for multiple customers at once. In all, PlantSpring and the BioFactory are a differentiated production system for high-value, innovative, and customer-demand-driven plant-based chemistries. The PlantSpring technology platform leverages our years of experience engineering plant metabolism, a variety of tools, an expanding set of AI and ML capabilities, and is protected by our broad IP positions. Through the Plattspring platform, we seek to unleash the natural capabilities of plants, the original biological systems, and make available commercial innovations that produce unique plant-based chemistries from plant species, including rare or undomesticated species, in a manner that the company believes is more robust and sustainable than other methods of production. We built our first AI ML capability into Plattspring to assist us in identifying targets for editing specific genetic pathways and improve efficiency and speed. Plants and their DNA contain a profound amount of information. When combined with our deep scientific experience and vast amounts of data that we have accumulated over our history, including a large proprietary database of genomic information across numerous plant species, we are able to search a vast trove of data for insights, enabling a rapid development process. We also plan to grow and leverage this expanding data set in our future AI ML development efforts. As we look ahead, we plan to incorporate AI ML techniques further into our development process, enabling learning and adaptation of knowledge gained from past activity, the generation of new data, insights, and connections between known and unknown pathways with the aim of accelerating development cycles, reducing development costs, and improving our rapid prototyping capabilities. These activities will also aid in discovering new pathways or new plant-derived compounds for future commercialization efforts, as well as help mitigate the risks associated with commercial scale-up. Our proprietary PCM structures provide us with the competitive advantage over single cell plant and other cellular production systems. Simply described, a PCM is a small group of plant cells that work together to emulate the metabolism of an entire plant. Because of this PCM structure, We are able to achieve growth without constant submerging in media, and there is no need for light. The PCMs are more stable, continuously producing the target chemistry compared to a batch in other production systems that have challenges with scaling or growth over time. The BioPak reproduction system leverages these PCMs, which are periodically fed a growth media that provides the nutrients necessary to support growth and produce the target chemistry. These PCMs reproduce over time, increasing the amount of biomass in the reactor and producing the target chemistry, which may be excreted by the PCM or harvested later. We believe the biofactory has the potential to be one of the most sustainable plant-based production systems across industries because of this production methodology. It does not use fermentation, and there are fewer of the sustainability challenges associated with other controlled environment production systems. For example, we expect our system has lower levels of off gases, reduced water demands, and lower energy requirements. We also expect the biofactory to have limited downtime between production cycles. Because the system produces these plant-based chemistries year-round in a bioreactor, it is protected from many of the adverse climate effects typically associated with traditional agricultural production. We use an efficient development process to deliver innovation through our plant screen platform, comprised of three primary stages named design, engineer, and verify. In the design stage, we apply AI ML to identify pathways that will produce the target and design the technical approach to deliver the target compound. In the end engineer stage, we direct changes in the plant cells. In the verify stage, we use a combination of analytical tools to verify the compound produce meets the customer's specification. We estimate the typical timeline to complete the design, engineer, verify process to be 12 months, at which point the verified chemistry would advance to pilot production. From there, we believe the typical development time from initiation of the pilot stage of development through to commercialization is 24 months. Certain compounds may have a shorter time to market, while some industries, such as pharmaceuticals, or expect to have a longer path to regulatory clearance. From a cost and time standpoint, we expect the customer will use their expertise to address formulation and regulatory matters. In combination with the design, engineer, verify stages of the development process, the timeline for Calix to achieve commercial availability is currently estimated at approximately 36 months, a development cycle that would offer customers compelling speed to market. With the expansion and further deployment of our AI ML capabilities and systematic learning as additional compounds move through the development process, we believe this development cycle time may be further accelerated. I'll now turn the call back to Bill to discuss our business model and provide updates on customer acquisition activities and company financials. Bill?