Calyxt, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Calix's first quarter 2022 earnings result 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 phone. If you would like to withdraw your question, please press the star key followed by the two key. If you're using speaker equipment, please lift the handset before making your selections. This conference is being recorded today, May 5, 2022. At this time, I would like to turn the conference over to Bill Koschak, Calix Chief Financial Officer. Please go ahead.

Thank you, and good afternoon. This is Bill Koschak, the Chief Financial Officer of Calix. I would like to thank you for taking time to join us for Calix First Quarter 2022 Earnings Results Conference Call and Webcast. Presenting with me today is Michael Acar, our President and Chief Executive Officer. Press release detailing these results crossed the wire after today's market close and is available on our company's website, calyxt.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, and in Calix press release in its SEC filings, each of which was 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 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 Calix Earnings Call today. For those of you who may be getting up to speed with our story following our October 2021 announcement in which we repositioned Calix, I'll take this moment to remind you we are a plant-based synthetic biology company committed to bringing the biomanufacturing capabilities of plants to innovative companies within our target end markets, the cosmeceutical, nutraceutical, and pharmaceutical industries. Our technology platform, unique production capability, and financial model are differentiated from other synthetic biology companies. I'm pleased to report we are moving full speed ahead into the growth and scaling phases of our organization's development with important expected milestones in 2022, which we will discuss on today's call. As a quick review of our technology platform and why we are convinced that the future of a number of industries depends on the sustainable production of chemistries that are plant-based, PlantSpring is our technology platform and is built on our significant experience engineering plant metabolism. We deliver innovations through an efficient development process from laboratory to pilot. These PlantSpring derived compounds are then produced through our proprietary bio factory. The biofactory harnesses the potential of plant cells in a multicellular matrix structure or proprietary plant cell matrices or PCMs. The PCMs are combined with growth media for production within a bioreactor or biofactory. The biofactory's plant-based foundation, the use of our PCMs, its ability to produce complex plant-based chemistries, its modular nature and geographic flexibility, differentiates the biofactory from other production systems used in the syn-bio and plant-based industries today. We believe the modular nature of our biofactory enables it to be scaled close to the customer in many instances, driving a more stable supply chain for our customers and potentially saving transportation costs as well. We also apply AIML capabilities across Plattspring development and biofactory production in driving efficiencies and the shortening of development timelines. Accordingly, we believe the company is positioned to be a supplier of unique chemistries that we believe are likely unable to be produced in more traditional synthetic biology production processes. These capabilities positions the company well considering key industry trends, including that more than 20% of the world's largest 2,000 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. Since the beginning of the year, we have made important commercial progress and achieved a number of important technical plat spring, biofactory, and AIML milestones, that have Calix well-positioned for future success. We are focused on advancing discussions and relationships with new potential customers in the cosmeceutical, nutraceutical, pharmaceutical industries. All large and innovative industries with customers that have current business needs to source sustainable and finite plant-based chemistries are known to be fast adopters of innovation and are actively seeking to reduce carbon footprints. As you recall, we are using a customer demand-driven approach to compound development and applying our filtering criteria, our target product profile, or TPP, to lists of compounds that are of interest to our potential customers. As of late April, Calix has evaluated 28 molecules identified by potential customers for development within our Plattspring platform and for production in our biofactory. That amount does not include another 58 such molecules that did not meet our TPP criteria and were not evaluated further. This group of 28 customer molecules includes several molecules that were identified by the potential customer as having been unsuccessfully attempted by other synthetic biology companies. As a reminder, we are targeting two to four customer demand driven compounds for development by year end. In January, we reported that our pilot biofactory production system became operational in late 2021. This development occurred on schedule and marks an important first step toward achieving at-scale commercial production. We have completed multiple runs in this pilot biofactory, focusing on ensuring the system is operating as planned, our plant cell matrices perform as expected, and that data is being captured properly as it is a driver of future AIML advancements. The pilot bio factory is modular and designed to be able to continually reproduce plant based chemistries while also producing multiple compounds at once. These capabilities provide us with flexibility when producing chemistries for multiple customers at the same time. We intend to scale this pilot production system to enable full production runs of compounds similar to those demanded for commercial production. We've also begun to deploy additional AI ML capabilities to both plant spring and the pilot bio factory. Calix currently uses AI-ML to assist in the identification of gene targets in the plant spring development process. During the past quarter, we integrated AI-ML capabilities into our lab-scale reactors, enabling the continual capture and analysis of data leading to optimization of performance. We intend to advance these lab-scale AI-ML capabilities into our pilot-scale reactor later this year. This deployment drives future decision and improves test cycles with the goal of shortening development timelines. Late last year, Kalich reported considerable progress in discovery and development of sustainable plant-based molecules in its biofactory. Results from our metabolomics analysis indicated more than 15,000 chemical signatures, including both known and as yet uncharacterized molecules and building block precursors. These signatures are chemical compounds involved in chemical reactions that produce other compounds. These chemical signatures that have been identified form a baseline library that enables us to quickly identify and assess customers' targets with the potential to drive accelerated development timelines. From this library, we have, based on interest expressed by potential customers, produced rosmarinic acid, a compound with antioxidant, anti-inflammatory, in antimicrobial properties, and that is used broadly in cosmeceuticals and nutraceuticals. Calix has also identified six additional compounds of interest for prospective customers. Calix intends to move rosmarinic acid into the pilot biofactory to further advance its capabilities and scale. Using data we have accumulated from our land-based activities and our lab-scale bioreactors, KLEGS can demonstrate at least a 35-fold increase in yield from land-based production to a lab-scale bioreactor. Leveraging these results, we project a further yield increase as we move production to pilot scale. Taken together with the land-based to lab results, the further advancement to pilot scale could drive an aggregate increase in yield of as much as 130-fold from land-based production to the pilot biofactory. These results underpin the company's scalability and sustainability benefits of the BioFact reproduction system. We have continued to make targeted new hires who are key to the growth and scale of our business. Just last month, we announced the hires of two directors, further deepening our expertise and knowledge and supporting our strategy and business model. Sue Ellen Boot joined as a business development director with more than 20 years of valuable business development experience to Calix. In her role, she will focus on facilitating potential partnerships, deal structures, valuation models, and subsequent transaction execution and alliance management. We also welcomed Elizabeth Teaglen as Manufacturing Director. Liz brings over 15 years of chemistry and purification expertise to Calix and will be responsible for pilot to commercial scale production of the company's customer demand-driven compounds, And along with an R&D leader, the Verify stage of product development. And as you may recall, in February, we onboarded our new SVP of business development, Jerry Nuobo. 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. Finally, in February, Calix successfully closed a successful financing, providing the company with net proceeds of approximately $10 million. This was a challenging time for many companies, particularly in the biotechnology industry, to raise capital. The fact that we did this is a testament to our strategy and focus. This raise strengthens Calix's financial position as we work to grow our business and realize its value. As a result, we now expect KALIS' cash runway to extend into early 2023. Our biofactory production system is differentiated from other production systems in use by synthetic biology companies today. Our biofactory is built around plants, which by their nature are complex, multicellular organisms. We believe this enables us to produce plant-based chemistries of greater complexity than many other production systems, including single cell fermentation-based systems. This certainly has been the feedback we have received from some of our prospective customers. We use a PCM as the biomass in our production system. The PCMs are stable because of their multicellular nature and can produce more than one plant-based chemistry at a time. As our PCMs grow and scale, they continuously produce the target chemistry. We use a growth media to bathe our PCM structures and provide nutrition. The bathing process is a portion of every hour and can be optimized using AI ML over time to maximize the productive capability of the PCM. Importantly, we have also aggressively pursued the expansion of our intellectual property portfolio. This enables us to carve out space for KX's proprietary technology, including our PCM and multicellular approach that is a critical foundation for the success of our company. Our production takes place within a bioreactor, our biofactory, so it is protected from many of the adverse climate effects typically associated with traditional agricultural production systems, as well as the scaling risks associated with other methods like fermentation. Finally, our biofactory production system is modular, which means it can be structured to produce more than one plant-based chemistry at a time. This modular design also allows the biofactory to be placed almost anywhere and thus geographically independent in comparison to other large-scale production systems, which typically requires a large investment in a single facility. These differentiators enable K-Leaks to produce complex plant-based chemistries in a short period of time. In some instances, we believe that the chemistries that we are able to produce may not be amenable to production through other means. Two additional differentiators are our customer focus and business model. Unlike historical calyx, or frankly some others in synthetic biology, we are coming to market developing and producing only plant-based chemistries our customers demand and need as developed through our target product profile. This gives us greater certainty of commercializations if we are successful in developing the chemistry and scaling its production. Due to the application of our TPP criteria, we expect the success rate for chemistries that we undertake development on to be very high. As we have stated, plants are a core of our technology, which we believe is a massive competitive advantage. Plants offer unmatched natural diversity and are capable of producing many more chemistries than other types of organisms. In many cases, these chemistries are far more complex than can be produced using a single cell organism. And in many cases, users of single cell organisms are trying to replicate through their development process what plants do naturally. When combining plants with our proprietary PCM structures in our bio factory, we gain the diversity of cell types a full plant would have without producing the full plant. This enables greater variety of chemistries to be produced at one time and generates a more stable scaling of the PCM biomass and target chemistry. Our business model is also differentiated from others in synthetic biology. Our business development team uses a customer-focused, demand-driven approach to the identification of plant-based chemistries we could develop. The business model requires that we are selective upfront to drive good decisions for both Calix and our customer. This criteria is our TPP. The TPP includes several areas, including technical capability to produce the desired chemistry, the size of the customer's demand pool in both quantity and dollars of spend in aggregate and per unit, and what other opportunities exist in the future to market the chemistry to others. We are targeting large demand pools, product revenue opportunities with potential multi-million dollar annual revenue opportunities per compound with a target gross profit margin in the middle double digits. This margin focus drives us towards the production of compounds scarce in nature and difficult to produce compounds that are high value and low volume from a production standpoint. After we've applied the TPP and accomplished some other interim steps, including small production of the target chemistry, we agree with the customer as to the specifics of the compound to be produced. We intend to have a production handled by infrastructure partners on our behalf, with the customer purchasing the plant-based chemistry from Calix under a supply agreement. Majority of the value to Calix in this business model is in the scale of product to the customer at the end of the development and scale-up process. There will also be instances, depending upon the compound desired or end market where the customer resides, funds the development costs through the design, engineer, verify, and pilot process. We expect the customer will address any regulatory or formulation matters with regards to the chemistry we will produce. In summary, Calix Plant Springs technology and the biofactory production system are differentiated from our peers in synthetic biology in many ways, including our business model. Our business model has resonated throughout our ongoing business development discussions with potential customers. In the near term, our customer activation efforts focus on end markets where we believe our current capabilities give us the best opportunity to win. including cosmeceuticals, nutraceuticals, and pharmaceuticals. These industries represent large end markets with customers that have current business needs to source sustainable and finite plant-based chemistries, are known to be fast adopters of innovation, and are actively seeking to reduce their carbon footprints. For example, the cosmeceutical ingredients market, which also includes personal care and flavors and fragrances, is estimated to spend more than $60 billion annually based on information from markets and markets. This ingredients markets includes large multinational cosmetic brands, regional and specialty brands, and flavor and fragrance houses who manufacture product or provide ingredients for those brands. Even if Calix is able to secure a small fraction of these large end markets, it represents a substantial business opportunity. We believe our development cycle could offer an unprecedented time measured from contract signing to commercializations to bring plant-based compounds to the market. We have consistently held that our 36 month development cycle represented a competitive advantage to that of other synthetic biology peers. As we have moved further into the customer acquisition process, we are now expecting to produce small quantities of product or evaluation by the customer early in the development process. As a result, we believe our development cycle may likely be shorter than 36 months. We also expect to further apply AIML throughout the stages of the Plattspring development cycle and in the biofactory production system, which is also intended to shorten our development cycle. For example, we plead to today that in some cases, the design engineer verify cycle can now be completed in as little as nine months. In summary, We have an industry-leading product development cycle that is expected to continue to shorten, enabling our path to product revenue to accelerate as well. Combined with the progression of our customer acquisition activity, we are excited by the prospects for Calix as we look forward for this aspect of the business. I'd like to now turn the call over to Bill, who will cover our licensing technology, our recent financial results, and key upcoming milestones. Bill?