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spk06: Welcome to the fourth quarter and full year 2021 financial results and business update conference call for YIELD 10 Bioscience. During the call, participants will be in listen-only mode. The presenters will address questions from analysts today. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the conference call over to your host, YIELD 10 Vice President of Planning and Corporate Communications, Lynn Brum.
spk04: Thank you, Alex, and good afternoon, everyone. Welcome to YIELD 10 Bioscience fourth quarter and full year 2021 conference call. Joining me on the call today are President and CEO, Dr. Oliver Peoples, Vice President of Research and Chief Science Officer, Dr. Christy Snell, and Chief Accounting Officer, Chuck Hazzor. Earlier this afternoon, YIELD 10 issued our fourth quarter and full year 2021 financial results. This press release, as well as slides that accompany today's presentation, are available on the investor relations events section of our website at yield10bio.com. Let's turn to slide two. Please note, as part of our discussion today, management will be making forward-looking statements. These statements are not guarantees of future performance, and therefore, you should not place undue reliance on them. Investors are also cautioned that statements that are not strictly historical constitute forward-looking statements, and such forward-looking statements are subject to a number of risks and uncertainties that could cause the actual results to differ materially from those anticipated. These risks include risks and uncertainties detailed in Yield 10's filings with the SEC, and the company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this conference call. And with that, I'll now turn the call over to Ali.
spk01: Thanks, Lynn. Good afternoon, everyone, and thanks for joining our call. In 2021, we executed against our strategic plan to establish Camelina as a new platform crop for the production of low-carbon petroleum replacements and food products. We made key hires, conducted field tests, and seed scale-up of various Camelina lines, and made other advances that create significant momentum going into 2022. Today, we'll provide an update on our recent accomplishments, including our 2021 field tests, as well as review our target markets with an emphasis on biofuel-free stock oil, present the fourth quarter at year-end financials, and summarize key milestones. We'll then open the call to questions. Let's turn to slide three. Our innovation platform, the Trade Factory, is centered around the oilseed camelina, the crop we plan to establish as a platform crop for the production of low-carbon petroleum replacements. Good products. We use our Trade Factory approach, applying the principles of synthetic biology to improve the performance of the crop and produce new seed products. This includes fixing more CO2 from the air to increase seed yield and oil content in the near term, and producing high-value proprietary seed products in the future. We believe that some of our varieties may also have the potential to sequester more carbon in the soil, as shown on the slide. Let's turn to slide four. We have significant momentum entering 2022. We've transitioned by identifying the Camelina lines that will enable us to turn our focus to early commercial activities to supply low carbon feedstock oil to the biofuel market. Our commercial team is engaging with potential supply chain partners to form alliances that will support our capital light business model. In January, we welcomed Darren Greenfield to our team to lead seed operations. Darren has more than 25 years' experience in canola with companies including VSF, Tau AgroScience, and SEBIS. Our commercial team is reaching out to growers for contract planting in 2022, establishing seed inventory and management systems to enable commercial seed supply, and planning for plant variety registrations and branding to support product launch. As we build our business around camelina, our research team has done an outstanding job developing our differentiated elite camelina lines to launch the business and a portfolio of novel gene traits. In late 2020, we began an intensive effort to deploy well-established herbicide tolerance traits and downy mildew resistance into camelina. Over the next year or so, the current varieties will be further enhanced by introducing these gene traits and other traits to create new varieties offering benefits to farmers and increased seed product revenue. In 2021, we continued developing and scaling up winter varieties as part of our strategy to access large acreage in the off-season when the land would lie fallow, so there will be no competition with soy and canola. We view establishing Camelina as a high-value winter cash cover crop as a key strategic goal for Yotam for biofuels in the near term and for the two new seed products in development, PHA bioplastics and omega-3 oils. Given the near-term commercial focus on biofuel food stock, we prioritized research efforts around oil content-boosting traits, many discovered using our grain platform. And we've recently reported data generated in our 2021 spring field tests and provided updates on our Cambogia programs, including early commercial activities in the biofuel space and progressing the PHA bioplastic trait. For more on our 2021 field test results, I'll pass the call over to Christy.
spk05: Thanks, Olly, and good afternoon, everyone. Our team executed an extensive spring field testing program in 2021, which has provided us with a rich data set on the performance of our camelina and canola lines. I'll now review some of our key findings. Let's turn to slide five, summary of 2021 spring field test results. We evaluated our camelina germplasm collection in 2021 and collected performance data on more than 20 spring-based germplasm lines. Some were from our internal collection and others were from university collections that we acquired. Our key internal camelina germplasm lines were among the best overall performers in the field as determined by seed yield, oil content, and agronomic properties. We also evaluated our CRISPR camelina line E3902. CRISPR camelina line E3902 again showed that it is a consistent performer producing about a 5% increased seed oil content in the field. Based on our work evaluating and comparing germplasm performance, we also confirmed that E3902 CRISPR traits are deployed in one of our best performing germplasm lines. Based on the oil yield and germplasm performance of Camelina Line E3902, we plan to apply for plant variety registration. Camelina C3015 for production of PHA. Our field work in 2021 also confirmed that Camelina with the C3015 trait is our best performing prototype PHA line, which produces up to 6% PHA in seed with good seed yields. Camelina containing the C3020 oil trait. We tested the C3020 trait in Camelina for the first time during the 2021 field season. lines produced up to a 9% increase in oil content, which is comparable to the 10% increase we observed in greenhouse studies. We identified this promising trait using our grain gene discovery platform. Canola containing the C3007 CRISPR trait. We also tested the C3007 trait in canola for the first time in 2021. In field tests, lines with this trait produced up to a 5% increase in oil content. In greenhouse studies, T3007 in canola produced an increase in oil in the range of 5%, as well as a significant increase in seed yield. Warm weather conditions in 2021 at the site where we tested this trait produced a lot of variability in seed yield, which complicated the collection of seed yield data. The C3007 trait targets the negative regulator of a key enzyme in oil biosynthesis, and our data in canola is very encouraging. I'd like to thank our team for doing such a great job managing the many complexities of our 2021 field test program, as well as completing the extensive data analysis resulting from the effort. Let's turn to slide six, outlook for 2022 camelina development. In 2022, we will continue to build our elite camelina germplasm. This will include conducting an extensive field test program, as well as seed scale-up utilizing contract growers, as we continue evaluating and scaling up our leading spring and winter camelina lines, the best of which we plan to register as new varieties. We will also continue to develop elite camelina with traits to boost seed oil content seed yield, herbicide tolerance, and downy mildew resistance. We've made good progress working on herbicide tolerance and will expand our testing for residual soil and over-the-top broadleaf weed control. We will also test candidate lines for resistance to downy mildew, a fungal disease. CRISPR-Cannolina Line E3902. Given the performance of our genome-edited high-oil line E3902, which has been confirmed is not regulated in the U.S. and Argentina, we plan for this to be registered as our first commercial elite camelina variety. We plan to ramp up seed production of E3902 for the feedstock oil market for renewable diesel. Seed is currently being scaled up in the 2021-2022 conference season, and we expect to use it for further seed production in 2022. We have also produced our first E392 camelina lines with herbicide tolerance genes, and these will be tested for the first time in the field this year. Camelina C3015 trait for PHA. We are planning acre-scale seed scale-up of our prototype camelina line containing the C3015 trait for production of PHA bioplastic, for process development and product sampling purposes. In R&D, we will continue to work to optimize the PHA bioplastic trait to produce 10 to 20% PHA bioplastic in seed and to demonstrate the PHA bioplastic copolymer production in camelina. Camelina C3020 trait for oil content. For camelina lines with the C3020 trait, we will conduct field tests to collect seed oil content and seed yield data. With that, I'll hand the call back over to Ali.
spk01: Thanks, Christy, and congrats to the team for their accomplishments advancing the program last year. Our strategy to build shareholder value is to commercialize camelina as a platform crop to produce renewable products, including feedstock oils for renewable diesel in the near term, and to leverage our advances in crop development to launch elite PHA camelina varieties for PHA bioplastics in the future. In addition to these two areas where Camelene can be used to replace petroleum products, we're also collaborating with Rothamsted Research to produce EPA, DHA, omega-3 oils for food. Let's turn to slide seven. Based on announced fuel industry investments, the production of renewable diesel alone is projected to grow up to 5 billion gallons annually from an estimated 1 billion gallons in 2021. These investments are necessary to meet regulations such as the California Low Carbon Fuel Standard And selling diesel fuel in California requires producers to meet a carbon standard by adding lower carbon renewable diesel to petroleum diesel or purchasing carbon credits. Increasing energy prices due to the crisis in Ukraine is another potential tailwind for biofuel demand. This new demand will have to be met mostly from increased vegetable oil production. Just to illustrate the scale of this challenge, adding 5 billion gallons of soybean oil would require another 60 million acres of soybean, acreage that is simply not available, so this will require multiple approaches. This includes new traits for increasing soybean and canola seed oil content and seed yield, and new oilseed crops, which is an opportunity for yield 10. A new camelina crop is well suited to support this growing feedstock demand, using spring varieties in areas which are less productive for soybean and canola, and as a winter cover crop when the land would otherwise be fallow. According to the illustration in this slide, harvesting 10 to 15 million acres of camelina as a cover crop could generate over $6 billion in revenue from oil and meal. Let's start with slide eight. Our commercial strategy for elite camelina is capital light, one using contract farming, seed crushing, and customer offtake agreements to manage costs and inventory risk in the early years of the business. To establish a leadership position in Camelina in the near term, we are prioritizing the development of Camelina lines with herbicide tolerance and disease resistance to enable large-scale acreage. Our performance rates for yield and oil will be stacked into these lines as we progress. In 2022 to 2023, we are planning to execute seed scale-up activities to enable planting in the range of 1,000 to 20,000 acres. We have a path forward with our current non-regulated varieties and will progress the regulatory path for new varieties, including those with herbicide tolerance as needed. In addition to our R&D activities, we have ongoing discussions with key players in the value chain, including seed processors and biofuel companies, where as stated, our goal is to secure offtake agreements. On to slide nine, a little discussion on PHA bioplastic. In the PHA bioplastic area, our efforts are focused on optimizing the PHA trait to enable PHA bioplastic production in camelina seed. Our business model is the same as for biofuel feedstocks. We use contract growers to produce the elite PHA camelina, which can be processed to produce three products, PHA bioplastic, biofuel feedstock, and protein meal. This will integrate PHA bioplastic production into large-scale, low-cost agriculture with the potential for costs in the range of feedstock oils. From a carbon perspective, taking CO2 directly from the air and directing it to PHA bioplastic and seeds is compelling. But this platform will take time to develop, and Christy has already outlined the R&D activities listed here for this year. Consumer pressure and increasing petroleum prices has increased major brand owner interest in alternative materials like PLA, which is compostable in industrial systems, and the more expensive PHA bioplastics, which are highly functional in use but have the added advantage that they are fully biodegradable in the environment. We are pursuing collaborations with industry as PHA bioplastics have traction with brand owners interested in biodegradable materials as a zero-waste, end-of-life solution for their products and packaging. We believe that this is a very attractive market. PHAP plastics are produced from plants. And I like to think of them as plastics made by plants. It represents a potentially disruptive technology, so we look forward to updating you on our progress throughout this year. Let's start with a slight pan for an update on fish oil and omega-3. There's a large opportunity in the omega-3 fish oil market driven by reduced supply of oil from harvesting fish and growing demand in aquaculture feed in nutraceutical markets. We believe that land-based production of omega-3s is an important potential solution for this market. As shown on the table, the Camelina EPA DHA omega-3 product has clear potential to be best in class across quality and composition, with around 20% combined DHA and EPA omega-3s, plus the third omega-3, ALA. It represents a sustainable way to meet the international growth anticipated in this attractive market. In 2022, we plan to continue our work with Rothamsted to progress to omega-3 traits, which we plan to stack into the elite family of varieties currently under development by yield 10 for feedstock oils and to progress third-party business discussions. Now let's turn to slide 11, licensing opportunities. We have non-exclusive research license agreements in place with Bayer, GDM, Forage Genetics, and Simplot to test their traits in various commercial crops. Each company is evaluating our traits in their target crop with the option to negotiate a commercial license. The arrows on the slide indicate the duration of those agreements. We are also following up on industry interest in oil content traits, including C3007 for soybean and canola. And we are seeking partners to test the traits in corn. The GLAIN grain platform also represents a unique collaborative opportunity driven by interest in identifying novel performance traits. Now let's turn to slide 12 for an update on financial results. Our net operating cash usage was 2.5 million for the fourth quarter 2021, and 9.3 million for the full year 2021. Our guidance for total net cash usage was 10 to 10.5 million for 2021, and the actual 2021 net cash usage was approximately 10.3 million. For the full year 2022, we estimate total net cash usage of 12 to 12.5 million. The increase over 2021 spend is to support our transition to commercial activities, including seed operations, as well as accelerated goal achievement and R&D. We ended the year with $16 million in cash, cash equivalents, and investments. We expected our cash on hand, together with expected revenue from our current government grant, will support our operations into first quarter 2023. We have no debt on our balance sheet. Let's now review the full year and fourth quarter 2021 operating results. For the full year ending December 31st, 2021, our net loss after taxes was $11 million or $2.33 per share as compared to $10.2 million or $4.30 per share in 2020. Total research grant revenues for the full year 2021 were $614,000 versus $799,000 for the full year 2020. For the full year 2021, R&D expenses were $6.2 million compared to $5.4 million in 2020. G&A expenses were 6.1 million for the full year 2021 as compared to 5 million in 2020. For the fourth quarter of 2021, the company reported a net loss after taxes of 3 million as compared to a net loss after taxes of 2.6 million for fourth quarter 2020. Total research grant revenues in the fourth quarter of 2021 were 152,000 versus 195,000 in the fourth quarter 2020. The decrease in the quarter reflects our assignment of internal resources to near-term commercial goals. In the fourth quarter of 2021, R&D expenses were 1.6 million compared to 1.4 million in the fourth quarter of 2020. G&E expenses were 1.5 million in the fourth quarter of 2021 as compared to 1.4 million in the fourth quarter of 2020. For more details on our financial results, please refer to the earnings release. Now let's talk to slide 13 for a list of upcoming milestones. In 2022, we will continue to focus on the following milestones, expanding our commercial activities targeting the renewable diesel market, continue to build our differentiated elite Camelina germ plasma collection, executing our 2022 field testing and seed scale-up program, advancing the optimization of our PHA bioplastic trade, and progressing the commercial launch plan for Camelina DHA EPA omega-3 oils. securing grant revenue, revenue generating strategic industry collaborations and additional grant revenue, and expanding our intellectual property portfolio. With that, I'd like to turn the call back over to Lynn for questions.
spk04: Thanks, Ollie. Alex, we're ready for questions.
spk06: Thank you. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
spk00: Thanks. Good afternoon. Hi, Anthony. How are you doing? Good, good. How are you doing, Lynn? So on the... The supply chain side of the business and the renewable diesel market, can you talk about the nature of the conversations your commercial team is having with these supply chain participants? And have you had any impacts recently from COVID, or do you feel like at this point that's behind you?
spk01: Yeah, so just let's take COVID off the table for the time being, and hopefully there won't be another variant that brings it back on. So I think we're pretty much through the COVID situation. Regarding the types of conversations we're having with biofuel companies, I mean, I would say what we've learned from the many different third-party conversations we have, I would say their priorities are, number one, securing supply, because obviously there's You know, these facilities are being built, and quite frankly, they can't really be supplied with soybean and oil, and there is no more tallow, literally, to go around. So, obviously, oil seed or oil processing has to increase. The second thing we're hearing is they'd like to move away from food crops. That also fits with the camelina story. And the third thing is they're really targeting getting to the lowest carbon intensity index score possible, which is obviously a big driver of value and actually defines how much of the renewable diesel they have to blend into their final fuel before they can sell it in California. So that's what we're hearing from the fuel players. The second thing we're hearing is that there's also a number of these fuel players are aligning with some of the big seed processors. These are the big ABC companies, ADMs, Bungies, Cargills. And then you get into Dreyfus, Richardson's, and there's a list of these. And we're also seeing, you know, I would say investment in new seed crushing capacity, both in the Canada and the U.S., not only among the large players, but also among many of the soybean co-ops and areas of the country that YieldPan is focused on. So, you know, we're seeing this across the value chain. And then when you look at, you know, where Yield 10 and how Yield 10 would like to get started in the business, in an ideal situation, it would be in a region suitable for growing our camelina, where we already have, I would say, capabilities in place. It would be, I would say, a biofuel player that preferably has crushing capability in place. and already has a channel to market for the fuel. So, you know, that would be sort of ideal as a launch point. But we're also seeing a lot of strategic interest from some of the bigger players. And that interest is driven, I would say, more long-term because they're so busy, you know, with these capital investments. But it's really more about, you know, how do they get the most compelling non-food low-carbon story and have to be quite honest with you, one of the major attractions is the combination of biofuel feedstock and PHA bioplastics because of the negative carbon impact of the bioplastic, and that seems to have some synergies. So, you know, we'll see how all those things shake out. Obviously, the size of the company dictates also the pace at which you can progress. And so, you know, we've got a lot of things ongoing, but obviously until something's actually, you know, I would say, codified legally, then we wouldn't be able to talk about it.
spk00: Okay. But, Ali, it sounds like talks are progressing. You know, at least from your comments, it sounds like you're having more conversations. Is there anything that they're requiring, you know, whether it's more validation, more field tests, anything that they're requiring, you think, to talk to get them over the hump, so to speak, in terms of, like you said, codifying or actually signing a contract? Or is it just, especially with the larger customers, it's just a lengthy process?
spk01: Yeah, it's just, with larger players, I mean, it's obviously a lengthy process. And quite frankly, I mean, an example would be of how some of the largest players see this is obviously Exxon. It's pretty involved in Global Clean Energy Holdings, which owns a company called Sustainable Oils that has a non-GMO camelina platform. As part of a recent deal, they obviously sought to secure 30% of the sustainable oils, which is the camelina seed business. They are clearly looking at this whole area strategically. One thing that the yield plan will not do is we will not trade on our intellectual property in Camelina just to work with an oil partner. We don't believe we have to do that. We believe we can essentially retain control of our intellectual property and capabilities and still work with these partners in a way that meets their needs but protects the long-term interests of our shareholders.
spk00: Okay, great. That's helpful. I'll hop back in the queue. Thank you.
spk06: Thanks, Anthony. Thank you. Our next question comes from the line of Sameer Joshi with HC Wainwright. Please proceed with your question.
spk02: Hey, good afternoon. Thanks for taking my questions. Just digging a little bit deeper, I know it is early days on discussions on the renewable diesel and access to market, but how do you envisage this will, as far as yield 10 is concerned, Would you be interacting with the renewable diesel producers or the contract farmers or the ABCs of the world or crushing companies? Who will be your most likely partner?
spk01: Right now, basically, we are already in conversation with farmers about growing contracts. And, you know, Darren, who joined us, he's literally drinking from a fire hose. So he's a very busy guy. And, you know, he's really, I would say, hit the ground running based on, obviously, the work of Christy and her team. But basically, you know, they were already in discussions with growers about contract production this spring and actually also plan for this winter as well. And, you know, we'll have to see how all that goes. There's obviously some real unique dynamics in the ag sector due to the Q train and it being such a big grain and an important grain producer. So growers are really, that would be contracts with yield 10. What we are trying to do, however, is to contract the offtake of the grain after harvest with crushers and or I would say buy a few companies to have crushing in place. So we see ourselves as being not an agent, but also I would say more or less the enabler for the value chain that collects our income at the farm gate, basically, versus selling seeds to the farmer.
spk02: Understood. And so in one of the slides you mentioned, I think Christy mentioned 1,000 to 20,000 acres to be planted. Is that the E3902 variety, or is that the E3020 variety? Yeah, E3902, we don't have an E3020.
spk01: It's too early for C3020. I mean, literally, you know, so literally, you know, the green team literally plucked C3020 out of the ether space. Okay. And I plugged it into Campbell, you know, with obviously really very exciting results. But that's a very, very new development. exciting in its own right, but it will take time to bring that forward. And I do think that obviously the R&D team is not only looking at C3020 by itself, but obviously starting to combine these things with some of the other oil trades that we have in hand, whether that's E3902 or the C3007. I would say one thing is clear is just as investors are interested in C-3020, we are seeing a similar interest from some of the larger seed players because suddenly oil value per acre is a huge driver in terms of the seed business itself, both for canola and soybean. So how all that works out, we will have to see, but we are already having conversations with some of the seed players on those things. Yeah, so I think, you know, Lynn reminded me of a key point here. So E392 is our lead spring variety, and obviously it's being scaled up. But we're also scaling up two winter lines. Christy, you want to speak to those?
spk05: Yeah, we have two proprietary winter lines that we've developed in-house that are working very well, both in extreme cold, and then we have one that works well in more temperate climates. And we're scaling those up right now to... the need for renewable diesel.
spk02: Do they have a number, like a 30-something?
spk01: They haven't been assigned a number yet.
spk04: An internal number, so not external numbers yet.
spk02: Got it, got it. So my next question is actually three or four questions in one, and just hear me out. Question one, part one of that is, For the E3902, what was the control oil content and the 5% improvement over that? How does that total oil content compare to soybean or canola?
spk01: You can't really make those comparisons because essentially soybean has about 18% oil. Canola, depending on the varieties, can have up to 40 plus percent oil. And then, of course, there's a wide variation across the geography. So these are still relatively small trials, I think. So the only thing we can really do is to compare it to the Camelina Control. And in that case, obviously, it stands out as having 5% more oil, which is obviously beneficial in terms of our launch of the business. But obviously, we won't stop there. And that's why some of these other traits like C3020 are really interesting.
spk02: So is it fair to assume that the camelina control was around 30% to 40% because it is closely related to canola?
spk05: It really depends where it was grown. You get higher oil content when you grow it up in Canada than you do in the Pacific Northwest U.S. states. So it really depends where it's grown. Yes.
spk02: Okay, okay. Yeah, yeah. And then the culminating question here is, I understand that 2020 is a new development, but is it considered regulated as against the E3902, which is not considered regulated?
spk05: Yeah. We believe the regulation will be advantageous through the new secure rule. It is a Camelina gene. But we, of course, have to go through that process to see how it pans out. But we believe there will be some advantage.
spk02: Okay. And then one last question on a different topic. The licensing agreements that you have with Simplot, Forage, uh those uh and others are ending in 2022 uh what is should we expect uh to be the outcome of these uh or do you expect these to be extended further um what how should we look at these licensing agreements yeah so you know i mean i think uh obviously in an ideal situation some of the law translate over to um
spk01: To basically commercial licensees that won't depend on what these companies see see And the field trials, you know this year and how they view that You know, we can't really provide any further color on it but certainly There's there's definitely progressing these and we know they're doing field trials this year we do have information, but we can't share that with you and
spk02: Okay, I'll take the rest of my questions offline. Thanks a lot for taking my question.
spk06: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call over to Lynn Brum for closing remarks.
spk04: Yeah, thanks, Alex. And I'll turn the call back over to Ali.
spk01: So I'd like to personally thank all of you for joining us on the call tonight, and especially our shareholders for your continued support. This is an exciting time for EO10 as we have gained clarity and focus on the opportunities ahead in 2022 and beyond. In the near term, we are focused on preparing for the launch of Camelina for the RD space, as well as on advancing our activities on PHA bioplastic and omega-3 oil products in development. I want to thank everyone at EO10 for keeping us on track to reach our goals in 2022. Have a nice evening, everyone.
spk06: Thanks, Alex. Thanks, everyone. You may now disconnect.
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