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spk03: Welcome to the second quarter 2022 financial results and business update conference call for yield 10 bioscience. During this call participants will be in a listen only mode. Excuse me. The presenters will address questions from the analysts today. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, YIELD 10 Vice President of Planning and Corporate Communications, Lynne Brum. Thank you. You may begin.
spk00: Lynne Brum Thank you, Rob, and good afternoon, everyone. Welcome to the YIELD 10 Bioscience Second Quarter 2022 Conference Call. Joining me on the call today are President and CEO, Dr. Ollie Peoples, Vice President of Research and Chief Science Officer, Dr. Christy Snell, and Chief Accounting Officer, Chuck Hazzard. Earlier this afternoon, Yield10 issued our second quarter 2022 financial results. This press release as well as slides accompanying today's presentation are available on the investor relations events section of our website at yield10bio.com. Let's now turn to slide two. Please note that as part of today's discussion, management will make 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 filing with the SEC. 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 turn the call over to Ali.
spk07: Thanks, Lynn. Good afternoon, everyone, and thanks for joining our call. As 2022 is progressing, we're making solid progress executing our commercial plan to launch camelina as a platform crop with a near-term focus on the biofuel feedstock market. Today, we'll provide an update on our recent accomplishments as well as provide an update on our market development efforts to contract 1,000 acres for winter grain production. We'll also provide an update on our spring field trials with a focus on our herbicide tolerance studies review key drivers in the biofuel free stock oil market, present the second quarter financials, and summarize key milestones. We will then open the call to questions. Let's talk to slide three, Yield 10's crop innovation platform. Our innovation platform, the Trade Factory, is centered around the oilseed camelina to increase carbon capture and direct increased carbon to the seed to produce decarbonizing seed products. We are currently working to establish Camelina as a new platform crop to produce low-carbon folium replacements and food products. Let's turn to slide four, Yieldtown's business model. Our business model is to provide farmers with a new growing opportunity by building elite Camelina varieties to produce seed products for new markets. Central to our plan is to develop elite Camelina seed varieties, contract production of Camelina grain with farmers, and supply customers in the renewables and food space under offtake agreements. With our current elite varieties progressing towards commercialization and our two proprietary value-added camelina seed product traits in development, we are positioned to establish and grow a large seed products business. Our lead product is low-carbon feedstock oil to meet increased demand from the biofuel sector. Here, we are in the early commercial stage and working steadily on partner outreach to secure offtake agreements. We believe this will be followed by the launch of omega-3 camelina to produce omega-3 oils for nutrition, and PHA bioplastic camelina to supply the growing demand for biodegradable zero waste plastic packaging. Combined, these products represent a significant revenue opportunity. Let's now turn to slide five, advancing the business. We're making solid progress executing our plan to launch our camelina seed products business. Our commercial team is engaging with potential supply chain partners to form alliances that will support our capital light business model and reaching out to growers for contract planting for winter 2022-2023. This fall, we plan to contract more than 1,000 acres of grain production in areas of southern Canada and the northwest regions of the U.S. We're also wrapping up quality seed production in the winter season in the U.S. and Canada, as well as in contra-season for our spring varieties for future grain production contracts. As we build our business around Campbellina, our research team has done an outstanding job progressing new seed varieties and a strong pipeline of traits. In 2022, we had an intensive effort underway field testing herbicide tolerance and downy mildew resistance traits. As Christie will describe today, we remain on track to achieve the very important milestone towards selecting herbicide-tolerant spring camelina lines for seed scale-up and future commercialization. Our winter field program is reaching a successful conclusion. with a 17-acre field in Saskatchewan planted last fall scheduled to be harvested next week. The 21-22 program is expected to provide us with important data on winter and spring varieties drawn in a range of geographies, as well as seed for additional seed production over this upcoming winter. Our extensive spring field test program is nearing harvest in the U.S. and Canada, which will allow us to generate further proof points on our traits and identify new camelina lines for commercial development. I will now pass the call over to Christy.
spk01: Thanks, Olly, and good afternoon, everyone. Before I provide a high-level update on our ongoing field program, let's start with an overview of our early commercial canelina lines. Please turn to slide six. We have three early commercial canelina lines, genome-edited spring line E3902 and winter lines WDH2 and WDH3 that were produced using a breeding procedure. We are continuing to ramp up seed production of each of these lines to make planting seed available to growers under contract. In winter 2022-2023, we anticipate that WDH2, our winter cold-tolerant line, will be available to participating growers where we are targeting more than 1,000 total contracted acres. Let's turn to slide seven. Our spring field testing program consists of germplasm variety trials and small plots. We conducted the trials at nine locations shown on the map. Our six sites in Canada span the provinces of Alberta, Saskatchewan, and Manitoba, and our three sites in the U.S. are located in Montana, Idaho, and North Dakota, all regions well-suited for growing camelina. Currently, plants are at the stage of late seed set or maturity at all nine of our sites. I'm pleased to report that depending on location, most fields have been rated good or excellent over the course of this growing season. Two sites will provide little to no data due to emergence issues at the site. In the photo of our Montana site, the plants appear yellow. This indicates the plants are maturing and are nearing harvest. The mid-July photo of our Idaho field shows healthy plants before flowering. If the weather stays on track into harvest, We believe our trials will produce a robust agronomic performance data set that will supplement the data that we obtained from the spring 2021 trials. This data package will be used to select germplasm for development and breeding purposes. Let's turn to slide eight. Camelina growers need a robust herbicide package that provides over-the-top spray weed control for broadleaf and grassy weeds. as well as tolerance to soil residues of Group 2 herbicides left from the growth of the previous crop. Over the next several slides, I will outline our progress and plans to generate camelina lines to provide farmers with the herbicide tolerance package that they need. As part of our spring program, we are evaluating candidate camelina lines that we have engineered for tolerance to over-the-top spray of a commercial broadleaf weed herbicide. I'm pleased to say that in our field testing to date, we have observed good herbicide tolerance to an established broadleaf herbicide at 1 or 2x the spray rate that is typically commercially applied to herbicide-tolerant canola. For over-the-top spraying, we applied two spray applications of the broadleaf herbicide at different times of the camelina growth cycle. The drone pictures in the top of the slide illustrate good growth of plots with camelina lines containing herbicide tolerance and little to no growth of control lines that do not have herbicide tolerance. The red dots on the photos indicate the field location of the control lines, which you can see are highly susceptible to herbicide. All of our herbicide tolerance events tested are showing good tolerance, including events produced in the E3902 germplasm background. After seed harvest, we will collect seed yield and oil content data for these trials to identify the best events to bring forward in our pipeline. Camelina is also highly susceptible to the presence of Group 2 herbicide residues in soil. Group 2 herbicides, mainly imidazolinones, or IMEs, and sulfonylureas, or SUs, are used extensively in the regions we are currently targeting for camelina production. Soil residues can persist in the soil and impair the emergence and growth of canelina. We have in hand a line obtained from a third party that has tolerance to IMEs. In the photos on the bottom of slide 8, we have demonstrated that the IME-tolerant line has normal growth in the presence of IME soil residues applied to the soil at 1 or 2x the commercially used rates. In contrast, the control line has impaired growth. The results of our trials to date indicate that we are well on track to identify lead and backup lines for broadleaf herbicide tolerance for commercial development and regulatory approval. Once these lines are identified, we plan to accelerate these candidates into a contra-season seed scale up this winter and put them on the path to regulatory approval. Let's turn to slide nine. The timeline on this slide shows our progress towards producing over-the-top spray broadleaf weed control and testing a herbicide for grassy weed control on camelina. The yellow boxes indicate work that is in progress or completed. In 2022, we verified broadleaf herbicide tolerance in our engineered camelina events, both in the greenhouse and the field. We have also ramped up regulatory efforts for our over-the-top herbicide tolerant lines based on the positive test results we've obtained this year. The white boxes describe the anticipated next steps in the development program, including contra-season field work this winter for product development trials and seed scale-up, and 2023 spring field work for product development and herbicide label amendments for camelina. Let's turn to slide 10. As mentioned previously, Group 2 herbicides, such as IMEs and SUs, can persist in soil for months following application and will negatively affect the growth of camelina. In slide 8, we demonstrated tolerance for IMEs in the field. We are now developing broader Group 2 herbicide soil residue tolerance for both IMEs and FCUs that will expand the acreage for camelina growth. We are stacking these traits for Group 2 soil residue tolerance with the traits for over-the-top herbicide spray tolerance described in the previous slide. To date, we have successfully stacked both herbicide tolerance traits into our best germplasm and will be soon conducting ME and SU soil residue tests in the greenhouse. If we are successful at identifying stacked herbicide tolerant plants, we plan to initiate the regulatory process and move plants into field trials in 2023. Let's turn to slide 11. In the second half of the year, we plan to initiate planting for multi-site 2022-2023 winter field trials, including conducting germplasm variety trials in different locations and expanding our winter germplasm breeding program. Our key targets for this work are developing lines suitable for integration with corn and soy with higher yields. In addition, we plan to conduct winter-contra-season seed production for spring varieties for our Yield 10 herbicide-tolerant lines and conduct additional testing and seed scale-up of the best events. We will also test a herbicide that is currently used to control grassy weeds with other crops. It is quite likely that camelina is naturally tolerant to this herbicide, so we will test it in the coming months to confirm this activity. As a wrap-up, I'd like to acknowledge the YIELD10 R&D team. They've put in a tremendous effort over the last year and a half generating herbicide-tolerant events in camelina and testing them in the greenhouse and in field trials. I'll now hand the call back over to Ali. Ali?
spk07: Thanks, Christy, and congratulations to the team for their significant accomplishments executing the spring program and generating positive preliminary data on herbicide tolerance in our camelina lines. Let's turn to slide 12, 2022 commercial winter seed production priorities. Our seed production activities are focused on two goals. First, the ramp up of contracted acres for grain production for processing to feed stock oil and protein meal. Second, high-quality seed production for winter camelina lines WDH2, WDH3, to enable ramp-up of contracted acres in fall of 2023 and beyond. We are also planning contra-season seed production for spring varieties, including E3902 and our herbicide-tolerant lines. Let's now turn to slide 13, tailwinds for biofuel feedstocks, and we all love a good tailwind. Our strategy to build shareholder value is to commercialize camelina as a platform crop to produce renewable products focused on feedstock oils for biofuels in the near term, and to leverage our advances in crop development to launch elite omega-3 camelina varieties and PHA camelina varieties for PHA bioplastics in the future. Over the past 24 months, we have pivoted to focus on the near-term commercial opportunity for camelina as a source of biofuel feedstock oil, and we are now well-positioned to take advantage of major tailwinds in this market. Let's turn to slide 14. the expansion of R&D facilities of RD or renewable diesel facilities in North America. Production of renewable diesel alone is projected to grow to 6 billion gallons annually in the next five years from an estimated billion gallons in 2021. These investments are necessary to meet regulations such as the California low carbon fuel standards and similar standards extending to other states in Canada. This new demand will have to be met mostly from increased use of vegetable oil. And this, in turn, is placing further pressure on vegetable oil prices, resulting in opportunities for new crops like camellia to expand production. Let's turn to slide 15, the Climate Bill and increasing global fuel demand. In early August, the U.S. Senate approved the Inflation Reduction Act of 2022. This legislation represents an unprecedented investment in addressing U.S. energy security, clean energy infrastructure, and climate change. This bill provides extensions for renewable diesel and clean fuel tax credits, as well as create sustainable aviation fuel tax credit, both essential to reducing greenhouse gas emissions in the transportation sector. Our winter camelina cover crop will support demand for decarbonizing feedstock oil for biofuels. The bill also provides funding support for climate-smart agricultural practices to incent growers to plant new cover crops. And the technology accelerator will focus investment into building resilient, rural communities, prime places for camelina production and green processing. And on top of all this, we have overall growing global demand for decarbonizing transportation fuels. Based on all this, we've concluded that this market is going to be constrained by the feedstock oil supply, creating a major opportunity for our camelina products business. Let's turn to slide 16, recent cover cropping partnerships. As many of you know, the oil sector likes to focus on securing, owning, and replenishing their own reserves, or as they like to refer to it, owning the well. The ag value chain doesn't lend itself to that model, but what we are seeing are partnerships along the value chain, including seed companies. The most recent of these was Bayer, an early round investor in the cover crop company Covercrest, acquiring a majority share with a grain processor, Mungy, and a large oil biofuel player, Chevron, also being shareholders. Let's start to slide 17, establishing the Camelina value chain. To establish a leadership position in Camelina, we are prioritizing development of Camelina lines with herbicide tolerance and disease resistance to enable larger acreage production. Our performance rates for yield and oil will be stacked into these lines as we progress. In 2022 to 2023, We plan to execute seed scale-up activities to enable planting for green production in the range of 1,000 to 20,000 acres. We are moving forward with our current non-regulated varieties and will progress the regulatory path for new varieties as needed. We also have ongoing discussions with key players across the value chain where, as stated, our goal is to secure partnerships and offtake agreements. Let's turn to slide 18, our long-term vision for Camelina. Although laser-focused, I stole that from Tom Brazy, on biofuel feedstock markets in the near term, our vision is to establish winter camelina as a platform crop to produce new seed products. To achieve this, we are working to provide the farmer with convenience in production and the highest financial returns per acre. Investments we are making now in improved germplasm, herbicide and disease tolerance will provide the foundation varieties for our two proprietary seed products in the future, PHA bioplastics and omega-3 oils. In the case of PHA bioplastics, we will be co-producing feedstock oil in the seed. Our analysis indicates that allocation of the significant carbon savings from replacing petroleum plastic to the feedstock oil has the potential to drive the oil CI, or carbon essentially, below zero, further enhancing our value proposition. Keep in mind, this entire market is about decarbonizing our economy and transportation in particular. Let's turn to slide 19, our summary of the PHA bioplastic omega-3 programs. Although currently focused on biofuel feedstocks, we continue to make progress in our two new seed product rates. In the PHA bioplastic area, our efforts are focused on optimizing the PHA trait to enable PHA bioplastic production in camelini seeds, which can be processed to produce three seed products, PHA bioplastic, biofuel feedstock oil, and protein meal. Our prototype camelina line C3015 has been growing at acre scale this year to produce BHA camelina grain for process and business development purposes. The R&D team is continuing activities related to trade optimization. Fish oil in the omega-3 markets. Although more a specialty market, camelina has proven to be an excellent platform for producing DHA plus EPA omega-3 oils. And there is a large opportunity in the omega-3 fish oil market driven by reduced supply of oil from harvesting ocean fish, and growing demand in aquaculture feed and nutraceutical markets. We continue to support our partners at Rothamsted and are very pleased to see the recently published patent application describing significant improvements to the original technology. If granted, this IP could extend patent protection through 2040. Now let's turn to slide 20, our licensing opportunities. We have non-exclusive research license agreements in place with Bayer, GDM, Forge Genetics, and Simplot to test their traits in various commercial crops. Each company is evaluating their traits in their target crop with the option to negotiate a commercial license. The arrows on the slide indicate the duration of these agreements. We're also following up on industry interest in oil content traits, including C3007 for soybean and canola, and we are seeking partners to test our traits in corn. The grain platform also represents a unique collaborative opportunity driven by interest in identifying novel performance traits. I will now turn the call over to Chuck to discuss the second quarter of financials.
spk06: Thanks, Ali, and good afternoon, everyone. Let's please turn to slide 21. We ended the second quarter with $10.2 million in cash, cash equivalents, and investments, and we expect that our cash on hand, together with expected revenue from our current government grant, will support our operations into the first quarter of 2023. We continue to have no debt on our balance sheet. Our net operating cash usage was $2.5 million for the second quarter of 2022, as compared to $2.1 million for the second quarter of a year ago. For the full year of 2022, we estimate total net cash usage of $12 to $12.5 million to fund our operations, including our expanded research and development activities and our preparations for the future commercial launch of our Camelina products. Now let's review the second quarter 2022 operating results. For the second quarter of 2022, the company reported a net loss after taxes of $3.4 million as compared to a net loss after taxes of $3.1 million for the second quarter of 2021. Total research grant revenues in the second quarter of 2022 were $103,000 as compared to $174,000 in the second quarter of 2021. The decrease was the result of allocating greater resources to support other Camelina research and development initiatives. In the second quarter of 2022, R&D expenses were $2 million, as compared to $1.7 million in the second quarter of 2021. And G&A expenses were $1.5 million for the second quarter this year, as compared to $1.6 million in the second quarter of last year. And for the six months ending June 30, 2022, grant revenue was $252,000, R&D expenses totaled $3.8 million, and G&A expenses totaled $3.2 million. Our net loss after taxes was $6.8 million. For more information and details on our financial results, please refer to our earnings release and our 10-Q. Holly, back to you.
spk07: Thanks, Chuck. Now let's turn to slide 22, the upcoming milestones. As you can see, our technology team has made terrific progress this year, executing on the development and scale-up of new Camelina lines for commercial production. We're very excited to be well aligned with the strong tailwinds and biofuels. As we progress into the second half of 2022, we will continue to focus on executing our key milestones, including expanding our commercial activities targeting the biofuels market, continue to build our differentiated elite camelina germplasm collection, collecting and analyzing data from our 2022 field testing program and executing our seed scale-up program, and advancing the optimization of our PHA bioplastic and progressing the commercial launch plan for camelina omega-3 oils. We are very busy in business development with outreach to prospective partners across the entire value chain with the goal of executing strategic industry collaborations. And we continue to build on our intellectual property portfolio. With that, I'd like to turn the call back to Lynn for questions.
spk01: Thanks, Ali. Rob, we're ready for questions.
spk03: Thank you, Lynn. At this time, we'll 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. One moment, please, while we poll for questions. Our first question comes from Anthony Vendetti with Maxim Group. Please proceed with your question.
spk05: Thank you. Yes, it sounds like you're making a lot of progress on a number of different fronts here. Specific to the Camelina line, you have this agreement with Rothamsted, and you expect that to extend the patent protection for this technology through 2040. Can you also talk about And it says they have an exclusive option to this technology. Can you talk about what the agreement with Rothamsted could mean in terms of collaboration, potential contracts, revenues? Maybe just give us a little more color around the agreement with Rothamsted Research.
spk07: Well, Anthony, that's a pretty big set of questions. Yeah. I'm going to take them one at a time. I think in regard to Rothamstad, you know, we have this exclusive option agreement with Rothamstad. We've been working and cooperating with them, you know, I would say over the last two years. Now, although Yoltan managed to sort of work pretty much throughout the entire COVID situation, Rothamstad's internal activities were impaired because the UK was in much more aggressive shutdown mode. But the team there, led by Jonathan Napier, actually made some great progress, particularly on this improved technology. And by improved technology, I mean essentially significantly increasing the levels of EPA in one line to, you know, I would say 25 to 30 percent of the oil. It's a pretty interesting market. And it opens up some interesting, I think, path to near-term commercialization that we are currently working internally on the regulatory front and also with Rothamsted on the path forward. So there's that. And that's really a product that we think is not really so much for Aquafeed. But there is a number of pharmaceutical products out there that are basically purified ethyl EPA. In other words, they're just a purified form of the EPA omega-3 acid in the cardiovascular disease area. Obviously, purifying EPA from fish oil is a lot more complex with about 10% EPA in there, plus all the wonderful things you get when you harvest fish from the ocean. and essentially separating it from something that's closer to 30% EPA in a pure oil form without all the residual contaminants from ocean harvesting. So we're pretty excited about that. We're working on it. How big that market could get, we will have to do more diligence on that, and that diligence is actually underway. On the broader front, that patent also includes progress on increasing the levels of EPA DHA in the lines as well. And I think there's also a second feed component in there, particularly relevant to salmon production, which includes astaxanthin. So it's a combination of increased EPA DHE oil production with essentially co-producing astaxanthin, which is another component. of the one or more expensive ingredients in aquaculture. So, you know, that's going to take a little bit longer just from a regulatory perspective, et cetera. But what you see is you see the potential to have a sequential launch of a series of products from that platform. We are working with the Rothamsted folks pretty much on a weekly basis, and we interact with them in that way. Delighted with their progress, and I think we are feeling that we now have a path forward to begin the commercial scale-up of this technology, and that's something that we're getting underway. Now, keep in mind that Yield 10 is a relatively small company. We also have this modest opportunity in biofuel in front of us, and as you see in the presentation, we are pretty heavily focused on building that revenue stream in the near term. So we'll be very judicious in how we approach this. We are making sure that we progress this in a very systematic way. And as we bring in additional resources, we will expand or accelerate the development of the omega-3. But when you look at the market and you look at where aquaculture is going, there's probably a half a billion to a billion dollar oil opportunity there. And obviously, we believe Camelina, for whatever biological reason, is extremely well suited to be a major source of that oil going forward. So we're very excited about it. But near-term priority is on biofuel.
spk05: Sure, sure. No, that's helpful. Just, Ali, maybe one follow-up to it. So the biofuel feedstock opportunity, which you're positioning for – contracting on 1,000 acres for the winter camelina, right? So that's expected to be planted by early 2020, October of 22. That harvest for processing camelina to oil and protein is anticipated in second quarter 23.
spk07: Yeah, late second quarter 2023. Of course, that totally depends where we plant it. As you'll see in those trials, we planted winter camelina all the way from Georgia to the north central Saskatchewan, which is pretty far up there. That includes the 17 acres of seed scale up of our WDH2 line, which is going to be the genetics we use for that thousand acres. And so that's going to be harvested sometime this week, I believe. And then obviously go through a seed cleaning process and a QC process. so that we can put it in bags and make it of high enough quality to provide the growers. So, you know, Georgia was high-prestiged many months ago. But obviously, as you move north, that season changes. And so, you know, when we talk about cover cropping, cover cropping is... is somewhat different in context depending on what latitude you're at. So further north, it's really about pruning a crop down over the winter. You may not plant a second crop once you harvest the winter camelina, whereas in the Corn Belt or further south, you will likely be double cropping. And so the cover cropping value is the same. The difference is that what you integrate it with in terms of your rotations is different.
spk05: So maybe just last question on that is, you know, assuming that goes well, how does that enable you to strike or sign contracts that will result in revenue from Camelina?
spk07: Yeah, so, you know, I mentioned we're very busy across the entire value chain. I think that's the first time I ever used the entire value chain in any disclosure. So we are in partnering discussions, you know, from soups and nuts in this case. Obviously, that includes some of the major grain processors. You know, Yield 10 is not going to become an ADM, Munger, Cargill-type company. That's not really what we're about. So we are talking to... folks in that space, without naming any names, about basically contract processing of that. And then, of course, you know, the people with the real problem are the folks who are investing in these renewable diesel facilities or renewable aviation biofuel. They're the ones with the need to secure supply. And so we are talking to a significant number of players in that area as well. So, you know, it's complicated, and there's partner, prospect, all across that value chain. And we're having, we believe, productive conversations with all of them.
spk05: Okay, so to sum it up, so a significant number of players really across the entire value chain. So you see a significant opportunity based on those comments, correct?
spk07: Yes, and I think, obviously, our goal as a company, and I think we've been very committed clear about emphasizing the capital light. It also includes working capital light. We don't plan to sort of build and store lots of inventory. I think we are feeling that based on conversations we were having, that there are definitely opportunities to essentially get offtake agreements in place so that we have a smooth transfer from farmer bin to to some kind of, you know, whether it's an elevator or a relay station and ultimately into a processing facility and then off into the biofuel players. So, you know, we're working hard to put those things in place and we'll scale the acreage depending on securing those things. We won't just simply grow Camelino on spec at very large scale. I think we're feeling this is a necessary step. I think we can feel we'll take the next step. But the rest of it, the goal is to have it contracted.
spk05: Okay, great. All right. Thanks very much. That was helpful. I'll hop back in the queue.
spk01: Thanks, Anthony.
spk03: Our next question is from Ben Cleave with Lake Street Capital Markets. Please proceed with your question.
spk02: All right. Thanks for taking my questions. First, I have a couple questions around the 1,000 acres of planting expected here later this year. First of all, I believe you just started seeking partners for that like six weeks ago in late June. Can you update us just on kind of the number of acres that are already secured and kind of what farmer reception has been so far in the early stages of this initiative?
spk07: Yeah, so without getting into too many specifics, I would say, you know, we're feeling we've definitely been able to attract more interest. Than a thousand acres that the key now is of course transferring interest into contracts, right? And so we're working on now translating, you know, what we believe are the lead growers In specific areas into contracts and that's obviously the key to the whole thing You know, we having having lots of them Prospects and no sales as I learned with metabolics means you have no sales so we are very focused on getting contracts in place with the lead growers and making sure that we are in a position to really support those growers because the key here is to build strong working relationships with farmers and make sure that the farmers are in this as our partners for the long haul because, you know, with time, we believe we can further improve Camelina to make it a very high-value opportunity for growers.
spk02: Got it. Perfect. Well, look forward to hearing more about that then on the next quarter call. Another question, and maybe we're getting a little ahead of ourselves here, but one of the slides you referred to scaling up activities to enable a move from 1,000 to 20,000 acres. Did that refer to what you believe you'd have inventory secured to plant in the fall of 23? Do you expect to have 1,000 acres of camelina planted in the fall of 22 and then 20,000 acres in the fall of 23?
spk07: I think right now, obviously, where we are and obviously the 1,000 acres is dependent on harvesting and cleaning the 17 acres, which quite frankly, with some of the hailstorms that were harming that part of the country, was getting a little nervous about that. But we feel we're in good shape with that. Obviously, we have seed cleaning and QC all lined up now to take care of it as well. So I think, you know, that 1,000 acres I think we feel will be in good shape to supply high-quality, clean seed to. And that's pretty important. You know, we will be in a position to plant tens of thousands of acres next year. We are scaling up quality seed to go through a QC process, to be bagged and processed and QC'd to be able to do that. Obviously, as we move forward, we need to make sure that we continue to work on the grower network. You know, I would say the interest from growers has been I was interest from growers and I think the interest from I would say agricultural media and those regions has been Really very positive I'm not sure how many interviews Lynn has you know cobbled together and forced me to do over the last few weeks, but we seem to be getting you know an awful lot of interest from I would say industry newsletters and blogs and podcasts and all these types of things. And that continues to build interest. But ultimately with growers, what we find is it's really about getting in a truck and driving to the farmer's field and standing in the field with the grower to discuss the proposition with them. And Darren Greenfield has got very muddy boots from doing that now. He's been at it the last several weeks. He's been very busy. He's making a lot of progress, and he seems to be getting quite a bit of interest in, primarily, you know, the initial focus was really in southern Alberta, but we have expanding interest in the Dakotas, Montana, Idaho, and Saskatchewan. So, you know, we're feeling that we're getting a lot of interest. Certainly, some of the drivers for that were not quite what I expected. For example, in some of those areas like Alberta, because of the high heat that they've experienced in some summers, having a crop that's sort of matured and can be taken off long before that happens is very attractive to growers. And so that's been one of the drivers that I didn't quite anticipate. I think the other aspect was Drawers seeing a potential revenue stream that would come in way before their normal harvest at a time when their sort of cash outlay has been maximized. It also seems to be another very positive thing. Now, all of this happened before the climate bill came into being. And as we understand it, and we'll have to wait and see, in the U.S. there's going to be more incentives for cover cropping. And it looks like Canada's also moving in that direction. still to be determined, but guess what? The cover cropping, we believe, is going to be a very major supported activity in the U.S. and Canada going forward.
spk02: Got it. Yeah, I think that as a rabid consumer of agricultural media, certainly this is a hot topic, basically any source I see. So that does not surprise me. One more question, let me get back in queue, and that's related to your research agreements and the timing. I understand these agreements are very fluid in nature and the research stage really has moving targets that are really out of your control. I get that. But I'm curious because three of the four agreements here have a targeted date ending this year. And so my question to you is if you have any real visibility that any of these three agreements are going to reach a conclusion this year, either with a commercial relationship or without.
spk07: Yeah, you know, the challenge there, of course, is these companies want to see more than one year of field data. So, you know, I think until we've seen that second year of data, which they're currently generating, you know, it's hard to say where these will go. You know, and then, of course, we have in those agreements, those same companies have restrictions on what we can tell you. And so, you know, we remain very optimistic, but that remains to be determined, and it remains to be, you know, seen in the eyes of our partners. And if that happens, then obviously that would be great. However, I will say that just like those tailwinds for biofuel are driving interest in Camelina, those same tailwinds are driving interest in new oil traits, oil content, obviously because that's such a huge value driver, in soybean and canola. And yield traits. And so, you know, we're seeing, I would say, a resurgence of broad interest in the major seed players in new technologies, innovation, and genetic traits that can improve or enhance, you know, what they're offering to growers and give them some differentiation. So, you know, we're feeling that the industry is catching up with us.
spk02: Got it, got it. Well, very good. Well, best luck with those agreements and with all the various initiatives you guys are working on here over the next couple months. Thanks for taking my questions, and I'll get back in queue.
spk07: Thanks, Ben.
spk03: Our next question is from Samir Joshi with HC Wainwright. Please proceed with your question.
spk04: Good afternoon, Ali. Thanks for taking my questions. Maybe this is a naive question, but for the herbicide-tolerant applications, What is the mechanism of action? The reason for this question is, does it absorb the herbicide but it doesn't react to it and doesn't, like the plant doesn't die, which could have implications on the seed itself, or does it not absorb the herbicide itself?
spk07: Oh, that's a very technical question, Sibir. You want to take a go at that?
spk01: Yeah, so the plant certainly absorbs the herbicide just like other plants, but we've engineered it to be resistant to that herbicide that it has absorbed. So that's why it can continue to grow.
spk04: Are there any implications if this is used for food purposes?
spk01: No, the herbicide that we've chosen to use is broadly used in food, and so it's been found to be safe in multiple crops. So there is no issue.
spk07: I think one thing we need to know here, Samir, we're not reinventing the wheel here. The industry has done a great job over the last 26 years of de-risking specific herbicide chemistries for use with herbicide-tolerant crops. And we are in a situation where we're able to simply build off of that by transferring it to new to Camelina. And that's what we're doing in the initial phases. And so we're not really, you know, what you're really doing is we're accelerating the deployment in Camelina of known technology that's well proven, well worked out, and for which the regulatory authorities have, you know, a lot of experience. We're not doing anything new here.
spk04: Understood. Coming to this 1,000 acres, 1,000-plus acres that you're planning, Two questions on this. Maybe we have discussed this in prior calls, but how many gallons of oil do you think this relates to? And part two of that question is, you are finding farmers and growers to do this right now for the next harvest season, but are there off-takers like crushers or even RDSAS producers who are also being contracted for this particular 1,000-plus acres?
spk07: Yeah, let me be very clear. I think, obviously, what the industry is interested in is tanker loads on trains heading to their facilities now. So they're really looking for, you know, hundreds of thousands of tons of oil. But obviously to get to that, we have to go through this first set of steps. So, you know, that's really what the industry is looking for. They're looking for, you know, if you're going to put in 5 billion gallons, you need an additional 5 billion, essentially you need an additional 5 billion gallons of vegetable oil. So, you know, that's a lot of oil. And so right now, I mean, just crude numbers, if you assume 8 pounds of oil per gallon and about approximately 600 pounds of oil oil per acre, you know, that would be, that would give you a kind of a reasonable sort of mid-range estimate of the many gallons. And, you know, but as I said, I think, you know, let's be clear, this is commercial development that we're in. We're not, I mean, at full commercialization, what we really want to think about is this on a million acres or five million acres. Right. That's, you know, that's But to get there, we have to do 17. Now we have to do 1,000. Then we have to do tens of thousands. And then we have to have herbicide tolerance to go to hundreds of thousands. And then it'll just have to expand then to millions. So, you know, it just takes time. It's a series of steps you just have to go through. There's no way around it.
spk04: Understood, understood. So this initial stage, at least this 1,000, maybe not the 20,000, but the 1,000 acres will be funded by Yield 10, not by any off-taker or crusher?
spk07: Well, I would say that. I would say that those conversations are ongoing. And so our goal is, you know, look, this is, for the 1,000 acres, that's something that we are going to be committed to because we Again, our goal is to really build strong relationships with the growers, so that we are committed to. However, we already are in conversations about essentially processing an offtake of that. So the goal is not to be, you know, growing and storing camelina grain. We don't want to do that, nor do I think we have to. I think there's such broad interest and such enormous demand for these feedstocks that we believe we should be able to move this forward and offload it within a short period of time of actually getting everything into bins. I mean, that's the goal.
spk04: Got it. And then one last one, actually sort of a corollary to the first question I asked about the decide. This picture on page eight, how big is this farm where this trial has been conducted or was conducted?
spk01: I think you could estimate it somewhere between a half an acre and an acre. I don't know the exact size, but that's where we are with that trial.
spk04: Okay, okay. And is that size good enough to prove out? You can see the results right there at the bottom of the screen, but is this enough?
spk01: These are replicated plots, so they are done in replicates so that we can get tight data. and figure out which events are best. So this is sufficient to get that kind of data, yes.
spk07: I think, Samir, I mean, unlike yield, which is much more complicated, the good thing about herbicide tolerance is either the plant dies or it doesn't die. And as you can see, the ones we've engineered won't die. And now, of course, the next phase is obviously does that treatment in any way, shape, or form impair seed oil content or yield? Obviously, Christie's And our team are going to be working on defining all of that data and then selecting the lines that have the best tolerance or resistance as well as essentially the best yield denial content. And those are the ones that will go forward into the sort of commercial development pipeline. Understood. Great.
spk04: Thanks a lot for taking my – yeah, yeah, no, it is. It looks very nice on the – the results are very nice. Thanks for taking my questions and good luck.
spk07: Thanks, Samir. Good talking to you.
spk03: We have reached the end of the question and answer session. I would now like to turn the call over to Lynn Brum.
spk00: Yeah, thanks, Rob. And I'll turn the call back to Ollie for a closing remark.
spk07: 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 yield 10 as we focus on preparing for the launch of Camelina for the biofuel space. We're engaging growers to participate in our winter program and scaling up seed production to enable ramp up of contracted acres in 2023. Developing a robust herbicide tolerance package is key to accessing large acreage for Cavalina. And with the data we've described today, we are well on track to achieve this important development milestone. I want to thank everyone at Yield 10 for contributions that are keeping us on track to reach our goals. Have a nice evening, everyone. Thank you.
spk03: Thanks, everyone. You may now disconnect from the conference.
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