Yield10 Bioscience, Inc.

Welcome to the fourth quarter and full year 2023 Financial Results and Business Update conference call for Yield 10's Bioscience. During this call, participants will be in a 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 Broom.

Thank you, Alicia. Good afternoon, everyone. Welcome to the 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 fourth quarter and full year 2023 financial results as well as our 10K. The press release as well as slides that accompany today's presentation are available in the investor relations events section of our website at yield10bio.com. Let's turn to slide two. Please note that as part of our discussion today, management will be making forward-looking statements. These statements do not guarantee the future performance and therefore you should not produce 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. The company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the day of this conference call. I'll turn the call over to Ali.

Thanks, Lynn. Good afternoon, everyone, and thanks for joining our call. Let's turn to slide three. We continue to make progress in our plans to commercialize sustainable products using the oilseed camelina as a platform crop. We're pursuing camelina seed oil products for two market opportunities and value chains. Each product has its own scale requirements, timeline, and value proposition. The first product is seed oil with high levels of the omega-3 fatty acids EPA and DHA, and the market driver is the growing supply deficits. I'm going to refer to these as our omega-3 products for the rest of this presentation. The second product is camelina seed oil, which produces a low carbon intensity feedstock oil for biofuels. This market is driven by government policies, has a potential to be very large, and will require the production of tens of millions of acres of non-food oilseed cover crops like camelina. In early 2024, we revised our strategy for biofuels. to focus on providing R&D services to third parties with the goal of generating service and licensing revenues from our advanced Camelina technologies. Today, we'll provide an update on recent accomplishments, more detail on the development of Omega-3 products, present fourth quarter and year-end financials, and summarize key milestones. We will then open the call to questions. Let's turn to slide four for progress on key 24 business milestones. We achieved numerous milestones in 2023. We demonstrated a closed-loop value chain from C. genitis to oil for sale. We progressed herbicide tolerance traits that included obtaining regulatory approval for growing HD camelina from USD APHIS. We also stepped up our commercial and development efforts on our omega-3 products, which Christy will review later on in this call. We were delighted with the recent USD APHIS approval for the growth of both omega-3 camelina traits, a year ahead of internal expectations, So kudos to our regulatory and technology team. Our commercial goals for omega-3 in 2024 include delivering samples of our omega-3 products, obtaining regulatory approval to use the oil and aqua feed in Chile, executing the commercial license with Rothmansett, and progressing partnership and update discussions. In biofuels, our goal is to execute R&D partnerships and license option agreements. In February this year, we signed our first license agreement with the Division of Bioenergy Oil Seeds, Vision is majority owned by a division of Shell Oil, and we look forward to supporting Vision as they scale up HT camelina production. On a technology front, we reported positive data from the ongoing herbicide pollens trials, and we expect to announce that the US EPA has approved adding camelina to a commercial herbicide label soon. This will complete the US regulatory requirements for large scale planting and herbicide use on our elite herbicide tolerant camelina. Let's start the slide five for an overview of target markets and business models. The end markets for omega-3 products include aqua feed, pet and animal feed, human nutrition, and pharmaceuticals, based on which we anticipate being able to build an omega-3 products business with over a billion in annual revenue over time. Near-term, our business model is to produce the omega-3 oils and sell them into aqua feed. For that market, we believe we can scale to around 150,000 to 300,000 acres. over the next five years, generating $150 to $300 million of revenue with good margins. This assumes we begin commercial production sometime in 2025-2026. We expect omega-3 oil margins to be a multiple of those achievable in biofuel markets. Our R&D services and licensing strategy for file shows is designed to enable better resource third parties to invest in accelerating grower adoption of Camelida and establishing large-scale value chains. With over 44 million acres of Camelina potential, we believe there's an opportunity to generate significant licensing revenue from our technologies. Let's now turn to slide six, establishing the Camelina oil value chain. An important commercial accomplishment in 23 was demonstrating closed-loop production of Camelina oil, validating the value chain from Camelina seed genetics all the way to oil products available for sale. As a result of this investment and establishing this core operating capability, we also gain necessary experience, which will benefit our omega-3 products business. In addition to the over 1,200 acres of winter camelina contracted in Q4, our seed ops team is already engaged in outreach to growers to generate interest in planting spring camelina. Based on our revised biofuel strategy, we are using a seed sales model and providing agronomy support to growers. This will expand our camelina grower network, the foundation for our omega-3 products business. Let's turn to slide seven, omega-3. The omega-3 fatty acids ALA, EPA, and DHA are essential for human health and wellness. ALA is abundantly available from vegetable oils including canola, soybean, flaxseed, and camelina. EPA and DHA, on the other hand, are only available from fish oil extracted from ocean harvested fish or krill. Markets for fish oil are driven by their EPA and DHE omega-3 content. Aquafeed, the largest market by volume, consumes around 75% of total fish oil production, mainly for salmon, is growing at 3% per year. The market for products for human nutrition, which includes everything from omega-3 capsules to omega-3 beverages, is growing at around 7% per year. Pet food and animal feed are also significant omega-3 markets, and there are attractive small-volume, high-value markets for fish oil derivatives used in pharmaceuticals. Since announcing the execution of our exclusive option to the omega-3 camelina technology in October last year, we have received inbound inquiries from industry leaders in each of these markets, many of whom have been following the Rothamstein technology development for some time. We are currently in active discussions with a number of them. Omega-3s are important in aqua feed to protect the health of the fish during production and the value of the final product as a healthy protein and source of dietary omega-3. And we believe there is considerable scope for increasing levels of omega-3s in aqua feed diets. Bottom line, increasing the use of omega-3s for these markets requires new sources of supply. Let's turn to slide eight, the omega-3 deficit. Across the aquaculture industry, there's an increased emphasis on sourcing sustainable aqua feed ingredients and transitioning from processing ocean harvested fish to produce fish meal and fish oil to land-based sources of protein and omega-3s. The fish oil supply and demand chart on the left was taken from a recent UBS analyst report, and the general reflects the following feedback we have heard in our discussions with industry players. Demand will continue to grow for the foreseeable future. Supply for fish oil will remain flat, The expectations are for higher prices and price volatility. An omega-3 supply deficit of around 500,000 tons per year is projected by 2030, and they believe that yield 10s omega-3 camelina can play a major role in sustainably addressing this deficit. Let's turn to slide nine. Camelina, sustainable omega-3 growth platform. The left side of the chart shows the levels of EPA and DHE omega-3s in fish oil from different sources. including anchovy oil, industry gold standard, and northern hemisphere fish oil, which is mainly used in aqua feed. We believe algal sources of omega-3s will remain high cost and limited in scale. Engineered oil seeds represent a sustainable, scalable, and cost-effective way to provide new sources of omega-3, and we believe our omega-3 technology has the potential to capture a significant share of the growth in this market. New Seed, which is part of the Australian ag company New Farm, has been a pioneer in this field, producing an omega-3 oil product using engineered canola, with around 10% DHA. Analysts project that as their production apers ramp up, with an oil selling price of around $2,400 per tonne, NuSEED could generate around $260 million in annual omega-3 product revenue by 2027-2028. In June last year, NuSEED obtained regulatory approval to use their DHA omega-3 canola oil in aquafeed in Norway. Norway produces around 60% of farmed salmon, and this was the first approval of a GMO ingredient for aqua feed in that country. Hopefully, new seeds' accomplishment in overcoming a major regulatory hurdle will broaden adoption of plant-based omega-3s, paving the way for our Camelina products. Congrats to them on a job well done. Yiltan's EPA DHA omega-3 product is very similar to non-aluminum emissary fish oil and has higher potential as a drop-in replacement in aqua feed, which will be our near-term market focus. The EPA product has between 20% and 30% EPA content and may be blended with non-fish sources of DHA and aqua feed in the near term, but will likely be used to produce higher-value EPA esters over time. Let's turn to slide 10 for an overview of our Omega-3 product development status. In the fourth quarter of last year, we announced that we had executed an exclusive option for an exclusive global license and are currently working closely with Rothamsted to finalize the license for the Omega-3 Tamdina technology. Prior work by Rothamsted demonstrated that the EPA DHA omega-3 product could be an effective replacement for fish oil and aqua feed trials for salmon. Human clinical studies carried out with this product also demonstrated it was effective in human diets, delivering the same target levels of EPA and DHA as fish oil. It also doesn't smell or taste like fish. Reading over the HD traits of the omega-3 camelina is fairly advanced, and this will be followed by seed scale-up of HD omega-3 camelina lines for large-scale planting. With regulatory approvals in hand and the close-up production capabilities established last year, we believe that the products in production have been de-risked. Our vision is to build a high-growth business producing clean omega-3 ingredients for aquaculture and then expand it to additional market opportunities. I will now turn the call over to Christy for an update on our technology progress.