Cibus reports second quarter 2023 financial results and provides business update

Date:08-11-2023

Cibus, Inc. (Nasdaq: CBUS), a leading agricultural technology company that develops and licenses plant traits to seed companies, announced its financial results for the quarter ended June 30, 2023, and provided a business update.

″Since January, when Cibus Global, LLC and Calyxt, Inc. signed an agreement to merge, the combined company has made incredible progress hitting our established milestones, including closing the merger transactions on May 31, 2023, and, in so doing, beginning to establish Cibus’ high-throughput plant breeding platform as a standard for plant based gene editing,″ stated Rory Riggs, Chairman and CEO of Cibus, Inc. ″This year we began commercializing our first three trait products by sending customers initial transfers of their elite germplasm with Cibus traits. We also made significant progress in the advancement of the next three traits in our pipeline." Mr. Riggs continued, "In addition, we opened the world’s first stand-alone high-throughput trait development facility for editing plants to support the commercial expansion of our trait business. Finally, and most importantly, we are seeing customer demand for our offerings, evidenced by the signing of multiple breeding collaborations with major global seed companies.″

As part of its breeding collaboration programs, Cibus shared that it has recently entered into a collaboration agreement with Bayer Ag to evaluate Cibus’ Trait Machine, its high-throughput (gene editing) breeding platform, and capabilities. Cibus will leverage its Trait Machine process anchored by its patented Rapid Trait Development System™, RTDS^®, to evaluate new techniques applicable to Bayer Ag germplasm.

Stated Mr. Riggs, ″Cibus’ RTDS is the set of proprietary technologies used in the Trait Machine process to integrate crop specific cell biology platforms with a series of gene editing technologies to enable a system of end-to-end crop specific precision breeding. Importantly, the traits from the Trait Machine are indistinguishable from traits developed using conventional breeding or from nature. Under the European Commission's July 2023 proposed regulations, products from Cibus’ RTDS gene edited traits would be regulated as ″conventional-like″ (breeding) traits, as they already are in the United States. Cibus believes that RTDS and the Trait Machine process represents a technological breakthrough in plant breeding that is the ultimate promise of plant gene editing: high-throughput gene editing systems operating as an extension of breeding programs.″

″The merger and the achievements of our 2023 milestones are important elements of our business plan. Together they provide critical building blocks in establishing Cibus in the trait business and in our position as a leader in high-throughput (gene editing) plant breeding. Our recent collaboration agreements, such as today’s announcement of our breeding collaboration with Bayer Ag, move us closer to establishing our vision of high-throughput plant breeding operating as a technological extension of conventional breeding programs.″ Added Mr. Riggs. ″In our vision, the goal is to establish crop-by-crop collaborations with seed companies to develop a new era of plant traits that can make farming more productive and profitable and address the sustainability needs in each crop created by climate change.″

Major Milestones Achieved in 2023

• First transfers of Cibus' three developed traits to customers in their elite germplasm. The first trait transfer was Cibus’ pod shatter reduction trait in canola, which was transferred to Nuseed in its elite germplasm. Following that transfer, in April 2023, Cibus transferred its HT1 and HT3 traits in rice to Nutrien in its elite germplasm.

• The opening of Cibus' 32,000 square foot Oberlin facility in San Diego which houses its proprietary Trait Machine™ process. This is the first semi-automated, high-throughput, end-to-end, trait production system providing a time bound, predictable, and reproducible breeding system for gene editing of commercial plants. The facility provides Cibus with the gene editing production capacity to support the commercial launch of its first three developed traits across canola, winter oilseed rape, and rice. This facility will also be central to Cibus' expected soybean trait business.

• In addition to its three developed traits, Cibus has three additional traits in development. Two of these traits, Sclerotinia resistance and HT2, are progressing through the greenhouse and to the field. Cibus announced that additional greenhouse test results had demonstrated successful resistance against white mold, Sclerotinia, in canola. These greenhouse tests showed both an enhanced and an additional mode of action from previously noted field trial results of the Cibus Sclerotinia resistance trait. Together, these two different modes of action provide an increased level of resistance against Sclerotinia than each alone. The Sclerotinia resistance trait is expected to enable yield improvement, cost reduction, and lower usage of fungicides.

• In July 2023, as part of its Farm to Fork initiative, the European Union proposed new regulations for New Genomic Techniques (NGTs). Under the proposed regulations, if adopted, Cibus’ traits such as pod shatter reduction and Sclerotinia disease resistance, would be regulated as ″conventional-like″ (breeding). If approved by the EU Parliament and Council (Member States), this change would be a watershed moment for the trait business. It would open up the gene edited trait business to the 100 million plus acres of farmland in the EU. In addition, it would be a critical point of inflection for the progress globally to treat gene edited traits like conventional breeding.

Future 2023 Milestones

In addition to the milestones that Cibus has already accomplished this year, Cibus has several important milestones that it expects to accomplish in the second half of 2023.

• Successfully validate its Trait Machine process in a customer’s elite soybean germplasm. In addition, Cibus expects to begin editing in its soybean platform in 2023.

• Transfer up to five additional seed company partners its pod shatter reduction trait in the customers’ elite germplasm.

• Initiate field trials in the UK for winter oilseed rape.

• Release additional greenhouse and field data associated with its Sclerotinia resistance trait and its HT2 trait.

• Initiate editing for its initial mode of action for nitrogen-use efficiency in canola.

• Enter into additional breeding collaborations in North America and South America for its HT1 and HT3 traits.

Second Quarter 2023 Financial Results

• Cash position: Cash and cash equivalents as of June 30, 2023, was $50.9 million. The Company believes cash and cash equivalents will enable Cibus to fund planned operating expenses and capital expenditure requirements into the first quarter of 2024.

• Research and development (R&D) Expense: R&D expense was $8.4 million for the quarter ended June 30, 2023, compared to $3.2 million in the year-ago period. The increase of $5.2 million is primarily related to increased lab supply and facility expenses, an increase in employee headcount, and an increase in stock-based compensation expense for restricted stock award grants and the acceleration of share vesting associated with stock award agreements due to the acquisition of Cibus Global, LLC.

• Selling, general, and administrative (SG&A) expense: SG&A expense was $11.1 million for the quarter ended June 30, 2023, compared to $3.6 million in the year-ago period. The increase of $7.5 million is primarily related to an increase in headcount, increased consulting and legal fees, and an increase in stock-based compensation expense for restricted stock award grants and the acceleration of share vesting associated with stock award agreements due to the acquisition of Cibus Global, LLC.

• Non-operating income (expenses): Non-operating income was $1.3 million for the quarter ended June 30, 2023, compared to $4.3 million in the year-ago period. The decrease of $3.0 million in non-operating income is due to changes in the fair value of the liability classified Class A common stock warrants.

• Net loss: Net loss was $20.5 million for the quarter ended June 30, 2023, compared to $2.5 million in the year-ago period.

• Net loss per share of Class A common stock was $(3.05) for the quarter ended June 30, 2023, compared to $(2.66) in the year-ago period.