Focusing Go-to-Market Strategies to Optimize
TALEN Technology Platform and Accelerate Trajectory to Positive
Free Cash Flow
Following Successful Proof of Concept, Advances
Soybean Products to a Streamlined Business Model Focused on Seed
Sales to Agricultural Processors
300,000 Bushels of Soybeans Sold to One of the
World’s Largest Processors
Cash Runway Extended into Fiscal Year 2022
Dan Voytas To Lead New Scientific Advisory
Board
Management to Host Conference Call on Thursday,
August 6, 2020 at 8:00 a.m. EDT
Calyxt, Inc. (NASDAQ: CLXT), a plant-based technology company,
has reported its financial results for the second quarter ended
June 30, 2020.
Advancement of Soybean Products to a Streamlined Business
Model
“With our high oleic soybean product, we were the first company
to successfully deliver a proof of concept for food developed with
gene editing technology,” said Jim Blome, Calyxt CEO. “The success
we achieved with this product has been amazing and represents a key
milestone achievement for everyone at Calyxt. We quickly scaled up
and within 15 months of our early 2019 launch are supplying some of
the world’s largest companies in their respective industries.
Having achieved proof of concept and pioneering regulatory success,
we are now progressing into a new commercialization program seeking
to supply Calyxt’s first product to large grain processors for
their own soybean processing businesses. Moving upstream enables us
to focus on developing and capturing greater value from high value
innovations and plant-based solutions with substantial disruption
potential,” continued Blome.
Summary of Soybean Processing Advancement:
- Final 2020 planted acres were nearly 72,000, representing a
doubling of acres from the total planted in 2019;
- In 2021, we intend to target seed sales to large grain
processors, representing at least $3 million to $4 million in
expected revenue as seed transactions will be revenue-generating
under the new go-to-market strategy;
- One of the world’s largest processors has purchased 300,000
bushels of Calyxt soybeans, which represents a significant portion
of June 30, 2020 inventory, and the processor will retain the
rights to process and sell the resulting soybean oil, while Calyxt
will purchase and market the resulting soybean meal;
- We similarly aim to sell our remaining grain inventories and
grain that we are contracted to purchase from the 2020 crop year to
large processors;
- We are eliminating positions related to soybean processing and
product sales, resulting in aggregate cash charges of approximately
$0.6 million for severance and other related payments, and we
expect to record a $0.9 million recapture of non-cash stock
compensation expense from forfeitures of un-vested awards;
- We expect to incur $0.5 million of additional cash charges over
the next twelve months as we exit processing and transportation
contracts;
- Contracted grain purchases and sales and the wind down of other
contractual obligations are expected to take approximately 12
months;
- Contracted grain purchases of the 2020 crop are expected to be
approximately 40 percent in the fourth quarter of 2020 and
approximately 60 percent over the course of the first and second
quarters of 2021;
- Including the sale of an expected percentage of grain that we
are contracted to purchase in the fourth quarter, our base case
2020 revenue expectation is between $17 million and $19 million,
and our cash usage for 2020 is expected to range between $43
million and $45 million, which includes an investment in accounts
receivable and inventory of between $15 million and $17
million;
- Our target is to convert the year-end 2020 investment in
inventory and accounts receivable of between $15 million and $17
million to cash in the first 60 days of 2021;
- Based on the grain purchase plan described in the preceding
three bullets, our grain revenue for 2021 is expected to be between
$22 million and $24 million, with seed revenue incremental to that
amount;
- If we are able to complete the sale of all grain we are
contracted to purchase in the fourth quarter of 2020, our revenue
would increase to between $23 million and $25 million, with a
corresponding decrease in expected 2021 grain revenue, and if we
collected all of the related receivables, our expected cash usage
in 2020 would be in the range of between $32 million and $34
million; and
- Effective execution of our go-to-market soybean strategy
decreases cash used by our soybean product line by over $45 million
through 2022.
Focusing Go-to-Market Strategies to Accelerate Trajectory to
Positive Free Cash Flow
“Calyxt was created with a mission to deliver disruptive
plant-based innovations with an initial focus on food and
agriculture,” said Blome. “Today, our innovations have applications
across a broad spectrum of industries. To drive value for our
TALEN® technology platform, our strategic focus is on traits with
higher-margin, downstream benefits for end users, differentiating
us from others who are focused on traits developed to provide
distinct benefits to the farmer. Our commercial proof of concept,
our strong intellectual property portfolio, and our position as a
leader in gene editing has led us to extensive talks with top
companies across several industries, including food,
pharmaceutical, energy, and agriculture. We plan to develop
projects with partners that leverage our strength in trait
development and gene editing and our partners’ product
commercialization expertise. Discussions with potential partners
have focused on our development of plant-based input solutions for
specific downstream issues, including consumer preferences,
sustainability, cost, quality, and regulatory compliance. By
leveraging our partners’ commercialization capabilities, this model
will reduce our cash needs and enable efficient market penetration
of Calyxt’s traits.
“We are well positioned to establish licensing arrangements
based on our TALEN technology, expertise in trait development, and
leading know-how in the gene editing field. Strategic licensing
arrangements provide an opportunity for broad market penetration of
our technology while we are able to achieve milestone or royalty
payments through our licensees’ commercialization efforts. For
product development activities, our specific entry point into the
value chain may vary by crop, depending upon a number of factors.
In crops like soybeans and wheat, we expect that the sale of seed
to processors or other supply chain participants will provide the
highest available margins and best path to delivering positive cash
flow. For certain traits, we expect licensing arrangements to
provide an efficient path to non-dilutive financing and potential
revenue generation,” added Blome.
TALEN Technology Platform and Differentiated Go-to-Market
Strategies:
Our streamlined business model comprises three go-to-market
strategies. Specific deal structure and the amount and timing of
cash flows will vary depending upon several factors, including cost
to develop, size of the opportunity, and the stage at which a
partner or licensee enters the development process. Summaries of
our go-to-market strategies are as follows:
- TALEN Licensing Arrangements: License Calyxt’s TALEN
technology for licensees’ use in their own development of specific
traits for negotiated upfront and annual fees and potential
royalties;
- Trait and Product Licensing Arrangements: License
Calyxt-developed traits or products to downstream partners with
commercialization expertise for negotiated upfront and milestone
payments and potential royalties; and
- Seed Sale Arrangements: Sale of seed to agricultural
processors, including millers and crushers, or others in the
relevant crop’s supply chain, with such sales expected to generate
revenue for Calyxt.
“For each product candidate, we will evaluate which go-to-market
strategy provides for the greatest value creation and most
efficient path to bring the product to market,” said Travis Frey,
Calyxt Chief Technology Officer. “We will engage with potential
partners as early as possible to enable the most value capture. Our
pipeline will shift as we complete proof of concept projects and
focus on new, more disruptive projects,” concluded Frey.
Calyxt Current Development Pipeline1:
CROP
TRAIT
TARGET COMMERCIAL PLANTING
YEAR
TARGET GO-TO-MARKET
STRATEGY
Alfalfa
Improved Digestibility
2021
Trait
Wheat
High Fiber
2022
Seed
Soybean
High Oleic, Low Linolenic
(HOLL)
2023
Seed
Hemp
Marketable Yield
2023
Seed and Trait
Hemp
Low THC for Food, Fiber, &
Therapeutics
2024
Seed and Trait
Oat
Gluten-free and Cold Tolerant
2026
Seed and Trait
Soybean
Improved HOLL
2026
Seed
Soybean
High Saturated Fat
2026
Seed and Trait
Pulse
Improved Protein Profile and
Flavor
2027
Trait
1
The agronomic and functional quality of
our product candidates and the timing of development are subject to
a variety of factors and risks, which are described in our filings
with the Securities and Exchange Commission.
Calyxt is also actively negotiating agreements with potential
partners with respect to specific opportunities for which
development activity would only commence upon reaching a commercial
agreement. These projects are not included in the preceding
table.
Today we have 8 projects at the Discovery stage or later in
development across alfalfa, hemp, oats, soybeans, and wheat, and
are exploring improved protein profile and flavor in pulse crops,
with several options under consideration.
Second Quarter Highlights:
- Calyxt’s HOLL soybean was deemed a non-regulated article under
the “Am I Regulated?” process by Biotechnology Regulatory Services
of the Animal and Plant Health Inspection Service (APHIS), an
agency of the United States Department of Agriculture (USDA). This
product represents our second-generation high oleic soybean.
- Late in the second quarter we released our non-edited hemp
germplasm by selling plants directly to a grower, driving several
thousand dollars of revenue. This quick commercial success is an
early step in making our hemp projects partner-ready, enabled the
gathering of valuable insights and data, and it is expected to
serve as the base germplasm for the development of other hemp
projects expected to launch beginning in 2023.
- Licensed a new method to help increase product development
efficiency from the University of Minnesota. The method has the
potential to reduce the time needed to edit plants from
approximately one year to several months.
- New provisional patent applications filed that are focused on
expanding Calyxt’s gene-editing technology portfolio; advancements
in hemp, soybean, and wheat; and additional germplasm generated
from our breeding pipeline.
- Patent granted in Australia covering the use of CRISPR gene
editing in plants. The intellectual property was invented in Dr.
Dan Voytas’ lab at the University of Minnesota and is exclusively
licensed to Calyxt. While TALEN gene editing technology remains the
primary tool for Calyxt’s cutting‐edge R&D, our CRISPR
intellectual property provides the opportunity to explore further
monetizing our IP portfolio by offering this CRISPR IP for
licensing.
New Scientific Advisory Board:
“As part of our scientific focus, Calyxt is planning to dedicate
a portion of its research activity toward addressing near-term
pipeline opportunities and longer-term large-scale opportunities,”
said Dan Voytas, Calyxt Chief Science Officer. “It is clear from
our discussions with potential partners that Calyxt is
well-positioned to provide plant-based solutions with our TALEN
technology to address many of the current problems they face.
“This initiative will also play an important role in the
development of our approach to ESG issues. Potential projects may
include using plants to better sequester atmospheric carbon and
increasing nitrogen use efficiency to reduce the need for
fertilizer. We believe that our TALEN technology can play an
essential role in quickly advancing and achieving these goals.
Calyxt intends to establish this board by December 31, 2020.
“While I continue in my current role as Calyxt’s Chief Science
Officer, I am also very excited to work with thought leaders to
identify critical problems that can be addressed using TALEN
technology, and look forward to speaking more about this
development at our Virtual Analyst Day in the fall of 2020,”
concluded Voytas.
COVID-19 Disruptions Highlight Benefits of Streamlined
Business Model:
“We have been exploring additional revenue-generating
opportunities, including collaborations, licensing, and other value
capture models for our technology platform since before the onset
of the COVID-19 pandemic and have committed to evaluate our
go-to-market strategy for product candidates on a case-by-case
basis in order to pursue the most efficient paths to value
creation,” added Blome. “The streamlined go-to-market strategy for
our soybean products that we are announcing today executes on that
commitment.
“The downstream demand disruptions and pricing volatility caused
by the COVID-19 pandemic reinforced the potential benefits of our
strategic trajectory toward more streamlined, lower cost, and more
capital-efficient upstream-focused go-to-market strategies.
Although over the course of the second quarter, initial supply and
demand dislocations for premium oil and meal have generally
moderated, led by the premium oil industrial market segment, and
this has led to substantial price recovery in the premium oil and
meal markets, our financial results and operations were negatively
impacted by price, demand and supply dislocations, and our
previously reported responsive actions. The crush schedule
cancellations that we took in response to the COVID-19 pandemic
provided an evaluation point for our soybean product go-to-market
strategy,” continued Blome.
CEO Summary
“In summary, Calyxt’s focus on disruptive innovation utilizing
plant-based inputs has energized our entire team. Through our
streamlined business model with differentiated go-to-market
strategies, we are targeting diverse revenue streams across
multiple industries, a high double-digit margin profile, and an
accelerated path to free cash flow. We believe the advancement of
our soybean products and anticipated cash receipts from our product
development efforts with partners extends our anticipated cash
runway into 2022. Additionally, the talent mix for the next stage
of business must be adjusted, and positions related to soybean
processing and product sales are being eliminated. I would like to
thank the Calyxt employees we separated today. All of them helped
us build a first-of-its-kind business in the United States. Their
contributions are valued, and I wish them well in their future
endeavors. I am incredibly proud of our team for what they have
built and how Calyxt is now positioned.
“We look forward to sharing more on our developing story at the
upcoming 40th Annual Canaccord Growth Conference on August 11-13,
the Intellisight 2020 Virtual Conference on August 12, the LD Micro
Virtual Conference on September 1-3, and the 22nd Annual H.C.
Wainwright Virtual Global Investment Conference on September 14-16.
Further details with respect to the key projects and business model
will be communicated during Calyxt’s soon to be announced Virtual
Analyst Day in the fall of 2020,” concluded Blome.
Financial Results for the Three Months Ended June 30,
2020
- Revenues increased by $1.9 million, or 465 percent, from the
second quarter of 2019 to $2.3 million in the second quarter of
2020. The revenue growth was driven by 487 basis points of volume
growth and 16 basis points of favorable product mix as we sold more
oil in 2020 as a percent of total revenue than in 2019, both
partially offset by 37 basis points of pricing, primarily the
result of lower meal prices than the prior period. High oleic
soybean meal was 79 percent of revenue in the period, compared to
89 percent a year ago. Most oil revenue in 2020 was from a single
customer purchasing our oil to be used as a plant-based alternative
to synthetic fluids, and we expect to fulfill their remaining
orders over the next three months.
- Cost of goods sold increased by $5.0 million from the second
quarter of 2019 to $5.3 million in the second quarter of 2020. The
increase in cost of goods sold reflects an increase in the cost of
product sold in the period as a result of higher sales volumes, the
impact of lower costs associated with products sold in 2019 because
grain costs were previously expensed as R&D, and a $3.2 million
net realizable value adjustment to inventories based on expected
selling prices, grain processing costs, and a significant amount of
excess seed produced for 2020 plantings.
- Gross margin, as reported, was a negative $3.0 million, or a
negative 131 percent, in the second quarter of 2020, a decrease of
$3.1 million from the second quarter of 2019. The decrease in gross
margin in the second quarter of 2020 reflects the higher costs we
have experienced during the high oleic soybean product’s proof of
concept period. The primary drivers of gross margin, as reported,
were net realizable value adjustments to inventory based on
expected selling prices, grain processing costs, and a significant
amount of excess seed produced for 2020 plantings. Gross margin, as
adjusted, was negative $0.8 million, or negative 34 percent, in the
second quarter of 2020, as compared to negative $0.3 million, or
negative 69 percent, in the second quarter of 2019. See below under
the heading “Use of Non-GAAP Financial Information” for a
discussion of gross margin, as adjusted, and a reconciliation to
the most comparable GAAP measure.
- R&D expenses increased by $0.1 million to $2.8 million,
driven by incremental professional service expenses related to new
patent filings to bolster our intellectual property portfolio.
- Selling and supply chain expenses increased by $0.1 million to
$1.3 million, driven by additional personnel costs.
- G&A expenses decreased by $1.4 million to $3.8 million,
driven by decreases in Section 16 officer transition expenses of
$0.5 million and $0.4 million less non-cash stock compensation
expenses.
- Net loss was $10.9 million in the second quarter of 2020, an
increase of $1.5 million from the second quarter of 2019, driven by
the increase in negative gross margins and changes in operating
expenses described above. Net loss per share was $(0.33) per basic
and diluted share in the second quarter of 2020, an increase of
$(0.04) per basic and diluted share from the second quarter of
2019.
- Adjusted EBITDA loss was $6.5 million in the second quarter of
2020, a decrease of $0.1 million from the second quarter of 2019.
See below under the heading “Use of Non-GAAP Financial Information”
for a discussion of adjusted EBITDA and a reconciliation to the
most comparable GAAP measure.
- Net cash used in the second quarter of 2020 was $12.2 million
compared to $7.8 million in the second quarter of 2019, driven by
the increase in net loss of $1.5 million and a net decrease in cash
flows from operating assets and liabilities, primarily the result
of the timing of cash payments to growers and carrying of higher
inventory levels following the halting of crush activity in early
May.
- Cash, cash equivalents, short-term investments, and restricted
cash totaled $35.3 million as of June 30, 2020.
Financial Results for the Six Months Ended June 30,
2020
- Revenues increased by $4.1 million, or 728 percent, from the
first six months of 2019 to $4.7 million in the first six months of
2020. The revenue growth was driven by 751 basis points of volume
growth and 19 basis points of favorable product mix as we sold more
oil in 2020 as a percentage of total revenue than in 2019, both
partially offset by 42 basis points of pricing, primarily the
result of lower meal prices compared to the same period in 2019.
High oleic soybean meal was 82 percent of revenue in the period,
compared to 89 percent a year ago. Most oil revenue in 2020 was
from a single customer purchasing our oil to be used as a
plant-based alternative to synthetic fluids, and we expect to
fulfill their remaining orders over the next three months.
- Cost of goods sold increased by $8.9 million from the first six
months of 2019 to $9.2 million in the first six months of 2020. The
increase in cost of goods sold reflects an increase in the cost of
product sold in the period as a result of higher sales volumes, the
impact of lower costs associated with products in 2019 because
Grain Costs were previously expensed as R&D, and a $4.2 million
net realizable value adjustment to inventories based on expected
selling prices, grain processing costs, and a significant amount of
excess seed produced for 2020 plantings.
- Gross margin, as reported, was a negative $4.5 million, or a
negative 97 percent, in the first six months of 2020, a decrease of
$4.8 million from the first six months of 2019. The decrease in
gross margin in the first six months of 2020 reflects the higher
costs we have experienced during the high oleic soybean product’s
proof of concept period. The primary drivers of gross margin, as
reported, were net realizable value adjustments to inventory based
on expected selling prices, grain processing costs, and a
significant amount of excess seed produced for 2020 plantings.
Gross margin, as adjusted, was negative $2.0 million, or negative
42 percent, in the six months ended June 30, 2020 compared to
negative $0.3 million, or negative 54 percent, in the same period
in 2019. See below under the heading “Use of Non-GAAP Financial
Information” for a discussion of gross margin, as adjusted, and a
reconciliation to the most comparable GAAP measure.
- R&D expenses increased by $0.7 million to $5.6 million,
driven by incremental professional service expenses related to new
patent filings to bolster our intellectual property portfolio,
increased experimental seed expenses, and higher personnel
costs.
- Selling and supply chain expenses increased by $0.8 million to
$2.9 million, driven by additional personnel costs, including $0.3
million of Section 16 officer transition expenses.
- G&A expenses decreased by $0.8 million to $8.5 million,
driven by a decrease in non-cash stock compensation of $0.5 million
and lower Section 16 officer transition expenses of $0.3
million.
- Net loss was $22.0 million in the first six months of 2020, an
increase of $5.2 million from the first six months of 2019, driven
by the increase in negative gross margins and changes in operating
expenses described above. Net loss per share was $(0.67) per basic
and diluted share in the first six months of 2020, an increase of
$(0.16) per basic and diluted share from the first six months of
2019.
- Adjusted EBITDA loss was $14.8 million in the first six months
of 2020, an increase of $2.5 million from the first six months of
2019. See below under the heading “Use of Non-GAAP Financial
Information” for a discussion of adjusted EBITDA and a
reconciliation to the most comparable GAAP measure.
- Net cash used in the first six months of 2020 was $24.8 million
compared to $17.3 million in the first six months of 2019, driven
by the increase in net loss of $5.2 million and a net decrease in
cash flows from operating assets and liabilities, primarily the
result of higher cash payments to growers and the halting of crush
activity in early May. Calyxt expects its cash usage to improve in
the second half of 2020 as it sells grain, and its burn rate is
reduced because of headcount reductions.
2020 Financial Guidance
- Contracted grain purchases of the 2020 crop are expected to be
approximately 40 percent in the fourth quarter of 2020 and
approximately 60 percent over the course of the first and second
quarters of 2021;
- Including the sale of an expected percentage of grain that we
are contracted to purchase in the fourth quarter, our base case
2020 revenue expectation is between $17 million and $19
million;
- Cash usage for 2020 is expected to range between $43 million
and $45 million, which includes an investment in accounts
receivable and inventory of between $15 million and $17
million;
- Our target is to convert the year-end 2020 investment in
inventory and accounts receivable of between $15 million and $17
million to cash in the first 60 days of 2021;
- Based on the grain purchase plan described in the preceding
four bullets, our grain revenue for 2021 is expected to be between
$22 million and $24 million, with seed revenue incremental to that
amount;
- If we are able to complete the sale of all grain we are
contracted to purchase in the fourth quarter of 2020, our revenue
would increase to between $23 million and $25 million, with a
corresponding decrease in 2021 grain revenue, and if we collected
all of the related receivables, our expected cash usage in 2020
would be in the range of between $32 million and $34 million;
and
- Effective execution of our go-to-market soybean strategy
decreases cash used by our soybean product line by over $45 million
through 2022 and extends cash runway into 2022 versus previous
guidance of late 2021.
“The advancement of our soybean products to a streamlined
business model focused on seed sales to agricultural processors
positions Calyxt with an upstream go-to-market strategy that over
time substantially reduces Calyxt’s significant working capital
investment requirement, its exposure to the commodity markets, and
complexity in the business model,” said Bill Koschak, Chief
Financial Officer of Calyxt.
“From a financial standpoint, an effective advancement enables
Calyxt to reduce its cash usage and realize higher gross margins
faster, and it would extend our cash runway into 2022. Moreover,
the migration upstream in terms of our soybean business with large
processors also accelerates our trajectory to achieve positive cash
flow from operations as the cash flows expected from products
coming to market by 2023 utilizing our differentiated go-to-market
strategies are all expected to be accretive to gross margins and
cash flow generation.
“During this period and given the complexity of timing and
multiple contracts, Calyxt is unable to provide guidance with
respect to our gross margins. However, management is focused on
cash usage and developing new partnership arrangements leveraging
our streamlined business model with differentiated go-to-market
strategies. Calyxt also expects to provide additional updates
during our soon to be announced Virtual Analyst Day in the fall of
2020,” concluded Koschak.
The revised 2020 financial guidance is as of August 5, 2020 and
we undertake no obligation to update our assumptions, expectations,
or our guidance as of any subsequent date. See the information in
the section titled “Forward-Looking Statements” for factors that
may impact the achievement of the revised guidance.
Second Quarter 2020 Results Conference Call
Calyxt Chief Executive Officer Jim Blome, Chief Financial
Officer Bill Koschak, and Chief Technology Officer Travis Frey,
Ph.D. will host the conference call, followed by a question and
answer session. The conference call will be accompanied by a
presentation, which can be viewed during the webcast or accessed
via the investor relations section of Calyxt’s website here.
To access the call, please use the following information:
Date:
Thursday, August 6, 2020
Time:
8:00 a.m. EDT, 5:00 a.m. PDT
Toll Free dial-in number:
1-888-221-3881
Toll/International dial-in number:
1-323-794-2591
Conference ID:
1020952
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have difficulty connecting with the conference
call, please contact MZ Group at +1 (949) 491-8235.
The conference call will be broadcast live and available for
replay at http://public.viavid.com/index.php?id=140895 and via the
investor relations section of Calyxt’s website here.
A replay of the call will be available for one month following
the conference.
Toll Free Replay Number:
1-844-512-2921
International Replay Number:
1-412-317-6671
Replay ID:
1020952
About Calyxt:
Calyxt (NASDAQ: CLXT), based in Roseville, Minnesota is a
plant-based technology company. We innovate, together with
like-minded partners, to deliver plant-based products with wellness
and sustainability benefits. We use cutting edge plant breeding
techniques to innovate and develop solutions to address unmet
consumer and market demands. For further information, please visit
our website at www.calyxt.com.
Use of Non-GAAP Financial Information
To supplement our audited financial results prepared in
accordance with GAAP, we have prepared certain non-GAAP measures
that include or exclude special items. These non-GAAP measures are
not meant to be considered in isolation or as a substitute for
financial information presented in accordance with GAAP and should
be viewed as a supplemental and in addition to our financial
information presented in accordance with GAAP. Investors are
cautioned that there are material limitations associated with the
use of non-GAAP financial measures. In addition, other companies
may report similarly titled measures, but calculate them
differently, which reduces their usefulness as a comparative
measure. Management utilizes these non-GAAP metrics in evaluating
and making operational decisions regarding our business.
We present gross margin, as adjusted, a non-GAAP measure that
includes the effects of high oleic soybean products sold with no
associated cost of goods sold because those costs were expensed as
R&D in a prior period and that also includes the impact of any
net realizable value adjustments to our inventories occurring in
the period, which would otherwise have been recorded as an
adjustment to value in a prior period or would have been recorded
in a future period as the underlying products are sold.
We provide gross margin, as adjusted, at this early stage of
commercialization as the amounts being adjusted affect the period
to period comparability of our gross margins and financial
performance.
The table below presents a reconciliation of gross margin to
gross margin, as adjusted:
Three Months Ended June
30,
Six Months Ended June
30,
In Thousands
2020
2019
2020
2019
Gross margin (GAAP measure)
$
(3,014
)
$
105
$
(4,521
)
$
229
Gross margin percentage
(131
)%
26
%
(97
)%
40
%
Adjustments:
Grain costs expensed as R&D
—
(386
)
—
(535
)
Net realizable value adjustment to
inventories
2,221
—
255
—
Gross margin, as adjusted
$
(793
)
$
(281
)
$
(1,966
)
$
(306
)
Gross margin percentage, as adjusted
(34
)%
(69
)%
(42
)%
(54
)%
We present adjusted EBITDA, a non-GAAP measure defined as net
loss excluding interest, net, income tax expense, depreciation and
amortization expense, stock-based compensation expense, grain costs
expensed as R&D, net realizable value adjustments to
inventories, Section 16 officer transition expenses, and research
and development payroll tax credits no longer realizable.
We provide in the table below a reconciliation of net loss to
adjusted EBITDA, which is the most directly comparable GAAP
financial measure. Because adjusted EBITDA excludes non-cash items
and discrete or infrequently occurring items, we believe that
adjusted EBITDA provides investors with useful supplemental
information about the operational performance of our business and
facilitates comparison of our financial results between periods
where certain items may vary significantly independent of our
business performance.
The table below present a reconciliation of net loss to adjusted
EBITDA:
Three Months Ended June
30,
Six Months Ended
June 30,
In Thousands
2020
2019
2020
2019
Net Loss (GAAP measure)
$
(10,902
)
$
(9,403
)
$
(21,965
)
$
(16,778
)
Non-GAAP adjustments:
Interest, net
(154
)
(92
)
244
(264
)
Income tax expense
—
—
—
—
Depreciation and amortization
452
342
904
689
Stock-based compensation expenses
1,797
2,304
3,068
3,860
Grain Costs expensed as R&D
—
(386
)
—
(535)
Net realizable value adjustment to
inventories
2,221
—
2,555
—
Section 16 officer transition expenses
77
671
437
859
Research and development payroll tax
credit
—
(63
)
0
(126
Adjusted EBITDA
$
(6,509
)
$
(6,627
)
$
(14,757
)
$
(12,295
)
Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. In some cases, you can
identify these statements by forward-looking words such as
“anticipates,” “estimates,” “expects,” “targets,” “intends,”
“plans,” “predicts,” “projects,” “should,” “will,” or “continue,”
the negative of these terms and other similar terminology.
Forward-looking statements in this press release include statements
about the potential impact of the COVID-19 pandemic on our business
and operating results; our future financial performance; product
pipeline and development; our business model and strategies for
commercialization and sales of commercial products; regulatory
progression; potential collaborations, partnerships and licensing
arrangements and their contribution to our financial results, cash
usage, and growth strategies; and anticipated trends in our
business. These and other forward-looking statements are
predictions and projections about future events and trends based on
our current expectations, objectives and intentions and premised on
current assumptions. Our actual results, level of activity,
performance, or achievements could be materially different than
those expressed, implied, or anticipated by forward-looking
statements due to a variety of factors, including, but not limited
to: the severity and duration of the evolving COVID-19 pandemic and
the resulting impact on macro-economic conditions; the impact of
increased competition; disruptions at our key facilities; changes
in customer preferences and market acceptance of our products;
competition for collaboration partners and licensees and the
successful execution of collaborations and licensing agreements;
the impact of adverse events during development, including
unsuccessful field trials or disruptions in seed production; the
impact of improper handling of our product candidates by
unaffiliated third parties during development, such as the improper
aerial spraying of our high fiber wheat product candidate; failures
by third-party contractors; inaccurate demand forecasting; the
effectiveness of commercialization efforts by commercial partners
or licensees; our ability to make grain sales on terms acceptable
to us; the timing of our grain sales; our ability to collect
accounts receivable; disruptions to supply chains, including
transportation and storage functions; commodity price conditions;
the impact of changes or increases in oversight and regulation;
disputes or challenges regarding intellectual property;
proliferation and continuous evolution of new technologies;
management changes; dislocations in the capital markets; and other
important factors discussed under the caption entitled “Risk
Factors” in our Annual Report on Form 10-K and subsequent filings
on Form 10-Q or 8-K with the U.S. Securities and Exchange
Commission. We do not assume any obligation to publicly provide
revisions or updates to any forward-looking statements, whether as
a result of new information, future developments or otherwise,
should circumstances change, except as otherwise required by
law.
CALYXT, INC.
CONSOLIDATED BALANCE
SHEETS
(In Thousands, Except Par
Value and Share Amounts)
June 30, 2020
(unaudited)
December 31,
2019
Assets
Current assets:
Cash and cash equivalents
$
3,875
$
58,610
Short-term investments
29,942
—
Restricted cash
393
388
Accounts receivable
2,411
1,122
Due from related parties
2
—
Inventory
5,282
2,594
Prepaid expenses and other current
assets
1,926
808
Total current assets
43,831
63,522
Non-current restricted cash
1,040
1,040
Land, buildings, and equipment
22,663
23,212
Other non-current assets
427
324
Total assets
$
67,961
$
88,098
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
572
$
1,077
Accrued expenses
1,998
2,544
Accrued compensation
1,293
2,181
Due to related parties
381
977
Current portion of financing lease
obligations
361
356
Other current liabilities
44
61
Total current liabilities
4,649
7,196
Financing lease obligations
18,109
18,244
Long-term debt
1,518
—
Other non-current liabilities
132
150
Total liabilities
24,408
25,590
Stockholders’ equity:
Common stock, $0.0001 par value;
275,000,000 shares authorized; 33,140,672 shares issued and
33,040,520 shares outstanding as of June 30, 2020, and 33,033,689
shares issued and 32,951,329 shares outstanding as of December 31,
2019
3
3
Additional paid-in capital
188,656
185,588
Common stock in treasury, at cost; 100,152
shares as of June 30, 2020, and 82,360 shares as of December 31,
2019
(1,043
)
(1,043
)
Accumulated deficit
(144,022
)
(122,057
)
Accumulated other comprehensive income
(loss)
(41
)
17
Total stockholders’ equity
43,553
62,508
Total liabilities and stockholders’
equity
$
67,961
$
88,098
CALYXT, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited and in Thousands
Except Shares and Per Share Amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Revenue
$
2,307
$
408
$
4,684
$
566
Cost of goods sold
5,321
303
9,205
337
Gross margin
(3,014
)
105
(4,521
)
229
Operating expenses:
Research and development
2,825
2,738
5,612
4,957
Selling and supply chain
1,349
1,202
2,929
2,107
General and administrative
3,808
5,206
8,528
9,368
Management fees
42
451
104
812
Total operating expenses
8,024
9,597
17,173
17,244
Loss from operations
(11,038
)
(9,492
)
(21,694
)
(17,015
)
Interest, net
154
92
(244
)
264
Foreign currency transaction loss
(18
)
(3
)
(27
)
(27
)
Loss before income taxes
(10,902
)
(9,403
)
(21,965
)
(16,778
)
Income taxes
—
—
—
—
Net loss
$
(10,902
)
$
(9,403
)
$
(21,965
)
$
(16,778
)
Basic and diluted loss per
share
$
(0.33
)
$
(0.29
)
$
(0.67
)
$
(0.51
)
Weighted average shares outstanding -
basic and diluted
33,039,338
32,732,988
33,013,739
32,704,834
CALYXT, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited and in
Thousands)
Six Months Ended June
30,
2020
2019
Operating activities
Net loss
$
(21,965
)
$
(16,778
)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization
904
689
Stock-based compensation
3,068
3,860
Changes in operating assets and
liabilities:
Accounts receivable
(1,289
)
(810
)
Due to/from related parties
(598
)
(1,156
)
Inventory
(2,688
)
(111
)
Prepaid expenses and other current
assets
(1,118
)
(169
)
Accounts payable
(505
)
(423
)
Accrued expenses
(546
)
(14
)
Accrued compensation
(888
)
(67
)
Other current liabilities
(93
)
(513
)
Other non-current assets
59
(378
)
Net cash used by operating
activities
(25,659
)
(15,870
)
Investing activities
Short-term investments
(29,942
)
—
Purchases of land, buildings, and
equipment
(517
)
(1,319
)
Net cash used by investing
activities
(30,459
)
(1,319
)
Financing activities
Proceeds from Payroll Protection Act
loan
1,518
—
Repayments of financing lease
obligations
(130
)
(122
)
Proceeds from the exercise of stock
options
—
308
Costs incurred related to shares withheld
for net share settlement
—
(559
)
Proceeds from the sale and leaseback of
land, buildings, and equipment
—
217
Net cash provided (used) by financing
activities
1,388
(156
)
Net decrease in cash, cash equivalents and
restricted cash
(54,730
)
(17,345
)
Cash, cash equivalents and restricted cash
- beginning of period
60,038
95,288
Cash, cash equivalents and restricted
cash - end of period
$
5,308
$
77,943
CALYXT, INC.
SUPPLEMENTAL CASH FLOW
INFORMATION
(Unaudited and in
Thousands)
As of June 30,
In Thousands
2020
2019
Cash, cash equivalents, restricted cash,
and short-term investments:
Cash and cash equivalents
$
3,875
$
76,434
Restricted cash
1,433
1,509
Short-term investments
29,942
—
Total cash, cash equivalents, restricted
cash, and short-term investments
$
35,250
$
77,943
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805006058/en/
Calyxt Media Contact: Trina Lundblad, Director of
Corporate Communications (612) 790-0514 media@calyxt.com
Calyxt Investor Relations Contact: Chris Tyson, Managing
Director MZ Group – MZ North America (949) 491-8235 CLXT@mzgroup.us
www.mzgroup.us
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