Calyxt, Inc. (NASDAQ:CLXT) Q3 2022 Earnings Conference Call November 3, 2022 4:30 PM ET
William Koschak – CFO
Michael Carr – President and CEO
Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Calyxt Third Quarter 2022 Financial Results and Corporate Update Conference Call and Webcast. [Operator Instructions] Please also note this conference is being recorded today, November 3, 2022.
At this time, I would like to turn the conference over to Bill Koschak, Calyxt Chief Financial Officer. Please go ahead, sir.
Thank you, and good afternoon. This is Bill Koschak, the Chief Financial Officer of Calyxt. I would like to thank you for taking time to join us for Calyxt Third Quarter ’22 Financial Results and Corporate Update Conference Call and Webcast. Presenting with me today is Michael A. Carr, our President and Chief Executive Officer. A press release detailing these results crossed the wire after today’s market close and is available on our company’s website, calyxt.com.
Before we begin the conference call, I’d like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to Calyxt’s SEC filings for a list of associated risks.
These remarks include a discussion of adjusted net loss and adjusted net loss per share. Both are non-GAAP financial measures. In Calyxt’s press release and its filings with the SEC, each of which is posted on our website at calyxt.com, you will find additional disclosure regarding these non-GAAP financial measures. References to these non-GAAP financial measures should be considered in addition to GAAP financial measures and should not be considered a substitute for results that are presented in accordance with GAAP.
Lastly, this conference call is being webcast. The webcast link is available in the Investor Relations section of calyxt.com.
At this time, I’d like to turn the call over to Michael for his opening remarks. Michael?
Thank you, Bill, and thank you for joining us on Calyxt’s financial results and corporate update call today. Today, I would like to walk you through our progress over the past few months before turning the call over to Bill for a financial update.
Despite unprecedented headwinds in the capital markets and the macro economy and the resulting liquidity challenges for the company, we have made substantial progress across numerous fronts within the areas of business development, licensing, infrastructure partnership and the advancement of chemistries under development, specifically the successful engineering of a key ingredient used in personal care products and vaccines as well as accepting membership in an important Department of Defense-sponsored manufacturing initiative that opens the door for Calyxt to federal grants.
We announced on October 25 that we had made substantial technical progress by successfully using a Calyxt-engineered Plant Cell Matrix to produce squalene. Squalene is an important ingredient in many personal care products and vaccine adjuvants, including several strands of flu and COVID-19 vaccines. Traditionally sourced from shark liver, many companies who require the ingredient for their products have already begun to seek out alternative squalene sources that represent a more sustainable solution.
With increasing demand for natural ingredients in cosmetics, along with the urgency to develop more vaccines that are effective at boosting immune response, the global squalene market represents a significant and growing market opportunity. Furthermore, the production of squalene validates the promise of our platform to engineer plant metabolism to produce innovative high-value plant-based chemistries for use in our customers’ materials and products across the end markets of cosmeceuticals, nutraceuticals and pharmaceuticals.
In the third quarter of 2022, we received 37 new chemistries from potential customers for evaluation, bringing the total number of chemistries cumulatively evaluated for development with our PlantSpring platform and for production in our BioFactory to 132. Of the 132 chemistries, 43 have met our target product profile criteria and are subject to further evaluation and discussion with potential customers. Additionally, the evaluated chemistries include several that were identified by potential customers as having been unsuccessfully attempted by others in the synthetic biology industry.
Our current customer projects under development remain on track. We continue to progress the pilot project for a major consumer packaged goods company with delivery of the plant-based chemistry expected by early 2023. This delivery has the potential to lead to a development agreement for this and potentially other chemistries.
Similarly, the development of our soybean-based palm oil alternative plant trait continues to progress, and we expect to achieve the first $100,000 milestone payment as early as the fourth quarter of 2022. The overall project is scheduled to be completed in the first quarter of 2024, at which time the second milestone payment of $100,000 would be due.
We also announced and signed an agreement with our first infrastructure partner, Evologic Technologies, to further develop and scale our PCM technology platform. The agreement supports the continued build-out of our plant-based synthetic biology capabilities and will power our speed-to-scale strategy and supports our ability to meet the growing interest in high-quality sustainable ingredients across the cosmeceutical, nutraceutical and pharmaceutical markets. Evologic’s contract development and manufacturing services based on its proprietary bioprocesses platform and technology supports companies like ours who are delivering unique and sustainable bioproducts. We anticipate sending the first PCM that will produce an engineered plant-based chemistry squalene to Evologic for scaling in the fourth quarter of 2022.
I would also like to note that we accepted membership to BioMADE, a Department of Defense-sponsored, or DoD, manufacturing innovation initiative. As a result, Calyxt is now part of a network comprised of synthetic biology companies, including Ginkgo Bioworks and Amyris, top-tier academic institutions, research-focused, not-for-profits, and the United States government agencies dedicated to innovating and growing the bioeconomy. Membership also enables us to apply for federal government grants to advance research in plant-based biomanufacturing. We are very pleased to be a member of this organization and to potentially advance research for the DoD in the area of plant-based sustainable solutions.
We had a productive quarter, and the team continues to make substantial progress despite challenging global macroeconomic dynamics and truly unprecedented headwinds in the capital markets. At the end of September, our Board of Directors announced that it is evaluating a full range of potential strategic alternatives and that it has to engage Canaccord Genuity as an advisor. This effort is ongoing, and it demonstrates Calyxt’s commitment to optimizing value for shareholders. We unequivocally believe in the potential of our technology. The progress we have made across multiple fronts over the past several months demonstrates our momentum and provides important validation of the work we do.
I’d like to now turn the call over to Bill, who will cover our third quarter financial results. Bill?
Thank you, Michael. Earlier today, we issued a press release describing our third quarter ’22 financial results. We also filed our Form 10-Q for the quarter this afternoon. For additional details about our financials for third quarter ’22, please refer to our press release or filings with the SEC.
I’d like to make a few comments on our cash and cash burn. We ended the quarter with cash and cash equivalents of $7.2 million as of September 30, 2022. Calyxt continues to be focused on the effective use of our cash resources, and we have reduced our costs while we execute on our near-term milestones, achieving the lowest burn rate our company has seen in recent years. Our cash burn in the third quarter of 2022 was $4.7 million, $1.2 million less than the second quarter of 2022.
I am pleased to report that in early November, Calyxt reached a settlement with one of its technology vendors regarding alleged intellectual property infringement. As a result of the settlement, Calyxt will receive $750,000 upon execution of an amended master services agreement, or MSA, and another $750,000 by January 31, 2023. The execution of the MSA is anticipated to occur in the fourth quarter of 2022. Calyxt will also receive reductions in contractual payments for a period of time.
The results of our cost-saving efforts, which are ongoing and include discretionary actions in management’s control and the legal settlement, have provided cash runway into the second quarter of 2023. This projection includes only committed customer cash from development agreements and technology and plant trait licensing. And accordingly, the cash runway could be extended into future periods.
In addition, on October 3, 2022, we entered into an amendment to our open market sale agreement with Jefferies that enables us, subject to a maximum sale of up to 1/3 of Calyxt’s public float in any 12-month period, to offer and sell up to 15,661,000 shares of our common stock. Since October 3, Calyxt has issued 2.0 million shares of its common stock, raising $0.1 million of proceeds net of offering fees and expenses. As a result of the issuance of these shares, Cellectis, once Calyxt’s majority shareholder, now has an ownership percentage of 49.1%, which enables us to pursue additional government grant programs as an incremental source of financing.
This concludes our call today. If you have further questions, please feel free to contact us or our Investor Relations firm, Argot Partners, and we will be happy to help you. Thank you for joining us on our call today.
Thank you very much for your participation. You may now disconnect your lines.