First Quarter 2020 Revenue of $2.4 Million
Provides Update on COVID-19 Impact
Announces Extended Cash Runway and Revises 2020
Cash Usage Guidance to between $30 Million to $34 Million
Management to Host Conference Call Today at
8:30 a.m. EST
Calyxt, Inc. (NASDAQ: CLXT), a plant-based technology company,
has reported its financial results for the first quarter ended
March 31, 2020.
Management Commentary
“The COVID-19 pandemic has caused an unprecedented global
crisis. I am very proud of the dedication and resilience of the
Calyxt team and of the actions we have taken in response to the
COVID-19 pandemic to protect our employees and our business,” said
Jim Blome, Calyxt CEO. “Most of our laboratory workers remain
onsite at our headquarters and all workers who are able to work
remotely have done so since early in the crisis. Protecting our
scientists and their projects is critical to our future, and thus
far we have handled the transition without disruption. I appreciate
the actions of our team to help ensure we stay safe and on track.
While the immediate future is uncertain, what is crystal clear is
that Calyxt must act judiciously and decisively to succeed during
this situation and after it is resolved. We have taken several
measures to respond to a dynamic environment that compels us to
bolster our liquidity and rapidly adapt to extraordinary
circumstances.”
“The first quarter of 2020 was initially marked by increasing
demand for our high oleic soybean products, offset in the latter
part of the quarter by the beginning of the COVID-19 pandemic,
which has temporarily disrupted the agricultural and food supply
chains globally and depressed food industry demand for premium oil.
These negative effects increased throughout the quarter and remain
with us today. We have responded to ongoing disruptions by pausing
our crush schedule to preserve cash, while continuing our seed
distribution activities for 2020 plantings, and continuing to ship
high oleic soybean oil to our recently announced world-class oil
customer. Looking forward at the macro-environment, we expect
prices for both oil and meal to remain low, demand for oil to
remain depressed and, depending on livestock herd sizes, meal
demand may also be depressed. We also expect some of the oil and
meal price pressure to be partially offset by lower grain purchase
costs. Despite these headwinds, we continue to geographically
expand our soybean meal customer base and continue to sample and
test with large consumer packaged goods companies. I am confident
that when the macro-environment stabilizes, we will emerge stronger
than before.”
“On the technology front, we continue to build out and improve
our gene editing technology suite. We licensed a new breakthrough
from the University of Minnesota, invented in a lab run by Calyxt
co-founder Dan Voytas, Ph.D., that will enable us to significantly
reduce the time needed to develop traits in certain crops. I am
pleased with the four product candidate advancements in our
development process in the quarter, especially considering the
unique nature of each. Our innovative technology, continuous
improvement and robust scientific team are what allows us to
maintain a competitive edge in the gene editing space,” continued
Blome.
“In the near-term, we expect to launch our first hemp product –
improved plants to address key problems facing hemp growers –
marking the launch of our second commercial product. We expect the
velocity of our revenue opportunities to accelerate as we build up
a robust portfolio of commercial products addressing several
different markets. For our efforts to secure new collaboration
agreements with industry partners, we aim to sign multiple new
agreements this year. We expect collaboration agreements to provide
us with cash milestone payments to further support our liquidity
and our vision that Calyxt is an innovation platform company.”
“In summary, despite increased headwinds and unprecedented
global disruption, we continue to execute on our business
initiatives, improve our gene editing platform, drive forward our
R&D programs, and extend our cash runway. I am incredibly proud
of our team and look forward to sharing more on our developing
story at the upcoming BMO Global Farm to Market Virtual Conference
on May 13,” concluded Blome.
Product Development and Intellectual Property
- Continued to expand intellectual property portfolio with new
U.S. patents granted and filing applications for new patent
families. Granted U.S. patents cover expansion of the core TALEN®
patent family with claims directed to methods for generating gene
edited plants as well as an additional soybean product concept. New
provisional patent applications focus on expanding the portfolio of
novel gene editing tools and enabling technologies, new product
concepts in soybean and wheat, and additional germplasm varieties
from its breeding program.
- In the first quarter 2020, four projects in the R&D
development process advanced to the next stage. As of March 31,
2020, there were 18 projects at the Discovery stage or later in
development across alfalfa, canola, hemp, oats, potatoes, soybeans
and wheat, with most projects in soybeans and hemp.
- Early in the second quarter the first hemp project advanced to
the commercialization phase. Calyxt expects to launch the product
for 2020 spring planting and complete the sale of all product
available in the quarter. While not significant to revenue, the
pilot is projected to deliver premium margins. To achieve these
results, Calyxt worked with a partner’s germplasm to quickly purify
and stabilize key varieties while leveraging Calyxt’s
patent-pending production system and analytics capabilities. This
success also enabled the gathering of valuable insights and data
that will benefit the development of other hemp projects which are
expected to launch beginning in 2023.
First Quarter 2020 Financial Results
- Revenues were $2.4 million in the first quarter of 2020, an
increase of $2.2 million or 1,414 percent from the first quarter of
2019. The revenue growth was driven by 1,440 points of volume
growth and 44 points of favorable product mix partially offset by
70 points of pricing changes. High oleic soybean meal was 87
percent of revenue in the first quarter of 2020, compared to 92
percent a year ago. Most oil revenue in the quarter was from a
world-class customer, active in all four premium oil target market
segments, to be used as a plant-based alternative to synthetic
fluids.
- Gross margins, as reported, were a negative $1.5 million in the
first quarter of 2020, a decrease of $1.6 million from the first
quarter of 2019, reflecting the higher costs experienced at this
early stage of commercialization of the high oleic soybean
products. Gross margin, as adjusted, a non-GAAP measure, was
negative $1.2 million, or negative 49 percent, as compared to
negative $1.5 million, or negative 63 percent, as reported under
GAAP. See below under the heading “Use of Non-GAAP Financial
Information” for a discussion of gross margin, as adjusted, and a
reconciliation of gross margin, the most comparable GAAP measure,
to gross margin, as adjusted.
- R&D expenses were $2.8 million in the first quarter of
2020, an increase of $568,000 from the first quarter of 2019,
driven by $284,000 of additional personnel costs, $123,000 of
incremental professional fees, and $78,000 of higher non-cash stock
compensation expenses.
- Selling and supply chain expenses were $1.6 million in the
first quarter of 2020, an increase of $676,000 from the first
quarter of 2019, driven by $879,000 of additional personnel costs
including $273,000 of Section 16 officer transition expenses, and
$123,000 incremental allocated expenses for facilities and
information technology expenses, partially offset by $314,000 of
lower non-cash stock compensation expenses due to the forfeiture of
awards.
- G&A expenses were $4.7 million in the first quarter of
2020, an increase of $558,000 from the first quarter of 2019,
driven by $392,000 of incremental professional services expenses
and increased depreciation expense.
- Net loss was $11.1 million in the first quarter of 2020, an
increase of $3.7 million from the first quarter of 2019, driven by
the changes in gross margin and operating expenses described above.
Net loss per share was $(0.34) per basic and diluted share in the
first quarter of 2020, an increase of $(0.11) per basic and diluted
share from the first quarter of 2019.
- Adjusted EBITDA loss, a non-GAAP measure, was $8.2 million in
the first quarter of 2020, an increase of $2.6 million from the
first quarter of 2019, driven by the changes in operating expenses
and the increases in negative gross margins described above and a
$570,000 decrease in interest expense driven by unrealized losses
on short-term investments. See below under the heading “Use of
Non-GAAP Financial Information” for a discussion of adjusted EBITDA
and a reconciliation of such measure to net loss the most
comparable measure calculated under United States GAAP.
- Net cash used in the first quarter of 2020 was $12.6 million
compared to $9.6 million in the first quarter of 2019, driven by
the increase in net loss of $3.7 million partially offset by a net
decrease in cash flows from operating assets and liabilities,
primarily the result of the higher cash payments to suppliers and
related parties in the first quarter of 2019.
- Cash, cash equivalents, short-term investments and restricted
cash totaled $47.4 million as of March 31, 2020.
COVID-19 Update
“Due to the COVID-19 crisis, we have observed changes in demand
across the oil markets and declines in the exchange-traded prices
for both oil and meal,” said Bill Koschak, Calyxt’s CFO. “As a
result, we paused our crush and refining schedule and expect
product sales efforts in the second quarter to shift to the second
half of 2020. We are pursuing sources of cash through high margin
collaboration agreements and licensing opportunities and are taking
further action to increase financial flexibility and liquidity,
including reviewing operating expenses, deferring purchases of
grain in the fourth quarter to the following year, and postponing
non-essential capital expenditures.”
“In April 2020, we received a $1.5 million loan under the
Payroll Protection Program implemented as part of the CARES Act.
After a thorough management review, we determined that the current
economic uncertainty made the loan necessary to support our ongoing
operations and allows us to continue employing our team members
through this unprecedented time. As a result of these actions we
expect our 2020 cash usage to be between $30 million and $34
million, lowered from our prior estimate of $34 million to $38
million. The lower use of cash in 2020, which we expect to continue
into 2021, is expected to extend our cash runway into late 2021. We
continue to evaluate additional strategies to further reduce our
cash usage.”
“We also have sold out of seed for the 2020 crop, with seed
distribution for 2020 spring planting underway. Deliveries of seed
are on schedule and we continue to monitor the distribution network
and to develop contingency plans for growers to receive their
orders, including the five new varieties we are launching this
spring,” concluded Koschak.
2020 Financial Guidance Revisions
On March 5, 2020, Calyxt issued 2020 financial guidance for
revenue, adjusted gross margin, and cash usage, which did not take
into account the impacts of the COVID-19 pandemic. Due to the high
degree of uncertainty created by the COVID-19 pandemic and the
challenges of accurately predicting the specific extent or duration
of the impact of COVID-19 on operations and financial results,
Calyxt is withdrawing guidance for 2020 revenue and 2020 adjusted
gross margin. In addition, taking into account anticipated
reductions in cash expenditures, timing of grain purchases in the
fourth quarter, and the proceeds from the Payroll Protection
Program loan, Calyxt now expects cash usage in 2020 to be in the
range of $30 million to $34 million, a reduction from previous 2020
cash usage guidance of $34 million to $38 million.
First Quarter 2020 Results Conference Call
Calyxt, Inc. will hold a conference call today at 8:30 a.m.
Eastern time to discuss its results for the first quarter ended
March 31, 2020. Calyxt Chief Executive Officer Jim Blome, Chief
Financial Officer Bill Koschak, Chief Technology Officer Travis
Frey, and Senior Vice President of Sales and Marketing Keith Blanks
will host the conference call, which will be accompanied by a
presentation and followed by a question and answer session.
To access the call, please use the following information:
Date:
Thursday May 7, 2020
Time:
8:30 a.m. EST, 5:30 a.m. PST
Toll Free dial-in number:
1-877-407-0789
Toll/International dial-in number:
1-201-689-8562
Conference ID:
13701507
Webcast:
http://public.viavid.com/index.php?id=138971
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 via the investor relations section of Calyxt’s website
here. The presentation used in the conference call and webcast will
be available for reference on Calyxt’s IR website at 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:
13701507
About Calyxt
Calyxt (NASDAQ: CLXT), based in Roseville, Minnesota is a
plant-based technology company. We partner with like-minded farmers
and companies 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 March
31,
In Thousands
2020
2019
Gross margin (GAAP measure)
$
(1,507
)
$
123
Gross margin percentage
(63
%)
78
%
Adjustments:
Grain costs expensed as R&D
—
(149
)
Net realizable value adjustment to
inventories
334
—
Gross margin, as adjusted
$
(1,174
)
$
(25
)
Gross margin percentage, as adjusted
(49
%)
(16
%)
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 March
31,
In Thousands
2020
2019
Net Loss (GAAP measure)
$
(11,063
)
$
(7,375
)
Non-GAAP adjustments:
Interest, net
398
(172
)
Income tax expense
—
—
Depreciation & amortization
452
342
Stock-based compensation expenses
1,271
1,556
Grain costs expensed as R&D
—
(149
)
Net realizable value adjustment to
inventories
334
—
Section 16 officer transition expenses
360
188
Research and development payroll tax
credit
—
(63
)
Adjusted EBITDA
$
(8,247
)
$
(5,672
)
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,” “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 impact on our business
and operating results, our future financial performance, product
pipeline and development, commercialization efforts and sales of
commercial products, regulatory progression, potential
collaborations and partnerships and their contribution to our
financial results, cash usage, 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 the successful execution
of collaborations; the impact of adverse events during development,
including unsuccessful field trials or disruptions in seed
production; failures by third-party contractors; inaccurate demand
forecasting; 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)
March 31, 2020
(unaudited)
December 31,
2019
Assets
Current assets:
Cash and cash equivalents
$
7,385
$
58,610
Short-term investments
38,620
—
Restricted cash
388
388
Accounts receivable
841
1,122
Due from related parties
7
—
Inventory
3,198
2,594
Prepaid expenses and other current
assets
1,594
808
Total current assets
52,033
63,522
Non-current restricted cash
1,045
1,040
Land, buildings, and equipment
22,902
23,212
Other non-current assets
441
324
Total assets
$
76,421
$
88,098
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
1,085
$
1,077
Accrued expenses
2,093
2,544
Accrued compensation
1,363
2,181
Due to related parties
554
977
Current portion of financing lease
obligations
361
356
Other current liabilities
94
61
Total current liabilities
5,550
7,196
Financing lease obligations
18,194
18,244
Other non-current liabilities
141
150
Total liabilities
23,885
25,590
Stockholders’ equity:
Common stock, $0.0001 par value;
275,000,000 shares authorized; 33,090,799 shares issued and
32,990,647 shares outstanding as of March 31, 2020, and 33,033,689
shares issued and 32,951,329 shares outstanding as of December 31,
2019
3
3
Additional paid-in capital
186,859
185,588
Common stock in treasury, at cost; shares
of 100,152 as of March 31, 2020, and 82,360 as of December 31,
2019
(1,043
)
(1,043
)
Accumulated deficit
(133,120
)
(122,057
)
Accumulated other comprehensive income
(loss)
(163
)
17
Total stockholders’ equity
52,536
62,508
Total liabilities and stockholders’
equity
$
76,421
$
88,098
CALYXT, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited and in Thousands
Except Shares and Per Share Amounts)
Three Months Ended March
31,
2020
2019
Revenue
$
2,377
$
157
Cost of goods sold
3,884
34
Gross margin
(1,507
)
123
Operating expenses:
Research and development
2,787
2,219
Selling and supply chain
1,580
904
General and administrative
4,720
4,162
Management fees
62
361
Total operating expenses
9,149
7,646
Loss from operations
(10,656
)
(7,523
)
Interest, net
(398
)
172
Foreign currency transaction loss
(9
)
(24
)
Loss before income taxes
(11,063
)
(7,375
)
Income taxes
—
—
Net loss
$
(11,063
)
$
(7,375
)
Basic and diluted loss per
share
$
(0.34
)
$
(0.23
)
Weighted average shares outstanding -
basic and diluted
32,988,141
32,677,944
CALYXT, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited and in
Thousands)
Three Months Ended March
31,
2020
2019
Operating activities
Net loss
$
(11,063
)
$
(7,375
)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization
452
342
Stock-based compensation
1,271
1,556
Changes in operating assets and
liabilities:
Accounts receivable
281
(124
)
Due to/from related parties
(430
)
(1,114
)
Inventory
(604
)
(379
)
Prepaid expenses and other current
assets
(786
)
(629
)
Accounts payable
8
(94
)
Accrued expenses
(451
)
(397
)
Accrued compensation
(818
)
(418
)
Other current liabilities
(156
)
(428
)
Other non-current assets
(120
)
(216
)
Net cash used by operating
activities
(12,416
)
(9,276
)
Investing activities
Short-term investments
(38,620
)
—
Purchases of land, buildings, and
equipment
(139
)
(346
)
Net cash used by investing
activities
(38,759
)
(346
)
Financing activities
Repayments of financing lease
obligations
(45
)
(59
)
Proceeds from the exercise of stock
options
—
125
Net cash (used) provided by financing
activities
(45
)
66
Net decrease in cash, cash equivalents and
restricted cash
(51,220
)
(9,556
)
Cash, cash equivalents and restricted cash
- beginning of period
60,038
95,288
Cash, cash equivalents and restricted
cash - end of period
$
8,818
$
85,732
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005359/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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