Cibus, Inc. — Q3 2023 Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2023. Financial statements are unaudited. Cibus completed its merger with Cibus Global on May 31, 2023; the nine-month 2023 results therefore include five months of Legacy Calyxt and four months of the combined company. Q3 2023 includes Cibus Global, while Q3 2022 reflects Legacy Calyxt only, limiting direct comparability.
Business context and reporting period
Cibus develops and licenses gene-edited plant traits, primarily for canola, rice, and soybean. It aims to earn revenue from research collaborations and, as traits reach commercialization, licensing and per-acre royalties. The May merger combined Cibus Global’s gene-editing platform and facilities with Legacy Calyxt. Cibus is structured as an “Up-C”; Class A shares have voting and economic rights, while Class B shares have voting rights but no direct economic rights.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0.475 million | $0.042 million | $0.714 million | $0.115 million |
| Research and development | $17.521 million | $3.016 million | $28.159 million | $9.207 million |
| Selling, general and administrative | $8.751 million | $3.229 million | $22.126 million | $9.965 million |
| Operating loss | $25.797 million | $6.203 million | $49.571 million | $19.057 million |
| Net loss | $34.528 million | $5.950 million | $60.431 million | $14.054 million |
| Net loss attributable to Cibus, Inc. | $26.429 million | $5.950 million | $50.513 million | $14.054 million |
| Basic and diluted loss per Class A share | $1.59 | $6.36 | $6.33 | $15.56 |
Revenue growth reflected the acquired Cibus Global collaboration activity, including rice and soybean research; revenue remains small relative to operating expenses. The filing does not report gross profit or gross margin separately. Q3 operating expenses included merger-related stock compensation and acquired-company costs. The quarter also included $8.1 million of royalty-liability interest expense and a $0.9 million warrant fair-value loss.
Cash flow and liquidity: Cash and cash equivalents were $31.9 million at September 30, 2023, versus $3.4 million at December 31, 2022; current assets were $34.5 million and current liabilities $25.1 million. The cash increase was largely associated with $59.4 million of cash acquired in the merger. Operating cash use was $29.2 million for the first nine months, compared with $15.6 million in 2022. Investing activities provided $55.5 million, mainly from acquired cash, and financing activities provided $2.0 million.
Debt and other obligations: Notes payable totaled $1.8 million, including $1.2 million current. Operating and finance lease liabilities totaled $24.6 million. The balance sheet also records a $157.1 million related-party royalty liability, including $10.8 million of non-cash interest expense recognized since the merger. The royalty arrangement entitles holders to 10% of specified revenues; payments begin only after specified subject revenues reach $50 million in a consecutive 12-month period, a threshold not met as of September 30. The liability is secured by substantially all of Cibus’s intellectual property.
Merger accounting added $585.3 million of goodwill and $135.4 million of acquired intangible assets; the purchase-price allocation remains preliminary. Redeemable noncontrolling interest was $129.1 million.
Material changes versus prior comparable periods
- Reported Q3 revenue increased to $0.475 million from $0.042 million, but the comparison reflects the addition of Cibus Global in 2023. Reported Q3 net loss rose to $34.5 million from $6.0 million, also reflecting the combined company and the royalty-liability interest charge.
- For the nine-month periods, reported revenue was $0.714 million versus $0.115 million and net loss was $60.4 million versus $14.1 million. These reported comparisons are similarly affected by the merger timing. Unaudited pro forma nine-month figures, prepared as if the merger occurred January 1, 2022, show revenue of $1.154 million in 2023 versus $0.992 million in 2022 and net loss of $88.474 million versus $61.603 million.
- Cash rose substantially after the merger, but operating cash use increased. R&D and SG&A expenses rose with the acquired operations and merger-related compensation and transaction costs.
Outlook, management commentary, and risks
- Management expects significant losses for several years and states that September 30 cash is not sufficient for 12 months or more. After anticipated cost savings, it expects available cash to fund planned operations and capital expenditures into early Q1 2024. Management says additional capital is needed within one year; the filing concludes substantial doubt exists about the company’s ability to continue as a going concern.
- On October 18, 2023, Cibus announced a strategic realignment focused on launching PSR, HT1, and HT3 traits, enabling its soybean platform, and advancing Sclerotinia resistance and HT2. Headcount was reduced from 242 to approximately 185; the company estimated about $0.5 million of one-time costs, mostly in Q4 2023. Cost actions also include reduced capital spending and contractor use.
- Management expected the soybean system work to be completed in Q4 2023, with the soybean Trait Machine operational and beginning edits in 2024. The Oberlin facility was operational and serving canola and rice customers. Cibus reported three transfers of canola/WOSR germplasm with its PSR trait and an initial rice transfer; these are development steps, not evidence of product commercialization or material royalty revenue.
- On October 20, 2023, Cibus entered a binding term sheet for an unsecured CEO-provided credit line of up to $5.0 million, drawable in $1.0 million increments from January 1 through March 1, 2024. Draws bear 12% simple interest and mature January 1, 2026. The term sheet automatically terminates if the company secures at least $20 million of debt or equity financing before January 1, 2024.
- Key risks include the need for additional financing and potential dilution or higher fixed obligations; delays or failure in trait development, customer adoption, or commercialization; regulatory and intellectual-property risks; and the uncertainty of estimates underlying goodwill, acquired intangibles, warrant fair value, and the royalty liability. No material pending legal proceedings were reported.
Most important facts for investors to verify
- Whether Cibus raises sufficient capital before its stated early-Q1 2024 cash runway endpoint, and the terms and availability of the CEO credit line or other financing.
- Progress from germplasm transfers and field testing to commercial contracts, product launches, and recurring trait-royalty revenue; reported revenue to date is limited.
- Whether announced cost reductions materially lower cash burn without impairing priority development and commercialization milestones.
- How the $157.1 million royalty liability changes as revenue forecasts are revised, and the consequences of its intellectual-property security interest.
- Final purchase-price allocation and future impairment testing for the substantial goodwill and acquired intangible assets, as well as dilution from equity awards and any future financing.