Calyxt, Inc. (proposed to be renamed Cibus, Inc.) — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The filing is by Calyxt, Inc. (Nasdaq: CLXT), not the post-merger Cibus entity. The proposed merger with Cibus Global, LLC was agreed on January 13, 2023, after year-end; closing was expected in the second quarter of 2023, subject to approvals and other conditions.
Business context and reporting period
Calyxt develops plant-based synthetic biology solutions using its PlantSpring technology platform and BioFactory production system, with additional licensing and agricultural trait-development activities. In 2022, it completed the wind-down of its vertically integrated soybean business and generated very little revenue from its newer focus. By the filing date, the proposed merger and limited capital had led to substantial operating cutbacks. Continuing activities were limited mainly to scaling one Plant Cell Matrix with Evologic, licensing efforts, and three existing customer projects.
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $0.157 million | $25.987 million |
| Gross profit (loss) | $0.157 million | $(2.570) million |
| Research and development | $11.553 million | $11.335 million |
| Selling, general and administrative | $10.974 million | $15.427 million |
| Operating loss | $(22.370) million | $(29.332) million |
| Net loss | $(16.891) million | $(29.199) million |
| Net loss per share | $(0.37) | $(0.78) |
| Net cash used in operating activities | $(19.364) million | $(18.811) million |
- Revenue fell 99% as soybean sales ended; 2022 revenue was primarily associated with the palm-oil-alternative soybean development collaboration. Gross margin was reported as 100% because cost of goods sold was zero.
- The smaller net loss reflected a $5.1 million noncash gain from remeasurement of common warrants, lower SG&A, and the completed soybean wind-down. It does not indicate positive operating cash flow.
- Cash and cash equivalents were $3.427 million and restricted cash was $0.099 million at year-end, or $3.526 million combined, down from $14.421 million a year earlier. Current assets were $4.132 million and current liabilities $1.662 million.
- Total liabilities were $15.188 million. These included $13.447 million of operating lease obligations and $0.097 million of financing lease obligations; the filing reports no outstanding conventional long-term debt at year-end. The company also has substantial ongoing facility lease commitments.
- Financing activities provided $9.989 million net cash, principally from the February 2022 offering. The company issued shares and warrants; 7.76 million common warrants remained outstanding at year-end.
Material changes versus 2021
- Revenue declined by $25.830 million, reflecting the end of soybean product-line sales. The company moved from soybean commercialization toward early-stage synthetic biology and licensing.
- SG&A declined 29%, while R&D increased 2%. Operating loss improved, but operating cash use rose 3% to $19.364 million.
- Net loss improved by $12.308 million, but the comparison was affected by the 2021 $1.528 million gain from forgiveness of the Paycheck Protection Program loan and the 2022 warrant fair-value gain.
- Adoption of the new lease accounting standard in 2022 resulted in recognition of operating lease assets and liabilities; the filing says adoption did not affect cash flows or the statement of operations.
Outlook, commentary and principal risks
- Going concern: Management concluded substantial doubt exists about the company’s ability to continue as a going concern for 12 months or more from the filing date. The auditor’s report also highlights the uncertainty. Management believed available cash, cost reductions, a legal settlement and potential Cibus interim funding would support operations through the second quarter of 2023—not beyond that period without further action.
- Interim funding: Under the merger agreement, Calyxt could request an unsecured, interest-free revolving facility of up to $3 million, potentially $4 million if the outside date were extended. Funds are restricted to ordinary-course operating expenses. Treatment on merger closing or termination is subject to the agreement’s terms and exceptions.
- Merger dependency: If the merger fails, the company said it might liquidate, seek another strategic transaction, or—considered less likely—continue operations with additional near-term financing. It warned that substantial stockholder distributions in a liquidation were highly unlikely and additional financing might not be available.
- Operating outlook: Management expected 2023 operating cash use and capital expenditures to be below 2022 levels because of cost reductions and narrower operations. The three continuing customer projects were not expected to generate material near-term revenue. No longer-term revenue or profitability guidance is provided.
- Merger and dilution: If completed, Cibus equity holders were expected to own a substantial majority of the combined company, significantly diluting existing Calyxt holders. The filing also discloses a potential termination fee of up to $1 million in certain circumstances.
- Execution and market risks: BioFactory production remained unproven at commercial scale; the business depends on third-party manufacturing, customer acceptance, successful development and licensing, and access to capital. Competition, regulatory uncertainty, intellectual-property disputes and the ability to retain key staff are material risks.
- Other items: A vendor intellectual-property dispute was settled in the fourth quarter of 2022; the filing reports $0.75 million of settlement proceeds and says the final installment was received in the first quarter of 2023. Headcount declined from 48 employees at year-end 2022 to 28 full-time employees at January 31, 2023. Management reported effective disclosure controls and internal control over financial reporting.
Important facts for investors to verify
- Whether the Cibus merger closed, the final transaction terms, required approvals, and the resulting ownership and dilution for former Calyxt stockholders.
- Actual interim-funding draws, remaining cash, and the company’s liquidity and going-concern position after the second quarter of 2023.
- Subsequent operating cash use, cost reductions, financing, and any further share or warrant issuance.
- Progress, production scale and economics for the Evologic Plant Cell Matrix work, and the status and commercial potential of the three continuing projects.
- The remaining lease obligations, the triggered indemnification obligation relating to Cellectis’s lease guarantee, and any material merger termination or settlement costs.