Cibus, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Cibus completed its merger with Cibus Global on May 31, 2023. Accordingly, historical comparisons are not like-for-like: pre-merger results are Legacy Calyxt, and the reported 2023 six-month results include only one month of Cibus Global. The company develops and licenses gene-edited plant traits to seed companies and also pursues sustainable-ingredient projects.
Financial results and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0.197 million | $0.041 million | $0.239 million | $0.073 million |
| Operating expenses | $19.508 million | $6.806 million | $24.013 million | $12.927 million |
| Operating loss | $19.311 million | $6.765 million | $23.774 million | $12.854 million |
| Net loss | $20.509 million | $2.485 million | $25.903 million | $8.104 million |
| Net loss attributable to Cibus, Inc. | $18.690 million | $2.485 million | $24.084 million | $8.104 million |
| Class A loss per share | $3.05 | $2.66 | $6.73 | $9.14 |
Revenue was generated primarily from research collaborations and contract R&D; management expects future revenue increasingly to come from trait licenses and royalties. The filing does not provide a clear gross profit or gross margin measure. Operating expenses rose substantially, reflecting the acquired business and merger-related compensation and costs. Q2 included $2.6 million of non-cash royalty-liability interest expense. For the six-month period, non-operating income was $0.4 million, down from $4.8 million, mainly reflecting warrant fair-value changes; the prior-year comparison benefited from a warrant gain.
Cash flow: Operating activities used $14.1 million in the first half of 2023, versus $11.3 million in 2022. Investing activities provided $58.8 million, mainly from $59.4 million of cash acquired in the merger. Financing activities provided $2.7 million, including $2.5 million of interim funding and $1.3 million of notes payable proceeds.
Liquidity and obligations at June 30: Cash and cash equivalents were $50.9 million; current liabilities were $22.4 million. Notes payable totaled $2.3 million, and operating lease liabilities totaled $24.0 million. A separate related-party royalty liability was $149.0 million; it is an estimated present value, not an ordinary near-term borrowing balance. Total assets were $814.3 million, including $585.3 million of goodwill and $135.4 million of intangible assets. The preliminary merger purchase-price allocation remains subject to revision.
Material changes and unusual items
- The May 31 merger added Cibus Global, created an Up-C structure, and resulted in approximately 22% redeemable noncontrolling interest held by other Cibus Global members. Class A shares have voting and economic rights; Class B shares have voting but no direct economic rights.
- Merger-related costs included $3.5 million of legal and professional fees, $1.9 million of severance, and $2.4 million of accelerated-vesting stock compensation for the six-month period. The company also recorded stock compensation for merger-related restricted awards.
- The $149.0 million royalty liability arose from a 2014 agreement entitling related-party holders to 10% of specified subject revenues. Payments begin after subject revenues reach $50 million in a consecutive 12-month period; that threshold had not been met by June 30. The obligation is secured by a security interest in substantially all company intellectual property.
- The company filed a Form S-3 registration statement for up to $200 million of securities; it had not been declared effective as of the filing date.
Outlook, commentary, and risks
Management expects continued losses for several years and stated that June 30 cash was not sufficient to fund operations for 12 months or more from the filing date. Management concluded there is substantial doubt about the company’s ability to continue as a going concern without additional capital. If financing is unavailable on acceptable terms, Cibus may reduce costs, delay development, or scale back operations; equity or debt financing could dilute shareholders or add fixed obligations.
Operationally, the company reported three developed traits across canola and rice, including pod shatter resistance in canola and two herbicide-tolerance traits in rice. It reported initial customer germplasm transfers and the opening and first production run of its Oberlin facility, operational in canola and rice. Management expected soybean operations in the second half of 2023 and soybean elite-germplasm editing in 2024; wheat and corn platforms were targeted by year-end 2025. These are forward-looking targets, not guarantees. Other uncertainties include trait-development and commercialization timelines, customer and farmer adoption, regulatory change, intellectual-property protection, dependence on third parties, financing access, and agricultural-market conditions. The European Commission had proposed gene-editing rules in July 2023; the proposal still required approval.
Other notable exposures include a 2023 Form S-3 that was not yet effective, long-term lease commitments, and the valuation sensitivity of the royalty liability to future revenue assumptions. The company reported no material pending legal proceedings and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Available cash, operating burn, subsequent financing activity, and management’s stated going-concern uncertainty.
- Progress and actual timing of soybean platform validation, customer transfers, and commercialization of developed traits.
- Whether the S-3 registration statement became effective and whether additional capital was raised, including resulting dilution or financing terms.
- The assumptions and measurement-period updates for the merger valuation, including goodwill and acquired intangible assets.
- Future revenue-trigger timing and valuation of the related-party royalty obligation, including its intellectual-property security interest.
- Potential effects of redeemable noncontrolling interests, restricted awards, warrants, and the Up-C exchange structure on Class A shareholders.