Filing summary
Important entity mismatch: The request identifies Cibus, Inc., but the supplied Form 10-Q is for Calyxt, Inc. (NASDAQ: CLXT). Verify the filing belongs to the intended company before relying on this summary.
Business context and reporting period
This unaudited quarterly report covers the quarter and six months ended June 30, 2020; it was filed August 5, 2020. Calyxt describes itself as an agricultural biotechnology company focused on plant-based products and gene-editing technology. Its commercial products included high-oleic soybean oil and meal, with a strategy centered on seed sales and licensing. Cellectis owned 68.7% of Calyxt’s common stock as of June 30.
Key financial metrics
Amounts below are in U.S. dollars; financial statement figures are in millions unless otherwise noted.
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $2.307 | $0.408 | $4.684 | $0.566 |
| Gross profit (loss) | $(3.014) | $0.105 | $(4.521) | $0.229 |
| Gross margin | -131% | 26% | -97% | 40% |
| Operating loss | $(11.038) | $(9.492) | $(21.694) | $(17.015) |
| Net loss | $(10.902) | $(9.403) | $(21.965) | $(16.778) |
| Adjusted EBITDA loss (non-GAAP) | $(6.509) | $(6.627) | $(14.757) | $(12.295) |
| Basic and diluted loss per share | $(0.33) | $(0.29) | $(0.67) | $(0.51) |
Adjusted gross margin, a non-GAAP measure, was -34% in Q2 2020 versus -69% in Q2 2019, and -42% for the first half versus -54% in the prior-year period. The company reported that this measure adjusts for specified inventory valuation effects and prior-period grain costs; it is not a substitute for GAAP results.
- Cash and liquidity: At June 30, cash and cash equivalents were $3.875 million, short-term investments $29.942 million, and restricted cash $1.433 million—$35.250 million combined. Current liabilities were $4.649 million. The company said available cash, cash equivalents, and short-term investments could fund short-term obligations.
- Cash flow: First-half operating cash use was $25.659 million, versus $15.870 million in 2019. Investing cash use was $30.459 million, including $29.942 million moved into short-term investments. Financing provided $1.388 million, including a $1.518 million Paycheck Protection Program (PPP) loan.
- Debt and leases: The balance sheet reported $1.518 million of long-term debt, the PPP loan, and financing lease obligations totaling $18.470 million, including $0.361 million current. The PPP loan bears 1% interest, matures in April 2022, and may be forgiven subject to program requirements; forgiveness was not assured.
- Balance sheet: Total assets were $67.961 million, total liabilities $24.408 million, and stockholders’ equity $43.553 million. Accumulated deficit was $144.022 million.
Material changes versus the prior comparable period
- Revenue rose substantially from a low base, driven by increased sales volume and product mix; lower soybean meal prices partly offset the increase. Most 2020 oil revenue came from one customer, whose remaining orders were expected to be fulfilled over the next three months.
- Gross margin deteriorated sharply. Management attributed this to commercialization and processing costs, COVID-related price and volume pressures, and inventory valuation adjustments. The filing cites inventory adjustments of approximately $3.2 million for Q2 and $4.2 million for the first half in its discussion, while its non-GAAP reconciliation lists different adjustment amounts. See investor verification items below.
- First-half net loss widened by $5.187 million year over year. Operating cash use increased by $9.789 million, with higher losses and operating-asset use, including inventory, contributing.
- Operating expenses totaled $8.024 million in Q2, down from $9.597 million, principally reflecting lower general and administrative expenses and Cellectis management fees. For the first half, operating expenses were nearly flat at $17.173 million versus $17.244 million.
- Cash, cash equivalents, and restricted cash fell to $5.308 million from $60.038 million at year-end 2019; the company had also invested $29.942 million in short-term securities. Combined cash, investments, and restricted cash were $35.250 million at quarter-end.
Outlook, management commentary, risks, and unusual items
- Management expected quarter-end cash, cash equivalents, short-term investments, and restricted cash to fund operations for at least 12 months and into 2022, based on expected expense reductions, soybean strategy execution, and partner-related receipts. The company also expected losses for several years and said future financing needs could require equity, debt, government, or commercial funding.
- On August 4, 2020, Calyxt approved advancing its soybean business to a streamlined model, reducing its soybean processing and product-sales roles. It expected about $0.6 million in cash severance and related charges, a $0.9 million non-cash stock-compensation recapture, and another $0.5 million of cash charges over 12 months to exit contracts. The contracted-grain wind-down was expected to take about 12 months.
- The company had sold 300,000 bushels of contracted 2020 soybean crop to a processor. The processor would retain rights to process and sell the oil; Calyxt would purchase and market the meal. The company expected its streamlined approach to reduce selling and supply-chain costs, while research and development expenses could increase moderately.
- COVID-19 had caused price, demand, and supply dislocations, although management reported some recovery in premium oil and meal markets during Q2. A resurgence, restrictions, supply-chain disruption, or difficult capital markets could undermine recovery and access to financing. Management reported no material delays to research programs or seed distribution at the time of filing.
- A significant portion of high-fiber wheat plants had been lost in field trials after improper aerial chemical applications by unaffiliated third parties. Management said the remaining crop could have lower agronomic or functional quality, potentially affecting launch scale and regulatory timelines, and reported pursuing recourse.
- Other risks include reliance on licensees for commercialization and royalties, possible restrictions from exclusive licenses, commodity-price exposure, customer concentration, execution of the new business model, and the $34.2 million in grain and seed purchase commitments reported as of June 30. The company reported no material pending legal proceedings and no material changes to previously disclosed risk factors other than newly described licensing risks.
Important facts for investors to verify
- Confirm that this Calyxt filing—not a Cibus filing—is the intended document.
- Reconcile the inventory valuation adjustment figures: the narrative reports approximately $3.2 million for Q2 and $4.2 million for the first half, while the non-GAAP reconciliation shows $2.221 million and $2.555 million, respectively.
- Track execution and costs of the August soybean-business transition, including the grain-contract wind-down, customer orders, and expected cash savings.
- Monitor liquidity and cash burn against management’s stated runway, including whether forecast partner receipts and expense reductions occur and whether additional financing is needed.
- Verify the outcome of the PPP loan-forgiveness application and the status of high-fiber wheat field-trial impacts and any related recourse.