Roseville, Minnesota, USA
November 6, 2019

• Q3 High Oleic Soybean Product Revenue of $3 Million Represents Highest in Company History
• Reiterates 2019 Annual Revenue Guidance of $7 Million to $8 Million
• Operational Savings Expected to Extend Cash Runway to Mid-2021
• Over 70,000 2020 Acres Contracted as of October 31, 2019

Calyxt, Inc. (NASDAQ: CLXT), a plant-based technology company focused on healthy food ingredients, has reported results for its third quarter ended September 30, 2019.

Key Third Quarter and Subsequent Highlights

• Revenue increased to a record $3.0 million in the quarter, driven by increased sales volumes of High Oleic Soybean Meal and Calyno® High Oleic Soybean Oil to our growing customer base.

• Sysco’s customer count is now above 60 for Calyno High Oleic Soybean Oil.

• Continue to maintain our 2019 revenue forecast of $7.0 million to $8.0 million as the crush and sales plan we have in place for the fourth quarter is expected to deliver achievement of our guidance. 

• Completed purchase of all remaining grain from the 2018 harvest.  

• Net cash used in all activities for the third quarter of 2019 was $10.0 million, substantially in line with previously announced financial guidance of $3.0 million to $3.25 million per month.

• Cash and cash equivalents totaled $66.4 million as of September 30, 2019.
  • Operational savings expected to extend cash runway to mid-2021.
• 2020 contracted acreage target for High Oleic Soybeans remains at 100,000 acres, an increase from 36,000 planted acres in 2019 and on track to achieve our goal of doubling contracted acres annually.

• As of October 31, 2019, we had contracted more than 70,000 acres for 2020.

• We will offer five new soybean varieties to support our geographic expansion and acreage growth in 2020.

• We continue to develop products in our R&D pipeline as well as R&D exploration in canola, hemp, oats, peas, peanuts, potatoes, soybeans and wheat, reaffirming Calyxt’s position as an innovation platform.
  • Product development efforts are focused on wellness, plant-based proteins and sustainability.
  • We are exploring potential collaborations with third parties for product ideas as part of an expanded go-to-market strategy.
• Partnered with Landus Cooperative, the sixth largest grain company in North America based on storage capacity, to expand our geographic footprint for acreage growth and weather-risk diversity by adding Landus’ seed distribution, agronomy support, grain storage and transportation services for our High Oleic Soybeans.
• Strengthened leadership team to support commercial growth opportunities with the appointments of:
  • Keith Blanks to the newly created position of Senior Vice President of Sales and Marketing with a focus on driving sales growth of Calyno soybean oil to food manufacturers, foodservice distributors and operators, and other channels.
  • Manoj Sahoo as Chief Business Development and Supply Chain Officer, focusing his efforts on the development of strategic collaborations for our product candidates and the continued development and optimization of our supply chain.

Management Commentary

“The third quarter of 2019 was marked by a highly encouraging level of market acceptance and growing interest for our proprietary High Oleic, premium soybean oil and our first commercial product,” said Jim Blome, Chief Executive Officer. “We are expanding our geographic footprint and generating weather-risk diversity by growing 2020 acres, bringing five new varieties to market and adding Landus’ seed distribution and agronomy support for our High Oleic Soybeans.”

“The TALEN® technology, which powers our innovation platform, is particularly exciting, allowing us to produce a plant that is based on precise and targeted changes to its natural genome.  With our established processes we can develop a healthier food ingredient in a short amount of time relative to other development processes. Moreover, we believe we have an exciting product pipeline that we intend to advance over time either through our own commercial organization or in collaboration with other industry participants with established market access and scale,” continued Blome.

“Following our successful completion of a voluntary consultation with the Food and Drug Administration in February 2019, we launched our first commercial product, Calyno, which is a High Oleic Soybean Oil with zero grams of trans fat per serving, a reduced saturated fat content, low polymerization levels, and other unique benefits that make it particularly attractive in multiple food manufacturing and foodservice applications.”

“Additionally, one of the world’s largest food service distributors, Sysco, took notice of the strong introduction and currently stocks and sells Calyno to its customers. Sysco’s customer count is now above 60 as commercial kitchens recognize the ROI possibilities that our oil can bring to their bottom line with up to 3X fry life and less varnish compared to commodity oils. Our research indicates that oil is one of the largest drivers of food costs in many restaurants and that the foodservice oil market is a $7.6 billion market segment, representing a large addressable market. We also see progress with food manufacturing, as large-scale industry participants accelerate their testing of specific applications of our oil. This $4.7 billion market segment is particularly appealing because our technology can deliver key characteristics like high stability, long shelf life and low polymerization,” explained Blome.

“To power Calyno’s growth trajectory, we have built out our supply chain – partnering with nearly 175 farmers in the Upper Midwest to grow our proprietary soybeans. Our collaboration with Agtegra, a farmer-owned grain and agronomy cooperative with more than 6,300 active member-owners in eastern North and South Dakota commenced in early 2019 and positions Calyxt with seed distribution, agronomy support, grain storage and transportation services. During the third quarter, we engaged Landus to increase our geographic footprint for acres by adding their seed distribution, agronomy support, grain storage and transportation services in Iowa. With the addition of Landus to our geographic footprint, we now have reach to 40% of the soybean acres grown in the United States. Based on these developments and our current progress, we are reiterating our 100,000 contracted acre target for 2020, up from 36,000 planted acres in 2019.”

“We continue to drive our R&D pipeline and expand it to include R&D exploration in canola, hemp, oats, peas, peanuts, potatoes, soybeans and wheat, which advances our leadership position as an innovation platform. We also expanded our go-to-market strategy by seeking to develop collaborations with third parties for that innovation. We anticipate these collaborations will deliver new revenue streams and will drive the monetization of our technology platform,” said Blome.

“From an operating perspective, we have assembled a strong leadership team to drive the business and are adding strategic hires to the team. We are seeing additional revenue opportunities as well as strategic opportunities for our product pipeline. We are excited to deliver healthier food and food ingredients to consumers and I look forward to leveraging our first-mover advantage and cutting-edge technology to create long-term, sustainable value for our shareholders,” concluded Blome.

Third Quarter 2019 Financial Results

• Revenue in the third quarter of 2019 increased to a record $3.0 million, primarily driven by scaling crush activity, generating sales momentum in soybean oil through foodservice distribution and continued testing with large food manufacturers.
• R&D expenses in the third quarter of 2019 were $3.6 million, compared to $3.4 million in the third quarter of 2018. The increase in R&D expenses is primarily due to an increase in non-cash stock compensation expense of $567,000, a reversal of payroll tax benefits that are no longer realizable of $536,000 and the addition of personnel. R&D expenses for the third quarter of 2018 included $1.1 million of grain costs we incurred prior to our commercialization in the first quarter of 2019, which affects the comparability of R&D expenses year over year.  
• SG&A expenses in the third quarter of 2019 were $6.2 million, compared to $3.3 million in the third quarter of 2018. The increase was driven by higher non-cash stock compensation costs of $1.6 million, increased personnel costs of $880,000 and an increase in professional fees expenses of $455,000. The increases in personnel costs and professional fees are partially offset by a reduction in the management fees we paid Cellectis, as we completed the internalization of nearly all services previously provided by Cellectis as of September 30, 2019.
• Net cash used in the third quarter of 2019 was $10.0 million, substantially in line with previously announced financial guidance of $3.0 million to $3.25 million per month.
• Net loss for the third quarter of 2019 was $10.7 million, or $(0.32) per basic and diluted share, compared to a net loss of $7.5 million, or $(0.23) per basic and diluted share, in the third quarter of 2018. The increase was driven by higher non-cash stock compensation expenses of $2.1 million and costs associated with the launching our first products in 2019.
• Adjusted EBITDA, a non-GAAP measure, increased to a loss of $6.9 million for the third quarter of 2019 from a loss of $6.4 million in the third quarter of 2018 driven by increases personnel costs, as the costs of commercialization in 2019 were largely offset by reductions in grain costs expensed as R&D in 2018. See below under the heading “Use of Non-GAAP Financial Information” for a discussion of Adjusted EBITDA and a reconciliation of Net Loss to Adjusted EBITDA, the most comparable GAAP measure.

• Cash and cash equivalents totaled $66.4 million as of September 30, 2019 compared to $93.8 million as of December 31, 2018.

“I am pleased with our cash usage trajectory in the third quarter of 2019,” added Bill Koschak, Chief Financial Officer of Calyxt. “We have largely completed investing in our G&A platform required to scale the organization. Future investments are expected to be in R&D as we grow our pipeline and collaboration projects, and in sales, supply chain, quality and food safety to support growth in our soybean product lines. We reiterate our prior FY2019 financial guidance of $7 million to $8 million in revenue and $3 million to $3.25 million in cash usage per month.

“Taking into account our anticipated usage going forward, including operational savings we have identified, I believe our cash position will be sufficient to fund operations to mid-2021,” concluded Koschak.

Website: http://www.calyxt.com

Published: November 7, 2019