Roseville, Minnesota, USA
March 4, 2021

• Continued to Progress Development of Winter Oats and Hemp, Both Targeted at Large Addressable Markets
• Secured Commitment from ADM to Purchase Remaining 2019 Grain Inventory and All 2020 Grain Production – Have Completed Sale of 40 Percent of 2020 Grain Crop
• Executed Commercial Agreement with S&W Seed Company on IQ™ Alfalfa Product, Marking Calyxt’s First Trait License Agreement

Calyxt, Inc. (NASDAQ:CLXT), a plant-based technology company, has reported its financial results for the fourth quarter and full year ended December 31, 2020.

Commentary & Key Accomplishments

“I am excited to step in and lead Calyxt at this time,” said Yves Ribeill, Ph.D., executive chairman. “On behalf of the Board, we want to thank Jim Blome for guiding Calyxt to a streamlined business model that can capitalize on delivering disruptive, plant-based innovations. He led Calyxt to a strong 2020, redirected Calyxt’s innovation engine toward new and high-value opportunities and built a team with the right talent mix to drive Calyxt’s go-to-market strategies, positioning Calyxt for growth – we wish Jim all the best in his future pursuits. This action represents a continuing step to focus Calyxt on significant innovation opportunities beyond commodity-based agriculture,” concluded Dr. Ribeill.

“The fourth quarter of 2020 and early 2021 was marked by several major achievements that will drive Calyxt’s performance and demand our focus over the next several quarters,” said Bill Koschak, CFO of Calyxt.

The key 2020 accomplishments include:

• Continued development of our winter oat projects, which target the growing food and feed oat markets as well as for use as an alternate-season cover crop. We believe our oat projects could support climate resilience, making oats more competitive economically and able to be grown in new regions of the continent, and over the longer term, in additional regions of the world. Projects in oats are expected to deliver sustainability benefits once they become available for commercialization, expected as soon as 2026.
• Continued development of our projects in hemp, which target the protein, nutraceutical, fiber, and advanced materials markets. Our first efforts are focused on standardizing the crop for broad acre adoption and modernizing the breeding process. Projects in hemp are expected to provide benefits to growers and others in the crop’s supply chain once they become available for commercialization, expected as soon as 2024.
• Securing a commitment from ADM to purchase our entire high oleic soybean 2020 grain production. As of today, we have sold 40 percent of the 2020 grain crop to ADM, with the remaining grain projected to be sold throughout 2021.
• An initial validation of Calyxt’s product development and trait licensing go-to-market strategy with the execution of a trait license agreement for Calyxt’s alfalfa product candidate to S&W Seed Company. This agreement represents an important milestone in the execution of Calyxt’s go-to-market strategies, and it also demonstrates Calyxt’s ability to work collaboratively, choose traits to enhance value, perform the research and development to ensure success, and support a large partner in bringing advanced plant science to market.
• The fortification of the balance sheet through the completion of a capital raise that netted Calyxt $14.0 million of proceeds and extended the company’s cash runway into the second half of 2022.

2021 subsequent events include:

• Entered into an agreement with Perdue AgriBusiness, an independent operating unit of Perdue Farms, ranked among the largest grain companies in the U.S., for the sale of soybean seed in 2021 that meets Perdue’s growing region specifications.
• Appointed Yves Ribeill, Ph.D. as Executive Chair to serve in this role while Calyxt undertakes a search for a new CEO to replace Jim Blome.
• Completed appointments of world-renowned plant-biochemistry experts including Anne Osbourn, Ph.D., Group Leader at the John Innes Center; Elizabeth Sattely, Ph.D., HHMI Investigator and Associate Professor of Chemical Engineering at Stanford University; and Paul Bernasconi, Ph.D., Former Global Function Head for Molecular Biology at BASF Biosciences, to new Scientific Advisory Board chaired by Calyxt Co-Founder Dan Voytas, Ph.D. The Calyxt Scientific Advisory Board will focus on the identification of product candidates with the potential to be valuable disrupters to their target markets.

“In August, we announced our three go-to-market strategies that greatly reduced the investment required to bring product candidates to market,” said Koschak. Those strategies are seed sales, trait development and technology licensing. Our trait license with S&W Seed Company and our seed sale agreement with Perdue AgriBusiness are two great examples of those go-to-market strategies at work.”

Current Development Pipeline

We have nine projects at Phase 1 Stage or later in development across alfalfa, hemp, oats, soybeans, and wheat.

1The agronomic and functional quality of our product candidates and the timing of development are subject to a variety of factors and risks, which are described in our filings with the Securities and Exchange Commission.

Calyxt is also actively negotiating agreements with potential partners with respect to specific opportunities for which development activities would only commence upon reaching a definitive agreement. These projects are not included in the preceding table.

Other Full Year 2020 Operational Highlights

• Patent portfolio continued to grow with 10 new patents issued, including patents covering the use of TALEN and CRISPR gene editing technologies in plants, and multiple new patent applications were filed.
• Collaborated with NRGene® to advance product pipeline, including adoption of NRGene’s cloud-based genomics platform to allow for more comprehensive evaluations to accelerate trait discovery and breeding across multiple crops.
• Appointed Sarah Reiter as Vice President of Business Development focusing on establishing world-class partnerships and value chains that lead to the successful commercialization of emerging technologies for companies of all sizes.
• Calyxt’s HOLL soybean was deemed a non-regulated article under the “Am I Regulated?” process by the Biotechnology Regulatory Services of the Animal and Plant Health Inspection Service (APHIS), an agency of the United States Department of Agriculture (USDA). This product represents our second-generation high oleic soybean.
• Released our non-edited hemp germplasm by selling plants directly to a grower, driving several thousand dollars of revenue. This quick commercial success is an early step in making our hemp projects partner-ready, enabled the gathering of valuable insights and data, and is expected to serve as the base germplasm for the development of other hemp projects expected to launch as early as 2023.
• Licensed a new method to help increase product development efficiency from the University of Minnesota. The method has the potential to reduce the time needed to edit plants from approximately one year to several months.
• Appointed Bobby Williams, Ph.D. to the newly created role of Director of Gene Editing to further expand Calyxt’s innovation, product pipeline, and trait discovery efforts and inform product advancement decisions.

Summary

“To enable us to retain our focus as a technology company with product concepts targeted at large addressable markets, we advanced the go-to-market strategy for our soybean product line and subsequently sold 40 percent of our 2020 grain production to ADM,” said Dr. Ribeill. We believe this advancement will enable us to accelerate growth through partners for soybean products versus the pace of cash generation we could have achieved on our own. Today, we see immense opportunities across our portfolio, including in food, nutraceutical, energy, and agriculture. Our plan is to develop projects with partners that leverage our strengths in trait development and gene editing and our partners’ product commercialization expertise. Discussions with potential partners have focused on our development of plant-based input solutions for specific downstream issues, including consumer preferences, sustainability, cost, quality, and regulatory compliance. We believe the necessary steps made in 2020 now strategically position Calyxt for growth and delivery of shareholder value in the years to come.”

Fourth Quarter Financial Highlights

• Revenue was $13.9 million in the fourth quarter of 2020, an increase of $10.2 million, or 270 percent, from $3.8 million in the fourth quarter of 2019. The revenue growth was driven by sales of grain in fourth quarter of 2020, as well as the liquidation of all soybean oil and meal inventories. The sales of grain in the fourth quarter of 2020 were $11.8 million and represent approximately 40 percent of the 2020 grain crop.
• Gross margin was a negative $4.9 million, or a negative 35 percent, in the fourth quarter of 2020, a decrease of $3.3 million from $1.7 million, or a negative 44 percent, in the fourth quarter of 2019. Gross margin percentage improved by 900 basis points year-over-year. The improvement in gross margin percentage in the fourth quarter of 2020 reflects the impact of our change in go-to-market strategy for the soybean product line and a reduction in net realizable value adjustments to inventories of $0.5 million, partially offset by $1.7 million of unrealized losses on commodity derivatives from hedging contracts sold to convert our fixed price grain inventories and fixed price Forward Purchase Contracts to floating prices, consistent with how we expect to sell the grain.
• Adjusted gross margin was negative $3.9 million, or negative 28 percent, in the fourth quarter of 2020, as compared to negative $1.6 million, or negative 43 percent, in the fourth quarter of 2019. The 1,500 basis point improvement was driven by the impact of our change in go-to-market strategy for the soybean product line.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted gross margin and a reconciliation of gross margin, the most comparable GAAP measure, to adjusted gross margin.

• Total operating expenses were $8.1 million in the fourth quarter of 2020, a decrease of $2.2 million, or 22 percent, from $10.3 million in the fourth quarter of 2019, driven by operating expense declines from the change in go-to-market strategy for our soybean product line and other operating expense reductions in General & Administrative expenses, partially offset by restructuring costs of $0.2 million. Restructuring costs include the impact of severance and other expenses resulting from the action we initiated in August 2020 to advance our soybean product line go-to-market strategy. We do not anticipate any further restructuring costs from this action.
• Net loss was $13.4 million in the fourth quarter of 2020, an increase of $1.2 million, or 10 percent, from $12.2 million in the fourth quarter of 2019. The increase was driven by the increase in negative gross margin partially offset by the decline in operating expenses. Net loss per share was $0.37 in the fourth quarter of 2020, equal to the net loss per share in the fourth quarter of 2019, as the higher net loss was offset by higher weighted average shares from our successful capital raise in the fourth quarter of 2020.

Adjusted net loss was $12.0 million in the fourth quarter of 2020, essentially flat with the fourth quarter of 2019. The slight increase was driven by the increase in negative adjusted gross margin which were nearly fully offset by the decline in operating expenses. Adjusted net loss per share was $0.33 in the fourth quarter of 2020, an improvement of $0.04 per share from an adjusted net loss per share of $0.37 in the fourth quarter of 2019 driven by higher weighted average shares from our successful capital raise in the fourth quarter of 2020.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted net loss and adjusted net loss per share, and reconciliations of net loss and net loss per share, the most comparable GAAP measures, to adjusted net loss and adjusted net loss per share.

• Adjusted EBITDA loss was $9.8 million in the fourth quarter of 2020, an increase of $1.2 million, or 14 percent, from $8.6 million in the fourth quarter of 2019. The increase was driven by the change in net loss.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted EBITDA and a reconciliation of net loss, the most comparable GAAP measure, to adjusted EBITDA.

• Net cash provided was $9.7 million in the fourth quarter of 2020, an increase of $17.6 million, from net cash used of $7.9 million in the fourth quarter of 2019. The increase was driven by $14.0 million of net proceeds from our capital raise in the fourth quarter of 2020 and $9.1 million of proceeds from the sale of short-term investments, partially offset by a $2.8 million net increase in cash flows used by operating assets and liabilities, primarily from activity related to our soybean product line, a $1.2 million increase in net loss, and a $1.3 million decrease in non-cash stock compensation expense. As of this date, we collected nearly all of our year-end accounts receivable.
• Cash, cash equivalents, short-term investments, and restricted cash totaled $30.0 million as of December 31, 2020.

Fiscal Year 2020 Financial Highlights

• Revenue was $23.9 million in 2020, an increase of $16.6 million, or 227 percent, from $7.3 million in 2019. The revenue growth was driven by the sale of a substantial portion of the 2020 grain crop and the completion of the sale of all soybean oil and meal during 2020. The sales of grain in 2020 were $13.0 million and included all remaining 2019 grain and seed and represent approximately 40 percent of the 2020 grain crop.
• Gross margin was a negative $11.3 million, or negative 47 percent, in 2020, a decrease of $9.3 million from $2.0 million, or negative 27 percent, in 2019. Gross margin percentage declined by 2,008 basis points year-over-year. The decline in gross margin percentage in 2020 was driven by the higher volume of product sold, the impact of lower costs associated with products sold in 2019 because $3.3 million of Grain Costs were previously expensed as R&D, $2.8 million of unrealized commodity derivative losses from futures contracts sold to hedge our fixed price grain inventory and fixed price Forward Purchase Contracts, and a $1.3 million increase in our net realizable value adjustment to period-end inventories including write-downs of excess seed produced for 2020 plantings. These increases were partially offset by higher selling prices and benefits from the advancement of our soybean product line go-to-market strategy.
• Adjusted gross margin was negative $7.2 million, or negative 30 percent, in 2020, compared to negative $4.5 million, or negative 61 percent, in 2019. The improvement on a percentage basis was driven by savings from the advancement of our soybean product line go-to-market strategy.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted gross margin and a reconciliation of gross margin, the most comparable GAAP measure, to adjusted gross margin.

• Total operating expenses were $32.6 million in 2020, a decrease of $5.1 million, or 14 percent, from $37.7 million in 2019, driven by operating expense declines from the change in go-to-market strategy for our soybean product line including $1.0 million from the recapture of non-cash stock compensation expense from the forfeiture and modification of unvested stock awards, lower stock compensation expense from fewer awards and lower award values, and other operating expense reductions in General & Administrative expenses, partially offset by restructuring costs of $0.7 million. Restructuring costs include the impact of severance and other expenses resulting from the action we initiated in August 2020 to advance our soybean product line go-to-market strategy. We do not anticipate any further restructuring costs from this action. The same period in 2019 also included $0.4 million of expense to write off R&D tax credits that were no longer realizable.
• Net loss was $44.8 million in 2020, an increase of $5.2 million, or 13 percent, from $39.6 million in 2019. The increase was driven by the increase in negative gross margin partially offset by the decline in operating expenses. Net loss per share was $1.32 in 2020, an increase of $0.11 per share from a net loss per share of $1.21 in 2019, driven by the higher net loss.
• Adjusted net loss was $40.3 million in 2020, essentially flat with $40.5 million in 2019. Adjusted net loss per share was $1.19 in 2020, an improvement of $0.04 per share from an adjusted net loss per share of $1.23 in 2019 driven by higher weighted average shares from our successful capital raise in the fourth quarter of 2020.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted net loss and a reconciliation of net loss, the most comparable GAAP measure, to adjusted net loss.

• Adjusted EBITDA loss was $31.6 million in 2020, an increase of $1.8 million, or 6 percent, from $29.8 million in 2019. The increase was driven by the change in net loss.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted EBITDA and a reconciliation of net loss, the most comparable GAAP measure, to adjusted EBITDA.

• Net cash used was $41.7 million in 2020, an increase of $6.4 million from $35.3 million in 2019. The increase was driven by the purchase of $11.7 million of short-term investments, the increase in net loss, a $4.2 million decrease in non-cash stock compensation expense, and an increase in cash flows used by operating assets and liabilities of $4.2 million, primarily from activity related to our soybean product line. These drivers were partially offset by $14.0 million of net proceeds from our capital raise.

CFO Summary

“From a cash perspective the fourth quarter of 2020 was highlighted by the significant progress we made transitioning our soybean products to a seed go-to-market strategy, our capital raise, and achieving planned reductions in operating expenses,” said Koschak.

“We completed the sale of all soybean oil and meal, exited nearly all soybean processing and transportation contracts, and sold approximately 40 percent of the 2020 grain crop. Our 2021 seed production is complete, and we are anticipating the sale of seed in 2021 based on what we have available that matches our potential customers’ targeted growing regions.”

“During the fourth quarter we completed a capital raise with net proceeds of $14.0 million. Investors in the SEC-registered, direct capital raise included Cellectis, our largest shareholder, and new institutional investors. We believe the support of Cellectis and our new shareholders is a testament to our new strategic direction and enables Calyxt to execute on our current business plan,” continued Koschak.

“Our operating expenses also declined in the fourth quarter, as a result of the benefits of the soybean transition and other actions we have taken to reduce costs to our targeted 2021 operating expense cash burn rate of $25 million or less,” concluded Koschak.

About Calyxt:

Calyxt (NASDAQ: CLXT), based in Roseville, Minnesota, is a technology company with a mission to deliver plant-based innovations for a better world. Founded in 2010, Calyxt uses its proprietary TALEN® gene editing technology to work with world-class partners via technology licensing, product development, and seed sale arrangements to revolutionize the way the world uses plants to solve problems. For further information, please visit our website at www.calyxt.com.

Website: http://www.calyxt.com

Published: March 4, 2021