Q2 2020 Yield10 Bioscience Inc Earnings Call
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Greetings welcome to the second quarter 2020 financial results update conference for years, you'll tend biofire.
During the call participants will be in listen only mode.
I will address questions from analysts today, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded Oh, no. That's kinda conference over to your host yields had vice president of planning and corporate communications when Rob. Thank you Ma'am you may now begin.
Thank you Donna and good afternoon, everyone welcome to yield 10 biased <unk> second quarter 2020 conference call.
Joining me on the call today, our president and CEO Dr. older people, Vice President of research and Chief Science Officer, Dr., Christy smell and Chief Accounting Officer, Chuck has or.
Earlier this afternoon Yelp Chen issued our second quarter 2020 financial result.
The press releases, while slides to accompany todays presentation are available on the Investor Relations section of our website at <unk> Dot com.
Let's turn to slide you.
Please note this part of our discussion today management over making forward looking statements. These statements are not guarantees of future performance and therefore, you should not place undue reliance on them.
Investors are also caution that statements are not strictly historical constitute forward looking statements such forward looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.
The risks include risks uncertainties detailed aneel tons filings with the FCC, including the company's most recent 10-K.
The company undertakes no obligation to update any forward looking statements in order to reflect events or circumstances that may arise. After the date of this conference call.
Now turn the call over to only.
Excellent.
Hi, everyone and thanks for joining our call.
So David will provide an update on the solid progress we have made against their R&D and business objectives, such as top 2020 is putting a research license with G.M. seats.
Christine will then review this thought it's about 2020 field test program.
Some recent R&D activities.
I'll now provide an update on our Camelina business pipeline progress review the financials.
To summarize our key milestones for 2020, well then open the call to questions from analysts.
Well, let's go to slide three or business profile.
Most of you know Yeltsinism agriculture Biossance company.
Innovations for sustainable food security.
This concludes performance trades for licensing and major food crops, where we are building relationships with major activities.
Variety or something else it kind of a leader.
Or kind of leave activity is core to our trade you discovery process and our platform for producing nutritional oils pitchy by materials.
The strong leadership team of operations, and we were masked himself to Canada.
Now, let's turn to slide four recent accomplishments.
It made considerable progress since our last call and only me.
No I would highlight some of her accomplishments.
We completed plotting for Tony Tony Field Test program, which Chris will discuss in more detail.
During second quarter, we submitted a highly regulated letter of inquiry to U.S.. The Apis purchased 33007 oil content boosting trade.
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This is our for submission to the agency significantly or first in the major crop.
Earlier today, we announced we signed the research agreement with G. M prove all years ago seven of our performance Straits elite soybean varieties.
Yeah. There's obviously is in the Midwest as well in a large footprint in Brazil, and Argentina, where there are leading seed company. This experts ses and soybean genetics.
And Judy also Judy I've also talked to explore forming a border collaborations celebrity Hilton screen treating discovery platform and Gtlds rapid trade editing capabilities, we Friday the soybean.
The discovery development at launch a novel soybean performance States.
I'll provide some more detail and G.M. later on this call.
We took additional steps to developing it that's the kind of leaner business.
We are developing proprietary advance varieties of kind of Luna for winter and spring planting provide us with core commercial lines.
Ploy stocking for pharmacy products rates.
I will enable us to increase acreage that's actually what the crop.
Canadian team executed the field taskbar, which are camelina varieties, and the 2900 2020 Caesar and the emeritus data looks very good.
You had experience with establishing the value chain, we contracted 50 acres of Camelina production or matata. The drop is being harvested soon will enable us to produce oil and meal samples for potential customers.
Moving forward to 2020 to 2021.
Look forward to generating additional proof points, forming strategic alliances.
The next to getting our business plan.
Well, let's start dislike flight for an update our cold at 19 business continuity plot.
First a big types of course are employees for keeping our business on track through the ongoing pandemic.
And we weren't Mascus Hubert talked to work on site in late May have a staggered schedule.
Pivoted to develop and working families implementing new technologies to accelerate trade a product development.
The substitute R&D team is focused on monitoring feels to us the progressing traits to your company in a pipeline.
He was a continuing travel restrictions realignment relying on video conferencing local consultants to monitor some field trials.
And second quarter, we secured U.S. kids I PPP that Cadeighty, Iraq dry funding puts a 47 payroll expenses.
Lastly.
Our business development and Investor Relations activities continue in virtual Colorado, we continue to unproductive interactions with the business development sites as we focus and so I think on various business relationships.
On the Investor front, we are holding one on one virtual bidding to looking forward to participating in the L.P. micro virtual conference on September 1st on the H.C. Wainwright Global Investor Conference on September 14.
Now, let's turn to slide six Okay factory business opportunities.
You will tighten straight factory is made up of great proprietary paging discovery platform.
Genetic modification of the changing targets Cavalier kind of leader.
Fuel testing to generate performance data.
Now, let's turn to slide southern business opportunities.
Not only not feel due to underperformance of trace in April three distinct commercial opportunities. The first is licensing or yield and performance straight through use of major grow crops corn, soybean canola and other crops secrete option value for our trades and most important large acreage global cross spirited feet crops.
Second this product sales based on our Catalina platform for producing nutritional oils in the near term.
Specialty oils in peachy biomaterials into future.
Strategic goal here is to develop the foundation for the Catalina products business and the capital efficient manner, and then build onto that.
Higher value products.
The third collaboration agreements for access to ore grade platform portray targets.
I'd like started to slide eight they progression major crops.
So thats, a you'll tend to capture value from illustrates the logic or crops like soybean corn canola mystery licensing to leading seed companies. So yields has executed a number of nonexclusive research license agreement with majors to progressive trades in specific troughs.
The option to negotiate a commercial license.
Yes. It is on the slide indicate the tournament the research license to us.
What's the Judy M.C. Johnson you research license, we have already GTM to the group of major companies working with of traits in different crops.
GBM as a group of multinational companies Bartenstein origin dedicated to the research development and commercialization of new varieties of soybeans and other crops to maximize productivity.
M. supplies around 25% of global soybean genetics.
750 employees they have a presence in 15 countries, including Argentina, Brazil, Paraguay, the United States in Canada.
South America is around 130 million acres of soybean located primarily in Brazil, Argentina Barbara.
The leader.
With the R&D program planned budget, the ambition to feel data and the 2022 timeframe were consistent with our licensees.
Yuletide is currently progressing trace of color on canola applies to identify pockets for these important north American commercial crops.
Focus or internal resources on fate discovery as Camelina development.
Let's turn to slide nine let's traits in development.
Great licensing can be a very lucrative revenue source the model for sharing trade volume is well understood in the industry.
It does however, take somebody for progress to generate data to enable commercial licensing discussions. So we don't control those timelines.
At the same time oilseed camelina.
A key component of our street factory as high potential isn't your crop.
Progressing testing illustrates the field stage and kind of provides us with the direct route to improve varieties basically a product hopefully.
I'd like to major crops with kind of what we do have the opportunity to participate fully in the business and I will discuss the commercial opportunities on the likely sequence of development later in this presentation.
On the job, it's clear that we believe using common unit to produce proprietary products.
Including specialty oils appear to biomaterials has very high revenue potential.
I'll now turn the call with the Christie.
Thanks Ali and good afternoon, everyone, let's now turn to slide 10.
The objective of our 2020 field tests is to generate multi site you'll data to further characterize our trade.
Identify commercial quality line and to obtain data to drive partnership discussions and our products business plan.
In the second quarter, we completed planning at our multiple field test sites in the U.S. in Canada.
We've included photos from two of our yield on the right side of the slide.
These photos were taken in early July when both the Camelina in canola trials were flaring.
So far the weather conditions and favorable for growth of both our candles and can all the line.
Some of the trials will be ready for harvesting and our contractors will continue harvesting sites as they are ready over the next month or so.
In Canada, we in our goal is to take in the performance data fabric trade designed to increase oil he killed or to produce tha biomaterials.
We are testing or CRISPR see 3007 straight designed to proceed oil content and candidly and that's the first time this year.
We're also conducting a bulk up for Chris for edit it oil content trait line E. Three nine cable.
We reported encouraging increases in oil content in our 29.
He screen I know too and this year, we are producing deal and grown seed for larger tests in 2021.
We're also testing to see 3004 I cannot.
Very promising he deal trait.
Just increased bigger branching and yield and greenhouse from plans.
And showed evidence a bigger and increase photosynthesis than prior built up.
Here, we plan to obtain yield yield and oil content data.
Reaches measurements conducted by our researchers during this year's field trial suggests it.
Has increased and multiple see 3004 lines.
We're also testing RPK Barb I on material trades he 3014.
I wasn't 15 in yield the first time to evaluate the co production of PHH and oil in the seat.
The purpose of this trial to determine if Steve first generation Phd lives are suitable for larger scale planting next year can begin tha product prototyping.
In our field tests of canola in Canada. Our goal is to generate data with our trade. So this important food oil crop to drive partnership discussion.
We are testing this phase 3004, Tritan canola for the first time to determine it increases observed and camelina translate to canola.
We're also bulking up he'd for 14, new commercial quality seems to be Thousandthree can all aligned as an extension of our prior work were testing it early canola lionsgate increases and he deal of up to 10%.
We plan to evaluate these lines field studies indicate your trial.
Our 2020 field test program is our largest and most extensive yet.
The data and eight harvest from this program will help us advance our working Camelina and may provide licensing opportunities and canola and other major crops.
Let's now turn to slide 11, which outlines our 2020 R&D priorities.
Completing our 2020 field trials remains our top R&D priority.
In addition to this work we are conducting additional activities.
To support our Camelina business plan.
As you're aware, we had been using our camelina platform to identify and evaluate more than 15 actual performance traits for crops.
As we plan for the further development and eventual commercialization of products produced 10, camelina yield tenants developing core camelina varieties needed to successfully commercialized crop at large scale.
Over the last few years, we have worked with several varieties and are building on this work with the development of a bold happily right.
Varieties that will capture and sustain able genetics and performance as a platform for our trade.
Our team has developed a double haploid spring and winter variety. The spring varieties are included in our 2020 access program.
The winter varieties for tested in a study that started in late summer last year and were recently harvested.
We recently reported that the reemergence and survival of the winter variety after the snow melt with very good.
Oh No is included on this slide of the winter trial taken in May about six weeks after snow melt.
We also recently announced that we established 50 acres of wild type screen Camelina under contract with the grower in Montana.
This is a business development activity intended to provide us with experience in establishing the value chain are producing camelina at commercial scale.
The crop pictured on the right during the flowering stage. It has now reached maturity and it's driving down and will be artists in the weeks ahead.
Steve we expect to have oil aneel available for sampling to potential customers.
Our traits are also being tested by several AG companies and their lease term plaza.
And we'll be evaluating three of our traits and their soybean germplasm.
We're impressed with the GTM team will be providing them with the information and resources needed to deploy artery and test in their lead germplasm.
We continue to support air forage genetics, and simplot as they evaluate our treats and soybean forage sorghum and potato.
Our generation if you will test data with some of our near a tree may enable yield tend to expand the number of seed companies and crops, including Kindle and corn in what's your traits are being evaluated.
In Camelina, we're continuing to build a technology and business plan, the developing advanced commercial camelina varieties with yield and oil performance trades.
Complemented by trade for herbicide tolerance and disease resistance.
We're also working to develop commercial events for our PHH Camelina trait.
Our team is continuing to focus on generating technology proof point for our lead trades and to further develop our camelina technology for specialty products.
I would like our R&D team for their tremendous efforts. So far this year Ali back to you. So I would like to thank Chris the on the R&D team, whose dedication and persistence. We critical as we have executed the field tests in the last few months.
So turning to slide 12 or yield times Camelina platform.
We believe family represents an opportunity to develop a large high growth profitable business over the longer term as a winter cover crop to produce nutritional oils and PJ biomaterials.
In the near term, we see opportunities to launch of Camelina business using accounts online strategy based on its positive attributes for some growing areas using contract farming goal see crusher.
Some of the Tracy of developing talent like the high oil line between vital to our UK, let's see 3004 clear to the strategy.
As a result, we are beginning to execute our business development strategy for kind of lead us to gain experience and established the value chain with the goal of generating near term revenue in parallel with accelerating the deployment of advanced varieties and products.
Obviously camelina seat is typically cold crushed approves oil and protein meal, and you'll turn class to participate directly in the sale of these and province.
Oil is rich and the Omega three fatty acid delay in recent clinical studies indicate that oil, let's talk health benefits.
The higher content of the Omega three elsewhere like athletic asset make it a preferred oil for use of agriculture feet.
And the downtime, we believe that you'll turn is well positioned to become the leading player and Cavalier focused initially on production outside of the corn built to produce nutritional oil without having to compete head to head for acres with commodity crops.
In the longer term, our vision is to produce specialty oils and pitchy biomaterials as a third product for processing engineered camelina seat.
We achieved by materials on natural polymers with applications in a wide range of markets, including animal nutrition, we sort of treatment and as bio plastics.
Our goal is to be able to produce the achieved by materials from kind of Molina and the cost range of edible oils to enable the broad market adoption.
We plan to focus our internal efforts animal nutrition and water treatment applications.
Partners for the Bioplastics opportunity.
According to our internal engineering estimates, we would achieve a viable cost of goods through phs. If we can produce the parliament over 10% seat weight with good see deals.
So a lowest personally very exciting to see this program moved from the Blue Sky to the Greenfield we estimate it could take another two years to optimize commercial varieties.
Having said that we're highly confident we don't have the team the knowledge in the tools, including Mcclave drain platform to develop this into a disruptive technology I could plastics markets.
We believe kind of lead engineered to produce PJ biomaterials will be an attractive large acreage cashcall recall for farmers opening new markets, thereby improving farm income and the sustainability of food and feed production.
Please turn to slide 13, let's cover a few financial highlights.
We ended the second quarter was 8.5 million cash cash equivalents and short term investments.
In April we received a loan and among the 333 Posen under the payroll protection program implemented under the Cures Act response to covert 19.
We feel utilize the pharmacists for you as payroll in second quarter and intend to apply for loan forgiveness under the program.
We also obtained the Canadian Iraq granted that provides us additional 67000 and restart support.
Now turning to warrant exercises.
The first half at play 20, there were approximately 1.7 million warrant exercises, which added capital to our balance sheet.
We have no debt.
Our net operating cash usage was 2 billion for the second quarter and 4.3 million for the first top 2020.
We expect our cash on hand, together with expected revenue from our current government Grant will support our operations into the second quarter of 2021.
Given the PPP and Iraq funds as well as savings capture to the anticipated for the balance of play Tony We are lowering our estimate of net operating cash usage to the range of 8.5 to 9 billion from the previous range of 99.5 billion.
We are directing this investment toward executing the business fun.
Let's now review the second quarter operating results.
You reported a net loss of 1.8 billion for the second quarter play today compared to a net loss of 1.9 million for the second quarter of 29 team.
Total resource drive revenues in the second quarter of 2020 or 21 to the 21000 versus 380000 in second quarter total 90.
Our ability to conduct research or the theory drive was not affected the most significantly in second quarter.
We expect to be able to conduct the restart as planned the months ahead.
And the second quarter of 2020 research and development expenses were 1.2 million and GSK expenses are also 1.2 billion.
This compares to 1.2 million of R&D expenses on 1 billion of DNA expenses and the second quarter of 2019.
Like the end of May reconfigured our obligations, we released its your unused legacy space on all of us.
And first quarter, we subleased excess space that are Hubert facility.
Result, we will be capturing savings going forward and say today on our facilities costs.
Retaining sufficient space that are Ruben facility to drawer theme as needed.
For more details on our financial results. Please refer to the earnings release, I know second quarter 10-Q.
Okay.
Let's now turn to slide 14 to discuss our upcoming milestones.
And the remainder of Tony Tony We will continue to focus on the fallen milestones executing a place what a fuel testing program to generate.
It can yield data for Stevie thousand 400, Catalina advances genome editing oil boosting traits, including our Eathree idle to line on the 60000 Southern Cal along the lines recently cleared by Ustašas will also report results release studies and clients are probably 31.
Progressing our trades at quarter end could all libel suit seeking to secure partners supporting GDN. They are fortunate that simply in the evaluation of our shapes and their respective crops.
Also we progressing the telling the products business, Bob including developing advanced commercial varieties that I've heard illustrates the based heartsick forwards disease resistance on oil and yield traits.
So I would say agreements were logistics and Dorsey crushing to provide samples have been oil and meal for perspective suspected offtake partners developing relationships with growers. So enable our seed larger see bulk up an interest responses in the play into it 2021, Android season, finding success and business development.
Finally, securing strategic industry collaborations and revenue generation commercial treat licensees.
I thought it lets call it turned back to Lynn.
A question.
Thanks Ali.
Hi, Donna you can now poll for questions.
Thank you the floor is now open for questions. If you look like.
Ask a question that star one on your telephone keypad at this time.
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Once again I want to register questions at this time.
Our first question is coming from Ben Clevie of National Securities. Please go ahead.
Alright, Thanks for taking my questions first question on the GBM collaboration Christy I believe you side, but they'd be considering three traits.
First did I hear that correctly and if so what what trades are part of this collaboration.
You are correct. If there are three traits that we can't disclose what these traits are according to our agreement.
Okay got it on.
And then.
Overnight Camelina you guys highlighted the kind of the commercial trajectory here kind of throughout your prepared remarks, I'd like to hone in on one of the the.
Comment that was made the note that was made where the launch case on slide seven where you noted that the launch case.
Potentially 2021 or 2022 event.
Ali.
There is.
Seemingly a lot the need to happen between now and the launch in 2021 can you just kind of outlined kind of the steps that you think could realistically be taken to make this a commercially viable product.
In 2021.
Yes. So so there is already sometime lead up production.
We are well aware of who's doing.
With that so frankly speaking what it really requires a seat scale up and really that's the purpose of the 50 acres, we didn't onetime of this year.
As to make sure we have the seed available should we want to go down that path as soon as next year.
So that's that's the first second SAP is because the primary focuses on oil and meal and the early days, we also need to have oil and meal samples available for perspective customers. Because you will 10 actually does not bond to start.
Branding and marketing time lean oil with Internet. Our goal is to find offtake partners with us MBS capital efficient as you can.
Yes, so there's a lot of business development to go.
The reason that we're scaling up some of our utilize let eathree line or to some of the double hotlines is to also expands the availability of those seeds.
Next year as a means to have RG interests potential available in plenty 22. So there is a tremendous amount of business development activity going on.
And obviously the teams working very hard to systematically check off the ability to create.
And operate core contracts.
Villages that manage the sort of crushing.
On storage and handling of the automobile and obviously identifying potential offtake partners. We are getting interest from various regions interesting done camelina automobile.
Got it and so I guess as a follow up to that then I mean, if you have the harvest yours is is.
Looks looks to be on pace for for this month, which is great.
And you've had conversations with you know with offtake partners as a.
To to sample the oil.
Are there do you do have agreements in hand, whereby there will be.
Folks looking at your product once it's once its processed ore or is that agreement still to be determined.
Just to be determined because that's kind of a chicken and egg situation.
So basically hubs seed we can't get into the into the business of establishing a question contract. So we now have a very good understanding of where about how on the cost of doing that.
With us lined up we will obviously go to the next step.
The emphasis we have is really establishing these capabilities of our capital light weight, you're not going to try to acquire we experts that we know business, we have new products, including specialty oils and fee achieved by materials that really will represent the growth.
And the larger volume opportunities.
It takes time to get to those and so the purpose of establishing this is to make sure that we have the potential to deliver value here based on our Camelina platform in the near term based on the oil as it makes the day.
In the future with improved oils.
Some specialty materials full pitches.
Got it.
Perfect and then last one for me and I think I know the answer to that but.
Chris do you highlighted that the canola field trials were.
Yes, we're progressing progressing well on we've seen on industry reports that that's true for the crop as a whole, but I just I just want to be 100% clear here on on on Youre on the plots that are on the in the ground right now for canola is there any.
Are there any plot that your that youre concerned with regarding accessory and not enough rain anything of that nature and are we what are we right now working like this is a field trial that that is.
Really well set for four for harvest here in coming weeks.
And we had very good weather this year, but we still haven't harvest.
You know, there's still a little bit of whether it could add.
Very good weather, so far and we've been very pleased with the growth so far.
Got it okay very good wall fingers crossed some other than it.
Lastly, arreola was.
As you know last year was.
Literally a disaster in the field on so that obviously compromised or ability to report yield data on a couple of the trade. So we are very encouraged by all of the trials are ongoing this year.
Including basically the C 3004 can we know yield trials oil content trials with Eathree nine or two and with the genome editing about c.. So weve a lot going on.
So far is looking good.
Even the PJ trial is looking particularly attractive given how long Christy if I have spent on it.
The exciting to see this thing actually growing in the field and look at pretty good.
Given that we've spent a lot shelter for three years on so now we look a lot going on obviously anything could happen between now and actually having this safely harvest again, and then started so we can do all the analysis, but it looks it looks a heck of a lot better than last year.
Yes that last year was brlfour everybody. So glad things are looking up this year mother, Nature's cooperating and thanks for taking my questions on what that will get back in Q.
Youre welcome Thanks, Ben.
Once again that is star one to register a question at this time.
Oh from.
Back over to you for closing comments.
Great. Thanks, Donna and I'll turn it over to Ali for closing.
Thanks, Glenn So in summary, we believe the green platform can be used to address a wide range of traits in a broad array of food and feed crops and enable the development of advanced commit camelina varieties for large scale production of proprietary specialty products.
Currently pursuing three distinct revenue opportunities, the first being licensing and better yield performance rates, we use a major row crops.
Product sales base, our Catalina plop are producing nutritional oils MPG materials.
Third the strategic industry collaborations and R&D revenues.
Personally to thank all of you for joining us in the call Tonight, especially our shareholders for your continued support like everyone else. We are dealing with the challenges are uncoated 19, with an emphasis on safety and business continuity, so I, particularly want to thank our employees for their continuing diligent efforts.
I want to thank everyone of you will tighten for setting I was on track to reach our goals and 2020 and I look forward to providing further updates. This year. So have a nice evening, everyone. If you don't them back to you.
Thank you ladies and gentlemen, thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
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