Q1 2021 Yield10 Bioscience Inc Earnings Call
[music].
[noise] centers, we'll 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 call is being recorded I would now like to turn the conference call over to your host yield 10, Vice President of planning and corporate Communications Lynne Brum.
Thank you Paul and good afternoon, everyone. Welcome to yield 10, Bioscience first quarter 2021 conference call. Joining me on the call today are president and CEO, Dr. Oliver Peoples, Vice President of research and Chief Science Officer, Dr. Kristi, Snell, and Chief Accounting Officer, Chuck Hauser.
Earlier this afternoon yield 10 issued our first quarter 2021 financial results. This press release as well as slides to accompany today's presentation are available on the Investor Relations events section of our website at El Pen I O Dot com.
Turning to slide two.
Please note that as part of our discussion today management on making forward looking statements. These statements are not guarantees of future performance and therefore, you should not place undue reliance on time and investors are also cautioned that statements that are not strictly historical constitute forward looking statements such forward looking statements are subject to a number of risks and uncertainties that could cause the.
Actual results to differ materially from those anticipated.
These risks and include the risks and uncertainties detailed and yield ten's filings with the SEC.
The company undertakes no obligation to update any forward looking statements and or to reflect events or circumstances that may arise. After the date of this conference call and I'll turn the call over to Ali Thanks, Lynn and good afternoon, everyone and thanks for joining our call.
Since the start of 2020, one and we've made strong business strong progress advancing yield ten's business.
The day I'll provide an update on how our business plans are progressing.
We will highlight our recent R&D accomplishments.
After which I'll review, the first quarter financials, and summarize our key milestones for 2020, one and beyond.
And then we will open the call for questions.
Let's turn to slide three.
I will focus here on several key accomplishments that doesn't go on.
The path to crystallize, our strategic vision for yield 10.
Analyzing camelina as a platform to produce.
PHA Bioplastics.
Earlier this year, we are 40 and achieving our key proof of concept and milestones for producing PHA bioplastics and feel Gordon and Camelina.
Scaling up the two best PHA Camelina lines from the book up to 6% and PHA by seed weight and <unk>.
21, and field test program.
People on to use seats from this for larger scale planting in 2020 sued on the initial PHA product prototyping.
We engaged a leading U S income tax performs to scale up of our Chris Bradshaw Easter I know two three and 902 oil content line spring and double half log line and a disease resistant elite Camelina line.
The cyclone <unk> scale up was enabled by cloud things, we can talk to you didn't California over this past winter.
But from the permitting substantially complete we have begun and planting for spring 2020 on fuel Star program, and the U S and Canada.
In January and the first U S patent was granted to Rossum said research and our co producing DHA plus CPA, when we get to the oil and kind of a leader.
And April USDA confirmed that our new CRISPR editing <unk> thousand and 70 family. The lines are exempt from regulation under seven and CFR approximately 40 under the secure rule and <unk>.
New crop regulatory framework and the U S.
And the first quarter of U S patent was granted to the University of Missouri.
And modifications to see 3000 and southern genes.
And he has all the content and oilseed crops, we have an exclusive license to this technology.
We also strengthened the balance sheet and early 2020, one, which we anticipate will support the achievement of volume building milestones into 2020 three.
Let's start with slide four.
This slide illustrates how we're translating science innovation to revenue growth.
Using our technology platform. The phage factory, we have discovered and they've always had multiple genes for increasing crop seed yield seed oil content and from making the oil oil seed products.
As a result, we now have 21 patent families and prostitution and two you recently issued U S patents and.
Our technology success enables two distinct revenue opportunities.
Prove camelina varieties for Camelina products business.
And trait licensing to major seed companies for Houston and other crops.
Let's turn to slide five.
Let me share with you why we are excited about the oil states heavily under product targets.
And I'm only the seats is a good oil and protein competition and it's been used for human and first production for over 100 years.
This crop and we use as a rotation crop and northwest and Canada.
And it's fast 90 to 100 to 100 day growth cycle makes it attractive as a really a cover crop and the Midwest, where cabo cropping with corn and soybeans, another way to increase farm revenues and vegetable oil and food production.
With our ability to accelerated development and by genetically reprogram the seat and improve its field performance.
This higher value products.
Believe there's tremendous upside per camelina as a major crop.
And start to slide six.
On a sequential sequential launch of products from our Camelina platform, each enabling increased farm and product revenue per acre, which we expect to drive farmer adoptions.
We estimate that there are two differentiated proprietary products Omega three oils, and phe bioplastics and the.
Potential to drive <unk> on your revenue profit potential of up to $4 2 billion.
However in order to get there we plan to establish the operating foundation of the business starting with the lead Camelina followed by the higher volume Omega three Emily to drive revenue margins and cash flow.
Today, we will focus on these two activities.
In parallel we will continue the development work and commercial PHA Camelina lines.
Internal projections indicate that we should then be able to commercialize it P. J camelina based on cash flow from the business.
Or at least kind of lead and I used to produce oil and meal, we see the potential of our 300 to $500 and product revenue per acre and shields and oil content are approved and on <unk>.
Market and one hundreds of millions by 2030.
We expect the markets for oil and meal will be will be supplied and the future using coal products from P. J camelina and based on as higher overall volume.
Omega three camelina based on the higher value for agriculture, and nutraceutical markets, we see a potential for doubling the product volume per acre.
About 600 to $900.
It's just a high value opportunity requiring a limited acreage.
We estimate and 300000 to 700000 acres of Omega three Camelina production Hood enabled revenue and the range of $180 million to $670 million.
Strong foundation for yield 10 and scopes.
For PHA Bioplastic, we would aim to produce a higher value product mix of PHA bioplastics oil and meal.
Given the magnitude of the plastics replacement opportunity.
So this product is expected to drive tens of millions of acres of adoption and.
We projected by 2000 and thirdly, we could have three to 4 million acres with revenue potential up to $3 $6 billion.
Let's start to slide seven.
Here, our strategic goal is to establish the camera and the products business operations and develop elite varieties for the future deployment of the Omega three and PHH base is that.
It will require us to make new hires and areas of seed operations regulatory affairs and business development.
We are executing multi acre seed scale up with the EZ line up to the age 12 and disease resistant lines as well as engaging contractors with scale out and plan for the fall winter 2021 season for planting in 2022.
And for guidance purposes, each acre of seed produced for planting and enable the planting of 100 to 250 acres of Camelina and production.
And business development, we are reaching out to growers crushers on oil and meal and users.
And so sorry.
And includes renewable diesel companies as well as salmon feed and farming players and north and South America.
Renewable diesel and May provide some tailwind for this activity.
Let's turn to slide eight.
Low carbon fuel standards are driving and emerging opportunity for the use of oil from elite camelina and the renewable fuel space.
To be clear, we will not be buying or subsidizing acres on behalf of energy companies and will look to secure off take agreements prior to moving to larger acreage production.
According to a recent report and biodiesel magazine.
And as much as $5 5 billion gallons of new potential capacity and the U S.
It should translate to approximately 45 billion pounds of vegetable oil feedstocks about.
It's worth noting the oil company names on the list of participants from this activity.
These may be potential partners will yield type.
This new demand will face headwinds from the food be fueled debate.
And the disconnect between U S vegetable oil supply and demand and growth.
And this is where we may be able to take advantage of the short growth cycle of camelina and its potential for double cropping with soybean.
The oil from soybean plus the oil from Camelina and the same 12 month period could bring oil production per acre or above 1100 pumps per acre moreland.
More than double the oil from soybean alone.
Co products from soybean and Camelina seed, partially a protein meal for feed and food.
Gerald and east where Youll tend on this space and we plan to provide updates as we make progress.
Let's start to slide nine.
Well it Mega three comedy and opportunity as a first and farthest the long overdue high volume sustainable products.
And the Omega three fatty assets EPA and DHA are essential and human types for development health and wellness and.
Come from Ali from fish.
And salmon and excellent source of Omega Threes is currently growing at 7% per year on a constant over 75% of salmon consumed.
Agriculture seat current realize on a dwindling supply of Omega three fish oil and disproportion harvested fish.
New nutraceutical markets for Omega threes.
Adding pressure for the scarce resource and creating a fish oil supply demand disconnect.
We believe we can serve this market based on the agreement with the Roth and <unk> Institute on the EPA plus DHA Omega three Camelina oil technology signed late last year.
Our longer term vision is to establish camelina as the gold standard sustainable vegan Aqua feed source for southern and production.
And the essential EPA DHA Omega three oils and high quality proteins and called the feed ingredients.
Let's turn to slide 10.
We are positioning this technologists and naval revenue and margin growth between the launch of our elite PHA Camelina lines.
This technology is it high resident readiness level and provides a significant market opportunity to bring a land based drop and replacement for fish oil to the agricultural market with additional potential and nutraceuticals.
The technology developed by Roth, and said with 20% and EPA, plus DHA fatty acid and oil already exceeds the profile of northern hemisphere fish oil.
First on Napier and its collaborators are conducted in multiple years of field trials and fishing doing studies.
Furthermore, clinical studies with the family and that E. P. DHA oil are shown to be equivalent to fish oil and the human diet.
And oddly enough without the fishy taste, which opens up additional opportunities and nutraceuticals with a variable cost basis.
Let's turn to slide 11.
We've been focused on developing the commercialization strategy for Omega three oil and South America, and the salmon feed markets and Chile.
We used the prospective value chain partners and end users is underway and both Argentina, and Chile, and we are chartering, our regulatory path forward to enable the commercialization of oil and meal.
And also relative to that team also continues to make progress on U S. Patent was granted to Rocco said earlier this year covering the coal production of DHA and DPA and Camelina.
That all have said team plans further see scale off the fleet of the leap from I guess <unk> line.
And 2021.
And later this week.
Professor and APR is presenting a paper at the American oil Emmis on your meeting providing an overview of the development of Omega Threes technology and.
And in addition, one of his collaborators laborers is presenting a poster on the human studies.
We look forward to keeping you posted as we progress along that path toward commercialization of this exciting technology.
Let's turn to slide 12.
We currently have four non exclusive research license agreements in place with AG majors, each evaluating our traits and those target crop with the option to negotiate and commercial license.
And the flight indicate the term of the research license agreements.
And reviewing our priorities for 2020, one we decided to defer and total trade development work and total on a car and plan to seek partners with development of first of all the Straits and niche crops.
Related to the great platform, we're seeing higher interest from the AG sector and new crop traits.
This may be driven in part by higher commodity prices and their unique technology approach.
We also believe there is a growing recognition that although CRISPR genome editing and the improved regulatory environment are very positive drivers for AG biotech and the major challenge remains the efficient identification of high volume gene traits.
Now turn the call over to Christie.
Thanks Ali Hello, everyone.
2021 and is off to its start our research team has made good progress with activities supporting regulatory and permitting yield trial contracting and the startup planning of our 2021 and killed testing program.
We have also made progress on speed scale up for our elite Camelina line.
[laughter] and program moving ahead, we are also taking and the steps needed to secure additional field testing and scale up and contra seasonal locations for fall 2020 one.
Now, let's turn to slide 13.
And the Camelina products business opportunity became clearer, we began working to deploy herbicide tolerance and disease resistant trait and create elite varieties as we develop the crop the commercialization.
And he started now a high priority and they are important for large scale adoption and providing value add for the farmer in terms of cost convenience yield protection and farm revenue.
Based on discussions with regulatory authorities and experts we believe that we can take advantage of the new more favorable regulatory environment and North America.
Here, we are working to rapidly deploy well known herbicide tolerance gene traits previously approved and other crops with a long history of safe use and approval.
As you know we are also progressing a number of performance traits aimed at increasing and yield and oil content haynesville.
And these will provide benefits for farm revenue oil and meal cost of goods sold and.
And the lower the carbon intensity score of the oil from renewable diesel.
Given the potential for a disconnect and vegetable oil supply and demand.
Our oil content traits may be kind of increasing interest to third parties.
These traits, including <unk> and I know two line currently being scaled and so.
<unk> thousand seven and they feel free.
3020, new oil trade from the <unk> platform.
And we fully develop our elite camelina variety and will provide a high performance team Kathy and the commercial Omega three and PHA Biopolymers trades.
Collectively the combination of traits in Camelina variety with value added products will enable crop diversification increased farm revenue and provide low cost sustainable solutions and businesses and consumers.
Now, let's turn to slide 14.
And as already mentioned, we have engaged a leading <unk> company to perform heat and scale up of Threep Camelina line.
E screen and I know to a CRISPR edited and high oil line.
And it's 12 doubled halfway to late line and.
And a third line, which is the C, which is a disease resistant and paint line.
And at scale up and these lines and the spring 'twenty 'twenty. One season is expected to enable future planning at the 100 to 1000 acres scale for subsequent larger scale planting and well for producing oil and meal for customer sampling.
And there is lead time involved for planning and Contra seasons and scale up therefore, we are working to engage contractors.
Additional seats and scale up activities and fall winter 2021.
And the first quarter, we focused on contracting permitting for our 2021 and field trials for sites and the U S and Canada.
This activity is substantially complete and planning has already begun at some of the site.
And our field program. This year, we will be planting elite camelina, Karen plasma variety and camelina with novel yield and oil trade.
In addition, we will scale up our two best PHA Camelina prototype lines.
Our team is also focused on developing elite commercial camelina varieties with herbicide tolerance and heat resistance and improved seed yield and oil content.
These lines will serve as a platform camelina variety for nutritional oils and PHA traits.
Our current scale up work with DHA Camelina lines will allow us to expand acreage for growth going forward and to make pilot material for testing and product applications.
We are also working on developing commercial events for the PHA camelina trade to enable large acreage deployment.
We continue to support our partners evaluating trade and our other commercial crops and are also seeing increased interest from current.
For new trades from our grain platform to evaluate and aircrafts of interest.
And house, we continued to leverage crane and support of our Camelina activities with the new oil content traits.
<unk> thousand and 'twenty going into field trials this year.
I would like to thank our team for their hard work in 2020, one and for staying focused on our priorities.
This has positioned us to meet proof points for elite Camelina line development and <unk>.
That's our PHA trade and to further develop our camelina and technology for specialty products.
I'll get back to yield thanks.
Thanks Christy.
Please turn to slide 15, and let's cover a few financial highlights.
We on these first quarter 2021, with $22 7 million and cash cash equivalents and investments.
During the first quarter, 2020, one and we raised net proceeds of $12 million from a public offering of common stock as well as $3 $9 million from the exercise of warrants.
Better aligning our balance sheet because their business strategy.
We have no debt.
Our net operating cash usage was $2 6 million from first quarter 2021 day.
Our cash on hand, together with expected revenues from our card and government grant to support our operations into early 2020 three.
We estimate that our net operating cash usage for the full year 2021 will be within the range of $10 million to $11 million.
This includes estimates for our contracted unplanned seed scale up activities and most on hires and all their support and business development and regulatory affairs and seed operations as we derive this and Boston investment towards executing our business plan.
Let's now review the first quarter of 2021 operating results.
The company reported a net loss of $2 6 million for the first quarter of 2020, one compared to a net loss of $3 6 million from the first quarter of 2020.
Total research grant revenues and the first quarter of 2021.
196000, groceries, and 179000, and the first quarter 2020.
And the first quarter of 2020, one research and development expenses were $1 3 million compared to $1 5 million and the first quarter of 2020.
General and admin expenses were one point formula and this first quarter of 2021 level with G&A expenses and the first quarter of 2024.
For more details on our financial results. Please refer to the earnings release.
So, let's turn to slide 16, and the upcoming milestones and.
2020, one we will continue to focus on the following milestones executing our 2021 field testing and see it scale up program.
Operating is substantially complete and as planting underway we are on track.
Continued to expand the elite Camelina Germplasm collection.
Progressing the business line for Camelina products, which will include working to access year round or contra seasons teach scale up capabilities and <unk>.
And the regulatory farmers to transfer certain camelina lines to South America.
Advancing the commercial launch upon from Camelina Omega three oils and South America.
Or we have recently engaged to see service provider and business development support.
Broadening our capabilities, particularly and regulatory affairs seed operations and business development.
And hiring or other arrangements.
Securing strategic industry collaborations to address market opportunities across the value chain enabled biotechs and products.
And securing revenue based on generating commercial credit licensees as we continue to expand our intellectual property portfolio, which is crucial for on a small company and three recent patent grants are integral to this effort.
And I'd like to turn the call back over to Lynn for questions.
Thanks Ali.
We're now ready for questions.
Thank you and will now be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad and call it.
Formation total on the cadence of your line is and the question queue. You May press star two if you'd like to remove your question from the queue.
One moment, please while we poll for questions.
Thank you. Our first question comes from Anthony Vendetti with Maxim Group. Please proceed with your question.
All I was wondering if you could talk a little bit more about these camelina line to the CRISPR edited ones and just talk about.
Where you're at with that on.
Opportunity you have.
Exclusive life license to the technology, what's the.
Alright, what's the timeline next steps.
What can we what can we look at her.
And the next slide.
Yes, so basically.
And Theres a number of oil content traits that we're working on one is on <unk>.
And I know through the one we're scaling up.
That was all developed in house by Christine and her team and it's actually already received.
Approval from the USDA offices, and nonregulated are exempt from regulation, depending on the particular awards used by the regulatory authorities on any given day of the week. So the good thing is it's essentially it doesn't require to be treated as a regulated product. So we have successfully scaled up.
Field trials without for two years with a 5% oil increase on.
And when you begin to look at these markets and the growing demand for vegetable oil, obviously traits with increased oil content and seed with per yield.
I actually have considerable volume so that's one.
The <unk> thousand and seven is in license from the University of Minnesota, Missouri, It's a little complex because of multiple copies of it.
What we're really doing is trying to optimize the culmination of edits that are required to actually define that outcome.
And then the third one that's progressing.
And.
Out of a creative platform is an entirely new discovery.
But again, Christina and her team eventually engineered family not to over and over and over produced this particular gene product on.
And this has covered that it actually increases oil.
And by 10% on on a good way to think about Camelina.
10% increase and oil given the higher volume of oil is about the same volume, 10% increase and seed yield.
And obviously these are things that we think can be important not only in camelina and potentially other oilseed crops as well.
And just as a follow up.
How how will yield 10.
Monetize this with.
And the next.
12 to 24 months, how do you how do you see the progression.
And the opportunities.
For yield 10.
Yes, so right now I mean, I think we from the first time would be good.
And our presentation and we talk.
And dedicate a whole slide to this whole renewable diesel driver.
That's been coming for a while but and I think it's becoming much clearer.
Actually creating a significant supply demand disconnect. So obviously.
To meet that demand.
Petroleum based diesel companies are literally going to have to source.
Low carbon and patch the renewable feedstocks from that from early from vegetable oil I think.
The story around using waste by on a number of things kind of going to be used up. So this is all going to have to come from additional supply of vegetable oil which opens the door.
And two camelina types.
Actual source of oil feedstock for that application.
Now keep in mind, the fuel space is very cost sensitive and.
And so although we're looking at this the reason we're scaling up these seats.
This year and Atlanta scale them on further over the winter is to be able to plot much larger acreage as we move ahead and <unk>.
And the execution of agreements for offtake.
With some of the companies in that space and so we're positioning ourselves to go forward and scale this up to generate revenue on.
And of course, we're not going to do this at risk on.
On behalf of oil companies that just doesn't make any sense to us.
Sure so on.
And the interim last question before I return it to the queue.
Are there any additional branch debt that you see here on the horizon.
And the next.
Three to six months.
Or anything new that you're working on.
So I think we're on.
Always working on ground lease obligations and one thing Thats really.
Interesting with the New administration has certainly youre seeing a much greater emphasis on carbon management and climate change and low carbon technologies carbon sequestration.
And ultimately the importance of agricultural and that and that area.
And is potentially very very large so we're well aware of what's going on.
And we do routinely and look for additional funding opportunities that we don't typically disclose what we've applied for and until such times as we get.
Feedback from the agencies so.
So that there is opportunities out there.
And as we've done in the past we plan to seek non dilutive financing, where we can get it.
Okay great.
We'll turn it back over to the queue. Thank you very much.
Thanks Anthony.
Thank you. Our next question comes from Amit Dayal with H C. Wainwright. Please proceed with your question.
And you I guess.
With respect to the field trials with <unk> what are the targets. The results were a meaningful and any color on the kind of improvements we might be looking for.
And so.
Obviously, there are small.
Theres, a number of things going on and these field trials. This year, obviously first and foremost we're scaling up some of these new lines and <unk> 902, <unk> 12 on the disease resistant Camelina line.
Oh, there is to secure large amounts of essentially high quality seats for subsequent further scale up and planting.
That's going to be one from the.
And second I'll call them as we continue to look at the performance of our oil content traits.
On the <unk> thousand four trait in particular, given its impact on our photosynthesis and.
Flat and figure.
Actually yield.
And then of course, we are progressing scale up of the two best BHA Camelina lines.
We've been very clear with the Investor community that we see the phe.
The PHH Camelina, obviously is having enormous potential value.
We've also been pretty clear that it will be the third product launch after the Omega three oils and so.
And we know we've got work to do to develop commercial quality lines, but in the meantime.
And we're scaling it up for a couple of reasons one is to enable EBIT larger planting and 2022 and that's really too.
Support flow product development work we.
And we do plan to do some.
Analysis and extraction.
We achieved from the lines at the end of this year, assuming successful scale up and the.
Goal is to really begin to develop the system to enabled us to be commercialized at very large scale and the sooner. We can begin to generate data on the phe camelina processing and PHH Catalina, but also to begin the regulatory analysis associated with getting it approved for very logical planting and obviously the sooner we get that started.
Sure.
Okay.
And with respect to your assets in South America is theres, the strength reasonably chose on Argentina and Chile.
The unusual.
I'll give you a yes to all of them.
I guess the Omega three oil is a really exciting product.
And obviously Europe is a kind of an odd.
Moratorium on the use of GM feed ingredients and farm salmon and Norwegians for some.
Dubious reason and prefer to harvest polluted fish from the ocean and extract the oil and meal from that and then feed it to Simon and that's completely not sustainable and it's actually devastating.
Neither of Apache's around Africa, and South America. So that's really something thats going to have to stop but and in South America and Chile in particular, they have a mandate to begin to move away from harvested fish.
And that drive is making the industry down there very interested in drop and replacement of pounded this too to the harvest. These fish and so we really see as a sort of wait to launch this outside of the North America, where there is still a.
And intellectual property challenge.
But also to address the second largest market and the world with the same feed companies actually are the main suppliers and Norway, which is if you like the large production area with above 60% market share certainly is around therapy on.
The other area, we believe we'll be addressing and 2025 is really north America because of the growth of inland agriculture, where youre seeing people farming salmon, and Florida, California, Maine, Indiana, New York State.
And I never saw and have received but actually it's actually growing considerably with very large.
And that's going to create what they call a closed loop agriculture systems for solid production.
Right understood.
Interest and thank you for that and.
Just last one from me with respect to.
And when the feedstock opportunity with the.
And the renewable diesel side of things.
Have you started any discussions with any of these companies that you highlighted in the slides on abuse. Just means of some that are looking into the Rd business and just wanted to get a sense of where you are with those discussions.
Yes, obviously I you know I would say there's been I've reached the yield time on.
And we are responding to it.
And that's really how this has begun to manifest itself. So.
I'll provide additional color as we go forward here, but what we do see as we see these investments going in.
And the law in California, Oregon, Washington State, Canada, and Europe is required and requiring them to do this and so a certain amount of diesel fuel. This all has to be based on low carbon and thats. The feedstocks and so this is something they more or less has to do which is why the capital investments are going in.
But when you look at these oil companies and you look at the scale of this globally and obviously securing supplies of feedstock for Louis.
Opportunities are going to become really really important to these companies.
Understood.
That's a line where you thanks so much.
Thank you.
<unk>.
Thank you there are no further questions at this time I would like to turn the call back over to Lynne Brum for any closing comments.
Yeah, Thanks, Paul and I'll now turn the call to Ali for his closing remarks I'd like to personally. Thank all of you for joining us on the call Tonight, and especially our shareholders for your continued support.
2021 is off to a good start with their field tile and seed scale up activities are well underway.
We are focusing on a promising market opportunities for oil and meal from early time line up as well as on the Rossum said Omega three technology as a sustainable profit and replacement official aisle I want to thank everyone at yield tied for setting us on track to reach our goals and plenty of 'twenty, one and have a nice evening.
This concludes today's conference.
Thank you everybody.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation have a wonderful evening.