Q4 2021 Calyxt Inc Earnings Call
Good afternoon, ladies and gentlemen, thank you for standing by welcome to Calix fourth quarter and full year 2021 earnings Conference results conference call and webcast.
During todays presentation, all parties will be in a listen only mode. Following the presentation. The conference will be opened for question.
If you have a question. Please press the star key followed by the one key on your Touchtone telephone you'd like to withdraw your question. Please press the star key followed by the two key.
If you are using speaker equipment, please lift the handset before making their selections.
This conference is being recorded today March 3rd 2022.
This time I'd like to turn the conference call over to <unk> Co Shack Calix Chief Financial Officer. Please go ahead Sir.
Thank you and good afternoon. This is bill <unk>, the Chief financial Officer of Calix.
I'd like to thank you for taking the time to join us for Calix fourth quarter and full year 2021 earnings results conference call and webcast.
Presenting with me today is Michael a car, our president and Chief Executive Officer.
Press release detailing these results crossed the wire after today's market close and is available on our company's website calix to dot com.
Before we begin the formal presentation I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and industry prospects are forward looking and maybe subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the <unk>.
Paul Please refer to the company's SEC filings for a list of associated risks.
This presentation also includes a discussion of adjusted net loss and adjusted net loss per share both are non-GAAP financial measures.
And Calix press release and its filings with the SEC each of which is posted on the company's website at Calix Dot Com you will find additional disclosure regarding these non-GAAP financial measures.
Francis to these non-GAAP financial measures should be considered in addition to the GAAP financial measures and should not be considered a substitute for results that are presented in accordance with GAAP.
Lastly, this conference call is being webcast. The webcast link is available in the Investor Relations section of Calix Dot com.
At this time I'd like to turn the call over to Michael for his opening remarks Michael.
Thank you Bill and thank you for joining us on our call today.
We are leading a plant based revolution and are committed to bringing the bio production capabilities of plastic innovators are today.
As I look forward, we're moving into the growth and scaling phases of our organization's development.
We have a differentiated platform our unique production capability and our financial model that is differentiated from other synthetic biology companies.
Look forward to sharing more about these points on our call today.
2021 was transformational for calix I'd like to take the opportunity to step back and review the substantial progress. We've made are transitioning from an agricultural business towards synthetic biology company in a short period of time.
Taking our existing technology people and Knowhow and redirecting this formidable collective asset in ways that realizes the company's full potential.
The simple vision was the basis of our new strategic initiative, which was announced in October .
That initiative is to leverage our core expertise and expand our offerings to provide innovative high value sustainably produce plant based chemistries to a wider group.
It's in a diversified base of customers.
We understood that the best use of our technology and talent and strongest potential to realize our company's value why isn't offerings didn't buy all solutions to major industries around the world, where should we need new ways to produce products that meet their corporate sustainability goals. This opportunity is enormous for calix.
As you May recall, Kelly develops high value plant based chemistries for customers leveraging the integration of our proprietary plant spring technology platform and our bio factory production system.
Platts spring is built on experience of more than a decade of engineering metabolism and.
And experience base built with our proprietary systems, our tools and technologies, our extensive portfolio of intellectual property and an expanding set of artificial intelligence and machine learning or AI.
Metal capabilities. This platform delivers innovation through an efficient process from laboratory to pilot, enabling calix to take our customers plant based chemistry needs through our design engineering and verification development process.
These planned spring derived compounds are then produced through our proprietary bio factory.
The bio factory harnesses the potential of plant cells in a multi cellular matrix structure.
Proprietary plant, so matrix or PCM.
The TCM circuit bind with gross media for production within a bioreactor.
Plant based foundation, the use of our PCM and its ability to produce complex plant based chemistries and it's modular nature and geographic flexibility differentiates the bio factory from other production systems used in the same boat and plant based industries today.
In light of Calix is iterative.
L capabilities to augment bone spring development and bio product reproduction.
Company is positioned to be a supplier of unique chemistries that are likely unable to be produced in more traditional sym bio production processes.
This strategy represented a change in our focus from agriculture to large innovative end markets, including Kosmos Cyclicals, Nutraceuticals and pharmaceuticals, all have high demand for plant based chemistries to replace less sustainable materials and inputs in their products or processes. This is a significant growth opportunity for calix.
Notably our approach to the buyout Gregory business model is customer focused and demand driven.
We use instead of criteria to evaluate opportunities that includes consideration of factors such as the plant based chemistry or potential customer needs and how well our bio factory can produce at the size of the customers demand pool, the speed of the customers' adoption and our financial returns. This approach helps ensure that we select the car.
Impounds from customers that drive the greatest potential for success for both our customers and calix at this stage of our business.
Target into two to four plant based Chemistries and development by the end of 'twenty to 'twenty two.
With respect to our commercial production, we expect to operate the bio character and an asset light manner to help mitigate the risk of achieving production at scale. We can do this by either using third party infrastructure partners for upscale biofact reproduction or because of its modular in nature. We could also locate a unit at a customer's facility.
Further our business model has potential for cash flow throughout our targeted 36 months development period with additional product related revenue and cash flow of between 12 O.
We are positioned calix for growth in scale by focusing on two main areas advancing our technology and the right people in place to set us up for success.
Since the start of the fourth quarter of 2021, I am pleased to share that we've achieved several important milestones.
We reported additional milestones in the commissioning of our biotech reproduction system.
Fluids commissioning our initial pilot bio factory, which was achieved on schedule and marks an important initial step towards achieving at scale commercial production.
We continue to collect and analyze data from this pilot facility have begun to deploy additional.
Resources to the pilot facility, which are expected to drive future decisions and help improve test cycles development timelines.
We also reported significant progress in sustainable discovery and development of plant based molecules or bio Gregory Reis.
Results from our targeted medical Omics analysis indicated more than 15000 chemical signatures. These signatures included both known and is yet another characterized molecules and building block precursors. We're short chemical compounds involved in chemical reactions that produce other compounds used chemical signatures form.
Baseline library available for calix to produce valuable compounds within our proprietary plant based bio credit creep production system and likely represents a fraction of the total plant based chemistries are system capable of performing.
We invested in new hires who are key to the growth of our business. We on boarded our new SVP of business development, Jeremy Nuovo, Jeremy brings more than 30 years of experience in the specialty chemicals, and biotechnology industries and diverse experience building multimillion dollar income streams, causing circles and market, including <unk>.
Recently care and home care.
Dr. Vijay duopoly joined Calix as Vice President.
Data science Vijay brings nearly 25 years of experience in developing solutions for businesses across diverse industries utilizing his experience and data technology.
No.
In addition that people joined as technology licensing leader he doesn't nearly 35 years of legal and technology licensing experience and we will focus on advancing our licensing activities and platform technology, including IP related to gene editing implants in our portfolio of crop innovations.
We also welcomed Doctor said Dobra global Chief artificial intelligence officer at IBM to our scientific Advisory Board just brings extensive leadership experience and a track record of transforming companies through data and his depth of experience, bringing AI based business solutions to major global corporations.
Be valuable as we continue to develop and augment the AI ml capabilities of our cloud spring platform and Biofact reproduction system.
We continue to advance our discussions with new potential customers in the Cosmos beautiful nutraceutical pharmaceutical industries, which are large and innovative industries that represent significant growth opportunities for calix.
On the Star Bar announcement back in October a new strategic initiative Disembowel, we were pleased with the breadth of interest from large companies in our target industries. Since then we've engaged with a wider breadth of companies, while making meaningful advancements with a select group of potential customers for the signing of contracts to engage our services.
Ultimately new revenue.
On the topic of financials last month's calix successfully closed an underwritten SEC registered offering with gross proceeds of approximately $10 $9 million before deducting the underwriting fees and other operating expenses. This raise strengthens calix financial position as we work to grow our business realize its value.
The fundamental underpinning of our strategic initiatives in Houston, but it is our conviction about the future of industry. It depends on the sustainable production of Chemistries that are plant based.
Helix is an unique opportunity to revolutionize how the world uses plants are focuses on innovating, where the consuming a finite resources and the sustainability of our planet intersect.
The global economy today is not sustainable as evidenced by such metrics as carbon pollution water scarcity and soil erosion.
Many corporations and consumers are shifting their focus to products that are sustainable and contain environmentally friendly plant based chemistries.
More than 20% of the world's largest 2000 companies are committed to carbon neutrality, we believe that in order to achieve this goal. These companies will need to incorporate plant based solutions into their businesses Calix and our proprietary plant spring technology platform and bio factory production system are distinctly qualified to meet this demand.
I mean world seeking to evolve to more sustainable solutions that are very diverse and uniquely capable of producing many chemistries that cannot be produced through other means including microbial fermentation.
Nearly 80% of classified natural compounds come from plants. Some estimates represent more than 1 million compounds are yet to be discovered.
Leveraging known compounds, discovering new ones or opportunities for our company.
Clients are central to our plot spring technology platform and bio factory production system.
Scientists are experts at engineering plant metabolism and have demonstrated this capability many times over across multiple plant species.
This expertise creates a unique perspective on the power plants and how they can be used to shape, our future gives calix expertise advantage over others.
We currently apply AI ml and the early stage of our development process and over time, we expect to expand these capabilities further into that process by adapting knowledge gained from past activity with predictive analytics to rapidly prototype and provide feedback accelerate the time to complete the development cycle and help mitigate.
The risk associated with commercial scale up.
For production, our bio factory utilizes a multi solar plant cell matrix structure or P. C. M P.
PCM structures are placed inside the bioreactor and gross media base, the PCM structures to provide them with nutrition. This differentiates calix process from other message that require a complete submersion themselves in gross media.
The bio factory is modular and is designed to be able to continuously produce plant based chemistries offering us flexibility when producing chemistries for multiple customers at once.
<unk> planned spring and the bio factory, our differentiated production system for high value innovative and customer demand driven plant based chemistries.
Yeah.
The plot spring technology platform Leverages, our years of experience engineering metabolism, a variety of tools and expanding certain AI ml capabilities is protected by our broad IP position.
Through the plot spring platform, we seek to unleash the natural capabilities of plants. The original biological systems make available commercial innovations that produce unique plant based chemistries from plant species, including rare or domesticated species in a manner that the company believes it is more robust and sustainable than other methods of production.
We built our first AI ml capability into blood screening to assist us in identifying targets for editing specific genetic pathways and improve efficiency and speed.
Plants in their DNA contained a profound amount of information when combined with our deep scientific experience and vast amounts of data that we have accumulated over our history, including a large proprietary database of genomic information across numerous plant species, we are able to search a vast trove of data for insights.
Enabling a rapid development process, we also plan to grow and leverage this expanding dataset and our future AI ml development efforts.
We look ahead, we plan to incorporate AI ml techniques further into our development process, enabling learning and adaptation of knowledge gained from past activity. The generation of new data insights and connections between known and unknown pathways with the aim of accelerating development cycles, reducing development costs and improving our.
Our rapid prototyping capabilities. These activities will also aid in discovering new pathways or new plant derived compounds for future commercialization efforts as well as help mitigate the risks associated with the commercial scale up.
Our proprietary PCM structures provide us with a competitive advantage over single cell plant in other cellular production systems simply described a PCM is a small group of clients those that work together to emulate the metabolism of an entire plant.
Cause of this PCM structure, we were able to achieve growth without constant submerged in media and there is no need for light.
Pcm's are more stable continuously producing the target chemistry compared to batch and other production systems that have challenges with scaling for growth over time.
Yeah.
The biotech reproduction system Leverages. These P C N which are periodically.
<unk> media.
Hi, nutrients necessary to support growth and produce the target chemistry.
These pcm's reproduce over time, increasing the amount of biomass it in the reactor and producing the target chemistry, which may be excreted by the P. C N or harvested later.
We believe the bio factory has the potential to be one of the most sustainable plant based production systems across industries because of this production methodology.
It does not use fragmentation and there are fewer of the sustainability of challenges associated with other controlled environment production systems. For example, we expect our system has lower levels of off gases reduced water demands and lower energy requirements.
Also expect the bio practice to have limited downtime between production cycles, because the system produces these plant based chemistries year round in a bioreactor. It is protected for many of the adverse climate effects typically associated with traditional agricultural production.
News and efficient development process to deliver innovation through our plants spring platform comprised of three primary stages named design engineer and verify.
The design stage.
And now to identify pathways that will produce the target and design technical approach to deliver the target compound and the engineer stage direct changes in the plants and the verify stage, we use a combination of analytical tools to verify the compound produced meets the customer's specification.
Estimate the typical timeline to complete the design engineer verify process to be 12 months.
Each point of verified chemistry would advance to pilot production.
From there we believe the typical development time from initiation of the pilot stage of development through to commercialization is 24 months certain compounds may have a shorter time to market. Some industries, such as pharmaceuticals or expect to have a longer path to regulatory clearance.
The cost and time standpoint, we expect the customer will use their expertise to address formulation and regulatory matters.
In combination with the design engineer verifies stages of the development process.
Timeline for Calix to achieve commercial availability is currently estimated at approximately 36 months.
All of them are cycle that would offer customers compelling speed to market.
The expansion and further deployment of our AI ml capabilities and systematic learning as additional compounds move through the development process. We believe this development cycle time, maybe further accelerated.
I'll now turn the call back to bill to discuss our business model and provide updates on customer acquisition activities the company financials Bill.
Thanks, Michael we take a customer focused approach to identifying and evaluating opportunities to help ensure that we select the compounds from customers that drive, but that's the potential for success at this stage of our business.
Those criteria include consideration of factors, such as the plant based chemistry or potential customers need and how well our bio factory can produce it.
The size of their demand pool, the speed of their adoption and our financial returns.
This approach helps ensure that we select the compounds from customers that drive the greatest potential for success at this stage of our business. Our goal is to develop two to four compounds in 2022.
After we have agreed with the customer on a compound to be produced the customer May fund the development costs through the design engineered verify process.
We expect the customer will address any regulatory or formulation matters with regard to the chemistry, we will produce at.
At scale production will likely be performed by our infrastructure partners on our behalf or as we have learned from recent interactions that customers may desire to produce the compound directly in their facility.
We expect the customer to purchase the compound from calix through a supply agreement on our achievement of add scale commercial production.
This business model has the possibility of cash flow at inception of the agreement and throughout the development cycle with cash flow being generated through product sales once commercial production is achieved.
Based on the criteria, we are applying in selecting compounds for development for customers. We by nature are targeting high value low volume plant based chemistries with large demand pools.
Our rapid revenue ramp upon achievement of commercial scale with an attractive margin profile. We are targeting mid double digit gross profit margins for the compounds we produce for customers.
A quick scale up of our cash flow post launch.
This business model has resonated throughout our ongoing business development discussions with potential customers.
In the near term our customer activation efforts focus on market segmentation, where we believe our current capabilities give us the best opportunities to win.
Cosmos, <unk> Nutraceuticals and pharmaceuticals.
These industries represent large end markets with customers that have current business needs to source finite plant based chemistries and are known to be fast adopters of innovation and are actively seeking to reduce their carbon footprint.
Since our Q3 2021 earnings announcement, we have continued conversations with a select group of potential customers that have plant based chemistry needs that align with our selection criteria feeds.
Feedback from these potential customers has been positive we believe we have a compelling offering for our target customers and we are working to secure our first contracts for the bio factory.
In summary, calix is poised to deliver plant based chemistries with compelling financial returns that assist customers in achieving their sustainability goals.
Together plants brings technology and the bio factory production system, our differentiated including their plant based foundation, our proprietary PCM the modular nature of the bio factory, which likely enables the avoidance of significant capital expenditures to achieve commercial production.
And a differentiated financial model.
We are initially targeting the Kosmos beautiful nutraceutical pharmaceutical end markets all innovative in their own right large and representing significant growth opportunities.
We use a customer demand driven approach for the development of high value innovative and sustainable plant based chemistries.
We are targeting two to four plant based chemistries in development by the end of 2022.
And our business model reflects an asset light approach with potential for cash flow throughout the targeted 36 month development period, and with a rapid scale up of product related revenue to follow.
Yes.
Turning to financial results today, we issued a press release, describing our fourth quarter and full year 2021 results and we also filed our Form 10-K for the year. This afternoon.
First our cash cash equivalents and restricted cash were $14 $4 million as of December 31, 2021.
Which includes the net proceeds from the sale of approximately one 4 million shares of common stock under our ATM share issuance program.
The December 31, 2021 cash balance includes $3 $9 million of net proceeds from those sales and another 200000 of cash was received in early January 2022, following the settlement of those sales with the broker.
The balance does not include the gross proceeds of $10 9 million that was raised in mid February for her SEC registered offering.
Now to the P&L.
Revenue was $1 $9 million for the fourth quarter of 2021.
Third to $13 9 million in the prior year and was 26.0 or $1 million in 2021 compared to $23 $9 million in 2020.
The increase for the year was driven by sales of the 2020 grain crop, which included higher volumes and reflected higher commodity prices in each case as compared to 2020.
Looking ahead, we expect revenues to decline meaningfully because of the wind down of our soybean product line and the shift of the business from its agriculture model into a synthetic biology company.
Total operating expenses were $6 $6 million in the fourth quarter of 2021 compared to $8 $1 million in the fourth quarter of 2020.
The decrease was driven by lower professional fees lower personnel costs and restructuring costs recognized in the fourth quarter of 2020.
For the full year total operating expenses were $26 $8 million in 2021 versus $32 $6 million in 2020.
Operating expenses, excluding $2 1 million of noncash stock compensation expense and $2 $3 million of depreciation and amortization expenses were $22 $3 million in 2021.
Net loss was $7 1 million in the fourth quarter of 2021, or <unk> 18 per share versus $13 4 million or <unk> 37 per share in the prior year period.
For the full year net loss was $29 $2 million in 2021, or <unk> 78 per share compared to a net loss of $44 $8 million in 2020 or net loss per share of $1 32 per share.
Adjusted net loss was $7 $4 million in the fourth quarter of 2021, or <unk> 19 per share compared to $12 2 million or <unk> 33 per share in the prior year period.
And was $33 $2 million in 2021, or <unk> 89 per share compared to $40 $8 million or $1 20 per share in 2020.
<unk> adjusted net loss was driven by strong operating expense management and the benefits from the wind down of the soybean product line.
Our business plans are now further supported by a balance sheet that has been enhanced by the $10 $9 million of gross proceeds before deducting underwriting fees and other operating expenses from the offering we completed in February .
We intend to continue to be disciplined in our uses of cash and anticipate the proceeds from the offering will be used to support the continued growth in scaling of our bio factory business model and selective hiring to support the progression and expansion of our AI ml capabilities.
As a result of the successful offering of our common stock and pre funded warrants and based on our current business plan. We now expect calix cash runway to extend to late 2022 inclusive of planned spending to support the growth and scale of our bio factory business model.
That runway includes committed customer payments for licensing and product development as of today.
As a result customer cash flows beyond those existing commitments together with actions within our control to hold expenses flat or below current levels, which serve to extend our cash runway into the first quarter of 2023 and potentially beyond.
For additional details about our financials for the fourth quarter and for the full year 2021, please refer to our press release or filings with the SEC.
I'll now turn the call back to Michael for his closing remarks, Michael.
Thanks Bill.
'twenty one was transformational for calix in which we became a synthetic biology company in her home right.
Since I joined the company repositioned our company for growth and scale by focusing on advancing our technology and putting the right people in place and set us up for success.
In short period of time, we have achieved several key milestones.
<unk> commissioning, our bio factory securing key hires in business development.
M L technology wise.
Expanding our scientific advisory board to include renowned AI ml expertise.
Advancing discussions with a widening breadth of potential new customers and strengthening our balance sheet.
Team here at Calix is hard at work to realize the value of our company. While we have much more to do I am proud of our team come so far in such a little time.
I look forward to continued momentum keep providing you with updates on our progress in the future.
Operator that concludes our prepared remarks, please open the line for questions.
Ladies and gentlemen at this time, we'll begin the question and answer session.
To ask a question you May press Star and then one using a touchtone telephone.
To withdraw your question you May Press Star then two.
If you are using a speaker phone we do ask you. Please pick up the handset prior depressing the numbers to ensure the best sound quality.
Once again that is star and then one to ask a question.
Our first question today comes from Laurence Alexander from Jefferies. Please go ahead with your question good.
Good afternoon, thanks, very much for the.
Detailed discussion.
At the opening of the call on the new platform can you elaborate on two things.
First.
Are the to what extent are the molecules, you're focusing on molecules known to decline to the customers.
And you're finding a new production process or are they.
Or are the customers coming to you and saying, we're looking for and effects.
And then you have to find molecules that together with them that achieve that effect. That's the first thing and then the second is can.
Can you give us some characterization of your customer pipeline.
You know.
Relative to your bandwidth the amount that you can process.
What's what the level of interest is and from the time that somebody signs an agreement to kind of when.
When you think you would have a commercially viable demonstration in their hands, just we can get a sense for kind of what the poll process look looks like.
Sure. Thanks, Laurence a couple of great questions. There one thing that I would no doubt on your first question is that our approach here is demand driven with our customers and so as we reach out to customers.
We look to them to identify specific compounds that theyre looking for a plant based.
And sustainable solution for and so through our discussions we're finding that in today's world and particularly in our new end markets that have cosmetics nutraceuticals and pharmaceuticals that these customers actually have in hand and have identified molecules that they need solutions for that are either currently not sustainable and or finite.
In nature.
I need another production system in which to do that in terms of in terms of bandwidth. Your second question.
We're really excited here.
Into Q4 in December to Commission, our pilot Bio factory.
200 leader.
<unk> factory.
Similar from a scaling standpoint that you would see in the in the pharma industry and as we look out here to 2022 and focusing on growth and scaling what's exciting about the bio factories that its modular in nature.
It can handle multiple compounds at the same time and so as we look with customers that have specific needs. It can vary by the <unk>.
Production output and then again as I mentioned by the number of compounds.
Okay, Great I'll hop back in queue.
Our next question comes from Bobby Burleson from Canaccord. Please go ahead with your question.
Alright, thanks for taking my questions.
So I guess the first one is just maybe if we can talk about geopolitics for a second.
Yeah, perhaps just a little too soon but curious whether or not you.
You are seeing an impact in terms of customer interest on either side of your business either.
Neither plant trade or.
<unk>.
Thanks Robby.
The geopolitical certainly is interesting times that we're all living in here now and we are currently not seeing anything that has a direct effect at this point in time, obviously, it's a fast moving situation here throughout the world and what we are seeing though is there's certainly a commitment towards sustainability and plant based solutions.
We've seen here in recent periods and really over the last several years as companies around the world are committed to carbon neutrality and sustainability. So the reception, we're receiving as I mentioned, a few moments ago. The fact that our customers have identified specific compounds that they need that plant based solutions.
This continues to be reinforced.
Okay, Great and then in terms of your two to four.
But agreements that you're targeting for this year.
Are those just with those all be with distinct.
Customers two to four distinct customers or could there be overlap where.
And customers working on several projects.
Very good question.
Essentially be both what we're seeing in our discussions with customers and as I mentioned have identified those compounds that they need a solution for a typically have several.
Our required sustainable solutions and so as we work through the compounds that are going to be really the best fit.
Bill will talk about our target product profile.
Very disciplined in identifying the compounds that we engage with.
But we are seeing multiple and customers have been also the potential of having one compound per customer.
Okay, Great and then just the last one for now.
Phil Phil was talking about a cash runway that.
Could extend into.
Q1, or maybe beyond based on additional activity, that's that's not being.
You know counted towards the end of 'twenty, two outlook and in terms of cash.
And I'm wondering does.
Those kind of frameworks in terms of timeline for your cash runway does that include.
Funding the plant trade business.
Is there any kind of nuance there as we understand.
That's still an active part of your operation.
Yeah.
Great question, Bobby and the way, we think about our runway as I said at the end of our prepared remarks is that our with the raise that we just completed it extends through the end of 2022, which is inclusive of two important data points first being it only includes committed customer cash so.
For purposes of that projection, we've only counted the cash that we've got committed to come to us from customers. So the majority of what we can execute from.
Licensing perspective, especially as our product development in the case of the bio factory would be upside to those.
And then it also includes from a spending perspective, our investments to continue to develop the bio factory production system.
Spanning its capabilities tie AI ml and.
And back into the plant spring platform.
And so we've also got the opportunity to evaluate as we go forward what level of spend do we need to put against that but when you put all those pieces together. It takes that end of 2022 runway and extends it out.
Into.
Q3 or Q.
Q1, 2023, and potentially beyond depending upon a number of factors.
Largely tied to the business development activity.
But to be clear youre not.
Winding down the plant trade business in order to fund certain buyouts that those are still ongoing activities across both sides of the company.
Absolutely we hired people back in Q4 to focus on the licensing side of the business.
He has continued.
Making wonderful progress with prospective customers.
Licensed both elements of our technology as well as the historically developed product candidates at his sole focus which is what we needed.
Okay, great. Thank you.
And our next question comes from Brian Wright from Roth Capital Partners. Please go ahead with your question.
Hmm.
Good afternoon, congratulations on all the progress you are making so quickly.
Thanks, Mike.
Youre welcome Mike My first question was.
But wanted to kind of get a sense. So so the the commissioning you said is completed and everything is set to go from that standpoint is that correct.
Yes, we were able to commission that there towards the end of the year sort of what we've guided to the street and I think it was Q3, when we made that announcement.
Okay, and so like all but like when I think about like you know commissioning a a.
They ship for Seaworthiness and stuff like that so it's it's all you know.
Producing like beta then or something similar to prove that it's up and ready to go just ready for.
Customer contracts and then things of that nature that just wanted to make sure I understood that correctly, yes. So we commissioned out and now we're in a position for growing and scaling it.
Which is continuing to expand its capacities one of the things Thats really a big driver for US now is to two overlaid or AI ml capabilities.
Within the system, which continues to ongoing and capture data, which makes our mission productivity even greater.
We're really interested in is focusing on scaling aspect as it relates to customers.
Necessarily milestones in order to continue to scale it.
That's the big driver for us here coming up going into Q1.
And then in your youth in this kind of ties into my next question because in your use of the proceeds.
You mentioned you know the first thing to mention is.
Enhancing the capabilities, including increasing its capacity to produce at larger scales. So just wanted to get a little more kind of color on the 200 to what are we kind of think and then I'm, assuming that's kind of.
Been kind of driven by kind of how that commissioning process went for you.
Correct again, the size of the facility mirrors, which you see in the pharmaceutical industry. It's a natural progression the thing that we're seeing.
Our focus is that the biofact Caribbean modular in nature, we're able to scale it potentially.
Potentially to scale it in different ways.
There has been request for example from customers enquiring about potentially putting a bio factory in one of their facilities.
<unk> to help them in their sustainability footprint by definition that would be a different size of bio factory. So the modularity and the scalability is something that we're going to continue to focus on.
So we're not in that situation you would be partially funding at even if it were on a.
Customers. So sorry, you would own the actual production system is that kind of how to think about that.
In that instance, yeah, that's the possibility as we mentioned.
Focus on commercial scale is really to leverage infrastructure partners and using an asset light approach.
What we're finding is as due to the modular nature of the facilities that we can be able to place at different areas and it's going to really depend on again going back to that approach to meet customer demand driven.
Customer has certain needs, we're able to be able to fit.
To those needs and address what theyre looking for in terms of sustainable compounds.
Okay, Great and then one last one if I if I can it sounds like you're making great progress with the negotiations with what's your first.
Commercial contracts with what's planned spring and Empire factory as you know it's there.
Yes.
Can you give us some color on stages of negotiations.
Yeah, I know, there's multiple people you're talking to but maybe kind of who's the furthest out kind of like.
You know any kind of color of of of you know.
Or are things being you know.
Is it time for the that is the time for the attorneys to review things are you know are we getting that close.
The exciting thing for us as we made the announcement.
Really becoming a synthetic biology company in October .
In making that.
Strategic initiative.
For calix takeoff as to the reception from customers I think we had roughly six of the top 100 sustainable companies. According to the Wall Street Journal and engaged in talks.
How has more than doubled the breath of conversation across.
Cosmetics Nutraceuticals now even into pharma continues to expand and of course the conversations.
In terms of the depth and how far along they are.
But we're very very encouraged is the reception you're getting a real Testament is the fact that customers are able to come to us with those specific compounds that they need a plant based solution for.
That makes the process.
Exciting for us and potentially moving a lot quicker than anticipated.
Great Great Congrats again.
Thank you.
Once again, if he would like to ask a question. Please press star and one.
Our next question comes from Amit Dayal from H C. Wainwright. Please go ahead with your question.
Thank you congrats on that everyone.
Most of my questions have been asked but just with respect to the AI and ml technologies.
Any of this built in house or are really relying on third party providers for these.
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Well, one I think it's a great question just just to highlight something that was a big milestone for us as you can see with our our progress we are really leading up to growth and scale. The AI and ml capabilities is incredibly important for us as it applies to really the entire business across the plant screen platform as well.
As our bio factory, so a big big.
A big driver for us in terms of value and additional future milestones that we may we may have.
And I'll add on to that.
From our perspective.
AI ml capability.
The area that's led by.
Our recent hire is both in the developed in house in terms of capabilities, but we run it largely in the cloud right. So it's not something that we've got to make massive investments in boxes and things like that at this time until it's proven to be quick to implement based on the capability that we had internally.
In terms of Holly we added.
Some things together and we've connected into the pilot bio factory until as we've run the shakedown.
And last question just talked about we've gathered a ton of insightful data.
We continue to use and Williams as we go forward so.
It's been a very quick win for us it's been impactful.
Using it.
Early stages of our development process.
The design phase to help us identify pathways and targets and we as we've gone forward I. Just gave you. An example of where we've expanded its capability already and we look forward to continuing to expand those as we look forward here.
Right and.
Just in regards to that the data that we are building these stuff like these.
Keep abilities the library, if you will.
What is it possible to monetize that information by giving access to other developers et cetera to look awesome that knowledge I guess.
Yes.
Yeah.
Good good good question absolutely.
There is another thing Thats one of the very attractive for about AI ml for our business model is the the vast amount of data that it does captured and that may not be directly related to again going back to our customer demand driven needs, but could be monetize and use elsewhere by others. So that.
It's certainly a consideration for us.
The beginning.
Alright, guys. That's all I have thank you so much.
Yeah.
Yeah.
And ladies and gentlemen, this will conclude our question and answer session I would now like to turn the floor back over to Michael car.
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