Q4 2021 Yield10 Bioscience Inc Earnings Call
Welcome to the fourth quarter and full year, 2020 , one financial results and business update conference call for yield 10 Bioscience.
During the call participants will be in listen only mode.
This call's yours 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 Alex and good afternoon, everyone welcome to yield 10, Bioscience fourth quarter and full year 2021 conference call.
Joining me on the call today are president and CEO , Dr. Oliver Peoples Vice President.
And of research and Chief Science Officer, Dr. Kristi, Snell, and Chief Accounting Officer, Chuck Hauser.
Earlier this afternoon, Youll kind of issued our fourth quarter and full year 2021 financial results. This press release as well as slides accompany today's presentation are available on the Investor Relations events section of our website at El pen bio Dot com.
Let's turn to slide two please.
Please note this part of our discussion today management will be looking 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 cautioned that statements are not strictly historical constitute forward looking statements and 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 include risks and uncertainties detailed in yield ten's filings with the SEC and 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 I'll turn the call over to Ali Thanks, Lynn Good afternoon, everyone and thanks for joining our call.
In 2021, we executed against our strategic plan to establish Camelina as a new platform crop for the production of low carbon petroleum replacements and food products we.
We made key hires conducted field tests and seed scale up of various camelina lines.
Other advantages that create significant momentum going into 2022.
So Dave will provide an update on our recent accomplishments, including our 2021 field tests as well as sort of your target markets with an emphasis on biofuel feedstock oil.
Present in the fourth quarter and year end financials and summarize key milestones.
We'll then open the call for questions.
Let's turn to slide three.
Our innovation plot farmer trait factory centered around the oilseed camelina.
We plan to establish a platform crop for the production of low carbon petroleum replacements. So I'd products user face factory approach applying the principles of synthetic biology to improve the performance of the crop and produce new seed products.
This includes fixing more cotwo in the air to increase seed yield in oil content in the near term and producing high value proprietary seed products in the future.
But some of them are varieties me also have the potential to sequester more carbon in the soil as shown on this slide.
Let's start to slide four.
We have significant momentum entering 2022, we've transitioned by identifying the camelina lines will enable us to turn our focus to early commercial activities to supply low carbon feedstock oil to the biofuel market.
Our commercial team is engaging with potential supply chain partners to form alliances.
Support our capital light business model.
In January we welcomed our new greenfield 13th to Leach seed operations.
John has more than 25 years' experience in canola with companies, including CSF Avago Science and service.
Our commercial team is reaching out to growers for contract planting in 2022, establishing seat inventory and management systems to enable the commercial seed supply I'm planning for plant variety registrations and branding to support product launch.
As we build our business around Camelina. Our research team has done an outstanding job developing a REIT differentiated leak camelina lines to launch the business on a portfolio of novel gene traits.
In late 2020, we began an intensive effort to deploy well established herbicide tolerance traits and downy mildew.
Mildew resistant into Camelina oil.
Over the next year or so the current varieties will be further enhanced by introducing these gene traits.
Other trades to create new varieties offering benefits to farmers and increased seat product revenue.
In 2021, we continue developing and scaling up winter varieties.
As part of our strategy to access large acreage in the off season, when along with life follow.
So there will be no competition with soybean canola.
We view, establishing camelina as a high value winter cash cover crop as a key strategic goal for Ya ton for Biofuels in near term and for the two new seed products in development Phe, Bioplastics and Omega three oils.
Given the near term commercial focus on biofuel feedstock, we prioritized research efforts around oil contact boosting traits.
Discovered using our grain platform.
And we've recently reported data generated in a 2021 Springfield US provided updates on our company of programs, including early commercial activities in the biofuel space and progressing the PHA bioplastic trade for.
For more on our 2021 field test results I'll pass the call over to Christie.
Thanks Ali and good afternoon, everyone.
Our team executed an extensive spring field testing program in 2021, which has provided us with a rich dataset on the performance of our Camelina and canola lines I'll now review some of our key findings, let's turn to slide five a summary of 2021 Springfield test results.
We evaluated our Camelina germplasm collection in 'twenty, 'twenty, one and collecting performance data on more than 20 spring base germplasm lines.
Some work from our internal collection and others, where some university collections that we acquired.
Our key internal Camelina germplasm lines were among the best overall performers in the field.
Determined by seed yield oil content and agronomic properties.
We also evaluated our CRISPR Camelina line E. Three nine O two.
Pittsburgh Camelina line <unk> 902, again shows that it is a consistent performer.
Producing about a 5% increase seed oil content in the field.
Just on our work evaluating and comparing germplasm performance. We also confirm that he <unk> nine O. Two Christopher three are deployed in one of our best performing tariff bottom lines.
Based on the oil yielding germplasm performance of Camelina line <unk> three nine O. Two we plan to apply for plant variety registry.
Camelina C 3015 for production of PHA.
Our field work in 2021 also confirm the camelina with the C 3015 trade.
That's performing prototype PHA line, which produces up to 6% PHA and feed with good yields.
Camelina containing the C 3020 oil trade.
We tested the C 3020 trading Camelina for the first time during the 2021 field season.
<unk> produced up to a 9% increase in oil content, which is comparable to the 10% increase we observed in greenhouse studies we.
We identified this promising trait using our green gene discovery platform.
And I'll, let containing the C 3007, Christopher trade.
We also tested the C 3007 trading canola for their first time in 2021.
In field test flights with this trade produced up to a 5% increase in oil content.
And greenhouse studies, three 3007, <unk> and canola produced an increase in oil in the range of 5% as well as the significant increase in seed yield.
Warm weather conditions in 2020 , one at the site, where we tested this trade produced a lot of variability in seed yield which complicated the collection of seed yield data.
<unk> 3007 trade targets, a negative regulator of a key enzyme in oil biosynthesis and our data and can all is very encouraging.
I'd like to thank our team for doing such a great job managing the many complexities of our 2021 killed test program as well as completing the extensive data analysis, resulting from the effort.
Let's turn to slide six outlet for 2022 Camelina development.
In 2022, we will continue to build our elite Camelina germplasm.
This will include conducting an extensive field test program as well as seed scale up utilizing contract growers as we continue evaluating and scaling up our leading spring and winter Camelina lines. The first of which we plan to register as new varieties we.
We will also continue to develop elite camelina with trades to seed oil content seed yield herbicide tolerance and downy mildew resistant weed.
We've made good progress working on herbicide tolerance and will expand our testing for residual soil and over the top broadleaf weed control. We will also test candidate lines for resistance to downy mildew, a fungal disease.
Christopher Camelina line <unk> hundred nine O two.
Given the performance of our genome edited high oil line <unk> three nine O two which has been confirmed is not regulated in the U S and Argentina. We plan for this to be registered as our first commercial elite camera arena PE Camelina variety.
Planned to ramp up production of eastern Idaho, too for the feedstock oil markets for renewable diesel.
He is currently being scaled up in the 2021 2022 contra season, and we expect to use it for further seed production in 2022.
We have also produced our first E suite to suite Camelina lines with herbicide tolerance gene.
And these will be tested for the first time in the field this year.
Camelina C 3015 trade for PHA.
We are planning acres scale seed scale up of our prototype Camelina line containing the C 3015 trade for production of PHA bioplastic for process development and product sampling purposes.
In R&D, we will continue to work to optimize.
Great.
10% to 20% PHA biopic and speed and to demonstrate the PHA bioplastic co polymer production in Camelina.
Camelina T 3020 trade for oil content.
Camelina lines with the <unk> 3020 trade, we will conduct field tests to collect seed oil content in CGM data with that I'll hand, the call back over to Ali.
Thanks, Christy and congrats to the team for their accomplishments advancing the program last year, our strategy to build shareholder value is to commercialize heavily now as a platform crops to produce renewable products, including feedstock oils renewable diesel in the near term and to leverage our advantages and crop development to launch elite Puget Camelina variety should be achieved bioplastics in the future.
In addition to the in addition to these two areas where companies can be used to replace petroleum products. They're also collaborating with Braskem said resource to produce EPA DHA Omega three oils for food.
Let's turn to slide seven.
Just on the non fuel industry industry investments production of renewable diesel alone is projected to grow up to 5 billion gallons annually from an estimated 1 billion gallons in 2021.
These investments are necessary to meet regulations, such as the California, low carbon fuel standard and selling diesel fuel in California requires producers to meet the carbon standard either by lowering.
Carbon.
Susan.
By adding lower carbon renewable diesel to petroleum diesel or purchasing carbon credits.
Interesting energy prices due to the crisis in Ukraine is another potential tailwind for biofuel demand.
This new demand will have to be met mostly from increased vegetable oil production.
Just to illustrate the scale of this challenge hunting 5 billion gallons of soybean oil would require another 60 million acres of soybean.
Acreage is that just simply not available. So this will require multiple approaches.
This includes new traits for an interesting soybean and canola seed oil content in seed yield and the oilseed crops, which is an opportunity for yield 10.
Our new Camelina crop is well suited to support this growing feedstock demand using spring varieties in areas, which are less productive for soybean and canola and as the winter cover crop when the line would otherwise be follow.
According to the illustration on the slide harvesting 10 to 15 million acres of Camelina cover crop could generate over 6 billion in revenue from oil and meal.
Let's start to slide eight.
Our commercial strategy for elite Camelina as a capital light one using contract farming seed crushing and customer off take agreements to manage costs and inventory risk in the early years of the business.
Stablish a leadership position in Camelina in the near term we are prioritizing the development of Camelina lines with Harbourside colors and disease resistance to enable large scale acreage.
Our performance rates were yielded oil will be stopped into these lines as we progress.
In 2022 to 2023 D I plan to execute to scale up activities to enable planting in the range of 1000 20000 acres.
Forward with our current nonregulated, you varieties and more progressive regulatory path for new varieties, including those with harbor site tolerance as needed.
In addition to our R&D activities, we have ongoing discussions with key players in the value chain, including seed processors and biofuel companies, whereas stated our goal is to secure offtake agreements.
Turning to slide nine a little discussion on PHA bioplastic.
And appreciate bioplastic area. Our efforts are focused on optimizing the PHA traits to enable phe Bioplastic productions in Camelina seed are.
Our business model is the safest for biofuel feedstocks use contract growers to produce the elite phe camelina, it's going to be process to produce <unk> products PHA bioplastic biofuel feedstock and protein meal. This will integrate phe bioplastic production into large scale low cost agriculture with the potential for costs in the range of feedstock oils.
From a carbon perspective, taking sidoti directly from the air and directing it to phe bioplastic in seats is compelling.
This platform will take time to develop and Chris has already outlined the R&D activities listed here for this year.
Consumer pressure and increasing petroleum prices has increased Brian Mitchell round owner interest in alternative materials like P. L. A just can possible in industrial systems and the more expensive PHA bioplastics, Mr highly functional and us but have the advantage that they are fully biodegradable and environment.
We're pursuing collaborations with industry as phe Bioplastics subtraction with brand owners interested in biodegradable materials as a zero waste end of life solution for their products and packaging with.
We believe that this is a very attractive market PHA prior plastics produced from plants and I would like to thank all of those plastics made by pumps represents a potentially disruptive technology. So we look forward to updating you on our progress throughout this year.
Starting to slide 10 for an update on fish oil and Omega three.
Theres, a large opportunity Omega three fish oil market driven by reduced supply of oil from harvesting fish and growing demand in aquaculture feeds nutraceutical markets.
We believe that land based production of Omega threes as an important has an important potential solutions for this market.
Shown on the table the Camelina EPA DHA Omega three product is clear potential to be best in class across quality and composition with around 20% combined DHA and EPA Omega threes, plus a third Omega three hilli.
Ah represents a sustainable way to meet the international growth anticipated in this attractive market.
In 2022, we plan to continue our work with Rotten start to progress the Omega three space with coupons of stock into the elite Thumbelina varieties currently underdevelopment a yield pen for feedstock oils at the progress third party business discussions.
Now, let's turn to slide 11 licensing opportunities.
We have nonexclusive research license agreements in place with their JDM forage genetics, and Simplot professor fits and various commercial crops. Each companies of all anything of trades and their cognate crop with the option to negotiated commercial license autos.
On this slide indicate the duration of those agreements.
We're also following up on industry interest in oil content traits, including <unk> thousand seven for soybean and canola.
<unk> partners to test based on corn.
<unk> Green car for all presents also represents a unique collaborative opportunity driven by interest in identifying novel performance traits.
Now, let's turn to slide 12 for an updated financial results.
Our net operating cash usage was $2 5 million for the fourth quarter 2021, and $9 3 million for the full year 2021.
Our guidance for total net cash usage was 10 to $10 5 billion for 2021 and the actual 2021 net cash usage was approximately $10 3 million.
For the full year 2022, we estimate total net cash usage of 12 to $12 5 million the.
The increase over 2021 spend is to support our transition to commercial activities, including seed operations as well as accelerated goal achievement and R&D.
We ended the year with $60 million in cash cash equivalents and investments we expect our cash on hand, together with expected revenue from our current government grants will support our operations into the first quarter of 2023.
We have no debt on our balance sheet.
Let's now review the full year and fourth quarter of 2021 operating results.
For the full year ending December 31, 2021, our net loss after taxes was 11 million or $2 33 per share as compared to $10 2 million or $4 30 per share in 2020.
Total research drive revenues for the full year 2021, or 614000 versus 799000 for the full year 2020.
For the full year 2021, R&D expenses were $6 2 million.
To $5 4 million in 2020.
G&A expenses were $6 1 million for the full year 2021, as compared to $5 million in 2020.
For the fourth quarter of 2021, the company company reported a net loss after taxes of $3 million as compared to a net loss after taxes of $2 6 million for fourth quarter of 2020.
Total research grant revenues in the fourth quarter of 2021 were 152000, especially 195000 in the fourth quarter 2020.
The decrease in the quarter reflects a refinement of internal resources to near term commercial goals in.
In the fourth quarter of 2021, R&D expenses were $1 6 million compared to $1 4 million in the fourth quarter of 2020.
<unk> expenses were $1 5 billion in fourth quarter 2021, as compared to $1 4 million in fourth quarter of 2020.
For more details on our financial results. Please refer to the earnings release.
Now, let's turn to slide 13 for a list of upcoming milestones.
In 2022, we will continue to focus on the following milestones responding our commercial activities targeting the renewable diesel market.
Continue to build our differentiated elite Camelina germplasm collection executing a 2022 field testing in seed scale up program advancing the optimization of our PHA Bioplastic trade.
And progressing the commercial launch plan for Tamblyn, our DHA EPA Omega three oils <unk>.
Securing grant revenue.
Our revenue generating strategic industry collaborations and additional grant revenue and expanding our intellectual property portfolio without I'd like to turn the call back over to Lynn for questions. Thanks Ali.
Alex we are ready for questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to remove your question from the queue for.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
Thanks.
Good afternoon.
So Anthony How're you doing.
Good good how are you doing so.
Yeah.
You know the supply chain.
Side of the business and the renewable diesel market, but what can you talk about the nature of the conversations your commercial team is having with the supply chain participants and have you had any impacts.
Ah recently.
From from Covid or do you feel like at this point that that's behind you.
Yeah. So just let's take take take Covid off the table for the time being and hopefully there won't be another variant that brings it back on so I think we're pretty much through the COVID-19 situation.
Regarding the types of conversations we're having with biofuel companies I mean, I would say what we've learned from the many different third party conversations we have I would say their priorities are number one securing supply because obviously.
These facilities are being built and quite frankly, they can't really be supplied by soybean oil and there is no more palo literally to go around so obviously oilseeds are oil processing has to increase.
The second thing, we're hearing is they'd like to move away from food crops.
It also fits with the Camelina story.
And the third thing is they're really targeting getting to the lowest carbon intensity index score possible, which is obviously a big driver of value and actually defines how much of the renewable diesel they have to blend into their into their final fuel before they can sell in California. So that's what we are hearing from the fuel players.
The second thing we're hearing is that there's also a number of these fuel players are aligning with some of the big Sea process processors. These are the big ABC companies Adm's Mongoose cargos.
And then you get into Dreyfus Richardson and there's a there's a list of these.
And we're also seeing you know what let's see investment and you see crushing capacity both in the Canada and the U S.
Only among the large players but also among.
Many of the soybean crops in areas of the.
The country the yield is focused on so we're seeing this across the value chain.
And then when you look at where yield 10, and how youll tend to like to get started in the business in an ideal situation would.
It would be in the region suitable for growing our camera leader.
Where we already have obviously capabilities in place.
It would be I would say a biofuel player preferably highs crushing capability in place.
And already as a channel to market for the fuels. So you know that's a that would be sort of ideal.
Launch point.
But we're also seeing a lot of strategic interest from some interest from some of the bigger players.
And I'm not interest has driven I would say.
More long term because they're so busy with these capital investments, but it's really more about how do they get the most compelling non food low carbon story.
I would have to be quiet.
Honest with you one of the major attractions is the combination of biofuel feedstock in PHA bioplastics because of the negative carbon impact with the bioplastics and not see yourself some synergies so.
We will see how all those things shake out.
Obviously the size of the company. It's also the pace at which you can progress and so.
You've got a lot of things ongoing, but obviously until something is actually.
I would say quantified legally then then we will be able to talk about it.
Okay.
It sounds like it sounds like.
Talks are are progressing.
You know at least from your comments it sounds like Youre having.
More conversations is there anything that they're requiring you know whether it's.
More validation Moorefield test anything that they're requiring you think.
Two to get them over the hump so to speak in terms of like you said codifying interaction.
Signing a contract or is it just it's just especially with the larger customers is just a lengthy process.
It's just you know with larger players I mean, it's obviously a lengthy process.
Thankfully I mean, an example would be.
Some of the largest player sees this as obviously Exxon.
It's pretty involved in global clean Energy Holdings, which always is a company called sustainable oil that has a obviously.
Our non GMO camelina platform.
This is part of a recent deal the obviously.
Sought to secure 30% of the sustainable oil such as the Camelina seed business.
You know they are clearly looking at this whole area of strategically.
One thing that the yield that we will not do is we will not trade on our intellectual property in Camelina, just just to work with oil Palmer.
We don't believe we have to do that.
We believe we can essentially retain control of our intellectual property and capabilities still work with these partners in a way that meets their needs.
But protect the interest of long term interests of our shareholders.
Okay, Great. That's helpful. I'll hop back in the queue. Thank you.
Thanks Anthony.
Our next.
Thank you.
Your next question comes from the line of Sameer Joshi with H C. Wainwright. Please proceed with your question.
Hey, good afternoon, thanks for taking my questions.
Just digging a little deeper.
I know it because the only news on.
Discussions on the renewable diesel them access to market, but how do you and besides this win.
As far as our intent is concerned would you be interacting with the renewable diesel producers songs contract kilometers or the abcs of the world or crushing companies like would it be your.
Most likely yes.
Yes, so regarding right now I mean, basically we are already in conversations with farmers about growing contracts on.
<unk>, who joined us.
He's literally drinking through a fire hose, so he's a very busy guy.
And he's really hit the ground running based on obviously the work of trust in our team.
Basically you know that we're already in discussions with doors.
Above contract production this spring and actually also planted plant for this went through as well.
We will have to see how all that goes so there's obviously some real unique.
Unique dynamics in the AG sector attributed the Q train and it being such a big great.
Great and important green producer so doors is really that would be contracts with yield 10.
What we're trying to do however is to contract the offtake of the grain after harvest.
With crusher.
Crushers on our oil company, which a biofuel companies to have crushing in place.
So we see ourselves as being sort of in Asia, but also I would say more or less.
Enabler for the value chain like flex or income.
The farm gate basically versus selling seats to the farmer.
Understood.
And so oh and one of them. The slides you mentioned I think just you mentioned a 1000 to 20000 acres.
To be blunt planted.
Is that.
E D.
Oh Boy I T or is.
E, Turkey, 20, where I T.
Yes, 900 to theirs and we don't have any <unk> hundred 30 <unk>.
Yes.
It's too early for <unk> thousand plenty I mean literally.
So literally.
The green team literally plot seafood 20 out of the ether space.
Okay.
Deducting plugged it into plugged it into Campbell.
Obviously, a really very exciting results.
But that's a very very good development.
Exciting and so right, but it will take time to bring that forward.
And I do think Thats, obviously, the R&D team is always looking at six 8020 by itself, but obviously start with to combine these things with some of your some of the other oil trades that we haven't had the rights.
<unk> hundred nine or two or the C suite folks in southern itself.
I would say one thing is clear is justice used investors retrofitting seafood plenty, we are seeing a symbol of interest from some of the larger players.
Because suddenly oil value per acre is a huge driver.
In terms of the seed business itself, both for canola and soybean. So how all that works out we will have to see but we are already having conversations with some of the players in those slides.
Okay.
Okay.
Yes, so I think.
Len reminded me a key point here, so Ethernet <unk> 92, as our lead spring variety and obviously that speaks scaled up.
But we are also scaling up to winter lines, Christy you want to speak to those.
Yeah, we have to our proprietary winter lines that we've developed in house that are.
We are working very well the extreme cold and then we have one that works well in more temporary.
Temperate climates, and we're scaling those up right now are too long.
The need for renewable diesel.
So do.
Do they have a number like 30 something.
There'd been assigned a number yet.
And internal numbers, so not external number he outlets lifestyle.
Got it got it so my.
Next question is actually three or four questions. In one then just hear me out.
Oh of course.
Welcome all of that is.
So the key.
So he remain all too well what was the control quality content.
Help us think improvement though of that hold those flat.
Oil content.
To soybean canola.
It's really amazing.
Because.
Essentially soybean has about 18% oil.
Depending on the variety is kind of up to 40 plus percent oil.
And then of course, there's a wide variation across the geographies. So these are still small relatively small trials I think so but the only thing we can really do is to compare it to the camelina control.
And in that case, obviously.
<unk> is having 5% more oil which is obviously beneficial.
In terms of our launch of the business.
But obviously, we won't stop there and Thats why some of these although traits like <unk> thousand 20.
Really interesting.
So is it fair to assume that the comedy in my control.
Is that on 30% to 40%.
Because it is dilutive to come along.
It really depends where it was ground you get higher oil content when you're growing up in Canada than you do in Pacific Northwest U S States, so it really depends where it counts.
Okay.
Emily.
Yeah Yeah.
Culminating question here.
Uh huh.
Please understand that 2020 is a new oh.
The ZIP consider did you need to hedge against the E U.
To which has not been calculated.
Please continue.
Yeah.
We believe the regulation will be advantageous through then you sick care rollout is it camelina gene that we of course have to go through that process to see how it pans out, but we believe there will be some advantage.
Okay, and then one last question one a different topic the licensing.
<unk>.
That you have Oh.
With Simplot for Florida.
Those are those are ending in 2022, Oh what is should.
Should we expect to be there.
The outcome of these or do you expect needs to be extended further.
What how should we look at these license in humans.
Yeah. So you know I mean, I think obviously in the ideal situation some of the wall translate over to.
So basically commercial licensees that will depend on what these companies C C.
And the field trials this year, how do they view that.
We can't really provide any farther colorado.
But suddenly.
There's a there's definitely progressing these I mean all of doing field trials this year.
We do have.
Information, but we can share that with you.
Oh.
Okay.
That's all my questions offline. Thanks, a lot for taking my question.
Okay.
Thank you.
Ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call over to Lynne Brum for closing remark.
Yeah, Thanks, Alex I'll turn the call back over to Ali.
So I'd like to thank especially thank all of you for joining us on the call Tonight, and especially our shareholders for your continued support. This is an exciting time for your tonnage we have gained clarity and focus on the opportunities ahead in 2022 and beyond in the near term we are focused on preparing for the launch of Camelina.
D space as well as on advancing activities on PHH bioplastic in Omega three oil products and development I want to thank everyone at yield 10 for keeping us on track to reach our goals and plenty of 'twenty two.
A nice evening everyone.
Thanks, Alex.
Everyone you may now disconnect.