Q2 2023 Cibus Inc Earnings Call

Good morning, ladies and gentlemen, and thank you for standing by welcome to see the second quarter 2023 financial results and corporate update conference call and webcast Jeremy.

Speaker 1: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to CVS second quarter, 2023 financial results and corporate update conference call and webcast.

Speaker 1: During today's conference call, all parties are in a listen-only mode.

During today's conference call all parties are in a listen only mode.

Speaker 1: To ask a question during the session, you will need to press star 1-1 on your telephone, and you will then hear an automated message advising your hand is raised. So with draw your question, please press star 1-1 again. This conference is being recorded today, August 10, 2023.

To ask a question during the session you will need to press star one one on your telephone and you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

This conference is being recorded today August 10th 2023.

Speaker 1: At this time, I would like to turn the conference over to Wade King, CBIS's Chief Financial Officer. Please go ahead, sir.

At this time I would like to turn the conference over to Wade King see this chief Financial Officer. Please go ahead Sir.

Speaker 2: Thank you and good morning. This is Wade Kidney, the Chief Financial Officer of SEVUS. I would like to thank you for taking time to join us for SEVUS. Second quarter, 2023, financial results and corporate update conference call and webcast.

Thank you and good morning. This is weak King Chief Financial Officer, I would like to thank you for taking time to join US for <unk> second quarter 2023 financial results and corporate update conference call and webcast.

Speaker 2: Presented with me today is Rory Riggs, our co-founder, chief executive officer and chairman, and Peter Beatham, co-founder, president and chief operating officer.

Presenting with me today is worried rates, our co founder and Chief Executive Officer, and Chairman and Peter become co founder President and Chief operating Officer.

Speaker 2: We press release detailing these results across the wire early this morning and is available on our company's website, sevis.com.

Press release detailing these results crossed the wire earlier this morning and is available on our company's website <unk> com.

Speaker 2: Before we begin the conference call, 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 may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call.

Before we begin the conference call I would like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and image.

Street 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 call.

Speaker 2: Please prefer to see this FCC filings for a list of associated risks. This conference call a 7.

Please refer to see the SEC filings for a list of associated risks.

This conference call is being webcast. The webcast link is available in the Investor Relations section of <unk> Dot com and will be accessible for 90 days.

Speaker 2: The webcast link is available in the investor relations section of CVS.com and will be accessible for 90 days.

Speaker 2: At this time, I'd like to turn the call over to Lauren for his opening remarks. Lauren.

At this time I would like to turn the call over to award for his opening remarks alright. Thanks.

Speaker 3: Thanks, Wade. Welcome to our first quarterly release, which we're really excited about. Financially, this quarter will be a little bit different from quarters going forward. Is our financial results for this quarter only reflect one quarter of the combined operations of Cali Concidus, as merger, green, and became effective in June 1st, 2023. That means the results reflect two months of Cali and one month of the combined up.

Thanks Wade.

Welcome to our first quarter release, which we're really excited about.

And actually this quarter will be a little.

Little bit different for quarters going forward as our financial results for this quarter only reflect one quarter of the combined operations of Calix Placebos as merger agreement became effective on June one 2023 that means the results reflect two months of scaling and one month of the combined operation I think the easiest way to understand this is Ted.

Speaker 3: I think the easiest way to understand this is to have Wade go over our financial presentation. Wade?

Wade go over our financial presentation.

Thank you Murray.

Speaker 2: Earlier today, we issued a press release describing our second quarter of 2023 results. We are also filing our fourth 10 queue for the quarter today. For additional details about our financials, for second quarter of 2023, please refer to our press release or fileings with the FTC.

Earlier today, we issued a press release, describing our second quarter 2023 results. We are also filing our Form 10-Q for the quarter to date.

Additional details about our financials for second quarter of 2023, please refer to our press release, our filings with the FCC.

Speaker 2: As we described, we are excited to bring the two leaders of gene editing and agriculture together in our recent.

As Ray described we're excited to bring the two leaders in key yesterday and agriculture, together and our recent merger today.

Speaker 2: The day we are reporting financials as part of this transition from the legacy K-LIX business alongside the combined company business.

Today, we are reporting financials as part of its transition from the legacy <unk> business alongside the combined company basis.

Speaker 2: Now for our second quarter, 2023 financial results.

Now for our second quarter 2023 financial results.

Speaker 2: Cash and cash equivalence has a June 30, 2023. This 50.90 million.

Cash and cash equivalents as of June 32023 is $59 million.

Speaker 2: The company believes our cash and cash equivalents will enable SEVIS to fund planned operating expenses and capital expenditure requirements into the first quarter of 2024.

The company believes our cash and cash equivalents will enable seamless to fund planned operating expenses and capital expenditure requirements into the first quarter of 2024.

Speaker 2: R&D expense was $8.4 million for the quarter into June 30, 2023, compared to $3.2 million in the year ago period.

R&D expense was $8 4 million for the quarter ended June 32023, compared to $3 $2 million in the year ago period.

Speaker 2: The increase of $5.2 million is primarily related to increased land supply and facility expenses, an increase in employee headcount, and an increase in stock based compensation expense for restricted stock awards, award grants, and the acceleration of share of besting associated with stock award agreements due to the acquisition of SEVIS Global Pell LC.

The increase of $5 $2 million is primarily related to increased plant supply and facility expenses and increase in employee headcount and an increase in stock based compensation expense for restricted stock Awards award grants and the acceleration of share.

Vesting associated with stock award agreements.

<unk> of seamless global LLC.

SG&A expense was $11 $1 million for the quarter ended June 32023, compared to $3 $6 million in the year ago period.

Speaker 2: SGA expense was $11.1 million for the quarter in the June 30, 2023, compared to $3.6 million in the year at Goat Period.

Speaker 2: The increase of $7.5 million is primarily related to an increase in headcount, increased consulting and legal fees, and an increase in stock-based compensation expense for RSA grants and the acceleration of share vesting associated with stock award agreements due to the acquisition of Cevis Global LLC.

The increase of $7 $5 million is primarily related to an increase in head count and.

Increased consulting and legal fees and an increase in stock based compensation expense for RSA grants and the acceleration of share vesting associated with stock award agreements due to the acquisition of <unk> Global LLC.

Speaker 2: Non-offerting income was 1.3 million for the quarter in June 30, 2023, compared to 4.3 million in the year ago period.

Non operating income was $1 3 million for the quarter ended June 32023, compared to $4 3 million in the year ago period.

Speaker 2: The decrease of $3 million in non-opering income is due to changes in the fair value of the liability classified Class A common stock warrant.

The decrease of $3 million and nonoperating income is due to changes in the fair value of the liability classified class a common stock warrants.

Speaker 2: Net loss was $20.5 million for the quarter-indicute 30th, 2023, compared to net loss of $2.5 million in the year ago period.

Net loss was $25 million for the quarter ended June 32023, compared to net loss of $2 5 million in the year ago period.

Speaker 2: Net loss per share of class a common stock was $2.74 for the quarter in the June 30, 2023, compared to net loss per share of $2.66 in the year of go. Period.

Net loss per share of class a common stock was to $2 74.

For the quarter ended June 32023, compared to a net loss per share of $2 66.

In the year ago period.

Speaker 2: Now I'll turn the call back to Rory for his further remarks.

Now I'll turn the call back to <unk> for its further remarks.

Thanks Wade.

Speaker 3: In addition to the financials, this quarter will also be a little different. As we look at this quarter's release as the inaugural call for Seabus as a public company.

In addition to the financials. This quarter will also be a little different as we look at this quarters release of overall call perceive us as a public company.

Speaker 3: Because of this, the format will be a little different than a typical call. Our goal today to begin to develop an understanding of who is our business goals, strategy and milestone.? You

Because of this the format will be a little different than a typical call. Our goal today is to begin to develop an understanding of who see us as our business goals strategy and milestones.

Speaker 3: From here, the plan would be to do quarterly calls to review our finances and provide updates on the commercial progress as we launch our developed trade.

From here the plan would be to the quarterly calls to review our finances and provide updates on our commercial progress as we launch our developed trades.

Speaker 3: The merger between Kayle and Sebus was a great one-time opportunity to merge the two pioneers in Jeanette.

The merger between Calix, let's see this was a great one time opportunity to merge the two pioneers in gene editing.

Speaker 3: The union is significant because in the early days of gene editing, Cebus, Selectus, Calix, and Svagricultural Subcitoran University of Minnesota, one of the founders of Calix, we're the leaders of the developing the field of agricultural gene editing.

Union is significant because of the early days of gene editing C business selectors calix agricultural subsidiary and the University of Minnesota, or Lasalle payloads were the leaders of the developing the field of agricultural gene editing.

Speaker 3: All this essential agricultural change, adding technology from the spirit, now resides in Seavours. We're really excited to be working with our colleagues from Halix and taking advantage of all this great intellectual life.

All of this essential agricultural gene editing technology for this period now resides in seamless we are really excited to be working with our colleagues from helix and take advantage of all of this great intellectual property.

Speaker 3: The merger also allowed us to become a public company. We believe 2023 was a good year for us to go public, as it is the point of inflection year for us as we transition from R&D to a commercial company.

The merger also allowed us to become a public company. We believe 2023. It was a good year for us to go public as soon as the point of inflection year for us as we transitioned from R&D to a commercial company.

Part of this transition.

Speaker 3: We laid out a list of 2023 milestones that were critical to this transition.

Laid out a whole list of 2023 milestones that were critical to this transition.

Speaker 3: We're really excited because we have already accomplished many of our 2023 milestones and our on target for our remaining ones. The key milestones that we...

We're really excited because we have already accomplished many of our 2023 milestones and are on target for our remaining ones.

The key milestones that we have accomplished a multi fold.

Speaker 3: We first successfully made the initial transfers of our initial tray.

We first successfully made the initial transfers of our initial trading products. We are free to develop traits one for pud reductions at all where we will seek rate at two of our herbicide tolerance and rice.

Speaker 3: We have three developed traits, one for pod chat reduction, and one for the Lurorol C-Great, and two for herbicide tolerance.

Speaker 3: Our business involves editing our traits in the elite germplasma customers and returning a transfer back to the customer their elite germplasma. Our trait. Since our merge was announced in January , we have successfully returned our first three traits to a canola customer and to her recitalent trace to a race customer. In addition, we expect five more canola transfers in 2023. In addition, we open the Oberlin facility. For all the young people, where theappropriate

Our business involves exiting our trades and the elite germplasm of our customers and returning of transfer back to the customer their lead germ plasm.

Got it.

Since our merger was announced in January we successfully returned our first three trades.

Lola customer.

Two herbicide tolerant traits to Arista customer. Additionally, we expect five more canola transfers in 2023.

We opened the overland.

The facility and the industry's first gene editing production facility.

Speaker 3: This system is critical to our commercial model that involves editing a customer's elite germplasm and enables us to perform these edits at a commercial scale.

This system is critical to our commercial model that involves exiting our customers will lead germ plasm.

Holds us to perform these edits at a commercial scale.

Speaker 3: Finally, we have three traits in development. Two of these traits are in advanced stages of development, going through greenhouse and field validation. One of the traits is for square-attentiary resistance. This is an important trait of the conno-

Finally, we have free trade in development two of these trades are in advanced stages of development going through greenhouse and field validation one of the trades as was clearer tenure resistance. This is an important trade promo and soybean.

Speaker 3: We've already released a very encouraged greenhouse results for this trade in Q223. We've set more data on this important trade in the second half.

We've already released very encouraged greenhouse results for this trait in Q2 'twenty three we expect more data on this important trade in the second half of 'twenty three.

Speaker 3: Now last part of our business, which is helpful to discuss, is our ability to get major state companies to work with us in breeding collaborations to develop our current traits, but also to develop new traits with customers. So we're really excited enough today that we have...

The last part of our business, which is helpful to discuss is our ability to get major seed companies to work with us and bridging collaborations to develop our current trades, but also to develop new traits with customers and so we're really excited to announce today that we have entered into.

Speaker 3: entered into a breeding collaboration with Bair to test and validate our trade-need-chain process and our ability to edit lead germpluses with the return back to customers. Their plans were edits of them. And then we have others following up, but this is a really big moment for us as we start to develop this whole new industry where we can put advanced trades in the seeds in a fraction of the time and cost of traditional breed.

Breathing collaboration with bare to test and validate our treatments in process.

Our ability to elite germplasm returned back to customers their plants with edits of them and then we have others. Following that but this is a really big moment for us as we start to develop this whole new industry, where we can put it.

Vance trades indices.

Fraction of the time and cost.

Traditional region. These.

Speaker 3: These milestones do what we mean. We say that 2023 is an inflection year for our business, and it's path to a fully commercial.

These milestones are what we mean when we say that 2023 is an inflection year for our business and this path to a fully virtual company.

Speaker 3: Importantly, these milestones help frame the new industry of high throughput genetic that we are building our goal and the cause to use these milestones to form a base from which to report our progress and building the company and the new.

Accordingly, these milestones help frame this new industry of high throughput gene editing that we are building our goal and the call is to use these milestone to form a base from which to report our progress in building the company in this new industry.

Speaker 3: In 2023, we started transferring trade products and customers with journalism. We started production runs in industries first, high throughput trade production facility. We signed important collaboration with the leading seed.

In 2023, we started transfer trade products and customers with journalism. We started production runs at his first high throughput trade production facility, we signed important collaboration Greenfields, leading seed companies to do.

Speaker 3: The development industry further and we had major regulatory milestones in being the trace of high-coupaginating on our path to be regularly similarly the trace of conventional

This industry further and we had major regulatory milestones as being that trace for high throughput gene editing.

Our path to be regulated similarly that trades Bachelor rig.

Speaker 3: 2023 so far has been quite a year.

2023, so far has been quite a year.

Speaker 3: And I'm sorry, I'm gonna break and we put a couple slides together to block you through our business, our goals and our prospects and then give you a framework so that as we quarter to quarter start educating you on our progress and our pipeline, you'd have a better position for which to understand.

And I'm, sorry, I'm going to break.

Couple of slides together to walk you through our business our goals and our prospects and gives you a framework so that as we quarter to quarter to start educating you on our progress in our pipeline.

Better positioning for which to understand us.

Speaker 3: I'd like to start this section with the slide we use every presentation, which is a slide of my senior management team. What's really exciting about this company is, as a co-founder, so I've been a part of the repeat in grade for over 20 years.

I'd like to start this section.

The slides we use every presentation, which is a slide of my senior management team, what's really exciting about this company is as a cofounder.

A part of that particular and Greg for over 20 years ago.

Speaker 4: Wade is my analyst at Biomatrix. I've been Wade for over 20 years. That's really exciting to come back and work with him again. And then we're very excited that we recently hired the former general counsel of Sanjenta. And he ran our licensing. It's really important for us to build our business and create an old business. Little back.

Wages by analysts at biometric so I've got to wait for over 20 years. So it's really exciting to come back.

And work with them together and then we're very excited that we recently hired a former general counsel of.

Syngenta.

Youth brand our licensing it's really important for us as we start to build our business development business.

A little background on who we are.

<unk> is in the productivity trading business.

Speaker 3: As such, when we create products, we look at this line you see here. It's the slope of the productivity increases in the seed industry over the last 50 years. Our job is to help maintain or grow the slope of this line. That's what people in the seed industry do, we're in the seeded.

As such when we create products, we look at the slide you see here, it's the slope of the productivity increases in the seed industry over the last 50 years.

Our job is to help maintain or grow the slope of the slide that's what people see the industry do.

We're in the seed industry. This is what I think does it changes existing change within our plan. So that the plant to protect itself from things like environment, where it is.

Speaker 3: This is what ending does. It changes existing genes within a plant, so that the plant can protect itself from things like the environment or disease.

Disease.

Speaker 3: Importantly, our products directly impact the yield and cost of farming. In other words, our products impact.

Importantly, our products directly impact the yield and cost of farming in other words, our products impact the slope of this slide.

Speaker 4: We are paid for our products based on seed sales with our trades. Our rural keys are based on exchange, the economics, or value from our trade to a crop. This is essentially the same basis Apple Pace Qualcomm for components Apple Qualcomm supplies to your iPhone. We're an ingredient in a business and we're paid for the value we've paid to that product.

We are paid for our products based on <unk> sales with our trades are royalties are based on our sense of the economics are value from our trade to a crop.

This is essentially the same basis, Apple Qualcomm for components, Apple Qualcomm supplies to your iPhone or an ingredient business that were paid for the value we bring to that product.

Speaker 3: In the seed industry, there are essentially three principal tools that are used to improve yields for the major.

And you'll see the industry. There are essentially three principal tools that are used to improve yields for the major crops versus improvements in the germ plasm the genetics of the seed itself.

Speaker 3: First is improvements in the germplasm, like the genetics of the seed itself. And then is improvement in new traits. And these are the traits that allow you to better manage the environment.

And then there is improvement in new trade. So these are the trades that allow you to better manage the environment and third there is chemicals.

Speaker 3: I'm crop protection chemicals. With the impact of climate change coming and the pressure to decrease chemical usage, your employment trade improvements are the center focus today to include productivity as scale.

Protection chemicals with the impacts of climate change coming and the pressure decreased chemical usage germ plasm create improvements or the central focus to date to improve productivity at scale.

This is our business.

Speaker 3: The licensing of intellectual property associated with trace is an integral part of Agri.

The licensing of intellectual property associated with trades as an integral part of agriculture.

Speaker 3: The royalty's pay for productivity trades for the major crops is estimated to exceed $10 billion. This is roughly equivalent to operating profits of a global crop protection chemical.

The royalties paid for productivity creates for the major crops is estimated to exceed $10 billion.

This is roughly equivalent to the operating profit for the global crop protection chemicals business.

Speaker 3: The target market for productivity and trade businesses is roughly the same as the target market for agricultural chemists.

<unk> market for productivity trade business is roughly the same as the target market for agriculture chemistry industry disease.

Speaker 3: disease, pests, weeds, and the climate. We're all focused on the same general target.

We and the climate, we're all focused on the same general targets. The economics are very straightforward for each cros, but always two principle drivers of productivity create growth.

Speaker 3: The economics are very straightforward for each cross, but those two principal drivers and productivity trade roles.

Speaker 3: First, the number of acres in a crop impacted by a civic trade. And two, the trade acres per pain for a specific trade.

First the number of acres on a crop impacts the bias to the credit to the trade acres per paid for specific trade.

A great example of this is our first disease for <unk> systems. The number of soybean acres impacted by skirt tenure is approximately 25% of the total soybean acres or roughly 50 million acres.

Speaker 3: A great example of this is our first disease trait for sclerotinia resistance. The number of soybean acres impacted by sclerotinia is approximately 25% of the total soybean acres, roughly 50 million acres.

Speaker 3: The estimated trade range is approximately $7 to $10 breaker, which is estimated to be roughly one-third of the cost to manage square-a-tunion using funding funds. This equates to a $350 to $400 bill of dollar in part to prepare to maintain the resistance in sleep.

The estimated trade range is approximately $7 to $10 per acre, which is estimated to be roughly one third of the cost to manage their opinion using fungicides.

This equates to a 350 to 400 and build the market for clarity in the resistance and soybean.

Speaker 3: The trade royalty market for this trade is much larger if you include Canola and Winter oil sea.

The trait royalty market for this trade is much larger if you include canola and winter oilseed rape.

Speaker 3: But most importantly, these calculations are great example of how the looking trait markets in the term values for virtually every productivity trait.

But also importantly, these calculations are great example of how to look at the trade markets and determined values for virtually every productivity trade.

In this slide.

Speaker 3: The BT trade is an excellent example of how productivity trades work. And as far as we're seeing here, there's an illustrative slide. These are real numbers, but BT is not our trade. BT is a very important trade union.

The BT trade.

Excellent example of our productivity <unk> work in the side. We're seeing here is an illustrative slide these are real numbers, but BT is not our trade BT is a very important trade to the industry.

Speaker 3: I was officially pregnant, so too.

For corn and cotton trait revolutionized where management is currently used on over 90% of the acres grown for each crop demonstrating the pervasiveness of this trade create fees range between $10 $15 per acre with total royalty paid for this trading across all crops.

Speaker 3: currently used on over 90% acres grown for each crop, demonstrating the birth base of this trait. Trade fees range between $10 and $15.

Speaker 3: Total royalty paid for this trade across all crops. It estimated over $4 billion a year. The math is pretty simple. Total Lakers grown with this trade on them by the trade fee of royalty paid.

Is estimated to be over $4 billion a year.

<unk> is pretty simple total acres grown with this trade on them by the crate for your royalty paid per acre.

Speaker 3: The issue is a lot like the movie industry. The end of every season, the outcomes total up the revenues and calculate the number of people, actors, or companies that have earned royalties. This happens every season in agriculture.

And so this feels a lot like the movie industry at the end of every season. The accountants total up the revenues and calculate the number of people actors or companies that have earned royalties. This happens every season and agriculture.

New slide.

Speaker 3: This picture is meant to depict the process of conventional farming. Although a lot of technology is such a selective breeding of impact is this...

This picture is meant to depict the prospects of conventional farming, although a lot of technologies such as selective breeding of impacted this industry.

Speaker 3: It's still a slow random and expensive process that the existing infrastructure centuries is not milling.

Still a slow random and expensive process that has existed for centuries theres not millennia.

GMO technologies of goodness amazingly impactful trades like the BC trade, but these technologies are still very lengthy and expensive.

Speaker 3: GMO technologies are going to be amazingly impactful.

Speaker 3: like the BT tray. But these technologies are still very lengthy and...

Speaker 3: The most recent study estimated GMO trade requires on average 16.5 years and $150 million from ideation worked through Closet.

The most recent study estimated that GMO trade requires an averaged $16 five.

Years, and $115 million from ideation through conversation.

Speaker 3: The promise of gene editing is it can be the digital moment in agriculture. These technologies can materially change the time and cost of the trade development. And we believe it will restart the productivity boom started with GMO technology.

The promise of gene editing as it can be the digital moment in agriculture. These technologies can materially change the time and cost with great development and we believe it will restart the productivity boom started with GMO technologies.

Speaker 3: I'd like to move on that Peter Beath I'm sort of explaining this technology. To understand really what we do, you really have to understand what is the big bait for the Peter and Greg and have them accomplish here.

I'd like to move it Peter visa sort of explain this technology to understand really what we do you really have to understand what is the big breakthrough Peter and Greg have accomplished.

Thanks, Lori and good morning, everyone.

Speaker 5: Feed is high throughput reading or as we call it, the trait machine changes the game.

This is high throughput breeding or as we call. It the trade machine changes the game.

Speaker 5: What separates Thibis in the plant gene editing industry is its trait-lushing process.

What separates Davis in the plant gene editing industry is its trade machine process.

Speaker 5: is built using CVS Patenton Revitrate Development System or RTDS.

It is built using <unk> patented rapid trait development system.

Yes.

Speaker 5: The process for mediation, molecular discovery, or what I call the what to edit, then editing to the field validation can take as little as five years.

The process from ideation, molecular discovery, well, what I call the what to edit.

Then editing to the field validation can take as little as five years.

Speaker 5: The trait machine process is a crop specific standardised end-to-end gene editing breeding system that edits a single cell from an elite germplasm and generates the cell into the same elite germplasm with that edit.

The <unk> machine process as a crop specific standardized end to end as gene editing breathing system, but it's a single cell from an elite germplasm and generates to sell into the same elite germplasm with that edits.

Speaker 5: It is the first time bound and a reproducible breeding system in the plant gene editing industry.

It is the first time bound in a reproducible breathing system and the plant gene editing industry.

It is the breeding system.

Used at Oberlin location.

As we recently reported.

Sided to now have <unk>, new Standalone gene editing production facility.

<unk> believes that Tds and the trade machine process represent the technological breakthrough imply operating it as the ultimate promise a plant gene editing.

High throughput gene editing systems that are able to work as an extension of customers breeding programs.

The machine enables a standardized reproducible system that develops in a fraction of the time and cost of conventional breeding while GMO processes.

There is another aspect of the trait machine that is equally important benefit to this new era.

The ability to develop prototypes and to accelerate commercialization once a trait is developed.

Prototypes validate specific edits in a crop that lead to a validated trade.

<unk> is focused on complex types that involve multiple edits and in some cases multiple genes.

In many cases, such as disease on nitrogen use efficiency traits.

And that product will consist of multiple modes of action.

Prototyping multiple modes of action is difficult.

Possible in conventional breeding.

This is a core attribute of Detroit, Michigan.

It is why we believe that we will be able to develop traits for many of the critical critically important traits like disease resistance that had been elusive using conventional grading will gmos.

Yes.

These benefits are integral to our vision for the future of bidding.

Back to you Roy.

Our Best example of what Peter was talking about.

But regarding the timeline for the development of new trades given the technology. He has helped develop as are some clarity in the trade fair trade is a really important trade in both canola and soybean.

It's amazing.

Amazing losses, and we believe that this royalty tier two crops is well over half a billion dollar of your royalty, but we're most excited for purposes of discussion.

You see on this chart the timeline for development and timeline for development this thing fits into it.

Xactly inline with our proposition of 4% to six years.

Government, Taiwan, where given the trade from the time you do a first Evan.

You can watch us manage this trade and see how well we are managing this business excellent benchmark for you to think about how are we doing new tricks.

When we started to see this we blindly assume that we would not be considered GMO.

Dream was if we could start developing technology that resulted in tracer distinguishable conventional breeding we deregulated like conventional breeding.

While we have to admit this video has taken a long time over over the last few years virtually all major markets have either passed legislation or on a road to pass legislation to regulate trades from our technology similar to trace for conventional breeding.

Hold up in the most critical of Gmos the European Union in July proposed new legislation was something called new genomic techniques are N GT.

Past, the EU unregulated trades from our technologies as conventional lake.

The new Parliament passed since we built was built we believe the remaining holdouts or quickly complete their process and in the meantime, the U S. The UK and most of the Latin American countries have already passed legislation.

<unk> 2023 has been the watershed year for genetic regulations and agriculture.

Next slide.

As I mentioned, we're in the productivity traded business the technologies at the forefront of gene editing in agriculture.

One of the key benefits of emerging with Calix is that the combined company now on many of the core original patents for gene editing and agriculture. The merger establish a strong technology platform and leadership position as we move forward.

Our goal in this section is to provide an overview of our business today and the progress we have made trace development, where they're crepe machine and the progress we've made in commercializing our initial development trades.

New slide 12.

The best evidence we have of the efficiency. The trade machine process is that we currently have a pipeline of six trades.

Three of these trade are fully developed and shipping one is a canola traded for pod chatter reduction the other two are for herbicide tolerance traits.

And rice.

Strong demand for each of these trades for pod chatter trade, we already have 10 customers that have entered into a pod chatter breeding collaboration importantly, we made our first transferred to new seat in Q1. This year, we expect to make five more transfers by year end 2023 of this trade and our customers leading germplasm.

Two of these.

<unk> are in advanced stages of development <unk> resistance in canola, the others tolerance traits for novel herbicide in canola.

Both trades are important traits for both to Noah and soybean.

<unk> resistant comprises three modes of action. We had previously reported positive results for the first motive action and recently reported encouraging results for the second mode of action, we expect to release, an additional greenhouse and field data by the end of the year in 2023 for <unk> systems.

The last trade for nitrogen use efficiency. This is a critically important trade for most crops. This eventually is trying to develop.

And that can maintain or improve productivity with less fertilizer.

We're just initiating this trait in canola and in rice.

For each of our trade products, we will regularly be reporting our progress in the greenhouse and into the field and it will be a regular part of our quarterly calls going forward.

New slide.

<unk> business is a crop by crop business, although trades are important in many crops each trade and each crop can vary on many levels. So it's trade for affected by different geographies and environmental conditions, our customers always a specific crop team and each seed company. In this way you can think of a crop and seed.

This is a business unit and part of the slide you can see that we have a canola business unit <unk> unit that will have a soybean.

Essentially work with these companies.

Private both our initial trade and a pipeline of praise to go with it.

Soybean is important because it makes our trade machine operational and 200 million additional acres.

Importantly, soybean farmers have been a leader in adopting new trades, especially the GMO trade. So we're really excited about moving into that marketplace. We already have to trace which we already have demand for that were first blockchain canola and soybean.

Yeah.

The event of actually having our soybean platform is a really a really big thing for us that we expect to happen in the second half of 2023.

Next slide.

As we've discussed crop specific trade machine, bringing processes, but the key to our business. The trade machine enables us to enter directly into a customer's will be germ plasm and return of germplasm and the customer a lot of it. It also lets us build high throughput breeding cooperations with seed companies in our crop.

Where we could work with them to help them develop some of their own trades. This is our vision crop by crop operating partnerships with seed companies, where we operate as an extension of their cross specific breeding operations.

Currently we are in the trade where treatment operational two crops canola rice. This means we're in a pretty big those crops by year end, we expect to be in frequency and operational and soybean thus.

Business and soybean by year end 2025, we expect to be in the trade machine business in both wheat and corn, we've already built crop specific trade machine breeding collaborations with seed companies in canola rice and soybean.

Next slide.

Our business plan to produce straightforward, we have a technology platform that enables us to develop more trades more quickly and with a faster speed to market.

Using this technology, we have a pipeline of six trades, which are of which three are development and launching and two are in advance stages of development and the six is just initiating editing process.

We're currently create machine operational two crops canola rice condition, we are close to being trade between operational soybean.

Together, we estimate the royalty potential of these crops.

Three develop traits into advanced trace to be $1 $6 billion and what's really interesting when you see the slide as you realize that over on the canola side, we are validating them launching square tenure.

And.

Herbicide reduction trades.

And canola those are the exact same trades that when we validate our business model for soybean, we're going to be able to go over and introducing the soybean. So it's not going to take development of wholesale nutrient trade development, it's transferring a trade from one crop to another crop which is really powerful.

Our goal right now.

And to get these five trades commercial and these three crops and that's what we'd like you to greatest Sean if we can as a huge opportunity for us.

We're all really excited about these are targets for which we expect to update shareholders in the quarters to come.

New slot.

Should we be self evident by now that we're pretty excited about the milestones. We've accomplished since we signed a merger agreement with Calix. Our remaining 23 milestones are also foundational to our business plan.

Our guidance on soybeans is obviously critically important as one of the two mega crops for trade developments. We believe we will have the trait machine process completed for soybean by year end.

Soybean ties into our other two milestone for 2023, we expect to announce additional greenhouse and field data for us clarity resistant trade and our Ht to create and canola. These are the cornerstones of our advanced trades Theyre huge trade for canola, but also a huge trades for soybean.

Our intention is our hedging of soybeans to be treated as soon as our soybean platform is operational together. These milestone successfully movements from R&D to commercial with over 250 million acres operational a pipeline of six trades and major C company partner already crops looks like trade collaboration agreements and a transfer.

The germ plasm seasons.

Together, they complete an important milestones that make 2023, the huge pointed inflection receivers and we believe for gene editing and plans in general the slides is particularly important because unless our milestones. This is our first guidance with our first quarter and we hope you'll greater for us for the next quarter. We hope to tell you how far we've moved to moving things forward.

In General this is how we take these quarterly calls we'll follow up I'll try to get you excited about some of the stuff we're doing all of it and show you how the pool industry moves.

Thanks for letting me listening through our business overview.

As evident our business currently is driven by our execution to get them developed creates launched commercially and together developing traits developed the royalty reduction potential of just these six trades and the three crops isn't mens and material increases as we had wheat and corn and these activities are really.

Consistent with being a commercially driven company, we're going to show the industry, how gene editing trade support and our subsequent calls will focus on tracking our progress on hitting milestones for each of these products and keep you posted on new trade development.

And with that let's go to Q&A, we'd love to take some questions.

Okay.

Thank you Sir we will now begin the question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for our first question.

Our first question comes from Laurence Alexander with Jefferies. Your line is open.

So good morning, So I guess, just first of all with the cash burn can you just characterize whether it is expected to be steady front end loaded back end loaded.

And how much of what you've sketched out what is your initial cash burn is tied to products that are not the first three commercial products.

Thanks Laurence.

Thanks, Craig I'd say, one knows we start we actually thought our slides we're going to match up the language, we apologize for the people on the call and I'll, let Wade walk through the cash we expect it to be even though we didn't walk I think the question of cash burn and where we are and how we manage it is a critically important question for all shareholders.

Sure Hey, Lawrence weight.

So our operating burn currently about $6 5 million per week.

We expect that to trend up at the end of this year towards $7 billion.

Per moths that dollars that obviously supports all of our facilities, including Sydney Oberlander facility, which is our dedicated trade machine facility in San Diego of course, sorry headquarters they need to bridge. It includes also the Rosebel facility.

Doug Healey with Calix.

And Thats 43000 square feet. So it takes into account obviously, both our operating needs and also our capital expenditures associated with making those all of those facilities fully operational from a trade machine standpoint.

We added 80 people last year for the company and we moderated the increase head count since then so we expect frankly.

Okay.

Capital needs of the company to be steady from here.

Incremental increases associated with adding.

Individuals and Capex.

Requirements tender.

This facilities on an ongoing basis. So hopefully that addresses your question. Once you can $6 5 million per mouse trending up to $7 million per month, and then steady from there.

Okay, Great and then just secondly can you unpack the difference between a trade going into kind of the breeding collaboration versus the transfer stage and once it gets into the transfer stage.

What the timeline is for cash revenues to hit your P&L and cash from a cash flow statement.

Can you just walk through kind of the cadence of.

Of the three particularly for the three products that you already commercialized.

So okay.

Excellent question. So we are starting to this transfer traits are developed.

<unk>.

To our customers and.

<unk> guidance, we've given lawrence's that we think it will take two to three years for them to do the things they necessary to validate registered buildup of seed inventory and get launched and so we expect two to three years. After we transferred to a customer that we just start to see revenues, we think that that could be a little bit faster than <unk>.

Because of the nature of other Reits sparkling works, but in the coal market and we think that those are really solid numbers.

And then the rest market, we're going to learn but because of the nature Pope license transfer and work.

I think that it could be faster.

And then just one last clarification and then I'll hop back in the queue is once the product is launched can you give a sense for the lag if any for you to be paid do you get paid at the end of the planting season. The end of the harvest can you just walk through kind of how the model should work in terms of getting the royalty payments to start flowing through to you.

So Laurence this is this is pay debate.

Thanks for that question I think that.

With regards to canola.

Our relationships with all of our customers.

It'll be.

Basically at the end of what they call counting bags.

At this season.

And then when they get all their returns in so around mid to mid year they'll come back to us with an analysis of exactly how many bags were sold and then the royalties.

Hum acre will.

It will be sent back to us.

Analysis can't Laurence this is wade.

Up to the fact that our expectations, we'd like giving ranges here in Manhattan.

ROE at each showing up on the P&L.

Customer shipments.

And the range of 2025 to 2026 first royalties and then obviously.

Free cash flow generated in.

The range in 2020, 62027 first free cash flow generation. So hopefully that gives you a range of metrics as it relates to model expectations, if I could.

One more just I always you've heard me say that I look at it is a lot like the movie business at the end of the season suddenly you look at all the players in Chicago, who you have to pay royalties to Enzo with Peter explained it is tomorrow understand exactly what happens in the AG business at that point. They look at all of the customer to pay a lot of royalties.

Look at all of their people they have royalties to them I think the whole industry reflects their royalty is essentially the same time.

Okay, great I'll jump back in queue. Thanks.

Thank you as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Our next question.

Our next question comes from Steve Byrne with Bank of America. Your line is open.

Yes, good morning to you.

I have a couple of questions about.

Potential to put <unk> two it's clear.

Soybeans.

First can you highlight what is HQ. Two is there does that represent a different mode of action from.

The multitude of herbicide tolerance transgenic traits that are in soybeans right. Now so is it is that different.

But perhaps you could highlight.

<unk>.

Whether there is any difficulty putting your gene edited traits.

Into soybeans that are full of.

Transgenic traits.

There's some talk out there that if there is.

Transgenic herbicide trait in there it makes it pretty difficult to do gene editing in there can you comment on that.

Then with respect to putting a gene edited trait into.

Our crop like soybeans that gets exported.

Does does that require.

European import approval for the gene edited treat.

Obviously now is is essentially precluded, but as you highlighted that that regulatory operation as is set for streamlining. So is that do you need that European regulatory change in order for you to get to put these <unk>.

Edited traits.

In soybeans that are going to be.

Exported and then sorry, but one last one on this and that is you put your gene edited traits in soybeans.

<unk>.

In some parts of the world those feeds are saved.

Do you have any concern about.

Being able to collect royalties on your your gene edited traits given the green handler can't detect it.

Thanks, Dave This is Peter.

I think I've got most of your questions one question.

So first of all we are so excited about the abilities of what we have in front of us with soybeans I think.

As you mentioned <unk> to try it so they're really got.

Got it changed how people think about traits in soybean not just.

Here in the U S but.

In South America as well so I think.

The ice tea to I can tell you is it is a new mode of action.

And without partners will be looking to add those.

Stacked potentially.

In soybean that allows farmers to have a much broader weed control system. So in some cases, where they may need some additional.

Herbicide tolerance that allows them to control really tough wade's. So it gives you.

A really great opportunity to think through the product lineup, adding <unk>. Two this is something that oh.

A number of our partners have talked to us about.

And as you know we have a <unk>.

Our relationship with GM.

In Latin America.

And that is one of the areas that we'll be working with them on the.

The other area is <unk>, so what mode in soybean is a really important right.

<unk>.

We do see the potential to stack this on with.

Other.

Approved advanced Transgenics.

I think the other question you mentioned was EU input and.

The way we understand it right now is that again there'll be approved events that you'll be able to work that already imported into.

Europe .

But the gene edited and addition.

Understanding that.

Proposal that they just approved in July will also not only planting in Europe , but also paved the way for imports and exports and so we're excited about that.

Then the last question I think he had was saved seeds.

<unk>.

And we're in the attendant telephone we work with our customers to provide the customers will be managing how that goes to market.

And with regard to <unk> as they deal with that on a on a on a yearly basis.

And I think they manage that very well and understand that there are some areas of the world that partners will save states.

We have no concerns about <unk>.

Taking that to market and having sites sites.

Well, thanks for answering that one question Peter.

Okay.

One real quick one for you and that is clear.

Would you have any interest in expanding into fruits and vegetables, I can imagine there could be interest there.

So Steve that's a great question I think the way I look at.

It is one of our blockbuster trades.

The beauty of our technology that we're bringing to the marketplace as it goes across crops and so you have this.

Understanding of disease resistance.

You can take from canola soybean and then into other crops that have what more homes.

So that's something we'd love to do in the future right now.

As a company, we're really focused on.

We already mentioned in the.

Script of the deck.

We are really focused on our first two crops with the street rates.

Expanding twos three crops with fixed rates, but in the future the ability to take the technology across crops and then also across different trials is really exciting for us.

Thank you.

And as you noted the ads.

This export thing, especially in important topic within the European legislation Thats, our understanding as they proposed to.

That problem will be solved for us, which is which is a really big event for us.

Yeah.

One moment our next question.

Our next question comes from Bobby Burleson with Canaccord Genuity. Your line is open.

Hi, Thanks for taking my questions, sorry about any background noise here.

Our growth conference.

So I guess.

My first one kind of I guess touches on the.

And to your last answer when.

When we start thinking about.

The learnings from crop to crop.

Even trade to trade.

Are there synergies that start to gather in terms of customer overlap where with the germ plasm.

Where it eases, maybe the pathway to additional collaborations.

And kind of de risks.

Things are going forward once once you get some momentum.

So Bobby this is Peter again.

Again, that's the part that.

From a technology standpoint, we're so excited we understand.

The what to edit probably better than most of these companies.

It has.

A really strong history of understanding.

Yes.

Complex types like disease resistance.

So.

I understand any of those but what do you need to add it.

Allows you to think more broadly and there are synergies associated with that so when I say broadly it means that.

Not only <unk>, but other diseases.

There is caused by Pat.

Passengers like fuze area.

As well as rust.

And other diseases that are really important constraints on agriculture broadly so you're.

Youre absolutely right. This is an opportunity.

To use that synergy to go across a number of different diseases.

Great and then maybe just understanding the technology moat area outside of patents.

Your trade machine process.

And how you've created something that's time bound and reproducible.

What aspect of the different stages that you guys outlined there is perhaps.

No.

I D ideation.

Maybe the most difficult for some of your partners.

To replicate on their own.

In terms of.

Doing this in house.

Thanks, Bobby it's Peter.

Peter again, I would say that.

The time bound and reproducible frankly seen as one of the most exciting things I've seen in the company and the history.

It is a.

As you saw on the slides, it's a three to five year process.

What's been most exciting to me is to see.

The ability of the team to take single cells through the whole regenerative plants. This is something that is not standard in any cell biology.

Around the world.

So I think.

Our abilities in that area, it's not just getting one or two cells to divide and go into two regenerated we're talking about millions.

So the efficiency rate that is beyond what you can even than what I, even I mentioned a few years ago.

So I think that for us.

That.

Allows us.

He knows about the secret sauce.

That is central to what we what we're doing in our cell biology team.

And I'll just add.

It's an honor to that from ideation without having any adobe one you'd be able to do complex edits and secondarily regeneration model, which we call. The crop specific trade machine processor, it's really hard to think through how to after your idea how to do a complex trade and really it's because of that that we now have this three to five years.

And you can see it in the square 10 year results that were pretty confident that it's just usually the last thing I'll call. My factory Maternity award because we grow these cells up in Heaven.

A crop at the end of its pretty well times and that's.

I appreciate the question.

Great. Thank you for that and then maybe one last quick one here on the.

Nitrogen.

New sufficiency.

I'm curious whether or not any.

Traits that you introduced there are compatible with <unk>.

Engineered microbial solutions that might be applied.

Around the plans around the REIT structure is this symbiotic with other solutions that are externally applied.

I know, it's early stages in terms of what you're exploring there.

So Bobby this is Pedro again.

Another great question.

When you think about.

Nitrogen use efficiency you can call it nutrient.

Efficiency.

There will be.

Synergies and symbiosis with.

Microbes in the soil.

We have a number of different targets.

Study that looked at.

Nitrogen use.

Implants and.

It is a lot of the interaction does happen within the soil.

It also happens within the plant.

We're looking at a number of different targets.

Targets, primarily because we have a technology that does.

Target multiple genes in multiple edits.

It really does open up the opportunities for us to look at what is out there on the biological side.

And how we might actually have some synergies and interactions on that front. So yeah, it's exciting opportunity.

And you framed it well when you look at nitrogen use efficiency above the soil and below the soils rates and then our first one is on below the soil trade, but youll learn as we go forward.

Rod.

Fantastic Thanks for taking my questions.

Thanks, Tony.

One moment our next question.

And we have a.

Question from the line of foreign to Alexander with Jefferies. Your line is open.

Im sorry, just a couple of follow ups first with the collaboration evaluation with buyer and or if you want to speak more generally.

First are you prohibited from entering into similar evaluations with other seed companies.

And second can you give some sense of what the kind.

Kind of the Holy Grail here is what the Blue Sky kind of what the efficient targeted efficiency gain that you wanted to lever that would then be split between you and them in terms of a value sharing.

And what's the goal with the collaborations and just try and quantify it.

It's a great question because it goes to the core of our business model and we now have.

Customers in all of the crops will say, we have 12 customers on each one it's the same model that they send us their elite germplasm. We then without elite germplasm tried to work with an initial trades and so on canola for example, everybody starts with it with a pud shatter collaboration agreement, where we try to put a pod shatter into their lease germplasm and our goal as a business.

Is that once people see how that works that will then that turned that into a broader collaboration agreements and we expect you to share of us signing into broader collaboration agreements and then those broader collaboration agreement, we'd expect to do two things one be able to advance our pipeline of trades. So if your inspire her tenure, it's not a secret that if we have quickly.

In canola, if we have square opinion developed that Theyre all they all have really indicated they would love to have that traded in our germplasm. So that's how you extend to a broader and secondarily everybody seems to have ideas that they understand what our processes to be able to evaluate new ideas and.

I think the way we look at bear is just in that agreement is just to understand like a lot of our customers how does that how.

How does that process work, how efficient and how to think about it with respect to our current trade through future trades.

Everybody needs to go through that sort of evaluation before they can sign on and go alright, I'm ready to put you into my system.

This is sort of they're putting themselves in that process and working with us.

And then you mentioned.

You mentioned kind of everybody in the industry Cross licenses technology.

Royalty how much of a drop through to EBITDA do you expect to see I mean will you be having any technology licenses or leakage.

That we should be taking into consideration.

Could you rephrase that I'm not sure I totally understood I apologize.

So when you receive royalties some companies in this sector when they receive royalties. They then have to pay.

Payments to other company. Thanks, that's a lot.

And Greg certain amount of leakage I'm just curious as to what you think if you get a certain royalty amount.

The contribution to EBITDA should be.

I'm glad you asked the question. Thanks, very very much first you should know also.

First of all a collaborative and so far everything we're doing is not exclusive we are working with people generally across all of these crops and we'd like to kind of be utilities that we can meet all exclusive source of trade. We don't have any other technology royalties that are due we have a 10% royalty that's due to early on in our financing we did a royalty financing whereas.

These investors got a 10% royalty on our revenues.

And so that would be a deduction of our revenues and secondarily, we have created a foundation for <unk>.

Investing in sustainable agriculture in developing countries and that's after we get $50 million of royalties there'll be a 2% deduction.

To this nonprofit to start doing development developmental work in agriculture knows that no other injections.

Okay, Great and then just lastly.

Probably a predictable answer on this one but what's your bandwidth or appetite for M&A. If other early stage biotech assets.

I'm available Calix was.

That's a great question.

As we the next year and a half we're so focused on getting our five projects out there.

You would get a 2025 to say God you got your three platform growing your trades are running we have our customers at that point, we really would love to be able to start thinking through how the industry shapes and how we can be a real participant in the industry and we'd be open to it.

Moment, we're really focused on.

And doing what we are promising.

Okay. Thanks.

Thank you. This concludes our question and answer session I would now like to turn the call back over to Roy rigs.

Okay.

Thanks, So much Tony this is really.

For all of Us.

This is sort of we now realize the Republic. This is kind of quarters without rural public offering we've put our documents together, we really are focused and we really are excited about where we are with our trades and where we are with this process.

Thanks for for following Us and I hope to be able to show you how the progress works in this new industry. The idea of having independent trade producer is a new concept for for agriculture, and I think that the reception, we're getting from customers on the quality of the trace we're developing is helping us get to that point, but the calix still helped us.

Thanks, very much for listening and we look forward to talking to you in future calls.

This concludes today's conference call. Thank you for your participation.

Yeah.

Yeah.

[music].

Sure.

[music].

[music].

[music].

Today's conference call all parties are in a listen only mode.

To ask a question during the session you will need to press star one one on your telephone and you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

This conference is being recorded today August 10th 2023.

At this time I would like to turn the conference over to Wade King see this chief Financial Officer. Please go ahead Sir.

Thank you and good morning. This is Wayne <unk>, Chief Financial Officer, Steve is I would like to thank you for taking time to join US for <unk> second quarter 2023 financial results and corporate update conference call and webcast.

Presenting with me today is worried rates, our co founder Chief Executive Officer, and Chairman and Peter become co founder President and Chief operating Officer.

Press release detailing these results crossed the wire earlier this morning, anticipating nickel on our company's website <unk> com.

Before we begin the conference call 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 call.

Please refer to see the SEC filings for a list of associated risks.

This conference call is being webcast. The webcast link is available in the Investor Relations section of <unk> Dot com and won't be accessible for 90 days.

At this time I'd like to turn the call over to award for his opening remarks, alright. Thanks.

Welcome to our first quarterly release, which we're really excited about.

And actually this quarter will be a little bit different for quarters going forward as our financial results for this quarter only reflect one quarter of the combined operations of Calix consumables as merger agreement became effective on June one 2023 that means the results reflect two months of scaling and one month of the combined operation I think the unit.

Way to understand this is to go over our financial presentation.

Thank you very.

Earlier today, we issued a press release, describing our second quarter 2023 results. We are also filing our Form 10-Q for the quarter to date.

Additional details about our financials for second quarter of 2023, please refer to our press release, our filings with the FCC.

As Ray described we're excited to bring the two leaders in GE and agriculture to gather and our recent merger today.

Today, we are reporting financials as part of this transition from the legacy <unk> business alongside the combined company basis now.

Now for our second quarter 2023 financial results.

Cash and cash equivalents as of June 32023 is $59 million.

The company believes our cash and cash equivalents will enable seamless to fund planned operating expenses and capital expenditure requirements into the first quarter of 2024.

R&D expense was $8 4 million for the quarter ended June 32023, compared to $3 $2 million in the year ago period.

The increase of $5 $2 million is primarily related to increased plant supply and facility expenses and increase in employee head count and an increase in stock based compensation expense for restricted Stock Awards award grants and the acceleration of share.

Vesting associated with stock award agreements due to the acquisition of seamless global LLC.

SG&A expense was $11 $1 million for the quarter ended June 32023, compared to $3 $6 million since a year ago period.

The increase of $7 $5 million is primarily related to an increase in head count increased consulting and legal fees and an increase in stock based compensation expense for RSA grants and the acceleration of share vesting associated with stock award agreements due to.

The acquisition of seamless global LLC.

Non operating income was $1 3 million for the quarter ended June 32023, compared to $4 3 million in the year ago period.

The decrease of $3 million and nonoperating income is due to changes in the fair value of the liability classified class a common stock warrants.

Net loss was $25 million for the quarter ended June 32023, compared to net loss of $2 5 million in the year ago period.

Net loss per share of class a common stock was to $2 74.

The quarter ended June 32023, compared to a net loss per share of $2 66 and.

In the year ago period, now I'll turn the call back to Ori for its further remarks.

Thanks Wade.

In addition to the financials. This quarter will also be a little different as we look at this quarters release of the inaugural call perceive us as a public company.

Because of this the format will be a little different than a typical call. Our goal today is to begin to develop an understanding of who see us as our business goal strategy and milestones.

From here the plan would be to quarterly calls to review, our finances and provide updates on our commercial progress as we launch our developed trades.

The merger between Calix, let's see this was a great one time opportunity to merge the two pioneers in gene editing.

Union is significant because of the early days of gene editing C business selectors calix agricultural subsidiaries University of Minnesota, or Lasalle payloads, we're the leader in developing the field of agricultural gene editing.

All of this essential agricultural gene editing technology for this period now resides in seamless we are really excited to be working with our colleagues from helix and take advantage of all of this great intellectual property.

The merger also allowed us to become a public company. We believe 2023 was a good year for us to go public as it is the point of inflection year for us as we transitioned from R&D to a commercial company.

Part of this transition.

Laid out a list of 2023 milestones that were critical to this transition.

We're really excited because we have already accomplished many of our 2023 milestones and are on target for our remaining ones.

The key milestones that we have accomplished a multifold.

We first successfully made the initial transfers of our initial trading products. We are free to develop traits one for pathogen reduction to lower winter oilseed rape and two of our herbicide tolerance and rice.

Our business involves editing our traits in the elite germplasm of our customers and returning a transfer it back to the customer their leaf germ plasm.

Good.

Since our merger was announced in January we successfully returned our first three trades.

Lola customer and.

Two herbicide tolerant traits to a race customer. Additionally, we expect five more transfers in 2023.

In addition, we opened the overland.

<unk> the industry's first gene editing production facility.

This system is critical to our commercial model that involves editing our customers elite germ plasm enables us to perform these edits at a commercial scale.

Finally, we have three traits in development two of these trades are in advanced stages of development going through greenhouse and field validation one other trades as first clearance in Europe resistance. This is an important trade promo and soybean.

We've already released very encouraged greenhouse results for this Q2 'twenty three we expect more data on this important trade in the second half of 'twenty three.

The last part of our business, which is helpful to discuss is our ability to get major seed companies to work with us and bridging collaborations to develop our current trades, but also to develop new traits with customers and so we're really excited notes today that we have.

Entered into a pre.

Breathing collaboration with bare to test and validate our trading and clearing process.

Our ability to elite germplasm returned back to customers their plants with edits of them and then we have others. Following that but this is a really big moment for us as we start to develop this whole new industry, where we can put advanced trades indices.

For the time and cost of traditional region.

These milestones are what we mean when we say that 2023 is an inflection year for our business and this path to a fully virtual covenant.

Importantly, these milestones help frame this new industry of high throughput gene editing that we are building our goal and the call is to use this milestone to form a base from which to report our progress in building the company in this new industry.

In 2023, and we started transfer trade products and customers with journalism. We started production runs at his first high throughput <unk> production facility, we signed important collaborations with leading seed companies to develop this and as you further and we had major regulatory milestones that are being that trades for high throughput gene editing.

Has to be regulated similarly, as it trades conventional rig.

2023, so far has been quite a year.

I'm sorry.

And we've put a couple of slides together to walk you through our business our goals and our prospects and gives you a framework so that as we quarter to quarter to start educating you on our progress of our pipeline.

Better positioned towards to understand us.

I'd like to start this section with a slide we use every presentation, which is a slide of my senior management team, what's really exciting about this company is.

Cofounder.

Part of the repeater and Greg for over 20 years ago.

Wages by analysts.

Biometric so I've got to wait for over 20 years, So it's really exciting to come back.

And work with them together and then we're very excited that we recently hired a former general counsel of.

Syngenta.

Youth brand our licensing it's really important for us as we start to build our business in print development business.

A little background on who we are.

Steve This is in the productivity trading business.

As such when we create products, we look at the slide you see here.

Slope of the productivity increases in the seed industry over the last 50 years.

Our job is to help maintain or grow the slope of the slide that's what people see the industry do where in the seed industry. This is what I think does it changes existing change within our plan. So that the plan to protect itself from things like environment where disease.

Importantly, our products directly impact the yield and cost of farming in other words, our products' impact the slope of this slide.

We are paid for our products based on <unk> sales with our trades are royalties are based on a percentage of the economics are value from our trade to a crop.

This is essentially the same basis, Apple Qualcomm for components, Apple Qualcomm supplies to your iPhone or an ingredient business that were paid for the value we bring to that product.

Let's see the industry. There are essentially three principal tools that are used to improve yields for the major crops versus improvements in the germ plasm thats the genetics of the seed itself.

And then there is improvement in new trade. So these are the trades that allow you to better manage the environment and third there is chemicals.

Crop protection chemicals with the impacts of climate change coming in the press release decreased chemical usage germ plasm create improvements or the central focus today to improve productivity at scale.

This is our business.

The licensing of intellectual property associated with trades as an integral part of agriculture. The royalties paid for productivity creates for the major crops is estimated to exceed $10 billion.

This is roughly equivalent to the operating profit for the global crop protection chemicals business.

Target market for productivity trade business at roughly the same as the target market for agriculture chemistry industry disease test.

And the climate, we're all focused on the same general targets. The economics are very straightforward for each cros, but those two principle drivers of productivity trade growth.

First the number of acres on a crop impacts the bispecific, Craig and to the trade acres.

Hey for a specific trade.

A great example of this is our first disease <unk> systems. The number of soybean acres impacted by Scott tenure is approximately 25% of the total soybean.

Acres or roughly 50 million acres.

The estimated trade range is approximately $7 to $10 per acre, which is estimated to be roughly one third of the cost to manage their opinion using fungicides.

This equates to a 350 to 400 build the market.

For clarity the resistance and soybean.

The <unk> market for this trade is much larger if you include canola and winter oilseed rate, but.

Most importantly, these calculations are great example of how to look at the trade markets and determining values for virtually every productivity trade.

In this slide.

The BT trade.

An excellent example of our productivity creates work in the side. We're seeing here is an illustrative slide real numbers, but <unk> is not our trade BT is a very important trade to the industry.

For corn and cotton.

<unk> revolutionized where management is currently used on over 90% acres grown for each crop demonstrating the pervasiveness of this trade create fees range between $10 $15 per acre.

Total royalty paid for this trading across all crops is estimated to be over $4 billion a year. The math is pretty simple total acres grown with this trade off by that create for your royalty paid per acre.

This issue is a lot like the movie industry at the end of every season. The accountants total up the revenues and calculate the number of people actors or companies that have earned royalties. This happens every season and agriculture.

New slide.

This picture is meant to depict the prospects of conventional farming, although other technologies such as selective breeding of impacted this industry. It's still a slow random and expensive process that has existed for centuries theres not millennia.

GMO technologies in goodness amazingly impactful trades like the BC trade, but these technologies are still very lengthy and expensive.

Recent study estimated that GMO trade requires an averaged 16 five years at $115 million from ideation through conversation.

The promise of gene editing as it can be the digital moment net agriculture. These technologies can materially change the time and cost of trade development and we believe it will restart the productivity boom started with GMO technologies.

I'd like to move it Peter visa sort of explain this technology to understand really what we do we really have to understand what is the big breakthrough Peter and Greg accomplished here.

Thanks, Lori and good morning, everyone.

<unk> high throughput breeding or as we call it the trait machine changes the game.

What separates Davis in the planting editing industry is it straight machine process is.

It is built using <unk> patented rapid trait development system for <unk>.

Yes.

The process from ideation molecular discovery.

I call that what to edit.

Editing to the field validation can take as little as five years.

The <unk> machine process as a crop specific standardized end to end as gene editing breathing system, but it's a single cell.

From an elite germplasm and generates to sell into the same elite germplasm with that edit.

It is the first time bound and reproducible breeding system and the plant gene editing industry.

It is the bidding system.

Used at Oberlin location.

As we recently reported.

<unk> now has <unk>, new Standalone gene editing production facility.

<unk> believes that Tds and the trade machine process represent the technological breakthrough imply operating it as the ultimate promise of plant gene editing.

High throughput gene editing systems that are able to work as an extension of customers breathing programs.

The machine enables a standardized reproducible system that develops traits and a fraction of the time and cost of conventional breeding while GMO processes.

There is another aspect of the type of machine that is an equally important benefit to this new era.

The ability to develop prototypes and to accelerate commercialization once a trait is developed.

Prototypes validate specific edits in a crop that lead to a validated trade.

Steve is focused on complex types that involve multiple edits and in some cases multiple genes.

In many cases, such as disease on nitrogen use efficiency trades. The ultimate product will consist of multiple modes of action.

Prototyping multiple modes of action is difficult.

Possible in conventional breeding.

This is a core attribute of the trade mission.

It is why we believe that we will be able to develop traits for many of the critical critically important traits like disease resistance that had been elusive using conventional grading while gmos.

These benefits are integral to our vision for the future of bidding.

Thank you Louis.

Our Best example of what Peter was talking about.

But regarding the timeline for the development of new traits given.

The technology has helped develop as are some clarity in the trade fair trade is a really important traded in both canola and soybean.

Amazing losses, and we believe that this royalty continues to crops is well over half a billion dollar of your royalty, but we're most excited for purposes of discussion as you see on this chart the timeline for development and timeline for development for this thing that's exactly in line with our proposition of 4% to six.

<unk> development, Taiwan, where given the trade from the time the deal first Evan.

You can watch us manage the straight and see how well we are managing this business excellent benchmark for you to think about how we do it new tricks.

When we started to see this we blindly assume that we would not be considered GMO.

<unk> was if we could start developing technology that resulted in tracer distinguishable conventional breathing we'd be regulated by conventional breeding.

While we have to admit this video has taken a long time over over the last few years virtually all major markets have either passed legislation or on a road to pass legislation to regulate trades from our technology similar to trade stroke conventional breeding.

The last holdout in the most critical of Gmos the European Union in July proposed new legislation was something called new genomics techniques are N GT.

The EU with regulated trades from our technologies.

Conventional lake and.

The EU Parliament passes we built was built we believe the remaining holdouts will quickly complete their process in the meantime, the U S. The UK and most of the Latin American countries have already passed legislation.

2023 has been a watershed year for genetic regulations and agriculture.

Next slide.

As I mentioned, we're in the productivity trade business the technologies at the forefront of gene editing in agriculture.

One of the key benefits of merging with Calix is that the combined company now on many of the core original patents for gene editing and agriculture. The merger establish a strong technology platform and leadership position as we move forward.

Our goal in this section is to provide an overview of our business today and the progress we have made trace development, where they're create machine and the progress we've made in commercializing our initial development trades.

New slide 12.

The best evidence we have of the efficiency of the trade machine process is that we currently have a pipeline of six trades.

Three of these traits are fully developed and shipping one is a canola traded for pod chatter reduction.

Two are for herbicide tolerance traits.

And Reits.

We have strong demand for each of these trades for pod chatter trade. We already have 10 customers that have entered into a pod chatter iridium collaboration importantly, we made our first transferred the new seat in Q1. This year, we expect to make five more transfers by year end 2023 of this trade and our customers. It can lead to Jerome pluses.

Sure.

Trades are in advanced stages of development. One this was clear change in resistance in canola, the others tolerance trait for novel herbicide in canola.

Both trades are important traits for both canola and soybean.

We're seeing resistant comprises three modes of action. We had previously reported positive results for the first one infection and recently reported encouraging results for the second mode of action, we expect to release, an additional greenhouse and field data by the end of the year in 2023 for <unk> systems.

The last trip for nitrogen use efficiency. This is a critically important trade for most crops. This essentially trying to develop.

Plan that can maintain or improve productivity with less fertilizer.

We're just initiating the straight into lower end and rice.

For each of our trading products.

We will regularly be reporting our progress in the greenhouse and into the field and it will be a regular part of our quarterly calls going forward.

New slide.

Trade business as a crop by crop business, although trades are important in many crops each trade and each crop can vary on many levels with trade for affected by different geographies and environmental positions our customers always a specific crop team and each seed company. In this way you can think about crop.

This is a business unit and throw the slide you can see that we have a canola business unit of price slippage unit that will have a soybean units.

We work with these companies.

Both our initial trade and a pipeline of price that go with it.

Soybean is important because it makes our trade machine operational and $200 million additional acres.

Importantly, soybean farmers have been a leader in adopting new trades, especially the GMO trade. So we're really excited about moving into that marketplace. We already have to trace which we already have demand for that were first blockchain canola and so yes.

Yes.

<unk> actually having our soybean platform is a really a really big thing for us that we expect to have in the second half of 2023.

New slide.

As we've discussed crop specific trade machine freedom processes of the key to our business that trade machine enables us to enter directly into a customer's will be germ plasm and return of germplasm and the customer of our edit it also lets us build high throughput breeding collaborations with seed companies in our crop.

Where we could work with them to help them develop some of their own trades. This is our vision.

Crop by crop operating partnerships with seed companies, where we operate as an extension of their cross specific breeding operations.

Currently we are in the trade where treatment can operational two crops canola rice. This means we're in a trigger those crops by year end, we expect to be a trade between operational and soybean thus.

Business and soybean by year end 2025, we expect to be in the trade machine business in both wheat and corn, we've already built cross considered treat machine really collaborations with seed companies in canola rice and soybean.

This slide.

Our business plan to produce straightforward, we have a technology platform that enables us to develop more trades more quickly and with a faster speed to market.

Using this technology, we have a pipeline of six trades, which are.

Three our development and launching and two are in advance stages of development and the 6% is just initiating editing process.

We're currently treat machine operational at two crops canola Rice. In addition, we are close to being trade between operational soybean.

Together, we estimate the royalty potential of these crops.

Three develop traits into advance traits to be $1 6 billion.

It's really interesting when you see the slide as you realize that over on the canola side, we are validating them launching square tenure.

And for.

Herbicide reduction trades.

In canola those are the exact same trades that when we validate our business model for soybean, we're going to be able to go over introducing the soybean. So it's not going to take development of wholesale nutrient trade development, it's transferring a trade from one crop to another crop which is really powerful.

Our goal right now.

And to get these five <unk> commercial and these three crops and that's what we'd like you to greatest on if we can as a huge opportunity for us and we're all really excited about these are targets for which we expect to update shareholders in the quarters to come.

New slot.

Can be self evident by now that we're pretty excited about the milestones we've accomplished since we signed our merger agreement with Calix. Our remaining 23 milestones are also foundational to our business plan.

Our guidance on soybeans is obviously critically important as one of the two mega crops for trade development. We believe we will have the trait machine process completed for soybean by year end.

Soybean ties into our other two milestones in place, we expect to announce additional greenhouse and field data for us clarity resistant trade and our agency to create and canola. These are the cornerstones of our advanced trades Theyre huge trade for canola, but also a huge trades for soybean.

It's our intention as our hedging of soybeans mystery as soon as our soybean platform is operational.

Together these milestone successfully move us from R&D to commercial with over 250 million acres operational a pipeline of six trades and major seed companies partner with all of the crops Brookside trade collaboration agreements that are transferred the germ plasm seasons.

Together, they complete an important milestones that made 2023, the huge pointed inflection receivers and we believe for gene editing and plans in general the slide is particularly important because unless our milestones as our first guidance with our first quarter and we hope youll greater for US is for the next quarter. We hope to tell you how far we've moved to moving things forward.

And in General this is how we take these quarterly calls we'll follow up I'll try to get you excited about sort of suffered.

We show you how the pool industry moves.

Thanks for listening to our business overview as is evident our business currently is driven by our execution to get them developed creates launched commercially and together developing traits developed the royalty potential of just these six trades and the three crops is immense and material increases as we are.

Wheat, and corn and these activities are really consistent with being a commercially driven company.

We're going to show the industry, how gene editing trades work and our subsequent calls we will focus on tracking our progress on hitting milestones for each of these products and keep you posted on new trade development.

And with that let's go to Q&A, we'd love to take some questions.

Thank you Sir we will now begin the question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for our first question.

Our first question comes from Laurence Alexander with Jefferies. Your line is open.

So good morning, So I guess, just first of all with the cash burn can you just characterize whether it is expected to be steady front end loaded back end loaded.

And how much of what you sketched out what is your initial cash burn is tied to products that are not the first three commercial products.

Thanks, Lawrence Thanks, Craig I'd say, one knows we start we actually thought our slides we're going to match up the language, we apologize for that and for the people on the call and I'll, let Wade walk through the cash we expect it to be even though we didn't walk I think the question of cash burn and where we are and how we manage it is a critically important question for all shareholders.

Sure Hey, Laurence this week.

So our operating burn currently about $6 5 million per week.

We expect that to trend up at the end of this year towards 7 million.

<unk> that dollars that obviously supports all of our facilities, including Sydney Oberlander facility, which is our dedicated <unk> facility in San Diego of course, our headquarters in Cambridge. It includes also the Rosebel facility.

Located with Calix.

And Thats 43000 square feet. So it takes into account obviously, both our operating needs and also our capital expenditures associated with making those all of those facilities fully operational from a trade machine standpoint.

We added 80 people last year to the company and we moderated the increase head count since then so we expect frankly.

Capital needs of the company to be steady from here.

Incremental increases associated with adding.

Individuals and Capex.

Requirements.

This facility on an ongoing basis, so hopefully that addresses your question once again $6 5 million.

Her mouth trending up to $7 million per month, and then steady from there.

Okay, Great and then just secondly can you unpack the difference between a trade going into kind of the breeding collaboration versus the transfer stage and once it gets into the transfer stage.

What the timeline is for cash revenues to hit your P&L and cash from a cash flow statement.

Can you just walk through kind of the cadence of.

Of the three particularly for the three products that you already commercialized.

So.

Excellent question. So we are starting to this transfer traits are developed.

<unk>.

To our customers.

We.

Guidance, we've given lawrence's that we think it will take two to three years for them to do the things they necessary to validate registered buildup of seat inventory and get launched and so we expect two to three years. After we transferred to a customer that we did start to see revenues, we think that that could be a little bit faster in place because of the <unk>.

Otherwise sparkle works, but in the <unk> market and we think that those are really solid numbers.

And then the rest market, we're going to learn but because of the nature Pope license transfer and work.

I think that it could be faster.

And then just one last clarification and then I'll hop back in the queue as well.

Once the product is launched can you give a sense for the lag if any for you to be paid do you get paid at the end of the planting season. The end of the harvest can you just walk through kind of how the model should work in terms of getting the royalty payments to start flowing through to you.

So Laurence this is this will pay the basin.

Thanks for that question I think that.

Yes.

With regards to canola.

And our relationships with all of our customers.

It will be.

Basically at the end of what they call counting banks.

At this season.

And then when they get all their returns in so around mid to mid year that will come back to us with an analysis of exactly how many banks were sold and then the royalties.

Acre will.

It will be sent back to us.

Analysis can Laurence this is wade.

Up to the fact that our expectations, we'd like giving ranges here.

Royalties showing up on the P&L.

Customer shipments.

And the range of 2025 to 2026 first royalties and then obviously.

Free cash flow generated in.

The range in 2000, 2000, 62027 first free cash flow generation. So hopefully that gives you a range of metrics as it relates to model expectations and I had.

One more just I always you've heard me say that I look at it is a lot like the movie business at the end of the season suddenly you look at all the players and figure out where you have to pay royalties to Enzo with Peter explained it is more understanding exactly what happens in the AG business at that point. They look at all of the customer to pay a lot of royalties and they look at all of their people they have royalties to them.

This reflects our royalties essentially et cetera.

Okay, great I'll jump back in queue. Thanks.

Thank you.

Binder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Our next question.

Our next question comes from Steve Byrne with Bank of America. Your line is open.

Yes, good morning to you.

I have a couple of questions about.

Potential to put <unk> two it's clear.

Soybeans.

First can you highlight what is HQ. Two is there does that represent a different mode of action from.

The multitude of herbicide tolerance transgenic traits that are in soybeans right. Now so is it is that different.

But perhaps you could highlight.

Whether there is any difficulty putting your gene edited traits.

Into soybeans that are full of.

Of transgenic traits.

There's some talk out there that if there is.

Transgenic herbicide trait in there it makes it pretty difficult to do gene editing in there can you comment on that.

And then with respect to putting a gene edited trait into.

Our crop like soybeans that gets exported.

Does does that require.

European import approval for the gene edited traits.

Which obviously now is is essentially precluded, but as you highlighted that the regulatory operation is set for streamlining. So is that do you need that European regulatory change in order for you to get to put these.

Gene edited traits.

In soybeans that are going to be.

Exported and then sorry, but one last one on this and that is you put your gene edited traits in soybeans.

Uh huh.

In some parts of the world those feeds are saved.

Do you have any concern about.

Being able to collect royalties on your your gene edited traits given the green handler can't detect it.

Thanks, Dave This is Peter.

I think I've got most of your questions one.

One question.

Thanks.

So first of all we are so excited about the abilities of what we have in front of us with soybeans I think.

As you mentioned.

<unk>, two and <unk> two trials that are really.

I'm going to change how people think about traits in soybean not just.

Here in the U S but.

In South America as well so I think.

The <unk> I can tell you is it is a new mode of action.

And without partners will be looking to add those.

Stacked potentially.

In soybean that allows farmers to have a much broader week control system. So in some cases, where they may need some additional.

Herbicide tolerance that allows them to control really tough wade's. So it gives you.

A really great opportunity to think through the product lineup, adding <unk>. This is something that.

A number of our partners have talked to us about.

And as you know we have a.

Our relationship with GM.

Latin America.

And that is one of the areas that we will be working with them on.

The other area is <unk>, so what mode in soybean is a really important right.

Yeah.

We do see the potential to stack this on with other.

Approved advanced Transgenics.

I think the other question you mentioned was EU input and.

The way we understand it right now is that again there'll be approved events that you'll be able to work that already imported into Europe .

Europe .

But the gene edited add addition.

Understanding that.

Proposal that they just approved in July will also not only planting in Europe , but also paved the way for imports and exports and so we're excited about that.

Then the last question I think you had was saved seeds.

Where we're at.

Again that telephone we work with our customers to provide the customers will be managing how that goes to market.

And with regard to save states they deal with that on a on a yearly basis.

And I think they manage that very well and understand that there are some areas of the world that farmers will save states.

We have no concerns about <unk>.

Taking that to market and having sites states.

Well, thanks for answering that one question Peter.

Okay.

One real quick one for you and that is clear.

Would you have any interest in expanding into fruits and vegetables, I can imagine there could be interest there.

So Steve that's a great question I think the way I look at <unk> is one of our blockbuster trades.

The beauty of our technology that we're bringing to the marketplace as it goes across crops and so you have this.

Understanding of disease resistance.

You can take from canola soybean and then into other crops that have what model homes.

So that's something we'd love to do in the future right now as a company we're really focused on.

<unk> already mentioned in the.

Script of the deck.

We are really focused on our first two crops with the freight rates.

Expanding twos three crops with fixed rates, but in the future the ability to take the technology across crops and then also across different trials is really exciting for us.

Thank you.

And as you know.

This export thing, especially in important topic within the European legislation Thats, our understanding as they proposed to.

That problem will be solved for us, which is which is a really big event for us.

One moment our next question.

Yes.

Our next question comes from Bobby Burleson with Canaccord Genuity. Your line is open.

Hi, Thanks for taking my questions, sorry about any background noise here, where data at our growth conference.

So I guess.

My first one kind of I guess touches on.

And your last answer.

When we start thinking about.

The learnings from crop to crop.

Or even trade the trade.

Are there synergies that start to gather in terms of customer overlap with the <unk>.

<unk> Plaza.

Where it eases, maybe the pathway to additional collaborations.

And kind of de risks.

Things going forward once once you get some momentum.

So Bob this is Pedro again.

Again, that's a positive.

From a technology standpoint, we're so excited we understand.

The what to edit probably better than most companies.

<unk> has.

A really strong history of understanding.

Ed.

Complex types like disease resistance.

So.

Understanding those what you need to add it.

Allows you to think more broadly and there are synergies associated with that so when I say broadly it means that.

Not only <unk>, but other diseases.

There is caused by Pat.

Passengers like fuze area.

As well as rust.

In other diseases that are really important constraints on agriculture broadly so youre.

Youre absolutely right. This is an opportunity.

To use that synergy to go across a number of different diseases.

Great and then maybe just understanding the technology moat here outside of patents.

Your trade machine process.

And how you created something Thats time bound and reproducible.

What aspect of the different stages that you guys outlined there is perhaps.

No.

I D ideation.

Maybe the most difficult for some of your partners.

To replicate on their own.

In terms of.

Doing this in house.

Thanks, Bobby.

Peter again, I would say that.

The time bound and reproducible type machine is one of the most exciting things I've seen in the company and the history.

It is.

As you saw on the slides, it's a three to five year process.

What's been most exciting to me is to see.

The ability of the team to take single cells through the whole regenerated plants. This is something that is not standard in in any cell biology.

Around the world and so I think.

Our abilities in that area is not just getting one or two cells to divide and go into two regenerated we're talking about millions.

So the efficiency rate that is beyond what you can even than what I, even I imagined a few years ago.

So I think that for us.

That.

Allows us.

About the secret sauce.

That is central to what we what we're doing and our cell biology team.

And just to add.

And <unk> to debt from ideation without having any ability one you'd be able to do complex editors and secondarily regeneration model, which we call. It crop specific trade machine processor, it's really hard to think through how to after your Ida had to do a complex trade and really it's because of that that we now have this three to five years.

You can see it in the <unk> results that were pretty confident that it's just using the last thing I'll call. My factory Maternity award because we grow these cells up in <unk>.

And have a profit.

Pretty well times and Thats, but I appreciate the question.

Great. Thank you for that and then maybe one last quick one here on <unk>.

Nitrogen.

New sufficiency.

I'm curious whether or not any.

The traits that you introduced there are compatible with <unk>.

Engineered microbial solutions that might be applied.

Yes.

Around the plans around the REIT structure is this symbiotic with other solutions that are externally applied.

I know, it's early stages in terms of what you're exploring there.

So Bobby this is Pedro again.

Another great question.

When you think about that.

Denise sufficiency.

<unk> nutrient.

Efficiency.

There will be.

Synergies and symbiosis with.

Microbes in the soil.

We have a number of different targets.

<unk> studied and looked at.

On nitrogen use.

Implants and.

It is a lot of the interaction does happen within the soil.

It also happens within the plant.

So we're looking at a number of different.

<unk> targets, primarily because we have a technology that does.

Target multiple genes in multiple edits.

It really does open the opportunities for us to look at what is out there on the biological side and.

And how we might ask.

<unk> have some synergies and interactions on that front, so yeah, it's exciting opportunity.

And you framed it well when you look at nitrogen use efficiency above the soil and below the soils rates and then our first one is on below the soil trade, but you'll learn as we go forward. This is how the device.

Fantastic Thanks for taking my questions.

Thanks, Tony.

One moment our next question.

And we have a.

Question from the line of Laurence Alexander with Jefferies. Your line is open.

Sorry, just a couple of follow ups first with the collaboration evaluation with buyer and or if you want to speak more generally.

First are you prohibited from entering into similar evaluations with other seed companies.

And second can you give some sense of what the kind.

Kind of the Holy Grail here is what the Blue Sky kind of what the efficient targeted efficiency gain that you wanted to lever that would then be split between you and them in terms of a value sharing.

And what's the goal with the collaborations can you just try and quantify it.

It's a great question because it goes to the core of our business model and we now have.

Customers in all the crops will say, we have 12 customers in each one it's the same model that based on the thorough elite germplasm with and without elite Germplasm tried to work with an initial trades and so on canola. For example, everybody starts with it with a pod shatter collaboration agreement, where we try to put a pod shatter into there are at least germplasm and our goal as a business.

Is that once people see how that works that we will then that turned that into broader collaborations agreements and we expect you to share of us signing into broader collaboration agreements and those broader collaboration agreements. We would expect to do two things one be able to advance our pipeline of trades. So if youre inspire tenure, it's not a secret that if we are if you are.

In canola, if we have <unk> developed that Theyre all they all that really indicated they would love to have that trading in our germplasm. So that's how you extend to a broader secondarily everybody seems to have ideas that they understand what our processes to be able to evaluate new ideas.

And I think the way we look at there is just in that agreement is just to understand like a lot of our customers how does how.

How does that process work, how efficient and how.

Think about it with respect to our current trade through future trades.

Everybody needs to go through that sort of evaluation before they can find on the go alright, I'm ready to put you into my system.

This is sort of they're putting themselves in that process and working those.

And then you mentioned.

You mentioned kind of everybody in the industry Cross licenses technology.

Yes.

Royalties, how much of a drop through to EBITDA.

You expect to see I mean will you be having any technology licenses or leakage.

That we should be taking into consideration.

Could you rephrase that I'm not sure I totally understood I apologize.

When you receive royalties some companies in this sector when they receive royalties. They then have to pay.

IP payments to other companies they settle up.

And Greg certain amount of leakage I'm just curious as to what you think if you get a certain royalty amount what the contribution to EBITDA should be.

I'm glad you asked the question. Thanks, very very much first you should know also.

Furthermore, our collaborative and so far everything we're doing is not exclusive we are working with people generally across all of these crops and we'd like to kind of the utilities that we can meet all exclusive.

Tracy we don't have any other technology royalties that are due we have a 10% royalty that's due to early on in our financing we did a royalty financing where these investors got a 10% royalty on our revenues.

And so that would be a deduction for our revenues and secondarily, we have created a foundation for <unk>.

Investing in sustainable agriculture in developing countries and that's after we get $50 million of royalties there'll be a 2% deduction.

To this nonprofit to start doing development.

Mental work in agriculture knows that no other injections.

Okay, Great and then just lastly.

Probably a predictable answer on this one but what's your bandwidth or appetite for M&A. If other early stage biotech assets.

I'm available way Calix was.

That's a great question.

As we the next year and a half we're so focused on getting our five projects out there.

At the end of 2025 to say God you got your three platform growing your trades are running we have our customers at that point, we really would love to be able to start thinking through how the industry shapes and how we can be a real participant in the industry and we'd be open to it I think for the moment, we're really focused on.

And doing what we are promising.

Okay. Thanks.

Thank you. This concludes our question and answer session I would now like to turn the call back over to Roy rigs.

Yeah.

Okay.

Thanks, So much Tony this is really.

For all of Us.

This is sort of we now realize Republic. This is kind of quarters without a thorough public offering we've put our documents together, we really are focused and we really are excited about where we are with our trades and where we are with this process.

Thanks for for following us.

I hope to be able to show you really how the progress works in this new industry. The idea of having independent trade producer is a new concept for for agriculture, and I think that the reception, we're getting from customers on the.

Quality of the trace we're developing what's helping us get to that point, but the calix still helped us. So thanks very much for listening and we look forward to talking to you in future calls.

This concludes today's conference call. Thank you for your participation.