Q3 2023 Yield10 Bioscience Inc Earnings Call
Hello, and welcome to the third quarter 2023 financial results and business update conference call for yield 10 bioscience during the call participants will be in listen only mode. The presenters will address questions from analysts today.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference call is being recorded.
I would now like to turn the conference call over to your host yield 10, Vice President of planning and corporate Communications Lynne Brum. Please go ahead.
Thank you Sarah and good afternoon, everyone. Welcome to yield 10, Bioscience third quarter 2023 conference call. Joining me on the call today are president and CEO, Dr. Oliver Peoples, Vice President of research and Chief Science Officer, Dr. Kristi, Snell, and Chief Accounting Officer, Chuck Hazard.
Earlier, the new Neogen issued our third quarter 2023 financial results. This press release is flawed.
Slides today's presentation are available on the Investor relations events section of our website.
El pen five dot com.
Let's turn to slide two please.
Please note that as part of our discussion today management will be making forward looking statements. These statements are not guarantees of future performance and therefore, you should not place undue reliance on them.
Investors are also cautioned that statements are not strictly historical constitute forward looking statements.
Such forward looking statements are subject to a number of risks and uncertainties that could cause the actual to differ materially from those anticipated.
These risks include risks and uncertainties detailed in yield ten's filings with the SEC.
The company makes undertakes no obligation to update any forward looking statements in order to reflect events or circumstances that may arise. After the date of this conference call.
I'll turn the call over to Ali Thanks, a lot.
Good afternoon, everyone and thanks for joining our call.
Turning to slide three.
We're making solid progress on our technology and business plans for launch Camelina as a platform crop with a focus on the biofuel feedstock market.
Do all your market for Omega three oils.
Different time Lino varieties, both products can be produced in a closed loop value chain.
He is contracting with doors, and oilseed crushers and securing offtake agreements with end users the different oils.
Today, we will provide an update on recent accomplishments and our camelina seed genetics to biofuel block for our progress developing herbicide tolerant varieties provide an update on our Omega three Italia and our program presented.
Chose <unk> key milestones.
We will then open the call to questions.
Let's now turn to slide four progress on key 2023 business goals.
Over the course of 2023, we've achieved numerous milestones on the path towards commercializing Camelina as a platform Crawford biofuels.
And you heard me say Polaris and producing high value Omega three fatty acids and Kevin.
In Biofuels are key commercial goal in 2023.
Demonstrate the value chain from Youll 10, Camelina seed.
Offtake of Camelina agreeing to a customer.
An important goal has been achieved as we have generated cash proceeds for ship seed shipments to growers and from grain shipments to biofuel player.
In 'twenty 'twenty four we intend to continue to deliver green for Houston, Bob Biofuel based on the wintertime, we like or contracts, we signed this fall.
This is a key area for partnership we are continuing to progress discussions to form additional partnerships and biofuels.
A year ago, we signed a one year extension of our research and option agreement, whereas the awesome set to complete the whole Mcguffey Cantilena program, which had been delayed due to COVID-19 restrictions in the U K we've.
We've made good progress with the aroma gives me camelina platform in 2023, and putting developing project timelines and the launch plan for the first product EPA Omega three oil.
A few weeks ago, we announced that we've exercised their option to finalize an exclusive global commercial license with Ralph instead.
Shortly thereafter, we announced the signing of an LOI for a partnership with biomarker groups one of the largest aqua feed producers in the world.
And I'm pleased to let you know that we have recently initiated seed scale up activities for the Omega three EPA Camelina line in Chile.
The E P. Eight line produces up to 20% EPA in SEDAR.
Going into 2024, we anticipate the production of pilot quantities of the purified EPA oil for business development purposes.
And potentially larger scale field production of EPA nimble enough to support our commercial development activities.
Let's now turn to slide five.
Stablish and Camelina production.
Our business plan is based on using advanced analytics to develop camelina as a platform crop for producing oil meal and specialty products today.
Today, there is a significant opportunity in the biofuels market.
Our vegetable oil is processed into sustainable aviation fuel and renewable diesel cigna.
Significant new demand for feedstock oils is being generated as new refineries are coming online.
And as new environmental commitments are being made to utilize these cleaner fuels across the globe.
Based on our partnering discussions we believe that biofuel sector recognizes that there is going to be a divergence of supply and demand at some point, but it's not yet clear what exactly this will happen.
Or 2023, we contracted approximately 2000 acres of winter and spring Camelina for production in Canada and the U S.
In Canada, we engage drawers in southern Alberta, Northern Alberta, The Peace River region in Saskatchewan and Manitoba.
In the U S. We contract tours in Idaho and Montana.
We're very pleased with the level of broad engagement we had.
<unk> shared their insights on the crop so theyre on fire practices are opportunities they see how they could use the crop and the rotations and comparative economics.
In particular, the growers had strong positive feedback on the types of herbicide tolerant varieties yield tightness, developing and how those could significantly expand the opportunity and add value for them.
We were also very pleased with the performance of our current tamblyn of varieties for example, or W. DHT winter variety is very robust and cold temperatures and planted seed shows are built and they will save mechanism for biopsy did not germinate in default, so dry winter and Germany issued in the spring.
Both our winter to spring varieties require some moisture to germinate, but then demonstrate excellent drought tolerance over the growing season. For example, we had 160 acre field in southern Alberta received just one five inches of rain over the entire season, but.
But over twice the yield of neighboring must certainly canola crops drawn under the same conditions.
Campbell you'd also showed good pest resistance in particular to flea beetles and in some areas grasshoppers, which are passed another oilseed crops, such as canola and mustard.
During the third quarter of 2023, our contract contracted growers harvested the winter and spring time, when the fields setting in motion the steps in the value chain from planting harvest grain deliberate spinoff date customer.
And this slide illustrates the steps of the value chain, we established Western Canada.
In the third quarter of 2023, we contracted with existing and new doors and plotted winter acres for harvested in summer of 2024.
As you can see in the photo to the right there's already been snow cover on that crop in Canada.
The same closed loop value chain can be used with Omega three cambria varieties for the production of Omega three oils in the future I will now turn the call over to Christie to an update on the development of H D stacked HD camelina variety.
Thanks Ali and good afternoon, everyone, let's turn to slide six.
A couple of years ago, we prioritized the development of herbicide tolerant camelina provide farmers with the robust weed control package supporting the broad adoption of the crop in North America.
We have been waiting for regulatory risk assets from USDA.
And the environmental protection agency to enable the use of gross loss Nate for control of broadleaf weeds with our engineered Camelina lines.
We hope that we would receive responses from the agencies before year end and I am delighted. This afternoon that we heard we received a positive response from USDA APHIS aiding that are include Phosphonate tolerant line is not considered regulated by the agency.
Growers have provided us with positive feedback on the potential of using <unk> arsenate tolerant camelina and their rotations.
Historically incorporation of herbicide tolerance traits, including to fascinate tolerance into canola helped to transform it from a marginal crop to a major crop grown on millions of acres and we believe camelina has the potential to follow a similar path.
We have demonstrated tolerance to applications of glyphosate and three seasons of successful field tests of our lead spring Ht Camelina variety. One main objective of our 2023 field testing with to collect and analyze the data on the same composition of the herbicide tolerant lines compared to <unk>.
Trolls.
Samples have been harvested for these analyses.
This is required for a data package to verify the safety of the meal for animal feed through itself determination process. We also intend to voluntarily submit this package to FDA in 2024.
With yield data in hand, and chain scale up activities underway, we remain on track to launch our first herbicide tolerant camelina variety as early as 2025.
Let's now turn to slide seven.
Over the course of 2023, we made good progress with the development of stack turbos side tolerance in spring and winter Camelina.
Stacked herbicide tolerant camelina exhibits tolerance to over the top applications include fascinate for broadleaf weed control as well as tolerance to group two herbicides in soil.
Camelina is very sensitive to group.
Group two revenues that's the group to trade is important to provide camelina with tolerance to su and any herbicide. It may remain in the soil from a previous season's crop.
This past summer, we reported encouraging data from our spring field trials, demonstrating robust acts herbicide tolerance and multiple of that.
Photos on the slide show examples of that with factor beside tolerance.
<unk> survived herbicide treatments.
Little to no growth in Controle plan within certain plants without stacked educate train and plots labeled with red dots on the slides.
We are currently analyzing agronomic data from the Springfield trials and are measuring healed in seed oil content.
We expect to choose the best lead and backup lines to move forward in our pipeline.
And our winter 2023 field tests, we are testing for the first time with several candidates stack H T winter candidly in our lines.
Here too we plan to choose the best suite and backup lines to move forward in our pipeline based.
No.
Earlier in 2023, we filed a request for regulatory status review, our RSR with USDA APHIS to determine if the stack trade is exempt from regulation.
I am pleased to say that we also received the response. This afternoon from USDA APHIS aiding that are H K stack is not considered regulated by the agency.
We believe that act herbicide tolerance lines will be a win win for growers and yield 10 and.
Citrate will allow robust weed control for farmers potentially increasing yielding revenue and providing tolerance to soil residue previously applied to herbicides.
This is expected to result in broad expansion of acres available for Camelina planting.
Let's now turn to slide eight.
As shown in the figure on the right of the slide are stacked herbicide tolerant <unk> 902 is a highly engineered camelina plants.
The molecular stack in this plant as a result of the use of a variety of tools.
The oil content trade anything inq, which improves seed oil content by 5% was achieved by editing eighteens. We previously determined that the resulting genome edited increased 902 lines is.
Not considered a regulated article with a submission to the USDA APHIS under the former am I regulated process.
Sure incorporate factor beside tolerance, we inserted a gene that confers tolerance with Austin eight containing herbicide when expressed in our plan.
We also inserted another mutated gene that when expressed in a plant confers tolerance to anything yet as skus in both group two herbicides.
Modern biotech tools allow the straightforward stacking of trades and we believe that the U S science, driven regulatory process is favorable for Camelina with factory.
As evidenced by our recent positive decision from USDA APHIS aiding that our HVAC is not considered regulated by the agency.
Okay.
Our EPA eight Camelina is also based on our molecular stack of jeans, enabling EPA production in the oil we.
We are utilizing <unk> stacking to deploying new traits in camelina with the aim to deliver ongoing enhancements to crop performance, which if achieved would bring enhanced revenue and margin to the crop.
Our strategy is to create a pipeline of highly engineered elite camelina variety to deliver ongoing performance improvements and agronomics yield oil content, Neil profile and other desirable attributes.
We are deploying these novel traits through genome editing traditional genetic modifications and breeding to create new camelina variety.
For example, we are deploying combinations of traits for additive effects, where we are evaluating performance traits such as <unk> 3004, <unk> thousand seven and <unk> thousand 20, and others to drive ongoing improvements to plant vigor seed yield in oil content.
As we create new engineered camelina variety, we intend to protect our camelina variety through plant variety protection and patent filings.
I'd like to acknowledge the tremendous efforts of the yield 10 technology team and their continued diligent efforts have produced the elite herbicide tolerant camelina germplasm that forms the foundation of our commercial Camelina pipeline for production of feedstock oils for Biofuels.
These herbicide tolerant lines are expected to provide the elite camelina germplasm background for high level production of Omega three oils and in the future PHA Bioplastics.
In the months ahead, and we look forward there further field testing our lead commercial quality herbicide tolerant camelina lines advancing the Omega three oil technology platform and we seek to secure favorable regulatory decisions for our elite Camelina products I'll now hand, the call back to Ali.
Thanks Christine.
Let's now turn to slide nine the Omega three market opportunity.
We secured the rights to the Omega three kind of latest technology from Rothman said in 2020, because we believe that the <unk> oils containing EPA and DHA.
Assets represent a very significant differentiated and growing market opportunity.
These omega three fatty acids are essential to agriculture feed in human nutrition.
As we've highlighted before there continues to be a major global supply constraints and disruptions in oil produced proportion harvested fish.
It has been reported recently that the cancellation of the first Peruvian anchovy harvest earlier this year across the industry of $1 billion.
And while the second answer we harvest is going forward the authorized conscious about 25% below 2022 levels, which is expected to extend the supply constraint on the industry.
We are also seeing positive developments on the regulatory front with Norway. The largest producer of farm salmon recently approving the use of a GMO Omega three oil from new seed the producer DHA containing oil and canola.
As a result of continued supply constraints as well as evidence of a more receptive regulatory environment. We are seeing increased third party interest in alternative sources like the Camelina Omega three platform.
Based on the technology developed by <unk> said, we believe that producing Omega three fatty acids and timber Lena represents a potential game changer for the Omega three and salmon farming industries by enabling a plant based predictable supply of this high value nutritional ingredients.
Based on our successful collaboration with Professor Johnathan Napier Steven Rocko Stead, we recently executed our exclusive option to an exclusive commercial license to the Omega three time winner.
Reflecting industry interest in Nuc sources WOMAC Street. We also recently signed a letter of intent with <unk> group, a global Aqua feed producer an industry leader to develop a collaboration on the production of Omega three for this market.
Let's now turn to slide 10.
With an overview of the Omega three tablet and the development status.
On the regulatory front, we filed in RSR with USDA, APHIS and third quarter for the EAA Camelina line, which produces oil was up to 20% EPA comes out.
And we are preparing a second <unk> filing for an Omega three company in the light that produces both EPA and DHA at levels similar to northern Hemisphere fish oil.
Using the RSR process for regulatory approval by USDA APHIS under the Securities we see a promising path to production of Omega three in the U S.
We recently began scaling up EPA ambilevous seat support business development activities and potentially additional planting in 2020 for the.
The EPA oil will also have use of accuracy formulations as it is closer to commercial production and we shouldnt be blended with our will DHA oil.
<unk> has also developed an extensively tested the Omega three.
Camelina Doj, one line, which contains 10% EPA and 10% each year in the oil <unk>.
Published results of Macrophage studies carried out in previous Rossum said collaborations with farmer has shown that the Doj one oil and serve as a drop in replacement for fish oil.
Human clinical studies also published Assuredness oil to be an effective alternative to fish oil and the human diet.
We look forward to completing the commercial license with Ralph instead, and working to form partnerships with Biomarin and others to advance <unk> towards commercialization Chuck over to you.
Thanks Ali and good afternoon, everyone.
Let's turn to slide 11 third quarter results.
We ended the third quarter of 2023 with $2 8 million in cash and cash equivalents.
During our third quarter of 2023, we raised $3 $7 million in a public offering of units.
Being a common shares and warrants, we expect that our cash on hand.
Adding the proceeds from the offering will support our operations into December of 2023.
We're engaged in a dedicated and ongoing effort to secure additional funds in the very near term in order to continue our operations.
Our net operating cash used for operating activities was $2 6 million for the third quarter of 2023 as compared to $2 7 million for the third quarter of last year.
For the full year 2023, we continue to expect total net cash usage in the range of $12 million to $13 million under our operations, including remaining payments to our growers for the first camera unit grain harvest.
I'll review, the third quarter and year to date operating results.
For the third quarter of 2023.
<unk> reported a net loss of $3 7 million or <unk> 41, a share as compared to a net loss of $3 5 million or 71 per share for the third quarter of the previous year.
As expected.
The completion of our department of energy graph during our first quarter of this year, we did not report revenue during the third quarter of 2023.
We did report $12.
$1 million of grant revenue in the third quarter of 2022.
R&D expenses were $2 $2 million during the third quarter of 2023 and during the third quarter of 2023, we recorded our first $100000 in payments received are due to us from shipments of seed and harvested grain to grow or as an off take partners as an offset to R&D expense.
R&D expenses in the third quarter of 2022 or $2 1 million.
General and administrative expenses were consistent between the two years at $1 5 million for the third quarter of both 2023 and 2022.
For the nine months ended September 32023, the company reported a net loss of $11 2 million or $1 70 per share compared to a net loss of $10 3 million or $2 <unk> per share during the first nine months of the previous year.
Year to date grant revenue during 2023 and 2022 from the completed.
$0 1 million 0.4 million respectively.
Research and development expenses were $6 4 million and $5 $9 million. During the nine months ended September 32023 at September 32020 through effectively and G&A expenses were $4 nine and $4 7 million for each of those periods.
For more details on our financial results.
Please refer to our earnings release value back to you. Thanks, Chuck Let's now turn to slide 12 upcoming milestones.
Before getting into the upcoming milestones I'd like to call it and the accomplishments of the yield 10 team, including the hot off the press news we received from USD <unk>. This afternoon.
Congratulations to the entire yield 10 technology team you under Chris's leadership have demonstrated compelling capabilities in the development and regulatory approval of advanced Camelina varieties developed using genetic engineering.
On the commercial side, we have set up a value chain and biofuel is requiring seed production and broader engagement and charted a path to use <unk> as a platform crop to produce <unk> fatty acids based on our collaborations with Rafa step.
For the biofuel market, we're continuing partnership discussions across the biofuel value chain to support ramping up the acreage of camelina to produce low carbon feedstock oil that market.
As we work to realize our vision of leading the industry in the commercialization of differentiated camelina varieties. Our focus is on introducing HD and stacked HD camera can be universities that are well suited to farmer rotations in North America.
I was thrilled to hear from Christy. This afternoon, we have received regulatory clearance for HD and start Ht Catalina. This.
This is not only a major milestone for <unk>, but also a major milestone for camelina as a new crop. These positive regulatory outcomes board well not only for the pending a review of our EPA Camelina RSR, but also for the Doj one RSR, we are preparing and for the performance traits in our pipeline we.
We are building seed inventory over the winter in South America. This award <unk> contracts we.
We believe the Omega three products represent a wide array of commercial opportunities. These essential fatty acids that are used in agriculture, food pet food pharmaceuticals, Nutraceuticals and EBIT cosmetics, we look forward to completing the commercial license with Rossum said on working with <unk> to form a partnership to produce Omega three oil for use in accuracy.
Some recent patent awards and notices of allowance for filings and our IP portfolio over the last few months as we continue to expand and build our intellectual property portfolio with that I'd like to turn the call back over to Lynn for questions. Thanks Ali Sara we're ready for questions.
Thank you if you have a question. It is star one on your telephone keypad. If you wish to withdraw your question simply press Star one again.
Our first question comes from the line of Ben <unk> with Lake Street Capital markets. Your line is open.
Alright, Thanks for taking my questions in your prepared remarks, you noted that you were continuing to progress the biofuel partnerships.
But there was no mention made of marathon Mitsubishi or American.
Your prepared remarks, I'm wondering first of all if you could give us an update on the status of these three relationships are they are are they all ongoing or have any of those parties exited discussions with you.
So I'm not going to get into too many details, but no. One has exited at this point and we have indicated that we are in extensive discussions and the biofuel space with other parties.
So it's a very busy area as you can imagine.
I think the issue of courses as a small company.
Working with these giants to get things to the point, where we're mutually agree on the path forward.
What will work down so nothing has changed with those guys.
Okay, well, that's good to hear and as a follow up to that.
To your comment right. There I mean, I'm wondering I appreciate youre not going to get into specifics, but I'm wondering if on a high level you can talk about.
Kind of what the barriers of any have been to converting these.
Our relationships to a commercial or investment.
Moreover, our formal investment.
Is there is there any kind of broad characterization.
That you can help make to give us confidence that these are going to be reaching a successful completion here soon.
No I think we remain very optimistic that we will achieve a successful partnership obviously that takes two is to agree on the structure of the funding.
How we go about this so no we don't we can't really provide color on the individual bonds, but I see overall.
The interest remains very strong.
New players come to the table, which is great, but ultimately its a matter of getting the time.
The decisions made within those organizations to essentially go forward on the path that we want to go forward on so we can't really provide too much color on the individual companies.
Okay.
Fair enough last one for me and then I'll get back in line you called out $100000 of accumulated green deliveries that were recognized as an offset to R&D in the quarter can you talk about the level of inventories of grain you have today or grand Thats expected to to.
To arrive here soon.
Ed.
For for future delivery over the next.
Over the last quarter over the next year.
Can be recognized as revenue or as continued still as R&D offsets.
So I think obviously.
Raise on between revenue.
Reimbursement and obviously, we're working with the audit group too to make sure that we stay on the right side of the fence on that so I'm not sure we can provide much more color.
We do have.
Additional.
Green and our oil.
In hand, but we're trying to essentially.
Use that strategically versus simply to make a quick sale.
Avenues to sell that couldnt call or get reimbursed for it if you like.
Our goal is to leverage that oil for other purposes, we have discussions ongoing regarding a more strategic use of that material.
Ali I think we've indicated.
We completed the harvest from the first two seasons, yes, we've completed the harvest on the.
That's basically where we are.
And I would add to that Ben that as we've talked about seed scale up as well we're positioning.
Across our portfolio of existing Camelina lines that are commercial as well so the Ht and stacked HD that are coming behind it to build inventory to support those launches that were anticipating so that's also part of the picture too.
Be able to have sufficient seed for grower contracts.
Yes, no thats fair enough.
An important calculus to make at this stage so understood on all on all counts.
Alright, well that does it for.
For me, Thanks for taking my questions and I'll get back in line.
Okay. Thanks, Dan.
Your next question comes from the line of Anthony Vendetti with Maxim Group. Your line is open.
Hi, Thanks for taking the question. This is actually Jeremy on the line for Anthony.
One quick question is there any overlap between all these different segments that you're in meaning is there a limit when you grow something you sort of have to focus on growing our camelina for I'll take for the crushers or for the herbicide tolerance or are they separate and you can really just keep growing each each segment.
Essentially the way to think about it Jeremy is that.
First generation of is obviously these aligns with for example, <unk> two that we started the great contracting with.
The <unk> hundred INR, two obviously, what's going to happen is those lines will be placed as the.
The HP technology comes online so it's like a it's like a generation one generation two generation three so they will they'll all ultimately end up Ht is adjusted it takes time to transition through this process of scale out with the non engineered lines and ultimately replace those with the engineered lines, which have higher value higher productivity.
Better integration of the crop rotations and that will be a continuous process, just like <unk> or <unk> or any of the big seed companies does this continuous improvement process in place.
Okay understood. Thank you and then just wanted to touch on you mentioned that you think you can get commercialization for the herbicide stack camelina.
Herbicide tolerance test Camelina and 2025, what does that I know.
It's a little early but what does that commercialization look like to you and how does that play out.
Well I mean, obviously in terms of commercialization and I'll, let kristy speeches technology, because it's a pretty big accomplishment for a small company.
Really fundamentally what it's going to balance that with the other steps in the regulatory process to go through the biggest one and the most expensive one for.
From our point of view of the development is really the USDA APHIS, because obviously if youre doing this work under these conditions is very expensive.
There's a lot of restrictions and regulations around as there should be until the deregulated because they believe it's safe so.
I think the.
The reality of it is is that.
We're going to move forward with us and I think we have a great project project coming up we know from the farmers. They wanted us, but we need to make sure. We check all the boxes in 2025 by that time, we will also built up quite a bit of.
I don't want to use the word inventory available.
Available seat for larger scale platform as.
As well as to generate is the growing interest in using it we know the growing interest is very very strong, but obviously, we've got more work to do in 2004 to get to that point.
Thank you a couple of understood alright.
Yes, you can talk a great.
Okay.
Well I guess all I can say is that our leaders are added for the <unk> phosphate tolerance is very robust in this field.
It's ideal for approval for regulatory agencies. So the team has done a great job.
Correcting that event and evaluating it.
Okay, Alright, Thank you I'll hop back in the queue.
Once again, ladies and gentlemen, if you have a question that is star one.
Your next question comes from the line of Noel Parks with Tuohy Brothers. Your line is open.
Hi, good afternoon.
Hi, Arnold.
Okay.
Hi, sorry, you're thinking a little little problem with my.
By phone options, just a second site.
Okay.
To come back.
I was just wondering if you.
You were just talking about.
We'll close immune tolerance.
I was wondering if you could maybe just drill down a bit more into feedback from growers from the most recent harvest and looking towards the next crops.
And I'm sort of thinking in terms of.
If any of the feedback you've gotten say year to date has really made any changes in terms of where you're headed in product development.
Yes, no I think I saw <unk>.
To give you.
A broad kind of sweeping overviews I think I think in general obviously, it was a pretty bad.
Area of the North America this year and so I think the number one thing was actually compared to the other crops that are growing in my farm.
Luke's really very good that's very obviously very robust.
The drought conditions those require water. This is a very robust I think the other aspects of it of course is that.
As they looked at the rotations is and we talked a about the herbicide tolerance with developing.
I just wanted to get very excited about it because they see ways to leverage that herbicide tolerance, just as a way to better manage their rotations and thats on a very encouraging thing.
And so I think in general.
The feedback is we remain very interested in one thing we did see at least coming from the.
Our commercial team was a lot more interest from the growers and planting spring Camelina and.
In 2024, because of some of the challenges we had with some of the other crops. So well that was interesting to see the.
The backend of 2023 of course, you've cut a drought for many months. So the soil is very very dry.
So we actually backed off and some of the winter planting just because of the drought conditions in some areas recognizing that thats probably.
The right thing to do at this stage, while we bring bring forward. These next generations of lines.
Strong interest that sum is definitely got the attention of the growers no question about that.
<unk> also as I said very <unk>.
Excited about the prospects for the 2008 tolerant camelina.
And then the stack camelina because if they are using these group twos and a significant share of their acreage.
Those acreages those acres are just not available for planting that will immediately after so.
Giving feedback that we're working on the right things we're doing the right thing.
To be negative in antibody.
One of the telling me that if we had been doing glyphosate the disorders off the farm.
Close to some of the REIT issues of season. So they are pretty vocal they have a strong opinions and very smart people because of course, the farmers not easy so.
Yes, it's clear we're working in the right thing is clear we got to do it right.
This first step with USDA APHIS, indicating the science is absolutely solid.
They don't see really any risk.
Step is obviously just what we believe is is getting the data on the on the meal and demonstrating these saves so I think the way I look at it going forward, it's all about two things.
It's about safety, it's about sites get the science right and get the safety right and then make sure it's adding value for the GOR and Thats. The way we are focusing on.
Developing our new products.
Okay.
Great Thanks for that detail.
Then sort of heading to another part of the value chain I wondered.
As you continue talking with various parties about partnership.
Could you generally characterize what discussions with.
The integrated oil companies.
One stream refining companies.
These days I'm just.
Well two things I'm kind of curious about their attention span.
And part of that is that there in my mind there Ben.
In their general surgery.
S G carbonization portfolios.
Jade from <unk>.
Some of our maintenance only puzzling and milestones I'd say over the last couple of them.
Quarters, and then also I recognize that they also tend to be kind of bureaucratic which meetings can take a wildwood consensus ongoing so.
Thanks.
Sorry about that.
I guess, let me just touch the position few things. So we are really pushing forward right now on few different oil products.
And it's absolutely crystal clear to the entire biofuel sector.
You're at $9 5 billion gallons of new vegetable oil demand by 2030.
The entire soybean and canola crop only produces around $8 5 billion gallons today, assuming we just stopped eating it.
Then yes.
<unk> is going to be a disconnect.
Everybody knows us everybody understands that.
Of course.
Then you get into the challenges around.
Very large.
Bureaucratic organizations was really smart people and very very smart people, but of course, they don't have the domain space in agriculture pharma and seed genetics so of course.
It is a hurdle.
And then you've got the hurdle.
The small company in Woburn, Massachusetts.
Basically indicating that they are going to get basically going to go and do what Bayer and Monsanto that.
And be successful and by the way, we just demonstrated we can be and so we kind of have to show them. We can do this.
Because of course there is.
Definitely an issue there, but I think when I look at the whole space I would say the entire sector knows this is going to be a crunch they've.
<unk> been pretty open and the discussions with us they know our parent oilseeds, particularly winter <unk> are going to be critical for the future of low carbon intensity biofuel feedstocks.
And then you get into the nuts and bolts of how do we make that happen.
And that's where the learning experience just just take tight it just takes time.
Unlike anyone else in the sector they want to turn our path.
Wanted to turn evolve in the pipe.
Kathleen oil.
As these pieces that have to be right.
Those dozen feet per well.
Are those the crusher.
And so but theyre getting their head around it.
And some of these things that you've seen with Cobra <unk> and <unk>.
They are obviously chevron I mean, that's happening it's happening it just takes time.
And you've got to get the circumstances right you've got a location right. So I think we will.
And the phenomenal progress, we're a small small company.
If you kind of look at it and say well how does that compare to what's going on in an Omega three as well guess.
Guess, what that disconnect between supply and demand has happened to that industry.
The massive wall.
We feel we've heard estimates official oil prices, which used to be $2000 a tonne.
<unk> $9000, a ton Oh and by the way if you want to use Aldo systems to produce this to make 20000 tons you have to invest $200 million. If you look at the very modest investment.
And while the facility in Blair, Nebraska. So so when you look at the two things are obviously quite different. It's just wanted to think the same technology. The same harborside technology. The same camelina differences. The Omega three has been modest further modified to make this much higher value oil and.
The market demand is.
Literally off the charts so.
Very different the all based on the same technology based on all of the investment we've made in new varieties of herbicide tolerance and the partnership with Ross instead, the difference being we announced we're executing the exclusive option and within a few weeks, we got an agreement in place with <unk>.
And I can tell you that we've had a lot of interest from a number of others. So it's just a different dynamic because.
Our industry knows they need this year, we have to solve the problem.
And so they're moving faster than the biofuel.
Biofuel guys.
Got it thanks, and just one last thing kind of touches on what you were you just talking about.
As you look ahead to the need to build inventory to support growing contracts.
Thinking is that does that imply any capital investment on your part down the road.
Is that a pretty quick timeframe can you sort of use leased facilities equipment et cetera to handle that.
So in terms of that I mean really the issue is at some point there'll be a question of working working capital associated with our planting seed inventory.
That's what it's going to be I mean that will that will be it but of course.
The whole idea that we have with this value chain is to have off take for the product the oil and the meal wind up ahead of time, so essentially one liter of defense part of the green from the grower through the processing facility or to the storage facility they get paid.
And we get paid and we pay them so.
It can be done fairly seamlessly that's what we've basically been doing with the ratio we have in western Canada.
Ultimately is of course, the business may likely evolve into different business models for sure as a <unk>.
Great. Thanks, a lot.
Okay no. Thank you for your questions time, Eric immigrate.
Thank you.
And I think Ali I'll turn the call back to you for closing remarks.
So I'd like to personally thank all of you for joining us on the call Tonight, and especially our shareholders for your continued support and I want to thank everybody at El pen for contributions are keeping us on track to reach our commercial and product development goals have a nice evening.
Thank you everyone for joining you may now disconnect. My apologies go ahead, that's fine.
Great.
We are going to disconnect now Noah thank you.
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Yes.
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