10-Q: Cibus Inc. Reports First Quarter 2024 Results, Highlights Progress in Gene Editing and Commercialization

Cibus Inc. reported a net loss of $27.0 million for the first quarter of 2024, while making significant strides in its gene editing technology and commercial partnerships.

Summary

• Cibus Inc. reported a net loss of $27.0 million for the first quarter of 2024, compared to a net loss of $5.4 million in the same period of 2023.
• The company's revenue increased to $0.5 million, up from $0.04 million in the first quarter of 2023, driven by collaboration agreements.
• Research and development expenses rose to $12.0 million, and selling, general, and administrative expenses increased to $7.0 million, primarily due to the merger with Cibus Global.
• The company's cash and cash equivalents stood at $24.5 million as of March 31, 2024.
• Cibus has made progress in commercializing its Pod Shatter Reduction (PSR) trait in Canola and its herbicide tolerance (HT) traits in Rice, securing agreements with multiple partners.
• The company has also established a scalable gene editing process in Wheat and continues to develop its Soybean platform.
• The EU Parliament has voted in favor of new laws that would differentiate gene editing technology from GMO technology, potentially impacting the regulatory landscape for Cibus.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there is positive progress in technology and commercialization, the significant net loss, increasing expenses, and going concern warning from the auditors create a negative sentiment. The company's need for additional capital and the uncertainty surrounding its future operations also contribute to the lower score.

Positives

• The company has made significant progress in commercializing its PSR trait in Canola and HT traits in Rice.
• Cibus has expanded its customer base in the Rice market, covering a substantial portion of addressable acres.
• The establishment of a scalable gene editing process in Wheat demonstrates the company's technological advancements.
• The EU's evolving regulatory landscape for gene editing could provide a more favorable environment for Cibus's products.
• The company has successfully raised capital through its ATM facility, providing additional financial resources.

Negatives

• Cibus reported a substantial net loss of $27.0 million for the first quarter of 2024.
• Operating expenses, including research and development and selling, general, and administrative costs, have increased significantly.
• The company's accumulated deficit has reached $503.2 million.
• Cibus's cash and cash equivalents are $24.5 million, while current liabilities are $21.7 million.
• The company's auditors have raised substantial doubt about the company's ability to continue as a going concern.

Risks

• Cibus faces the risk of needing additional near-term funding to finance its operations.
• The company's ability to obtain additional capital on acceptable terms is uncertain.
• There are risks associated with the commercialization of the company's traits and the adoption by farmers.
• Regulatory developments could impose significant burdens on gene editing processes or products.
• The company is dependent on distributions from Cibus Global to cover its corporate and overhead expenses.
• The company's ability to achieve commercial success is subject to various market and technological risks.
• The company's financial resources may not be adequate to support operations for the next 12 months.

Future Outlook

Cibus expects to continue to incur significant expenses and operating losses for the next several years. The company anticipates that it will continue to generate losses for the next several years and will need to raise additional capital to support its business plans to continue as a going concern within one year after the date that these financial statements are issued. The company expects cash used by operating activities in 2024 to be higher than 2023 driven by a full year of combined companies in 2024 versus only seven months of combined companies in 2023. The company expects cash provided by financing activities in 2024 to be higher than 2023 driven by the need to raise capital to fulfill the company's forecasted spending in 2024 and beyond.

Management Comments

• Cibus believes that its RTDS technologies and Trait Machine process represent a technological breakthrough in plant breeding.
• Cibus believes that its gene editing technologies and trait products have the potential to accelerate agricultures jump to a climate smart, more sustainable, crop production system.
• Cibus believes the impact of these regulations is the beginning of the gene editing era.
• Cibus believes that its cash and cash equivalents as of March 31, 2024, is not sufficient to fund its operations for a period of 12 months or more from the date of this filing.

Industry Context

The report highlights the evolving regulatory landscape for gene editing in agriculture, particularly in the EU, which is moving towards treating gene-edited traits similarly to those developed through conventional breeding. This shift is significant for Cibus, as it aligns with the company's technology and could open up new markets and opportunities. The company is positioning itself as a leader in the gene editing era, emphasizing its high-throughput facilities and its role in augmenting seed company breeding operations.

Comparison to Industry Standards

• Cibus's focus on high-throughput gene editing facilities aligns with the industry's move towards more efficient and scalable breeding processes, similar to companies like Pairwise and Benson Hill.
• The company's development of multiple traits across different crops, including Canola, Rice, Soybean, and Wheat, is comparable to other agricultural biotech companies that are diversifying their product pipelines.
• The company's emphasis on traits that address productivity and sustainability challenges is consistent with the broader industry trend towards climate-smart agriculture.
• The company's financial results, including its net loss and cash burn, are not uncommon for early-stage biotech companies, but the company's cash position is a concern compared to companies with more established revenue streams.
• The company's reliance on the ATM facility for funding is a common practice for companies in this sector, but it also highlights the need for more sustainable financing options.

Related Party Transactions

• Cellectis, the Company's largest shareholder prior to the completion of the Merger Transactions, has guaranteed the lease agreement for the Companys Roseville, Minnesota facility.
• The Company agreed to indemnify Cellectis for any obligations incurred by Cellectis under its guaranty of the obligations under the lease, effective upon Cellectis ownership falling to 50 percent or less of the Companys outstanding common stock.

Stakeholder Impact

• Shareholders face the risk of dilution and potential loss of investment due to the company's need for additional capital and the going concern warning.
• Employees may be impacted by potential cost reduction measures and the uncertainty surrounding the company's future operations.
• Customers and partners may be affected by the company's ability to deliver on its commercialization plans.
• Creditors face the risk of non-payment if the company is unable to secure additional funding.

Next Steps

• Cibus will continue to work towards commercializing its PSR trait in Canola and HT traits in Rice.
• The company will continue to develop its Soybean platform and explore partnerships for its Wheat platform.
• Cibus will monitor the regulatory developments in the EU and other regions.
• The company will seek additional funding to support its operations and growth.
• Cibus will continue to execute its business model and manage expenses.

Key Dates

Keywords

gene editing, plant traits, agriculture, RTDS, crop productivity, commercialization, Canola, Rice, Soybean, Wheat, herbicide tolerance, pod shatter reduction, sustainability, biotechnology