•

Final 2020 planted acres were nearly 72,000, representing a doubling of acres from the total planted in 2019;

•

In 2021, we intend to target seed sales to large grain processors, representing at least $3 million to $4 million in expected revenue as seed transactions will be revenue-generating under the new go-to-market strategy;

•

One of the world’s largest processors has purchased 300,000 bushels of Calyxt soybeans, which represents a significant portion of June 30, 2020 inventory, and the processor will retain the rights to process and sell the resulting soybean oil, while Calyxt will purchase and market the resulting soybean meal;

•

We similarly aim to sell our remaining grain inventories and grain that we are contracted to purchase from the 2020 crop year to large processors;

•

We are eliminating positions related to soybean processing and product sales, resulting in aggregate cash charges of approximately $0.6 million for severance and other related payments, and we expect to record a $0.9 million recapture of non-cash stock compensation expense from forfeitures of un-vested awards;

•

We expect to incur $0.5 million of additional cash charges over the next twelve months as we exit processing and transportation contracts;

•

Contracted grain purchases and sales and the wind down of other contractual obligations are expected to take approximately 12 months;

•

Contracted grain purchases of the 2020 crop are expected to be approximately 40 percent in the fourth quarter of 2020 and approximately 60 percent over the course of the first and second quarters of 2021;

•

Including the sale of an expected percentage of grain that we are contracted to purchase in the fourth quarter, our base case 2020 revenue expectation is between $17 million and $19 million, and our cash usage for 2020 is expected to range between $43 million and $45 million, which includes an investment in accounts receivable and inventory of between $15 million and $17 million;  

•

Our target is to convert the year-end 2020 investment in inventory and accounts receivable of between $15 million and $17 million to cash in the first 60 days of 2021;

•

Based on the grain purchase plan described in the preceding three bullets, our grain revenue for 2021 is expected to be between $22 million and $24 million, with seed revenue incremental to that amount;

•

If we are able to complete the sale of all grain we are contracted to purchase in the fourth quarter of 2020, our revenue would increase to between $23 million and $25 million, with a corresponding decrease in expected 2021 grain revenue, and if we collected all of the related receivables, our expected cash usage in 2020 would be in the range of between $32 million and $34 million; and

•

Effective execution of our go-to-market soybean strategy decreases cash used by our soybean product line by over $45 million through 2022.

•

TALEN Licensing Arrangements:  License Calyxt’s TALEN technology for licensees’ use in their own development of specific traits for negotiated upfront and annual fees and potential royalties;

•

Trait and Product Licensing Arrangements: License Calyxt-developed traits or products to downstream partners with commercialization expertise for negotiated upfront and milestone payments and potential royalties; and

•

Seed Sale Arrangements: Sale of seed to agricultural processors, including millers and crushers, or others in the relevant crop’s supply chain, with such sales expected to generate revenue for Calyxt.

CROP

TRAIT

TARGET COMMERCIAL PLANTING YEAR

TARGET GO-TO-MARKET STRATEGY

Alfalfa

Improved Digestibility

2021

Trait

Wheat

High Fiber

2022

Seed

Soybean

High Oleic, Low Linolenic (HOLL)

2023

Seed

Hemp

Marketable Yield

2023

Seed and Trait

Hemp

Low THC for Food, Fiber, & Therapeutics

2024

Seed and Trait

Oat

Gluten-free and Cold Tolerant

2026

Seed and Trait

Soybean

Improved HOLL

2026

Seed

Soybean

High Saturated Fat

2026

Seed and Trait

Pulse

Improved Protein Profile and Flavor

2027

Trait

•

Calyxt’s HOLL soybean was deemed a non-regulated article under the “Am I Regulated?” process by Biotechnology Regulatory Services of the Animal and Plant Health Inspection Service (APHIS), an agency of the United States Department of Agriculture (USDA). This product represents our second-generation high oleic soybean.

•

Late in the second quarter we released our non-edited hemp germplasm by selling plants directly to a grower, driving several thousand dollars of revenue. This quick commercial success is an early step in making our hemp projects partner-ready, enabled the gathering of valuable insights and data, and it is expected to serve as the base germplasm for the development of other hemp projects expected to launch beginning in 2023.

•

Licensed a new method to help increase product development efficiency from the University of Minnesota. The method has the potential to reduce the time needed to edit plants from approximately one year to several months.

•

New provisional patent applications filed that are focused on expanding Calyxt’s gene-editing technology portfolio; advancements in hemp, soybean, and wheat; and additional germplasm generated from our breeding pipeline.

•

Patent granted in Australia covering the use of CRISPR gene editing in plants.  The intellectual property was invented in Dr. Dan Voytas’ lab at the University of Minnesota and is exclusively licensed to Calyxt.  While TALEN gene editing technology remains the primary tool for Calyxt’s cutting‐edge R&D, our CRISPR intellectual property provides the opportunity to explore further monetizing our IP portfolio by offering this CRISPR IP for licensing.

•

Revenues increased by $1.9 million, or 465 percent, from the second quarter of 2019 to $2.3 million in the second quarter of 2020. The revenue growth was driven by 487 basis points of volume growth and 16 basis points of favorable product mix as we sold more oil in 2020 as a percent of total revenue than in 2019, both partially offset by 37 basis points of pricing, primarily the result of lower meal prices than the prior period. High oleic soybean meal was 79 percent of revenue in the period, compared to 89 percent a year ago.  Most oil revenue in 2020 was from a single customer purchasing our oil to be used as a plant-based alternative to synthetic fluids, and we expect to fulfill their remaining orders over the next three months.

•

Cost of goods sold increased by $5.0 million from the second quarter of 2019 to $5.3 million in the second quarter of 2020. The increase in cost of goods sold reflects an increase in the cost of product sold in the period as a result of higher sales volumes, the impact of lower costs associated with products sold in 2019 because grain costs were previously expensed as R&D, and a $3.2 million net realizable value adjustment to inventories based on expected selling prices, grain processing costs, and a significant amount of excess seed produced for 2020 plantings.

•

Gross margin, as reported, was a negative $3.0 million, or a negative 131 percent, in the second quarter of 2020, a decrease of $3.1 million from the second quarter of 2019. The decrease in gross margin in the second quarter of 2020 reflects the higher costs we have experienced during the high oleic soybean product’s proof of concept period. The primary drivers of gross margin, as reported, were net realizable value adjustments to inventory based on expected selling prices, grain processing costs, and a significant amount of excess seed produced for 2020 plantings. Gross margin, as adjusted, was negative $0.8 million, or negative 34 percent, in the second quarter of 2020, as compared to negative $0.3 million, or negative 69 percent, in the second quarter of 2019. See below under the heading “Use of Non-GAAP Financial Information” for a discussion of gross margin, as adjusted, and a reconciliation to the most comparable GAAP measure.

•

R&D expenses increased by $0.1 million to $2.8 million, driven by incremental professional service expenses related to new patent filings to bolster our intellectual property portfolio.

•

Selling and supply chain expenses increased by $0.1 million to $1.3 million, driven by additional personnel costs.

•

G&A expenses decreased by $1.4 million to $3.8 million, driven by decreases in Section 16 officer transition expenses of $0.5 million and $0.4 million less non-cash stock compensation expenses.

•

Net loss was $10.9 million in the second quarter of 2020, an increase of $1.5 million from the second quarter of 2019, driven by the increase in negative gross margins and changes in operating expenses described above. Net loss per share was $(0.33) per basic and diluted share in the second quarter of 2020, an increase of $(0.04) per basic and diluted share from the second quarter of 2019.

•

Adjusted EBITDA loss was $6.5 million in the second quarter of 2020, a decrease of $0.1 million from the second quarter of 2019. See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted EBITDA and a reconciliation to the most comparable GAAP measure.

•

Net cash used in the second quarter of 2020 was $12.2 million compared to $7.8 million in the second quarter of 2019, driven by the increase in net loss of $1.5 million and a net decrease in cash flows from operating assets and liabilities, primarily the result of the timing of cash payments to growers and carrying of higher inventory levels following the halting of crush activity in early May.

•

Cash, cash equivalents, short-term investments, and restricted cash totaled $35.3 million as of June 30, 2020.

•

Revenues increased by $4.1 million, or 728 percent, from the first six months of 2019 to $4.7 million in the first six months of 2020. The revenue growth was driven by 751 basis points of volume growth and 19 basis points of favorable product mix as we sold more oil in 2020 as a percentage of total revenue than in 2019, both partially offset by 42 basis points of pricing, primarily the result of lower meal prices compared to the same period in 2019. High oleic soybean meal was 82 percent of revenue in the period, compared to 89 percent a year ago. Most oil revenue in 2020 was from a single customer purchasing

our oil to be used as a plant-based alternative to synthetic fluids, and we expect to fulfill their remaining orders over the next three months.

•

Cost of goods sold increased by $8.9 million from the first six months of 2019 to $9.2 million in the first six months of 2020. The increase in cost of goods sold reflects an increase in the cost of product sold in the period as a result of higher sales volumes, the impact of lower costs associated with products in 2019 because Grain Costs were previously expensed as R&D, and a $4.2 million net realizable value adjustment to inventories based on expected selling prices, grain processing costs, and a significant amount of excess seed produced for 2020 plantings.

•

Gross margin, as reported, was a negative $4.5 million, or a negative 97 percent, in the first six months of 2020, a decrease of $4.8 million from the first six months of 2019. The decrease in gross margin in the first six months of 2020 reflects the higher costs we have experienced during the high oleic soybean product’s proof of concept period. The primary drivers of gross margin, as reported, were net realizable value adjustments to inventory based on expected selling prices, grain processing costs, and a significant amount of excess seed produced for 2020 plantings. Gross margin, as adjusted, was negative $2.0 million, or negative 42 percent, in the six months ended June 30, 2020 compared to negative $0.3 million, or negative 54 percent, in the same period in 2019. See below under the heading “Use of Non-GAAP Financial Information” for a discussion of gross margin, as adjusted, and a reconciliation to the most comparable GAAP measure.

•

R&D expenses increased by $0.7 million to $5.6 million, driven by incremental professional service expenses related to new patent filings to bolster our intellectual property portfolio, increased experimental seed expenses, and higher personnel costs.

•

Selling and supply chain expenses increased by $0.8 million to $2.9 million, driven by additional personnel costs, including $0.3 million of Section 16 officer transition expenses.

•

G&A expenses decreased by $0.8 million to $8.5 million, driven by a decrease in non-cash stock compensation of $0.5 million and lower Section 16 officer transition expenses of $0.3 million.

•

Net loss was $22.0 million in the first six months of 2020, an increase of $5.2 million from the first six months of 2019, driven by the increase in negative gross margins and changes in operating expenses described above. Net loss per share was $(0.67) per basic and diluted share in the first six months of 2020, an increase of $(0.16) per basic and diluted share from the first six months of 2019.

•

Adjusted EBITDA loss was $14.8 million in the first six months of 2020, an increase of $2.5 million from the first six months of 2019. See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted EBITDA and a reconciliation to the most comparable GAAP measure.

•

Net cash used in the first six months of 2020 was $24.8 million compared to $17.3 million in the first six months of 2019, driven by the increase in net loss of $5.2 million and a net decrease in cash flows from operating assets and liabilities, primarily the result of higher cash payments to growers and the halting of crush activity in early May. Calyxt expects its cash usage to improve in the second half of 2020 as it sells grain, and its burn rate is reduced because of headcount reductions.  

•

Contracted grain purchases of the 2020 crop are expected to be approximately 40 percent in the fourth quarter of 2020 and approximately 60 percent over the course of the first and second quarters of 2021;

•

Including the sale of an expected percentage of grain that we are contracted to purchase in the fourth quarter, our base case 2020 revenue expectation is between $17 million and $19 million;

•

Cash usage for 2020 is expected to range between $43 million and $45 million, which includes an investment in accounts receivable and inventory of between $15 million and $17 million;  

•

Our target is to convert the year-end 2020 investment in inventory and accounts receivable of between $15 million and $17 million to cash in the first 60 days of 2021;

•

Based on the grain purchase plan described in the preceding four bullets, our grain revenue for 2021 is expected to be between $22 million and $24 million, with seed revenue incremental to that amount;

•

If we are able to complete the sale of all grain we are contracted to purchase in the fourth quarter of 2020, our revenue would increase to between $23 million and $25 million, with a corresponding decrease in 2021 grain revenue, and if we collected all of the related receivables, our expected cash usage in 2020 would be in the range of between $32 million and $34 million; and

•

Effective execution of our go-to-market soybean strategy decreases cash used by our soybean product line by over $45 million through 2022 and extends cash runway into 2022 versus previous guidance of late 2021.

Date:

Thursday, August 6, 2020

Time:

8:00 a.m. EST, 5:00 a.m. PST

Toll Free dial-in number:

1-888-221-3881

Toll/International dial-in number:             

1-323-794-2591

Conference ID:

1020952

Toll Free Replay Number:

1-844-512-2921

International Replay Number:

1-412-317-6671

Replay ID:

1020952

Three Months Ended June 30,

Six Months Ended June 30,

In Thousands

2020

2019

2020

2019

Gross margin (GAAP measure)

$

(3,014

)

$

105

$

(4,521

)

$

229

Gross margin percentage

(131

)%

26

%

(97

)%

40

%

Adjustments:

Grain costs expensed as R&D

—

(386

)

—

(535

)

Net realizable value adjustment to inventories

2,221

—

255

—

Gross margin, as adjusted

$

(793

)

$

(281

)

$

(1,966

)

$

(306

)

Gross margin percentage, as adjusted

(34

)%

(69

)%

(42

)%

(54

)%

Three Months Ended June 30,

Six Months Ended

June 30,

In Thousands

2020

2019

2020

2019

Net Loss (GAAP measure)

$

(10,902

)

$

(9,403

)

$

(21,965

)

$

(16,778

)

Non-GAAP adjustments:

Interest, net

(154

)

(92

)

244

(264

)

Income tax expense

—

—

—

—

Depreciation and amortization

452

342

904

689

Stock-based compensation expenses

1,797

2,304

3,068

3,860

Grain Costs expensed as R&D

—

(386

)

—

(535)

Net realizable value adjustment to inventories

2,221

—

2,555

—

Section 16 officer transition expenses

77

671

437

859

Research and development payroll tax credit

—

(63

)

0

(126

Adjusted EBITDA

$

(6,509

)

$

(6,627

)

$

(14,757

)

$

(12,295

)

June 30, 2020 (unaudited)

December 31,

2019

Assets

Current assets:

Cash and cash equivalents

$

3,875

$

58,610

Short-term investments

29,942

—

Restricted cash

393

388

Accounts receivable

2,411

1,122

Due from related parties

2

—

Inventory

5,282

2,594

Prepaid expenses and other current assets

1,926

808

Total current assets

43,831

63,522

Non-current restricted cash

1,040

1,040

Land, buildings, and equipment

22,663

23,212

Other non-current assets

427

324

Total assets

$

67,961

$

88,098

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

572

$

1,077

Accrued expenses

1,998

2,544

Accrued compensation

1,293

2,181

Due to related parties

381

977

Current portion of financing lease obligations

361

356

Other current liabilities

44

61

Total current liabilities

4,649

7,196

Financing lease obligations

18,109

18,244

Long-term debt

1,518

—

Other non-current liabilities

132

150

Total liabilities

24,408

25,590

Stockholders’ equity:

Common stock, $0.0001 par value; 275,000,000 shares authorized; 33,140,672 shares issued and 33,040,520 shares outstanding as of June 30, 2020, and 33,033,689 shares issued and 32,951,329 shares outstanding as of December 31, 2019

3

3

Additional paid-in capital

188,656

185,588

Common stock in treasury, at cost; 100,152 shares as of June 30, 2020, and 82,360 shares as of December 31, 2019

(1,043

)

(1,043

)

Accumulated deficit

(144,022

)

(122,057

)

Accumulated other comprehensive income (loss)

(41

)

17

Total stockholders’ equity

43,553

62,508

Total liabilities and stockholders’ equity

$

67,961

$

88,098

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Revenue

$

2,307

$

408

$

4,684

$

566

Cost of goods sold

5,321

303

9,205

337

Gross margin

(3,014

)

105

(4,521

)

229

Operating expenses:

Research and development

2,825

2,738

5,612

4,957

Selling and supply chain

1,349

1,202

2,929

2,107

General and administrative

3,808

5,206

8,528

9,368

Management fees

42

451

104

812

Total operating expenses

8,024

9,597

17,173

17,244

Loss from operations

(11,038

)

(9,492

)

(21,694

)

(17,015

)

Interest, net

154

92

(244

)

264

Foreign currency transaction loss

(18

)

(3

)

(27

)

(27

)

Loss before income taxes

(10,902

)

(9,403

)

(21,965

)

(16,778

)

Income taxes

—

—

—

—

Net loss

$

(10,902

)

$

(9,403

)

$

(21,965

)

$

(16,778

)

Basic and diluted loss per share

$

(0.33

)

$

(0.29

)

$

(0.67

)

$

(0.51

)

Weighted average shares outstanding - basic and diluted

33,039,338

32,732,988

33,013,739

32,704,834

Six Months Ended June 30,

2020

2019

Operating activities

Net loss

$

(21,965

)

$

(16,778

)

Adjustments to reconcile net loss to net cash used by operating activities:

Depreciation and amortization

904

689

Stock-based compensation

3,068

3,860

Changes in operating assets and liabilities:

Accounts receivable

(1,289

)

(810

)

Due to/from related parties

(598

)

(1,156

)

Inventory

(2,688

)

(111

)

Prepaid expenses and other current assets

(1,118

)

(169

)

Accounts payable

(505

)

(423

)

Accrued expenses

(546

)

(14

)

Accrued compensation

(888

)

(67

)

Other current liabilities

(93

)

(513

)

Other non-current assets

59

(378

)

Net cash used by operating activities

(25,659

)

(15,870

)

Investing activities

Short-term investments

(29,942

)

—

Purchases of land, buildings, and equipment

(517

)

(1,319

)

Net cash used by investing activities

(30,459

)

(1,319

)

Financing activities

Proceeds from Payroll Protection Act loan

1,518

—

Repayments of financing lease obligations

(130

)

(122

)

Proceeds from the exercise of stock options

—

308

Costs incurred related to shares withheld for net share settlement

—

(559

)

Proceeds from the sale and leaseback of land, buildings, and equipment

—

217

Net cash provided (used) by financing activities

1,388

(156

)

Net decrease in cash, cash equivalents and restricted cash

(54,730

)

(17,345

)

Cash, cash equivalents and restricted cash - beginning of period

60,038

95,288

Cash, cash equivalents and restricted cash - end of period

$

5,308

$

77,943

As of June 30,

In Thousands

2020

2019

Cash, cash equivalents, restricted cash, and short-term investments:

Cash and cash equivalents

$

3,875

$

76,434

Restricted cash

1,433

1,509

Short-term investments

29,942

—

Total cash, cash equivalents, restricted cash, and short-term investments

$

35,250

$

77,943