Summary of Cibus (CBUS) Conference Call - May 21, 2025 Company Overview - **Company Name**: Cibus (Ticker: CBUS) - **Industry**: Agricultural Biotechnology - **Focus**: Development of gene-edited crop traits in canola, rice, and soy using a rapid trait development system - **Current Rating**: Buy with a price target of $23.50 [1] Core Points and Arguments Gene Editing vs. GMO - **Definition**: Gene editing involves making precise changes to an organism's DNA, while GMOs involve transferring genes from one organism to another [3][4] - **Regulatory Recognition**: Global regulators have acknowledged that gene-edited crops are indistinguishable from natural occurrences, leading to recent approvals in various countries, including Ecuador and the EU [6] Rapid Trait Development System (RTDS) - **Technology**: Utilizes a gene repair oligonucleotide to make precise edits at the single-cell level, allowing for multiple changes within genes and across genomes [7][8] - **Speed Advantage**: Traditional plant breeding can take 10-30 years; Cibus aims to deliver new traits within 12 months, significantly improving time-to-market [9][11] Revenue Model - **Pre-Revenue Status**: Currently, Cibus is a pre-revenue company, planning to generate income through royalties from developed traits [12] - **Market Potential**: Traits developed for major crops like soy, which covers over 250 million acres in North and South America, can lead to substantial royalty income [13] - **Royalty Estimates**: Expected royalties of $10 to $15 per acre for traits related to weed management, with potential for significant revenue as traits are adopted [14][15] Developed and Developing Traits - **Current Traits**: - **Rice**: Two herbicide-tolerant traits for efficient weed management [20][21] - **Canola**: Pod shatter reduction trait to preserve yield during harvest [22] - **Future Traits**: Advanced traits in development include additional herbicide tolerance and disease tolerance for canola and soy [23][24] Farmer Value Proposition - **Cost Reduction**: Traits can reduce input costs for farmers, improving profit margins by decreasing the need for herbicides and other inputs [25][26] - **Market Dynamics**: Farmers are willing to pay a premium for traits that enhance productivity and reduce operational costs [27] Timeline for Revenue Generation - **Projected Start**: Traits expected to be planted and royalties to begin flowing in 2027, with a gradual increase through 2029 [28][29] Near-Term Catalysts - **Customer Announcements**: New customer acquisitions in the rice portfolio and advancements in field trials for advanced traits [30][31] - **Wheat Platform**: Expansion into wheat traits is also being explored [31] Bio Fragrance Business - **Overview**: Cibus has discovered a yeast that produces oil, which can be used to create bio fragrances for consumer packaged goods (CPG) companies [32][33] - **Revenue Potential**: Expected nominal revenues in 2025, with significant growth potential in the tens of millions of dollars annually [34] Key Drivers for Business Growth - **Predictability and Speed**: Ability to deliver traits within 12 months is a significant competitive advantage [36] - **Regulatory Environment**: Harmonization of regulations globally opens up markets, allowing Cibus to operate similarly to conventional breeding programs [36][37] Other Important Content - **Market Size**: Major crops involved cover over 500 million acres, indicating a vast market opportunity for Cibus [36] - **Investor Interest**: Recent press releases have generated significant interest from prospective partners and customers [36] This summary encapsulates the key points discussed during the Cibus conference call, highlighting the company's innovative approach to agricultural biotechnology and its potential for future growth.

Group 1 - Cibus, Inc. is a leading agricultural biotechnology company focused on gene editing technologies to develop specific traits in seeds [1][3] - The company will present its advancements in gene-editing technology, regulatory developments, and commercialization strategy at the AGP Annual Virtual Healthcare Company Showcase [2][3] - Cibus addresses significant productivity and sustainability challenges for farmers, with an estimated global economic cost of $300 billion annually due to diseases and pests [3] Group 2 - Cibus operates as a technology company rather than a seed company, licensing traits to seed companies in exchange for royalties [3] - The company has a pipeline of five productivity traits, focusing on weed management in rice, pod shatter reduction, and disease resistance [3] - Cibus aims to develop and commercialize plant traits more efficiently and cost-effectively than conventional breeding methods [3]

Group 1: Earnings Performance - Cibus reported a quarterly loss of $0.74 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.70, but an improvement from a loss of $1.12 per share a year ago, indicating a year-over-year improvement [1] - The company posted revenues of $1.03 million for the quarter, missing the Zacks Consensus Estimate by 12.37%, but showing an increase from $0.55 million in the same quarter last year [2] - Over the last four quarters, Cibus has surpassed consensus EPS estimates only once, while it has topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Cibus shares have declined approximately 10.1% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the next quarter is -$0.68 on revenues of $1.2 million, and for the current fiscal year, it is -$2.66 on revenues of $9.93 million [7] Group 3: Industry Context - The Agriculture - Operations industry, to which Cibus belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - Another company in the same industry, Bioceres Crop, is expected to report a quarterly loss of $0.10 per share, reflecting a significant year-over-year decline [9]

Financial Performance - Total revenue for Q1 2025 was $1,034,000, a 90% increase from $545,000 in Q1 2024[23] - Net loss for Q1 2025 was $49,392,000, compared to a net loss of $26,972,000 in Q1 2024, indicating a worsening financial position[23] - Basic and diluted net loss per share of Class A common stock was $1.34 for Q1 2025, compared to $1.12 for Q1 2024[23] - Cibus, Inc. reported a net loss of $49,392,000 for the three months ended March 31, 2025, compared to a net loss of $26,972,000 for the same period in 2024, indicating an increase in losses of approximately 83.5% year-over-year[30] - The total segment loss for the three months ended March 31, 2025, was $(49,392,000), compared to $(26,972,000) in 2024, indicating a loss increase of 83.1%[84] Operating Expenses - Operating expenses for Q1 2025 totaled $42,605,000, compared to $18,998,000 in Q1 2024, reflecting a significant increase due to goodwill impairment of $20,950,000[23] - Total operating expenses for the three months ended March 31, 2025, were $42,605,000, up from $18,998,000 in 2024, reflecting a 124.4% increase[84] - The company incurred a royalty liability interest expense of $8,377,000 related to parties during the first quarter of 2025, slightly up from $8,329,000 in the prior year[30] Cash and Assets - Cash and cash equivalents increased to $23,587,000 as of March 31, 2025, from $14,433,000 as of December 31, 2024[21] - Total assets decreased to $335,045,000 as of March 31, 2025, down from $350,069,000 as of December 31, 2024[21] - As of March 31, 2025, the Company had $23.6 million in cash and cash equivalents and $21.0 million in current liabilities[41] Liabilities - Total liabilities increased to $261,088,000 as of March 31, 2025, compared to $252,238,000 as of December 31, 2024[21] - The company reported a royalty liability of $207,819,000 as of March 31, 2025, up from $199,442,000 as of December 31, 2024[21] - The Royalty Liability related to parties increased to $207,819,000 from $199,442,000 as of December 31, 2024, reflecting an effective yield of 16.5%[145] Goodwill and Impairment - The company recognized a goodwill impairment of $20,950,000 during the first quarter of 2025, which was not present in the same quarter of 2024[30] - Goodwill impairment for the three months ending March 31, 2025, was $20,950,000, with total accumulated impairment losses increasing to $352,750,000[103] Shareholder Information - The company had a total of 32,657,738 Class A common shares outstanding as of March 31, 2025, compared to 21,014,970 shares as of March 31, 2024, reflecting a significant increase in shares issued[28] - The weighted average shares of Class A common stock outstanding increased to 35,052,692 for the three months ended March 31, 2025, from 20,862,938 in 2024[74] Future Outlook - The company has not provided specific guidance for future performance, citing various risks and uncertainties in its operations[14] - The Company anticipates continued losses for the next several years and plans to finance future cash needs through various means, including commercialization activities and potential equity or debt financings[42] Stock-Based Compensation - Total stock-based compensation for the first quarter of 2025 was $2,499,000, compared to $2,528,000 in the same quarter of 2024[30] - The stock-based compensation expense for the three months ended March 31, 2025, was $232,000, compared to $19,000 for the same period in 2024[125] - Stock-based compensation expense related to RSAs decreased from $2,446,000 in Q1 2024 to $1,840,000 in Q1 2025, with unrecognized compensation expense of $6.0 million remaining[129] Revenue Recognition - Revenue for the three months ended March 31, 2025, was $1,034,000, compared to $545,000 for the same period in 2024, representing an increase of 89.5%[84] - Revenue recognized from the collaboration agreement with Procter & Gamble increased significantly from $172,000 in Q1 2024 to $869,000 in Q1 2025[148] Legal and Compliance - The Company has accrued an estimate of $3.0 million for litigation liability based on a recent court decision, although it is not a party to any material pending legal proceedings[143] - The Company has not experienced any counterparty credit losses as of March 31, 2025, maintaining a diversified portfolio of high investment-grade securities[100]

Financial Performance - Cibus reported a net loss of $49.4 million for Q1 2025, an increase of $22.4 million compared to a net loss of $27.0 million in the same period last year[12]. - Total revenue for Q1 2025 was $1,034,000, a 90% increase from $545,000 in Q1 2024[32]. - Net loss for Q1 2025 was $49,392,000, compared to a net loss of $26,972,000 in Q1 2024, indicating a worsening financial position[32]. - The company had a basic and diluted net loss per share of Class A common stock of $1.34 in Q1 2025, compared to $1.12 in Q1 2024[32]. Expenses - Research and development (R&D) expenses for Q1 2025 were $11.8 million, slightly down from $12.0 million in the previous year, reflecting cost reduction initiatives[12]. - Selling, general, and administrative (SG&A) expenses rose to $9.9 million in Q1 2025, up from $7.0 million in the prior year, primarily due to a $3.0 million estimated litigation liability[12]. - Operating expenses for Q1 2025 totaled $42,605,000, compared to $18,998,000 in Q1 2024, reflecting a significant increase due to goodwill impairment of $20,950,000[32]. - The company reported a goodwill impairment of $20,950,000 in Q1 2025, which was not present in Q1 2024[32]. Cash and Assets - Cash and cash equivalents as of March 31, 2025, were $23.6 million, expected to fund operations into Q3 2025 without additional financing[12]. - Cash and cash equivalents increased to $23,587,000 as of March 31, 2025, up from $14,433,000 at the end of 2024[33]. - The total current assets increased to $25,884,000 as of March 31, 2025, compared to $16,946,000 at the end of 2024[29]. - Total liabilities rose to $261,088,000 as of March 31, 2025, compared to $252,238,000 at the end of 2024[31]. Regulatory and Product Development - Cibus achieved positive regulatory decisions for its HT1 and HT3 rice traits in Ecuador, confirming they are equivalent to traits developed through conventional breeding[1]. - The USDA-APHIS designated Cibus' canola disease resistance traits as not regulated, reinforcing the regulatory status of its RTDS technologies in the U.S.[1]. - Cibus is on track for the commercial launch of HT1 and HT3 traits by 2027, with customer germplasm integration already underway[1]. - The company expects to prepare delivery of initial traits to a California customer by mid-2025 and to a Latin American customer by the end of 2025[13]. - Cibus' Sclerotinia resistance program showed positive results, with advancements in multiple modes of action against Sclerotinia in canola[1]. Securities and Financing - Proceeds from issuances of securities amounted to $22,599,000 in Q1 2025, significantly higher than $6,534,000 in Q1 2024[33].

Core Insights - Cibus is advancing its gene editing technologies, particularly in rice and canola, with a focus on herbicide tolerance and disease resistance traits, targeting a commercial launch by 2027 [1][2] - Positive regulatory developments in Ecuador and the U.S. validate Cibus' gene editing technologies, enhancing its commercial prospects [1][2][7] - The company reported a significant increase in net loss for Q1 2025, primarily due to a goodwill impairment, while also showing progress in revenue generation [8][9][24] Company Developments - Cibus has achieved positive results in its Sclerotinia resistance program, demonstrating multiple modes of action against the disease in canola [1][4] - The USDA-APHIS has designated Cibus' canola disease resistance traits as not regulated, reinforcing the regulatory status of its RTDS technologies [1][2][7] - The company is expanding its trait development pipeline, with successful field trials and customer agreements in rice, including collaborations with major rice seed companies [5][7] Financial Performance - For Q1 2025, Cibus reported revenue of $1.034 million, up from $0.545 million in the same period last year [23][24] - Research and development expenses were $11.8 million, slightly down from $12.0 million year-over-year, while selling, general, and administrative expenses increased to $9.9 million [8][24] - The net loss for the quarter was $49.4 million, compared to $27.0 million in the previous year, largely due to a $21.0 million goodwill impairment [8][9][24] Regulatory and Market Progress - The California Rice Commission approved the planting of gene-edited rice, marking a significant milestone for Cibus in the U.S. market [7][9] - EU member states have endorsed a negotiating mandate on the regulation of plants obtained by New Genomic Techniques, facilitating discussions for legislative adoption [1][7] - Cibus plans to deliver initial traits to customers in California and Latin America by mid-2025 and the end of 2025, respectively [7][9]

Core Viewpoint - Cibus, Inc. has received regulatory confirmation from Ecuador's Ministry of Agriculture and Livestock that its herbicide tolerance traits in rice (HT1 and HT3) are equivalent to those developed through conventional breeding, allowing for further product development and commercialization in Ecuador [1][2][3] Company Overview - Cibus is a leading agricultural technology company focused on developing and licensing plant traits to seed companies, utilizing its Rapid Trait Development System™ (RTDS) to enable targeted genetic changes without recombinant DNA [2][5] - The company aims to address critical productivity and sustainability challenges for farmers, with a long-term focus on major global row crops such as canola, rice, and soybean [5] Regulatory Developments - The Ecuadorian Ministry of Agriculture and Livestock has determined that Cibus' HT1 and HT3 rice traits can proceed with registration and commercialization under existing laws, avoiding restrictions that apply to transgenic plants [2][4] - This regulatory decision is expected to facilitate the introduction of Cibus' herbicide tolerance traits in Latin American markets through partnerships with companies like Interoc [3][4] Market Implications - Cibus plans to collaborate with Interoc, which has expertise in rice seed genetics, to integrate HT1 and HT3 traits into elite rice lines, providing innovative weed management solutions to growers in Latin America [3][4] - The company believes that this regulatory approval in Ecuador will pave the way for pursuing similar clearances in other key Latin American markets [4]

Group 1: Cibus Earnings Expectations - The market anticipates Cibus (CBUS) to report a year-over-year increase in earnings driven by higher revenues for the quarter ended March 2025 [1] - The consensus EPS estimate for Cibus is a loss of $0.70 per share, reflecting a year-over-year change of +37.5%, with expected revenues of $1.18 million, up 114.6% from the previous year [3] - The consensus EPS estimate has been revised 1.49% lower in the last 30 days, indicating a reassessment by analysts [4] Group 2: Earnings Surprise Prediction - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, suggesting that recent analyst revisions may provide more accurate predictions [6] - Cibus has an Earnings ESP of -5.04%, indicating a bearish outlook from analysts regarding the company's earnings prospects [10] - The stock currently holds a Zacks Rank of 2, making it challenging to predict a consensus EPS beat [11] Group 3: Historical Performance and Industry Comparison - Cibus has only beaten consensus EPS estimates once in the last four quarters, with a recent surprise of -14.47% when it reported a loss of $0.87 per share against an expected loss of $0.76 [12][13] - Corteva, Inc. (CTVA), another player in the agriculture operations industry, is expected to post earnings of $0.87 per share, indicating a year-over-year change of -2.3%, with revenues projected at $4.51 billion, up 0.4% [17] - Corteva's consensus EPS estimate has been revised 1.4% higher, resulting in a positive Earnings ESP of 0.19%, suggesting a likely beat against the consensus EPS estimate [18]

Group 1 - Cibus, Inc. will report its first quarter 2025 financial results on May 8, 2025, and will host a conference call at 4:30 p.m. ET to discuss these results and other updates [1][2][3] - The company specializes in agricultural biotechnology, focusing on gene editing technologies to develop specific traits in seeds, addressing productivity and sustainability challenges for farmers [4] - Cibus is not a seed company but a technology company that licenses traits to seed companies in exchange for royalties, with a long-term focus on major global row crops such as canola, corn, rice, soybean, and wheat [4] Group 2 - The company has developed a pipeline of five productivity traits, including weed management in rice, pod shatter reduction, and sclerotinia resistance, which are its near-term focus [4] - The global economic impact of diseases and pests on agriculture is estimated to be approximately $300 billion annually, highlighting the importance of Cibus' innovations [4]

Financial Data and Key Metrics Changes - Cash and cash equivalents were $14.4 million as of December 31, 2024, with $21.6 million net proceeds received in 2025 from a registered direct offering [37] - R&D expense decreased to $12.4 million for Q4 2024 from $14.2 million in the previous year, primarily due to lower non-cash stock compensation and cost-saving initiatives [38] - Net loss improved to $25.8 million for Q4 2024 compared to a net loss of $277.2 million in the prior year, which included a non-cash goodwill impairment charge of $249 million [38] Business Line Data and Key Metrics Changes - The rice platform is gaining momentum with collaborations affirming herbicide resistance traits, and agreements with four major rice seed companies covering approximately 40% of accessible rice acres [15][16] - In canola, Cibus has developed productivity traits for Pod Shatter Reduction and continues to progress on advanced traits for disease resistance and herbicide tolerance [18][19] - The soybean platform achieved a significant milestone with successful editing of soybean cells for HT2 traits, allowing access to an estimated 125 million accessible soybean acres [26][27] Market Data and Key Metrics Changes - The global regulatory environment is evolving favorably, with the EU's pending legislation expected to regulate gene-edited plants similarly to conventional breeding, opening new markets for Cibus [29][30] - The California Rice Commission approved planned field trials for advanced rice traits, marking a significant milestone in a key American market [30] Company Strategy and Development Direction - Cibus is transitioning from an agricultural trait development company to a commercial trait company, focusing on gene-edited productivity traits that address sustainability challenges for farmers [8][9] - The company emphasizes its proprietary Rapid Trait Development System (RTDS) as a key differentiator, enabling rapid and predictable trait development [14] - Cibus is also advancing its Sustainable Ingredients program, targeting low carbon ingredients and biofragrances for the consumer packaged goods industry [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in key markets and the potential for significant value capture as regulatory frameworks evolve [41][42] - The company is positioned to capitalize on the global adoption of gene-edited solutions, with traits moving into customer germplasm and showing promising results in field trials [42] Other Important Information - Cibus expects existing cash and cash equivalents to fund planned operating expenses into late Q3 2025, supported by recent financing [37][64] - The company is focused on achieving several important milestones in 2025, including the completion of EU legislation and continued development of its soybean platform [34][35] Q&A Session Summary Question: What does the EU decision mean for commercial products in Europe? - Management highlighted the importance of the EU's regulatory process and its implications for accelerating customer programs and trade [46][49] Question: Can you discuss the patentability of genetic modifications under the current EU law? - Management noted that the EU Council advocates for transparency in patenting, which is seen as beneficial for the seed industry [52][54] Question: Are commercialization dates for products on track? - Management confirmed that all timelines are on track, with significant progress expected in the current year [58][60] Question: Will there be meaningful revenues from the sustainable ingredient business in 2026? - Management expressed confidence in generating revenues from biofragrance products in 2026, indicating strong market interest [68][70] Question: Are you in touch with potential customers in Europe? - Management confirmed ongoing collaboration with European customers on various traits, including Sclerotinia tolerance [72][74] Question: What are the expectations for operating costs moving forward? - Management indicated that while current cost reductions are significant, further optimizations are expected as processes are refined [76][78] Question: What priority traits and crops will receive the most resources? - Management emphasized focus on rice, canola, and soybean platforms, particularly in disease resistance and productivity traits [84][86]