Calyxt Reports First Quarter 2022 Financial Results

Achieved technical BioFactory™ and AIML milestones to support customer demand-driven molecule development at scale

Progressed relationships with an expanding network of potential new customers across the cosmeceutical and flavor and fragrance end markets

Continued investment in key hires to strategically position Company for future growth and scale

Management to host conference call and webcast today at 4:30 p.m. ET

Calyxt, Inc. (Nasdaq: CLXT), a plant-based synthetic biology company, today announced financial results for its first quarter ended March 31, 2022.

“The first quarter of 2022 marked a period of instrumental advancement across several critical areas for Calyxt. As a result of our expanded customer engagement, the breadth and depth of our business development discussions have grown, demonstrated by the 28 molecules identified by potential customers that we have evaluated for development with our PlantSpring platform for production in our BioFactory. That amount does not include another 58 such molecules that did not meet our criteria and were not evaluated further. Impressively, some of these 28 molecules were identified by the potential customers as having been unsuccessfully attempted by others in the industry. Simultaneously, we have made significant technical advancements for our PlantSpring and BioFactory platforms.  These include the incorporation of AIML into our bioreactor’s lab scale production process and the completion of the development of a compound identified by a potential customer for evaluation. As this compound’s production scales in the BioFactory, it is expected to lead to future development and manufacturing contracts from customers. We have also aggressively pursued the expansion of our intellectual property portfolio with multiple patents issued and new patent applications filed during the quarter. This enables us to carve out space for Calyxt’s proprietary technology including our Plant Cell Matrix^™ (PCM^™) and multi-cellular approach that is foundational for the success of our Company. Finally, in the first quarter we completed an underwritten offering of common stock and warrants that generated approximately $10 million in net proceeds. This strengthened our balance sheet and provides us with the runway to continuing scaling our technology to potentially secure new business arrangements,” said Michael A. Carr, President and Chief Executive Officer at Calyxt.

Mr. Carr added: “We have strengthened our position to harness the incredible diversity of plants and the world’s demand for sustainable products. By leveraging our proprietary PlantSpring technology platform with our BioFactory production system to develop and sell high value plant-based chemistries to potential customers in our large and innovative target end markets, including cosmeceuticals, nutraceuticals, and pharmaceuticals, we continue our focused drive to realize value for our stakeholders.”

Key accomplishments in the first quarter of 2022, and through the date of this press release, include the following:

Achievement of Technical PlantSpring™ and BioFactory™ Milestones

• In January 2022, Calyxt announced that its initial pilot BioFactory™ production system became operational at its headquarters in Minnesota. This development occurred on schedule and marked an important first step toward achieving at-scale commercial production. The Company has completed multiple runs in its pilot BioFactory, focusing on ensuring the system is operating as planned, its PCM structures perform as expected, and that data is being captured properly as it is a driver of future artificial intelligence and machine learning capability (AIML) capability. The pilot facility is modular and designed to be able to continuously produce plant-based chemistries while also producing multiple compounds at once. These capabilities are expected to provide the Company with flexibility when producing chemistries for multiple customers at the same time. The Company intends to scale this pilot production to enable full production runs of compounds similar to those demanded for commercial production.
• Calyxt has also begun to deploy additional AIML capabilities to both PlantSpring and the pilot Biofactory. Calyxt currently uses AIML to assist in the identification of gene targets in the PlantSpring development process. During the past quarter it integrated AIML capabilities into its lab-scale reactors, enabling the continual capture and analysis of data, leading to optimization of performance. The Company intends to advance these lab-scale AIML capabilities into its pilot-scale reactor later this year. This deployment drives future decisions and improves test cycles with the goal of shortening development timelines.
• Late last year, Calyxt reported considerable progress in discovery and development of sustainable plant-based molecules in its BioFactory. Results from its metabolomics analyses indicated more than 15,000 chemical signatures, including both known and as-yet-uncharacterized molecules and building block precursors. These signatures are chemical compounds involved in chemical reactions that produce other compounds. The chemical signatures that have been identified form a baseline library that enables  Calyxt to quickly identify and assess customers’ targets with the potential to drive accelerated development timelines. From this library, Calyxt has, based on interest expressed by potential customers, produced rosemarinic acid, a compound with antioxidant, anti-inflammatory, and antimicrobial properties and that is used broadly in cosmeceuticals and nutraceuticals. Calyxt has also used this baseline library to identify six additional compounds of interest for prospective customers. Calyxt intends to move the PCM producing rosemarinic acid into the pilot BioFactory to further advance the BioFactory’s capabilities and scale.
• Using data it has accumulated from its land-based activities and its lab scale bioreactors, Calyxt has demonstrated at least a 35-fold increase in yield from land-based production to a lab scale bioreactor. Calyxt projects a further yield increase as it moves production to pilot scale. Taken together with the land-based to lab results, the further advancement to lab scale could drive an aggregate increase in yield of as much as 130-fold over land-based production yields based on the current scale of the pilot BioFactory. These results underpin the Company’s scalability and sustainability benefits of the BioFactory production system.
• As part of Calyxt’s ongoing validation of its platform technology, it is on track to realize certain upcoming technical milestone targets:
  • Within PlantSpring, and building on Calyxt’s current gene targeting capability, to establish AIML capabilities for the identification of pathways in the Design phase of development by mid-year 2022.
  • Building on our lab-scale reactor AIML rollout, to have AIML capabilities fully functioning within the pilot BioFactory by mid-year 2022.
  • By the end of 2022, to design additional PCM structures capable of providing the foundational precursors to developing chemistries and molecules that are of interest to a broad range of customers within our target end-markets.
  • To advance current engagement with potential infrastructure partners in order to have one engaged by the end of 2022.

Steadfast Focus on Customer Relationships

• Calyxt’s business model for its proprietary PlantSpring technology and the BioFactory is customer demand-driven. During the quarter the Company continued to advance its discussions with potential customers within its target end markets including the cosmeceutical, including personal care and flavors and fragrances, nutraceutical, and pharmaceutical industries. These are three key large end markets with customers that have current business needs to source finite plant-based chemistries. They are also markets known to be fast adopters of innovation that are actively seeking to reduce carbon footprints. For example, based on research from MarketsandMarkets¹, Calyxt estimates that the cosmeceutical ingredients market, which also includes personal care and flavors and fragrances, was a spend of more than $60 billion in 2020 and growing at a mid-single digit compound annual growth rate. This market includes large multinational cosmetics brands, regional and specialty brands, and flavor and fragrance houses who manufacture products or provide ingredients for those brands.

• The breadth and depth of Calyxt’s business development discussions have grown. Calyxt has evaluated 28 molecules identified by potential customers for development with PlantSpring for production in our BioFactory. That amount does not include another 58 such molecules that did not meet Calyxt’s target product profile, or TPP, criteria and were not evaluated further. The group of 28 molecules includes several that were identified by the potential customers as having been unsuccessfully attempted by others in the industry. As part of the customer acquisition process, Calyxt is expecting to produce small quantities of product for evaluation by the customer and as a result, Calyxt believes the development cycle from contract signing to commercialization may likely be shorter than 36 months.
• The Company is targeting two to four customer demand-driven compounds for development by year end using its selection criteria to determine the compounds to pursue. The Company uses the term “compounds” to describe compounds, molecules, and plant-based chemistries interchangeably.

“In our conversations with customers, it’s exciting to see their recognition of the advantages in our approach,” said Michael A. Carr. “They understand that our innovative technology platform and cutting-edge production system can provide sustainable biomanufacturing solutions to meet their product and ingredient needs.”

Calyxt’s business model for PlantSpring and BioFactory has two customer demand-driven revenue streams, one focused on development activity and the other on product sales. Most important is the product revenue expected to be generated once commercialization is achieved. Calyxt anticipates a rapid revenue ramp following the customers’ commercial launch of a compound, and is targeting customers’ compounds with large demand pools, potential multi-million-dollar annual revenue opportunities per compound, and a target gross profit margin in the mid-double digits at scale. Calyxt also believes its prospective customers will pay for development in some instances.

Licensing of Technology and Traits

• In the first quarter of 2022, Calyxt finalized its strategy for optimizing potential revenue from the licensing of its technology and plant traits. The strategy is two-pronged and reflects (1) a broad outreach to companies in the plant gene-editing and biotechnology space for their licensing of the Company’s intellectual property assets and (2) the monetization of the Company’s historically developed agricultural traits through their license to counterparties including seed companies, processors, and others. Calyxt is offering licenses for the many gene editing and breeding technologies in its patent portfolio, including its TALEN patent estate. As it relates to the licensing of agricultural traits strategy, active discussions are occurring on multiple traits, including Calyxt’s soybean and wheat offerings. Calyxt is targeting the execution of licenses in both the technology and trait licensing categories during 2022.
• In the fourth quarter of 2021, Calyxt contracted with a large food ingredient manufacturer to develop a soybean intended to produce an oil that could serve as a replacement for palm oil. The project remains on track for a first quarter of 2024 completion. The food ingredient manufacturer is funding Calyxt’s development costs over the term of the agreement and holds an option for future development and commercialization.

Investments in Key Hires

• In February 2022, Calyxt announced that Gerry Nuovo joined the Company as Senior Vice President of Business Development, bringing more than 30 years of experience in the specialty chemicals and biotechnology industries and diverse experience building multimillion-dollar income streams in the cosmeceuticals end market, including personal care and home care. Mr. Nuovo will be responsible for business development activities in cosmeceuticals, including potential partnerships, deal structures, valuation models, and subsequent transaction execution and alliance management.
• In April 2022, the Company announced the hires of Ms. Suellen Boot as Business Development Director and Ms. Elizabeth Teigland as Manufacturing Director. Ms. Boot brings over 20 years of valuable business development experience to Calyxt where she will be responsible for a number of functions, including potential partnerships, deal structures, valuation models, and subsequent transaction execution and alliance management. Ms. Teigland brings over 15 years of chemistry and purification expertise to Calyxt and will be responsible for pilot to commercial scale production of the Company’s customer demand-driven compounds, and along with an R&D leader, the Verify stage of product development.

Other Business Updates

• In February 2022, Calyxt closed the placement to an institutional investor in an SEC-registered underwritten offering of 3,880,000 shares of its common stock, pre-funded warrants to purchase up to 3,880,000 shares of its common stock, and common warrants to purchase up to 7,760,000 shares of its common stock. The gross proceeds of the offering were $10.9 million, before deducting underwriting fees and estimated offering expenses. The Company plans to use the approximately $10.0 million in net proceeds from the offering for enhancing the capabilities of its BioFactory production system and increasing its capacity to produce at larger scales, continuing to build out the Company’s PlantSpring technology platform and AIML capabilities, furthering customer relationships, and for working capital and general corporate purposes. The pre-funded warrants were exercised in full on May 4, 2022.

Financial Results for the Three Months Ended March 31, 2022

• Cash, cash equivalents, and restricted cash totaled $17.9 million as of March 31, 2022, including net proceeds of $10.0 million that was raised in mid-February from the SEC-registered offering.
• Revenue was nominal in the first quarter of 2022 compared to $4.4 million in the first quarter of 2021. The decrease in revenue was driven by the late 2021 completion of the wind-down of the Company’s soybean product line. All revenue in the first quarter of 2022 was associated with the Company’s agreement with a food ingredient manufacturer to develop a palm oil alternative.
• Total operating expenses were $6.1 million in the first quarter of 2022 compared to $7.3 million in the first quarter of 2021. The decrease was primarily driven by the recapture of non-cash stock compensation expense from the forfeiture of unvested stock awards in the first quarter of 2022 and lower operating expenses.
• Net loss was $5.6 million in the first quarter of 2022 compared to $10.0 million in the first quarter of 2021. The improvement in net loss was driven by the completion of the wind-down of the soybean product line which drove an improvement in gross margin and lower operating expenses. Net loss per share was $0.13 in the first quarter of 2022 compared to $0.27 in the first quarter of 2021. The improvement in net loss per share was driven by the improvement in net loss and a year-over-year increase in weighted average shares outstanding.
• Adjusted net loss was $6.0 million in the first quarter of 2022 compared to $8.8 million in the first quarter of 2021. The improvement in adjusted net loss was driven by the completion of the wind-down of the soybean product line which drove an improvement in gross margin and lower operating expenses. Adjusted net loss per share was $0.14 in the first quarter of 2022 compared to $0.24 in the first quarter of 2021. The improvement in adjusted net loss per share was driven by the improvement in adjusted net loss and a year-over-year increase in weighted average shares outstanding.

“The continued expansion of our AIML capabilities has already contributed to expediting the development process, and we believe we can now complete the Design, Engineer, and Verify phases of our development cycle in some cases in as little as nine months’ time and we look forward to reporting progress against the 24-month pilot cycle in the future. In addition, we have now secured key hires that represent our revenue streams: business development, chemistry/purification, and licensing,” said Bill Koschak, Chief Financial Officer at Calyxt. “Further, the approximate $10.0 million in net proceeds from the capital raise we recently completed in February, in spite of volatile market conditions, allows us to scale our BioFactory production and AIML capabilities. Our plans to utilize PlantSpring and the BioFactory to target customers in large and innovative end markets like cosmeceuticals, nutraceuticals, and pharmaceuticals are resonating in conversations across industries, and we look forward to providing updates in the coming months. Thanks to the successful offering of our common stock and warrants and assessing our discretionary spending, we now expect Calyxt’s cash runway to extend into early 2023.”

First Quarter 2022 Results Conference Call

Calyxt’s President and Chief Executive Officer, Michael A. Carr, and Chief Financial Officer, Bill Koschak, will host a conference call discussing Calyxt’s results for the first quarter of 2022, followed by a question-and-answer session. The conference call will be accompanied by a presentation, which can be viewed during the webcast or accessed via the investor relations section of Calyxt’s website at www.calyxt.com.

To access the call, please use the following information:

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. The conference call will also be broadcast live and available for replay via the investor relations section of the company’s website at www.calyxt.com.

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