Cibus, Inc. (NASDAQ:CBUS) is a pioneering agricultural biotechnology company that is at the forefront of the gene editing revolution in the agriculture industry. The company's proprietary Rapid Trait Development System (RTDS) technology platform is transforming the speed, precision, and scale at which new plant traits can be developed and commercialized.
Business Overview
Cibus is not a seed company, but rather a trait licensing company that partners with leading seed companies to incorporate its gene-edited traits into their elite germplasm. The company's primary focus is on developing productivity traits that address key challenges faced by farmers, such as disease resistance, weed control, and nutrient-use efficiency. These traits are designed to improve farming productivity and profitability while also reducing the environmental impact of agriculture.
The core of Cibus' technology is its RTDS platform, which is covered by over 500 patents and patents pending. RTDS enables Cibus to rapidly develop complex traits and directly edit them into the elite germplasm of its seed company partners. This process can be completed in as little as 3 years, a fraction of the time required for traditional breeding or GMO approaches, which can take over a decade.
Cibus' trait development and commercialization model is structured around licensing its traits to seed companies in exchange for royalty payments based on the sales of seeds containing Cibus' traits. This business model allows Cibus to focus on its core competency of trait development while leveraging the established commercial infrastructure and customer relationships of its seed company partners.
Regulatory Tailwinds
A key development for Cibus in the first quarter of 2024 was the landmark vote by the European Union (EU) Parliament to endorse the regulation of gene-edited crops similarly to conventionally bred crops. This was a significant milestone, as the EU has historically maintained some of the strictest regulations around agricultural biotechnology.
The EU Parliament's vote, coupled with similar regulatory advancements in other major agricultural markets like North America and South America, has created a global alignment around the treatment of gene-edited traits. This regulatory landscape is highly favorable for Cibus, as it paves the way for the widespread adoption of its gene-edited traits by seed companies and farmers.
Commercial Progress
Cibus has made substantial progress in commercializing its developed trait portfolio, particularly in canola and rice.
In canola, the company has signed agreements with 10 customers for its Pod Shatter Reduction (PSR) trait, which helps prevent seed loss during harvest. This demonstrates the strong demand for Cibus' traits and the company's ability to execute on its commercial strategy.
In rice, Cibus has signed agreements with four of the largest companies in the U.S. and Latin America, including Nutrien and Interoc, for its herbicide tolerance (HT1 and HT3) traits. These agreements collectively represent approximately 40% of the addressable rice acres in these regions, highlighting the significant market opportunity for Cibus' rice traits.
The company's success in canola and rice has positioned Cibus as a fully integrated commercial-stage gene editing company, with a growing portfolio of validated traits that are being actively commercialized with leading seed companies.
Advanced Trait Pipeline
In addition to its developed traits, Cibus has two advanced traits in its pipeline that have the potential to drive significant value for the company.
The first is a Sclerotinia (white mold) resistance trait, which the company has successfully stacked with two different modes of action in canola. Cibus expects to receive greenhouse results for a third mode of action in 2024, bringing it closer to commercializing this important trait.
The second advanced trait is a herbicide tolerance trait, known as HT2, which the company believes has the potential to be the first gene-edited trait to achieve 100 million acres of yearly use. Cibus has successfully completed edits of the HT2 trait in canola and expects to receive greenhouse results in 2024.
Both the Sclerotinia resistance and HT2 traits are considered "multi-crop" traits, meaning they have the potential to be deployed across multiple crop types, including canola, wheat, oilseed rape, and soybean. This versatility represents a significant commercial opportunity for Cibus.
Soybean Platform Development
Cibus has also made important progress in developing its soybean platform, which the company views as a key strategic initiative. Soybean is a massive addressable market, with over 200 million acres grown in the U.S. and Brazil alone.
The company recently reported a breakthrough in its ability to regenerate plants from single soybean cells, a critical milestone in establishing a scalable soybean editing platform. Cibus expects to have its soybean platform operational by the end of 2024, which will allow it to develop and commercialize traits in this important crop.
Financials
For the full year 2023, Cibus reported annual revenue of $1.8 million and a net loss of $267.6 million. The company's annual operating cash flow was -$46.2 million, and its annual free cash flow was -$50.5 million.
In the first quarter of 2024, Cibus generated revenue of $545,000 and incurred a net loss of $27.0 million. The company used $13.5 million in cash for operating activities during the quarter.
As of March 31, 2024, Cibus had $24.5 million in cash and cash equivalents, with current liabilities of $21.7 million.
Cibus will need to raise additional capital in the near term to fund its ongoing operations and continued development of its trait pipeline. The company has been successful in raising funds through its at-the-market (ATM) facility, having generated $6.2 million in net proceeds in the first quarter of 2024 and an additional $9.5 million in the second quarter to date.
Risks and Challenges
While Cibus has made significant strides in commercializing its gene-edited traits, the company faces several risks, including the ability to secure additional financing, the successful development and commercialization of its advanced traits, and the potential for regulatory changes that could impact the adoption of gene-edited crops.
Outlook
However, the company's strong intellectual property position, growing customer base, and favorable regulatory environment provide a solid foundation for Cibus to continue leading the gene editing revolution in agriculture. The successful development and commercialization of its advanced traits, such as Sclerotinia resistance and HT2, could unlock significant value for the company and its shareholders.
Conclusion
Overall, Cibus is well-positioned to capitalize on the growing demand for productivity-enhancing, sustainable agricultural solutions. The company's innovative technology, robust commercial partnerships, and favorable industry trends make it an intriguing investment opportunity for those seeking exposure to the rapidly evolving agricultural biotechnology sector.