Business Overview and History
Cibus Inc (NASDAQ:CBUS) is a leading agricultural technology company that develops and licenses plant traits to seed companies for royalties. The company's proprietary gene editing platform, the Rapid Trait Development System (RTDS), has enabled it to revolutionize the speed and precision of trait development, positioning Cibus as a pioneer in the gene-edited agriculture industry.
Cibus was founded in 2008 as Cibus Global, Ltd. in the British Virgin Islands, with the goal of harnessing gene editing technologies to improve farming productivity and sustainability. In 2019, the company reorganized as Cibus Global, LLC, a Delaware limited liability company. In May 2023, Cibus completed a business combination transaction with Calyxt, Inc., a former publicly-traded plant biotechnology company, to form the current Cibus, Inc. entity.
This merger marked a significant milestone for the company, bringing together the technology platforms and facilities of two pioneering companies to create a leading agricultural technology company for the development of productivity traits. Prior to the merger, Calyxt, Inc. had been developing gene editing technologies since its founding in 2010. However, Calyxt faced several challenges, including net losses since inception and the need to raise additional capital to support its operations and trait development efforts.
The core of Cibus' technology is its RTDS platform, which utilizes a single-cell, protoplast-based gene editing approach to develop complex plant traits in a time-bound and predictable manner. This breakthrough has allowed Cibus to build a pipeline of five productivity traits, three of which are already developed and in field trials or ready for commercialization. The company's ability to rapidly develop and integrate these traits into its customers' elite germplasm is a key differentiator and a testament to the power of its RTDS platform.
Cibus' business model is centered on collaborating with major seed companies to develop, license, and commercialize its trait products for royalties. The company has established partnerships with leading seed companies in its core crop platforms of rice, canola, and soybeans, positioning it to capitalize on significant market opportunities.
Financial Performance and Liquidity
Cibus' financial performance has been impacted by its transition from an R&D-focused organization to a commercial-stage gene editing company. For the nine months ended September 30, 2024, the company reported revenue of $3.05 million, up from $714,000 in the prior-year period. This increase was driven by revenue from collaboration agreements related to contract research for the company's rice and soybean platforms.
The company's net loss for the nine-month period was $256.91 million, compared to a net loss of $60.43 million in the same period of 2023. This increase was primarily due to a $181.43 million goodwill impairment charge recorded in the third quarter of 2024, as well as higher R&D and SG&A expenses related to the Cibus Global acquisition and the company's ongoing transformation.
For the full fiscal year 2023, Cibus reported revenue of $1.82 million and a net loss of $267.63 million. The company's operating cash flow (OCF) for 2023 was negative $46.21 million, while free cash flow (FCF) was negative $50.53 million.
In the most recent quarter (Q3 2024), Cibus generated revenue of $1.67 million, representing a 251% increase from Q3 2023. However, the company reported a net loss of $201.46 million for the quarter, a 483% decrease from Q3 2023, primarily due to the goodwill impairment charge. Q3 2024 OCF was negative $37.91 million, and FCF was negative $38.65 million.
As of September 30, 2024, Cibus had $28.8 million in cash and cash equivalents. The company has implemented cost-saving initiatives, including a reduction in force and other measures, which are expected to reduce its monthly cash usage by approximately 20%. Cibus believes that its existing cash and cash equivalents, along with the proceeds from its recent equity offerings, will fund planned operating expenses and capital expenditures through the first quarter of 2025.
Cibus' liquidity position as of September 30, 2024, shows a debt-to-equity ratio of 0.0017, a current ratio of 1.44, and a quick ratio of 1.44. The company's current liabilities stood at $21.90 million. Cibus does not have any disclosed available credit lines.
Operational Highlights and Strategic Priorities
Cibus has made significant progress in advancing its core crop platforms and trait pipeline in 2024. In rice, the company has established collaborations with four major seed companies in the U.S. and Latin America, with the goal of commercializing its herbicide tolerance (HT1 and HT3) traits. Cibus has received germplasm from all of its rice customers and has either completed or initiated the trait transfer process, with successful field trials of stacked HT traits in 2024. The company is working with its U.S. and Latin American customers to launch these herbicide tolerance traits in 2027 or 2028, estimating the potential market opportunity to be approximately $200 million in annual royalties in these regions. Cibus also sees an opportunity to expand its rice traits into Asia, potentially generating additional annual royalties of approximately $150 million, excluding China.
In canola, Cibus has completed initial field trials for its Pod Shatter Reduction (PSR) trait in the elite germplasm of several customer seed companies in Europe. The company expects to complete planting of its expanded next set of European field trials for the PSR trait, with results expected in the fall of 2025. Cibus continues to work closely with its North American customers for the initial commercial launch of PSR in 2026. The company also achieved important milestones in the development of its Sclerotinia resistance and HT2 traits, with positive greenhouse results and plans for further field trials in 2025.
Cibus is also making strides in its soybean platform, having improved the editing efficiency in soybean cells and anticipating the completion of additional editing and regeneration capabilities by the end of 2024. The company sees the soybean platform as a key foundation for its sustainable ingredients business, where it continues to pursue partner-funded collaborations. Cibus expects that achieving these capabilities will enable them to enter what they believe is a soybean market opportunity over 200 million addressable acres.
Looking ahead, Cibus has realigned its organization to focus on the advancement of its weed management traits in rice, its PSR trait in canola, and its Sclerotinia resistance trait in canola and soybeans. The company believes these priorities represent its nearest-term commercial opportunities and has implemented cost-saving initiatives to preserve capital resources for these key initiatives.
Competitive Landscape and Risks
Cibus operates in a competitive agricultural biotechnology industry, with companies such as Bayer, Corteva, and BASF actively developing and commercializing plant traits. However, the company's RTDS platform and its ability to rapidly develop complex traits that are indistinguishable from conventionally bred traits provide a significant competitive advantage.
Regulatory risks remain a concern, as the global harmonization of gene editing regulations continues to evolve. Cibus has proactively engaged with policymakers and has seen positive progress in key markets, such as the Americas and Europe. However, the company's future success remains dependent on the continued acceptance and favorable regulatory treatment of its gene-edited traits.
Other risks include the company's ability to secure additional financing, potential delays or setbacks in its trait development and commercialization efforts, and the inherent uncertainties associated with the agricultural industry, such as weather, pests, and commodity price fluctuations.
Conclusion
Cibus Inc (NASDAQ:CBUS) is a pioneering agricultural technology company that has leveraged its proprietary RTDS platform to develop a robust pipeline of productivity traits for major crop platforms. The company's ability to rapidly develop and integrate these traits into its customers' elite germplasm has positioned it as a leader in the gene-edited agriculture industry.
While the company's financial performance has been impacted by its transformation and the recent goodwill impairment, Cibus' strategic realignment and cost-saving initiatives aim to preserve capital resources and focus on its nearest-term commercial opportunities. The company's strong partnerships with leading seed companies and its progress in advancing its core crop platforms suggest that Cibus is well-positioned to capitalize on the growing demand for sustainable, productivity-enhancing agricultural solutions.
With its innovative RTDS technology and Trait Machine process, Cibus is poised to address significant market opportunities in rice, canola, and soybeans. The company's expectation to achieve several important milestones by the end of 2024, including the completion of additional editing and regeneration capabilities for its soybean platform, underscores its commitment to growth and innovation in the agricultural biotechnology sector.