Calyxt, Inc. (CLXT) on Q4 2021 Results - Earnings Call Transcript
Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Calyxt Fourth Quarter and Full Year 2021 Earnings Conference -- Result Conference Call and Webcast. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for question. This conference is being recorded today, March 3, 2022. And at this time, I would like to turn the conference call over to Bill Koschak, Calyxt’s Chief Financial Officer. Please go ahead, sir.
Bill Koschak: Thank you and good afternoon. This is Bill Koschak, the Chief Financial Officer of Calyxt. I would like to thank you for taking the time to join us for Calyxt’s fourth quarter and full year 2021 earnings results conference call and webcast. Presenting with me today is Michael A. Carr, our President and Chief Executive Officer. Press release detailing these results crossed the wire after today’s market close and is available on our company’s website, calyxt.com. Before we begin the formal presentation, I’d like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and industry prospects are forward-looking, and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company’s SEC filings for a list of associated risks. This presentation also includes a discussion of adjusted net loss and adjusted net loss per share, both are non-GAAP financial measures. In Calyxt’s press release and its filings with the SEC, each of which is posted on the company’s website at calyxt.com, you will find additional disclosure regarding these non-GAAP financial measures. References to these non-GAAP financial measures should be considered in addition to GAAP financial measures and should not be considered a substitute for results that are presented in accordance with GAAP. Lastly, this conference call is being webcast. The webcast link is available in the Investor Relations section of calyxt.com. At this time, I’d like to turn the call over to Michael for his opening remarks. Michael?
Michael Carr: Thank you, Bill, and thank you for joining us on our call today. We are leading a plant-based revolution and are committed to bringing the bioproduction capabilities of plants to innovators of today. As I look forward, we’re moving into the growth and scaling phases of our organizations development. We have a differentiated platform, a unique production capability and a financial model that is differentiated from other synthetic biology companies. I look forward to sharing more about these points on our call today. 2021 was transformational for Calyxt. I like to take the opportunity to step back and review the substantial progress we’ve made in our transition from an agriculture business to a synthetic biology company in a short period of time. We are taking our existing technology, people and knowhow and redirecting this formidable collective asset in ways that realizes the company’s full potential. This simple vision was the basis of our new strategic initiative, which was announced in October. That initiative is to leverage our core expertise and expand our offerings to provide innovative, high value and sustainably produced plant-based chemistries to a wider group of end markets in a diversified base of customers. We understood that the best use of our technology and talent, and strongest potential to realize our company’s value lies in offering SynBio solutions to major industries around the world urgently need new ways to produce products that meet their corporate sustainability goals. This opportunity is enormous for Calyxt. As you may recall, Calyxt develops high value plant-based chemistries for customers leveraging the integration of our proprietary PlantSpring technology platform and our BioFactory production system. PlantSpring is built on experience of more than a decade of engineering plant metabolism and experienced base built with our proprietary systems or tools and technologies, our extensive portfolio of intellectual property, and an expanding set of artificial intelligence and machine learning or AIMl capabilities. This platform delivers innovation through an efficient process from laboratory to pilot, enabling Calyxt to take a customer’s plant-based chemistry needs through our design, engineering and verification development process. This PlantSpring derived compounds are then produced through our proprietary BioFactory. The BioFactory harnesses the potential of plant cells in a multicellular matrics structure, our proprietary Plant Cell Matrix or PCM. The PCM are combined with growth media for production within a bioreactor. This plant based foundation, the use of our PCMs, its ability to produce complex plant-based chemistries and its modular nature and geographic flexibility differentiates the BioFactory from other production systems used in the SynBio and plant-based industries today. In light of Calyxt iterative AIMl capabilities to augment both PlantSpring development and BioFactory production, the company is positioned to be a supplier of unique chemistries that are likely unable to be produced in more traditional SynBio production processes. This strategy represented a change in our focus from agriculture to large innovative end markets including cosmeceuticals, nutraceuticals and pharmaceuticals. All have high demand for plant based chemistries to replace less sustainable materials and inputs in their products or processes. This is a significant growth opportunity for Calyxt. Notably, our approach to the BioFactory business model is customer focused and demand driven. We use a set of criteria to evaluate opportunities that includes consideration of factors such as the plant-based chemistry or potential customer needs and how well our BioFactory can produce it, the size of the customer’s demand pool, the speed of the customer’s adoption and our financial returns. This approach helps ensure that we select the compounds from customers that drive the greatest potential for success for both our customers and Calyxt at this stage of our business. We are targeting to have two to four plant-based chemistries in development by the end of 2022. With respect to our commercial production, we expect to operate the BioFactory in asset-light manner to help mitigate the risk of achieving production at-scale. We can do this by either using third-party infrastructure partners for at-scale BioFactory production or because of its modular nature, we could also locate a unit in a customer’s facility. Further, our business model has potential for cash flow throughout our targeted 36 months development period, with additional product related revenue and cash flow to follow. We have positioned Calyxt for growth and scale by focusing on two main areas, advancing our technology and putting the right people in place to set us up for success. Since the start of the fourth quarter of 2021, I’m pleased to share that we’ve achieved several important milestones. We reported additional milestones in the commissioning of our BioFactory production system. This includes commissioning our initial pilot BioFactory, which was achieved on schedule and marks an important initial step towards achieving at-scale commercial production. We continued to collect and analyze data from this pilot facility, have begun to deploy additional AIMl resources to the pilot facility, which are expected to drive future decisions and help improve test cycles and development timelines. We also reported significant progress and sustainable discovery and development of plant-based molecules in our BioFactory. Results from our targeted metabolomics analysis indicated more than 15,000 chemical signatures. These signatures included both known and as yet uncharacterized molecules and building block precursors, which are chemical compounds involved in chemical reactions that produce other compounds. These chemical signatures form a baseline library available for Calyxt to produce valuable compounds within our proprietary plant-based BioFactory production system and likely represents a fraction of the total plant-based chemistries our system is capable of performing. We invested in new hires who are key to the growth of our business, we on boarded our new SVP of Business Development, Gerry Nuovo. Gerry brings more than 30 years of experience in the specialty chemicals and biotechnology industries, and diverse experience building multi-million dollar income streams in cosmeceuticals end market including personal care and home care. Dr. Vijay Gullapalli joined Calyxt as Vice President, AIML Data Science. Vijay brings nearly 25 years of experience in developing solutions for businesses across diverse industries, utilizing his experience in data technology, AIMl. In addition, Pete Ball joined as Technology Licensing Leader, Pete has nearly 35 years of legal and technology licensing experience and will focus on advancing our licensing activities and platform technology, including IP related to gene-editing in plants and our portfolio of crop innovations. We also welcome Dr. Seth Dobrin, Global Chief Artificial Intelligence Officer at IBM to our Scientific Advisory Board. Seth brings extensive leadership experience and a track record of transforming companies through data and AI. His depth of experience bringing AI based business solutions to major global corporations will be valuable as we continue to develop and augment the AIMl capabilities of our PlantSpring platform and BioFactory production system. We continue to advance our discussion with new potential customers in the cosmeceutical, nutraceutical and pharmaceutical industries, which are large and innovative industries that represents significant growth opportunities for Calyxt. Let’s start with our announcement back in October of our new strategic initiative into SynBio, we were pleased with the breadth of interest from large companies in our target industries. Since then, we’ve engaged with a wider breadth of companies while making meaningful advancements with a select group of potential customers for the sign of contracts to engage our services, and ultimately, new revenue. On the topic of financials, last month Calyxt successfully closed and underwritten SEC registered offering, with gross proceeds of approximately $10.9 million before deducting the underwriting fees and other operating expenses. This raise strengthens Calyxt financial position as we work to grow our business and realize its value. The fundamental underpinning of our strategic initiative into SynBIo is our conviction that the future of industry depends on the sustainable production of chemistries that are plant-based. Calyxt have a unique opportunity to revolutionize how the world uses plants. Our focus is on innovating or the consuming of finite resources and the sustainability of our planet intersect. The global economy today is not sustainable, as evidenced by such metrics as carbon pollution, water scarcity and soil erosion. Many corporations and consumers are shifting their focus to products that are sustainable and contain environmentally-friendly plant-based chemistries. More than 20% of the world’s largest 2,000 companies are committed to carbon neutrality. We believe that in order to achieve this goal, these companies will need to incorporate plant-based solutions into their businesses. Calyxt and our proprietary PlantSpring technology platform and BioFactory production system are distinctly qualified to meet this demand. In a world seeking to evolve to more sustainable solutions, plants are very diverse and uniquely capable of producing many chemistries that cannot be produced through other means, including microbial fermentation. Nearly 80% of classified natural compounds come from plants and some estimates represent that more than 1 million compounds are yet to be discovered. Leveraging known compounds and discovering new ones are opportunities for our company. Plants are central to our PlantSpring technology platform and BioFactory production system. Our scientists are experts at engineering plant metabolism and have demonstrated this capability many times over across multiple plant species. This expertise creates a unique perspective on the power of plants and how they can be used to shape our future because Calyxt have expertise advantage over others. We currently apply AIML in the early stage of our development process, and over time, we expect to expand these capabilities further into that process by adapting knowledge gain from past activity, with predictive analytics to rapidly prototype and provide feedback, accelerate the time to complete the development cycle and help mitigate the risk associated with commercial scale. For production, our BioFactory utilizes a multicellular Plant Cell Matrix structure or PCM. The PCM structures are placed inside the bioreactor and grows media the PCM structures to provide them with nutrition. This differentiates Calyxt process from other methods that require a complete submersion of cells and growth media. The BioFactory is modular and is designed to be able to continuously produce plant-based chemistries, offering us flexibility when producing chemistries for multiple customers at once. In all, PlantSpring and the BioFactory are differentiated production system for high value, innovative and customer demand driven plant based chemistries. The PlantSpring technology platform leverages our years of experience, engineering, plant metabolism, a variety of tools and expanding set of AIML capabilities is protected by our broad IP position. Through the PlattSpring platform, we seek to unleash the natural capabilities of plants, the original biological systems and make available commercial innovations that produce unique plant-based chemistries from plant species including rare or domesticated species in a manner that the company believes is more robust and sustainable than other methods of production. We build our first AIML capability into PlantSpring to assist us in identifying targets for editing specific genetic pathways and improve efficiency and speed. Plants in their DNA contain a profound amount of information. When combined with our deep scientific experience and vast amounts of data that we have accumulated over our history, including a large proprietary database of genomic information across numerous plant species, we are able to search a vast trove of data for insights, enabling a rapid development process. We also plan to grow and leverage this expanding data set in our future AIML development efforts. As we look ahead, we plan to incorporate AIML techniques further into our development process, enabling learning and adaptation of knowledge gained from past activity, the generation of new data, insights and connections between known and unknown pathways with the aim of accelerating development cycles, reducing development costs and improving our rapid prototyping capabilities. These activities will also aid in discovering new pathways or new plant derived compounds for future commercialization efforts, as well as help mitigate the risks associated with commercial scale. Our proprietary PCM structures provide us with the competitive advantage over single cell plant and other cellular production systems. Simply described, our PCM is a small group of plant cells that work together to emulate the metabolism of an entire plant. Because of this PCM structure, we’re able to achieve growth without constant submerge in immediate and there is no need for light. The PCMs are more stable, continuously producing the target chemistry compared to a batch and other production systems that have challenges with scaling or growth over time. The BioFactory production system leverages these PCM, which are periodically said the growth media that provides the nutrients necessary to support growth and produce the target chemistry. These PCMs reproduce over time, increasing the amount of biomass in the reactor and producing the target chemistry, which may be excreted by the PCM or harvested later. We believe the BioFactory has the potential to be one of the most sustainable plant-based production systems across industries, because of this production methodology. It does not use fermentation and there are fewer of the sustainability challenges associated with other controlled environment production systems. For example, we expect our system has lower levels of off gases, reduced water demands and lower energy requirements. We also expect the BioFactory to have limited downtime between production cycles, because the system produces these plant based chemistries year round in a bioreactor, it is protected from many of the adverse climate effects typically associated with traditional agricultural production. We use an efficient development process to deliver innovation through our PlantSpring platform, comprised of three primary stages named design, engineer and verify. The design stage we apply AIML to identify pathways that will produce the target and design, the technical approach to deliver the target compound. In the engineer stage, we direct changes in the plant cells. In the Verify stage, we use a combination of analytical tools to verify the compound produced meets the customer’s specification. We estimate the typical timeline to complete the design, engineer, verify process to be 12 months, at which point the verified chemistry would advance to pilot production. From there, we believe that typical development time from initiation of the pilot stage of development through to commercialization is 24 months, certain compounds may have a shorter time to market, while some industries such as pharmaceuticals, are expect to have a longer path to regulatory clearance. And the cost and time standpoint, we expect the customer will e use their expertise to address formulation and regulatory matters. In combination with the design, engineer, verify stages of the development process, the timeline for Calyxt to achieve commercial availability is currently estimated at approximately 36 months, a development cycle that would offer customers compelling speed to market. The expansion and further deployment of our AIML capabilities and systematic learning as additional compounds move through the development process, we believe this development cycle time may be further accelerated. I’ll now turn the call back to Bill to discuss our business model and provide updates on customer acquisition activities and company financials. Bill?
Bill Koschak: Thanks, Michael. We take a customer focused approach to identifying and evaluating opportunities to help ensure that we select the compounds from customers that drive the best potential for success at this stage of our business. Those criteria include consideration of factors such as, the plant-based chemistry our potential customers need and how well our BioFactory can produce it, the size of their demand pool, the speed of their adoption and our financial returns. This approach helps ensure that we select the compounds from customers that drive the greatest potential for success at this stage of our business. Our goal is to develop two to four compounds in 2022. After we have agreed with the customer on a compound to be produced, the customer may fund the development costs through the design, engineer, verify process. We expect the customer will address any regulatory or formulation matters with regard to the chemistry we will produce. At-scale production will likely be performed by our infrastructure partners on our behalf or as we have learned from recent interactions, the customers may desire to produce the compound directly in their facility. We expect the customer to purchase the compound from Calyxt through a supply agreement on achievement of at-scale commercial production. This business model has the possibility of cash flow at inception of the agreement and throughout the development cycle, with cash flow being generated through product sales once commercial production is achieved. Based on the criteria we are applying and selecting compounds for development for customers, we by nature are targeting high value low volume plant-based chemistries with large demand pools, enabling a rapid revenue ramp upon achievement of commercial scale, with an attractive margin profile. We are targeting mid double-digit gross profit margins for the compounds we have produce for customers, enabling a quick scale of our cash flow post-launch. This business model has resonated through our ongoing business development discussions with potential customers. In the near-term or customer activation efforts focus on a market segmentation where we believe our current capabilities give us the best opportunities to win, including cosmeceuticals, nutraceuticals and pharmaceuticals. These industries represent large end markets with customers that have current business needs to source finite plant-based chemistries and are known to be fast adopters of innovation and are actively seeking to reduce their carbon footprints. Since our Q3 2021 earnings announcement, we have continued conversations with a select group of potential customers that have plant based chemistry needs that align with our selection criteria. Feedback from these potential customers has been positive. We believe we have a compelling offering for our target customers and we are working to secure our first contracts for the BioFactory. In summary, Calyxt is poised to deliver plant-based chemistries with compelling financial returns that assist customers in achieving their sustainability goals. Together, PlantsSprings technology and the BioFactory production system are differentiated, including their -lant based foundation, our proprietary PCM, the modular nature of the BioFactory, which likely enables the avoidance of significant capital expenditures to achieve commercial production and a differentiated financial model. We are initially targeting the cosmeceutical, nutraceutical and pharmaceutical end markets are innovative in their own right large and representing significant growth opportunities. We use a customer demand driven approach for the development of high value innovative and sustainable plant-based chemistries. We’re targeting two to four plant based chemistries in development by the end of 2022 and our business model reflects an asset light approach, with potential for cash flow throughout the targeted 36 month development period and with a rapid scale of a product related revenue to follow. Turning to financial results today, we issued a press release describing our fourth quarter and full year 2021 results and we also filed our Form 10-K for the year this afternoon. First, our cash, cash equivalents and restricted cash were $14.4 million as of December 31, 2021, which includes the net proceeds from the sale of approximately 1.4 million shares of common stock under our ATM share issuance program. The December 31, 2021 cash balance includes $3.9 million of net proceeds from those sales and another $200,000 of cash was received in early January 2022, following the settlement of those sales with the broker. The balance does not include the gross proceeds of $10.9 million that was raised in mid-February from our SEC registered offering. Now to the P&L. Revenue was $1.9 million for the fourth quarter of 2021, compared to $13.9 million in the prior year and was $26.0 million in 2021, compared to $23.9 million in 2020. The increase for the year was driven by sales of the 2020 grain crop, which included higher volumes and reflected higher commodity prices in each case as compared to 2020. Looking ahead, we expect revenues to decline meaningfully because of the wind down of our soybean product line and the shift of the business from its agriculture model into a synthetic biology company. Total operating expenses were $6.6 million in the fourth quarter of 2021, compared to $8.1 million in the fourth quarter of 2020. The decrease was driven by lower professional fees, lower personnel costs and restructuring costs recognized in the fourth quarter of 2020. For the full year, total operating expenses were $26.8 million in 2021 versus $32.6 million in 2020. Operating expenses, excluding $2.1 million of non-cash stock compensation expense and $2.3 million of depreciation and amortization expenses were $22.3 million in 2021. Net loss was $7.1 million in the fourth quarter of 2021 or $0.18 per share versus $13.4 million, or $0.37 per share in the prior year period. For the full year, net loss was $29.2 million in 2021, or $0.78 cents per share, compared to a net loss of $44.8 million in 2020 or net loss per share of $1.32 per share. Adjusted net loss was $7.4 million in the fourth quarter of 2021 or $0.19 per share, compared to $12.2 million or $0.33 per share in the prior year period and was $33.2 million in 2021 or $.89 per share, compared to $40.8 million or $1.20 per share in 2020. The improvement in adjusted net loss was driven by strong operating expense management and the benefits from the wind down of the soybean product line. Our business plans are now further supported by a balance sheet that has been enhanced by the $10.9 million of gross proceeds before deducting underwriting fees and other operating expenses from the offering we completed in February. We intend to continue to be disciplined in our uses of cash and anticipate the proceeds from the offering will be used to support the continued growth and scaling of our BioFactory business model and selective hiring to support the progression and expansion of our AIML capabilities. As a result of the successful offering of our common stock and pre-funded warrants, and based on our current business plan, we now expect Calyxt cash runway to extend to late 2022 inclusive of plan spending to support the growth and scale of our BioFactory business model. That runway includes committed customer payments for licensing and product development as of today. As a result, customer cash flows beyond those existing commitments, together with actions within our control to hold expenses flat or below current levels would serve to extend our cash runway into the first quarter of 2023 and potentially beyond. For additional details about our financials for the fourth quarter and for the full year 2021, please refer to our press release or filings with the SEC. I’ll now turn the call back to Michael for his closing remarks. Michael?
Michael Carr: Thanks, Bill. 2021 was transformational for Calyxt in which we became a synthetic biology company in our own right. Since I joined the company, we positioned our company for growth and scale by focusing on advancing our technology and putting the right people in place to set us up for success. In a short period of time, we have achieved several key milestones. These include commissioning our BioFactory, securing key hires and business development, AML and technology licensing, expanding our Scientific Advisory Board to include renowned AIML expertise, advancing discussions with a widening breadth of potential new customers and strengthening our balance sheet. The team here at Calyxt is hard at work to realize the value of our company, while we have much more to do, I’m proud of our team for having come so far in such a little time. I look forward to continued momentum and to providing you with updates on our progress in the future. Operator that concludes our prepared remarks, please open the line for questions.
Operator: Our first question today comes from Laurence Alexander from Jefferies. Please go ahead with your question.
Laurence Alexander: Good afternoon. Thanks very much for the detailed discussion on -- at the opening of the call on the new platform. Can you elaborate on two things? First, are the -- to what extent are the molecules you’re focusing on, molecules known to the client -- to the customers and you’re finding a new production process and/or are they -- are the customers coming to you and saying we’re looking for an effect and then you have to find molecules together with them that achieve that effect? That’s the first thing. And then the second is, can you give some characterization of your customer pipeline relative to your bandwidth and the amount that you can process. What the level of interest is and from the time that somebody signs an agreement, to kind of when you think you would have a commercially viable demonstration in their hands, just we can get a sense for kind of what the full process loop looks like?
Michael Carr: Sure. Thanks, Laurence. A couple of great questions there. One thing that I would note, Laurence, on your first question is that, our approach here is demand driven with our customers. And so as we reach out to customers, we look to them to identify specific compounds that they’re looking for a plant-based and sustainable solution for. And so through our discussions, we’re finding that in today’s world, and particularly in our new end markets that of cosmetics, nutraceuticals and pharmaceuticals that these customers actually have in hand and have identified the molecules that they need solutions for that are either currently not sustainable and/or finite in nature and they need another production system in which to do that. In terms of bandwidth, your second question, Laurence, we’re really excited here at the end of Q4 in December to commission our pilot BioFactory. It’s a 200 liter BioFactory, very similar from a scaling standpoint that you would see in the pharma industry and as we look out here to 2022 and focus on growth and scaling, what’s exciting about the BioFactory is that it’s modular in nature. It can handle multiple compounds at the same time and so as we look with customers that has specific needs, it can vary by the production output and then, again, as I mentioned by the number of compounds that’s currently producing.
Laurence Alexander: Okay. Great. I’ll hop back in queue.
Operator: Our next question comes from Bobby Burleson from Canaccord. Please go ahead with your question.
Bobby Burleson: Hi. Thanks for taking my questions. So, I guess, the first one is just maybe if we can talk about geopolitics for a second. Perhaps this is a little too soon, but curious whether or not you’re seeing an impact in terms of customer interest on either side of your business, either plant trait or SynBio?
Michael Carr: Thanks, Bobby. In terms of the geopolitical, certainly is interesting times that we’re all living in here now. We are currently not seeing anything that is a direct effect at this point in time. Obviously, it’s a fast moving situation here throughout the world. What we are seeing, though, is there certainly a commitment towards sustainability and plant-based solutions. What we’ve seen here in recent period and really over the last several years is that companies around the world are committed to carbon neutrality and sustainability. And so the reception we’re receiving, as I mentioned, a few moments ago, the fact that our customers have identified specific compounds that they need that plant-based solution for us continues to be reinforced.
Bobby Burleson: Okay. Great. And then in terms of your two to four development agreements that you’re targeting for this year, are those -- would those all be with distinct customers, two to four distinct customers or could there be overlap where given customers working on several projects?
Michael Carr: Very good question. It could essentially be both. What we’re seeing in our discussions with customers, as I mentioned, have identified those compounds that they need a solution for. They typically have several that are required sustainable solutions. And so as we work through the compounds that are going to be really the best fit, you’ve heard, Bill, talk about our target product profile or very, very disciplined in identifying the compounds that we engage with. But we are seeing multiple and customers have been also the potential of having one compound per customer.
Bobby Burleson: Okay. Great. And just the last one for now that, Bill, was talking about a cash runway that could extend into Q1 or maybe beyond, based on additional activity that’s not being counted towards the kind of end of 2022 outlook in terms of cash. And I’m wondering, does you’re both kind of frameworks in terms of timeline for your cash runway, does that include, funding the plant trait business? Is there any kind of nuance there, we understand that that’s still an active part of your operation?
Bill Koschak: Great question, Bobby. And the way we think about our runway, as I said, in the end of our prepared remarks, is that our -- with arrays that we just completed, it extends through the end of 2022, which is inclusive of two important data points. First being, it only includes committed customer cash. So for purposes of that projection, we’ve only counted the cash that we’ve got committed to come to us from customers. So the majority of what we can execute from a licensing perspective especially is or product development in the case of the BioFactory would be upside to those amounts. And then it also includes from a spending perspective, our investments to continue to develop the BioFactory production systems, expanding its capabilities, tying AIML into it and back into the PlantSpring platform. And so we’ve also got the opportunity to evaluate as we go forward, what level of spend do we need to put against that, but when you put all those pieces together, it takes that end of 2022 runway and extends it out into Q3, sorry, Q1 2023 and potentially beyond depending upon a number of factors, largely tied to the business development activity.
Bobby Burleson: But to be clear, you’re not winding down the plant trait business in order to fund the SynBio because there are still ongoing activities across both sides of the company?
Bill Koschak: Absolutely. We hired people back in Q4 to focus on the licensing side of the business and this continued and it’s making wonderful progress with prospective customers to license both elements of our technology, as well as the historically developed product candidates. It’s a sole focus, which is what we needed.
Bobby Burleson: Okay. Great. Thank you.
Operator: And our next question comes from Brian Wright from ROTH Capital Partners. Please go ahead with your question.
Brian Wright: Thanks. Good afternoon. Congratulations on all the progress you’re making so quickly.
Michael Carr: Thanks, Brian.
Brian Wright: My -- you’re welcome. My first question was, I wanted to kind of get a sense, so the commissioning, you said, is completed and everything set to go from that standpoint, is that correct?
Michael Carr: Yes. We were able to commissioned towards the end of the year, sort of what we’ve guided to the street and I think was Q3 when we made that announcement.
Brian Wright: Okay. And so like, all that, like, when I think about, like, commissioning a ship for seaworthiness and stuff like that. So it’s all producing, like, better then or something similar to prove that it’s up and ready to go, just ready for customer contracts and things of that nature, I just wanted to make sure I understood that correctly?
Michael Carr: Yes. So we commissioned now and now we are in a position for growing and scaling it, which is continuing to expand its capacities. One of the things that’s really a big driver for us now is to overlay our AIML capabilities within the system, which continues to ongoing and capture data, which makes productivity even greater. We’re really interested and it’s focusing on the scaling aspect as it relates to customers and unnecessarily milestones in order to continue to scale it? That’s the big driver for us here coming up into Q1.
Brian Wright: And then in your use -- and this kind of ties into my next question is, in your use of the proceeds, you mentioned, the first thing to mention is enhancing the capabilities, including increasing this capacity to persist larger scales. So, just wanted to get a little more kind of color on a 200 to what are we kind of thinking and I’m assuming that’s kind of being kind of driven by kind of how that commissioning process went for you?
Michael Carr: It’s correct. Again, this size of facility mirrors what you see in the pharmaceutical industry, it’s a natural progression. The thing that we’re seeing within our focus is that the BioFactor being modular in nature, we’re able to scale it and -- the potentially to scale it in different ways. There’s been requests for example from customers inquiring about potentially putting a BioFactory in one of their facilities and able to help them in their sustainability footprint. By definition, that would be a different size of BioFactory. So the modularity and the scalability is something that we’re going to continue to focus on.
Brian Wright: So in that situation you would be partially funding it, even if it were on a customer’s facility, you would own the actual production system. Is that kind of how to think about that in that situation…
Michael Carr: In that instance, yeah, that’s the possibilities. As we mentioned, our focus on commercial scale is really to leverage infrastructure partners and use an asset-light approach. But what we’re finding is, is due to the modular nature of the facilities, that we can be able to place in different areas and it’s going to really depend on, again, going back to the approach to be customer demand driven, as the customer has certain needs, we’re able to -- be able to fit to those needs and address what they’re looking for in terms of sustainable compound.
Brian Wright: Okay. Great. And then one last one, if I can, it sounds like you’re making great progress with worth of negotiations with your first commercial contracts with PlantSpring and BioFactory is that, is there -- can you give us some color on stages of negotiations, like, yeah, I know, there’s multiple people you’re talking to, but maybe kind of who’s the furthest out kind of like, any kind of color of -- are things being -- is it time for the attorneys to review things or are we getting that close?
Michael Carr: The exciting thing for us as we made the announcement and really becoming a synthetic biology company in October and making that the real strategic initiative for Calyxt take off is the reception from customers, I think, we had roughly six of the top 100 sustainable companies according to the Wall Street Journal engaged in talks like that by now it’s more than doubled the breadth of conversation across cosmetics, nutraceutical, now even into pharma continues to expand. And of course, the conversations varied in terms of the depth and how far along they are. But we’re very, very encouraged as the reception. And again, a real testament is the fact that customers are able to come to us with those specific compounds that they need a plant-based solution for and that makes the process really exciting for us and potentially moving a lot quicker than anticipated.
Brian Wright: Great. Great. Congrats again.
Michael Carr: Thank you.
Operator: Our next question comes from Amit Dayal from H.C. Wainwright. Please go ahead with your question.
Amit Dayal: Thank you. Good afternoon, everyone. Most of my questions have been asked, just with respect to the AI and ML technologies. Is any of this built in house or are we relying on third-party providers for these solutions?
Michael Carr: Well, one, I think, it’s a great question, just to highlight something, that was a big milestone for us, as you can see with our progress, really leading up the growth and scale. The AIML capabilities is incredibly important for us as it applies to really the entire business across the PlantSpring platform, as well as our BioFactory. So a big try -- a big driver for us in terms of value and additional future milestones that we may have.
Amit Dayal: That -- and I’ll add on to that, Amit. From our perspective, that AIML capability, that area is led by our recent hire is both in -- both developed in-house in terms of capabilities, but we run it largely in the cloud, right? So it’s not something that we’ve got to make massive investments in boxes and things like that. At this time until it’s proven to be quick to implement based on the capability that we had internally in terms of how we added some things together and we’ve connected it into the pilot BioFactory. And so as we’ve run the shakedown as to Brian’s last question, just talked about, we’ve gathered a ton of insightful data that we continue to use and will use as we go forward. So it’s been a very quick win for us. It’s been impactful. We are using it in the early stages of our development process in the design phase to help us identify pathways and targets, and we -- as we’ve gone forward, I just gave you an example of where we’ve expanded its capability already and we look forward to continuing to expand those as we look forward here.
Amit Dayal: Right. And just in regards to that the data that we are building based off of these AIML capabilities. The library, if you will, is -- would it be possible to monetize that information by giving access to other developers, et cetera, to work off of that knowledge, I guess?
Michael Carr: Yeah. I…
Amit Dayal: Just trying if we -- yeah.
Michael Carr: Yeah. Just -- Amit, good question. Absolutely. I mean, there is another thing that’s, one, very attractive for -- about AIML for our business model is the vast amount of data that it does captured and that may not be directly related to, again, going back to our customer demand driven needs, but could be monetized and used elsewhere by others. So that is certainly a consideration for us from the beginning.
Amit Dayal: Perfect. All right guys. Thanks. That’s all I have. Thank you so much.
Operator: And ladies and gentlemen, this will conclude our question-and-answer session. I’d now like to turn the floor back over to Michael Carr.
Michael Carr: Thanks everyone for joining us on our call today. If we were not able to address all your questions on today’s call, please feel free to contact us or Investor Relations firm, Argot Partners, who would be happy to help you. Operate?
Operator: And ladies and gentlemen, that will conclude today’s conference call. We do thank you for your participation. You may now disconnect your lines.
