Cibus, Inc. Q3 FY2024 Earnings Call

Good day, and welcome to the Cibus Third Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Please note, today's event is being recorded. I would now like to turn the conference over to Carlo Broos, Chief Financial Officer. Please go ahead.

Thank you, and good afternoon. I would like to thank you for taking the time to join us for Cibus third quarter 2024 financial results and business update conference call and webcast. Presenting with me today is Rory Riggs, our Co-Founder, Chief Executive Officer and Chairman; and Mr. Beetham, Co-Founder, President and Chief Operating Officer. Before we begin the call, 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 Cibus SEC filings for a list of associated risks. This conference call is being webcast. The webcast link along with our press release and corporate presentation are available on the Investor Relations section of cibus.com to assist you in your analysis of our business. With that, I would now like to turn the call over to Mr. Riggs. Go ahead, Rory.

Thanks, Carlo, and good afternoon, everyone. Before I begin, I'd like to recognize Carlo's participation on today's call as our Chief Financial Officer. Carlo has stepped in for Wade King following Wade's leave of absence. Although Carlo was new to the investment community, he is a skilled financial leader who brings nearly 14 years of experience at Cibus alone and decades in a variety of roles, including his role as Head of Finance for the EMEA region and CFO for Netherlands and Belgium at Syngenta as well as his work in audit during his early years at Deloitte. We are grateful for his ability to seamlessly step in for Wade and look forward to his contributions as a member of our executive team as we look ahead to the future as a commercial enterprise. With that, I'd like to begin today's call with a high-level update on our business activities this quarter and year-to-date. Following my remarks, Peter will provide more detail on our recent developments and how we are progressing within our crop platforms. Carlo will then conclude with the financial discussion. As we reflect on the first nine months of 2024, it's clear that this has been a transformative period for Cibus as we evolve from an R&D-based business to the first commercial gene editing company in the industry. This continued transformation from an R&D-focused company to the first commercial stage gene editing company was essential to the streamlining of our organization to more efficiently focus our efforts on executing on our product launches with our herbicide-resistant traits in rice and traits for Pod Shatter Reduction in canola, while maintaining the ability to capitalize on our positive progress in developing our soybean platform and advancing our traits for Sclerotinia resistance and herbicide tolerance, our H2 traits. Our evolution has been achieved. There were a series of successful milestones associated with three cornerstones of our business. The first cornerstone is the completion of our Trait Machine process and industrial technology breeding platform that creates a time-bound and predictable trait development process. The second cornerstone is operationalizing or scaling the Trait Machine platform to develop a multi-trait pipeline with the goal of commercializing plant traits with multiple customers and multiple crops. Our third cornerstone is represented by our ongoing collaborations with major seed company customers with the goal to develop, license, and commercialize these traits in their seeds for trait fees or royalties. These three cornerstones are the foundation of this new technology business in agriculture for the development of productivity traits or traits that make farming more productive, economical, and sustainable. Our first cornerstone is the Trait Machine process. It is a paradigm shift in the breeding of complex traits. For each of our crop platforms in canola and rice, and for each of our traits for these crops, we can now complete our edits on the customer's elite germplasm and regenerate the edited germplasm to a plant within just 12 months. This breakthrough in speed and predictability of technology-based breeding is foundational to developing each trait and accelerates the timetable to commercialization for each trait once developed. We believe that this timetable will also accrue to our soybean platform. A predictable timetable for integrating our traits into a customer's germplasm is a key part of the commercialization of a customer trait, which begins with the receipt of a customer's germplasm. Evidence of our ability to use the Trait Machine process to edit and deliver to the greenhouse in a time-bound and predictable fashion can be seen in our recent announcement of successful greenhouse data for our HT-2 trait in canola. It took less than 12 months from edit to greenhouse results for this trait. We have also announced our disease program with which we also expect greenhouse results within 12 months of the edit. We now have a pipeline of five different traits. For each of these traits, we have completed edits and have had either successful field trials or expected greenhouse results for each of those traits. Our ability to develop so many traits within a compressed time frame is a testament to the efficiency we have developed with the Trait Machine process. Our second cornerstone is operationalizing or scaling our trait machine process to develop a pipeline of traits. This is also a paradigm shift in breeding new traits. Our ability to industrialize the transfer of traits and the development of new traits shows the power of our Trait Machine process to shorten the development timeline, commercialization timeline, and the cost of developing new traits. The third quarter was a great quarter to show our ability to scale our Trait Machine process as an ongoing production system with multiple different crops and multiple traits. In rice, we now have multiple customers, each having multiple lines. The initial edit happened within a 12-month framework, and we expect that gene-edited HT3 traits in multiple customer lines will all occur within this 12-month production target. In winter oilseed rape with multiple customer germplasm, we completed the first field trials for our Pod Shatter Reduction trait. These trials were completed in the elite germplasm of several customers. These edits were completed in the greenhouse within a 12-month time frame. In addition, we had the first successful field trial with stack gene edit traits using our HT1 and HT3 traits in rice. We expect to develop a family of stacked herbicide tolerant traits for our customers in rice. This ability to efficiently develop a family of stack traits is a key strength of the Trait Machine process. It's expected that our Sclerotinia-resistant disease trait in canola will consist of multiple modes of action, which will be combined to form our Sclerotinia resistant product, and is expected that we will offer multiple gene edit herbicide traits across the entire industry. We expect that these traits with Sclerotinia resistance will have a similar scale opportunity in soybean. We expect that our technology will be able to attain the scale in a similar time bound and predictable manner. This is what we mean by operationalizing the Trait Machine process. Our third cornerstone is our collaboration with major seed company customers with a goal to develop, license, and commercialize these traits in their seeds for trait fees or royalties. This is an important validation of our technology as a commercial platform. The development of gene editing as an extension of the breeding programs for our seed company customers is a key part of the development of this new gene editing trait industry. This cornerstone is about the use of the Trait Machine process as the key engine for the commercialization of our traits across multiple crops, multiple traits and multiple customer lines in an efficient, time-bound, and predictable manner. This is the underlying framework and validation of our commercial process model for gene editing in agriculture. The speed of our Trait Machine process will enable materially faster commercialization timelines for new traits as well as updates for new traits once launched. This momentum with existing customers with the goal of commercializing our traits in different customer germplasm in different crops continued in the third quarter. We have now established collaborations with major seed companies in each of our crop platforms. In each case, we have received the elite germplasm of each customer for a specific crop. Each of these cooperations with seed companies is being made with the goal to develop, license, and commercialize the trait in near germplasm for trait fees. For soybeans, the goal right now is to develop the Trait Machine crop platform. In rice, each of our collaborations was made with the goal of developing our herbicide-resistant trait and near germplasm for commercialization. In the U.S., we also signed an important agreement with Albaugh and RTDC to continue our collaboration for supplying Clethodim herbicide to support the expected launch of our custom-tolerant rice trait, our HT-3 trait to our U.S. rice seed customers, utilizing Albaugh's herbicide registration and crop protection expertise. This partnership is a key part of the ongoing commercialization of herbicide-tolerant traits as an economic partnership between the seed company, the chemical company, and the trait company. Our ongoing field trials for our Pod Shatter Reduction trait in canola and winter oilseed rape in customer germplasm are also key elements of the commercialization of our Pod Shatter trait with seed company customers. In soybean, our initial platform is being developed with GDM germplasm. This was established with the goal to develop a platform for the development and commercialization of selected traits in soybeans, like our HT2 trait and our trait for Sclerotinia. The ongoing work with our traits and customers' germplasm as part of their commercialization program is a model for how this new gene editing industry operates. As we entered the last quarter of this year, we're excited about the technological and commercial base we have built to establish the first commercial trait business. Through each cornerstone of our model, we are differentiating and establishing ourselves as an important element within the seeds and trait industry and are able to drive value for our seed customers and the grower community. Now Peter would like to provide some more background on our commercial activities and technological updates.

Thank you, Rory, and good afternoon to everyone. The last quarter and the first nine months of this year have highlighted our strong advances in gene editing globally for important traits and important crops. As Rory mentioned, our Cibus team is focused on our product launches. We are streamlining our processes as we leverage efficiencies and synergies for our semi-automated trait development process. We are ending the year well positioned to achieve several important milestones. Before I summarize our advancements, I want to highlight the critical importance of our leadership in the agricultural gene editing industry. Just this past week in Iowa at the World Food Prize keynote address by Dr. Dongyu, the Food and Agriculture Organization of the United Nations Director General, he identified some of the immediate challenges we face with rising food insecurity, and he clearly advocated for how important gene editing will be to solving these challenges. To quote Dr. Dongyu, gene editing technology accelerates the breeding process significantly. It's faster than traditional breeding methods. It improves resistance to pests, diseases, and environmental stresses. This includes tolerance to high temperatures, droughts, floods, and salinity, among others. For us at Cibus, it is abundantly clear that there is a global movement and a call to action for gene editing to be incorporated into seed company breeding programs. Cibus has been developing the fundamentals of gene editing from the ground up for over two decades. We are well positioned to capture this moment as we continue our transition to a commercial-stage gene editing company. As we explained in our last quarterly update, this past year has seen an expansion of our rice seed company customer base. Today, I'd like to use our rice platform as a case study to demonstrate what's possible with gene editing in agriculture and how Cibus is leading this effort. Rice is one of the world's most important food crops. But historically, it has not benefited from the best nonselective herbicide tolerance traits due to the limitations of conventional breeding and GMO technologies. This is the one example where our gene editing capabilities come into play. Our rice platform journey began with recognizing a critical need. Rice farmers globally, and especially in Latin America, were struggling with weed management and, in some cases, spend over $120 per acre on herbicides and their application. Without effective weed management solutions, farmers have sacrificed yield and grain quality, leading to reduced profits. To address this, we leveraged our Trait Machine process to develop our herbicide tolerance traits HT1 and HT3, which allow rice plants to survive herbicide application and provide the potential to significantly reduce weed management costs. With these developed traits, we then moved edited plants into field trials to demonstrate the effectiveness of our traits. You can see striking photos on our website, showing treated rice field trials where elite genetics of rice with our gene-edited traits thrive after herbicide application, while the unedited crops are devastated. Importantly for farmers, these trials have also shown excellent control of weeds that are impacting yield and quality. And as Rory shared, our next step has been the first-ever development of stacked gene-edited herbicide tolerant traits in rice, where we observed positive field trial results furthering the promise of enhanced weed management options for farmers. These impressive results have led to commercial agreements with four major rice seed companies in North and South America. We've received germplasm from each customer and are now incorporating our traits into their elite germplasm. In addition, we signed an agreement to continue our collaboration with Albaugh, LLC and RTDC to supply Clethodim herbicide to support Cibus's expected launch of its Clethodim, which we call the HT3 trait in the U.S., marking an important milestone in the commercial development of HT3 in the U.S. We are working with our U.S. and Latin American customers to launch these traits in 2027 or 2028. We see an opportunity to potentially access approximately 9 million seeded rice acres, which we estimate represents a market opportunity of approximately $200 million in potential annual royalties. We are now also looking to expand our rice traits into Asia. This is an enormous long-term opportunity starting in 2030. But even without including China, it could generate additional annual royalties of approximately $150 million. This rice case study demonstrates why and how Cibus is leading the gene editing effort in agriculture. We are addressing critical farmer needs using our Trait Machine process to develop traits quickly and cost-effectively, addressing problems that conventional breeding and GMO technologies couldn't solve. Our ability to stack multiple traits is expected to provide comprehensive solutions for farmers while our non-GMO approach is gaining regulatory acceptance globally, opening markets previously closed to older technologies like transgenic biotechnology. The fact that we're attracting major seed companies as partners affirms our technology and approach. The success we're seeing in rice highlights the commercial potential of our trait development process across multiple crops. We're not just developing individual traits, but pioneering a new paradigm in agricultural innovation. Now moving to canola and winter oilseed rape briefly, as Rory had already highlighted, that we have made significant strides in both our developed and advanced traits. As mentioned, the Pod Shatter Reduction, PSR, we've completed initial successful field trials for winter oilseed rape in the U.K. And more specifically, we have already completed planting of our expanded next set of European field trials with results expected in the fall of 2025. We also continue to work closely with our North American customers through our initial commercial launch of PSR in 2026. This work includes confirming key specifications for PSR and the other agronomic or trait characteristics from our seed company customers for hybrid seed launch. While we are streamlining to focus our herbicide tolerance in rice, our PSR trait work and our soybean platform, we are maintaining our ability to continue progress in other areas. This includes ongoing progression of our advanced traits, which have started in canola, including initial editing, greenhouse results, and field trials. For our HT2 trait, we confirmed second-generation edits and initial data showing canola with improved herbicide tolerance compared to our first-generation HT2. This advanced trait potential, multi-crop applicability means that HT2 could potentially be the first gene-edited trait to achieve 100 million acres of year use, representing one of our largest opportunities as we aim to earn royalties across multiple crops for the same trait. In addition to HT2 in canola, we have made substantial progress with our Sclerotinia resistance trait, achieving multiple important milestones year-to-date. We have now done edits in three modes of action. Let me take a moment to provide context of why multiple modes of action are critical for crops to have disease resistance. Diseases like Sclerotinia, also known as white mold, can evolve quickly. And Sclerotinia has complex life cycles, so providing crops with multiple modes of action to defend themselves against disease is critical to address the evolving disease and environments. The best resistance known as durable resistance, which has been achieved using multiple modes of action. So for Cibus, our gene editing strategies provide an opportunity to provide this durable resistance for multiple crops. While our progress with our advanced traits in canola is exciting on its own, the advancements we have made in traits like Sclerotinia resistance in HT2 are laying crucial groundwork through our expansion into other crops, including specifically our anticipated development of our soybean platform. This advanced platform, one of the most challenging endeavors in Plant Biology, is expected to be operational by the end of 2024. We have already improved the editing efficiency in the soybean cells. We've anticipated completing additional editing and achieving regeneration capabilities within this time frame, representing a key inflection point that will enable us to enter what we believe is a soybean market opportunity over 200 million addressable acres. Beyond market size, the soybean platform will further serve as one of the foundations for our sustainable ingredients business where we continue to pursue partner-funded collaborations. These achievements across our crop platforms and trait pipeline showcase our ability to develop complex multi-crop traits addressing significant global agricultural challenges. We're not just meeting our milestones, we're pioneering a more sustainable and productive future for global agriculture. And with that, I'll hand over to Carlo for a financial update.

Thank you, Peter. Looking at our financials for the third quarter. Cash and cash equivalents were $28.8 million as of September 30, 2024. Taking into account the impact of cost-saving initiatives, once fully implemented, which we estimate will reduce our monthly cash usage by approximately 20%. Cibus expects that existing cash and cash equivalents will fund planned operating expenses and capital expenditure requirements through the first quarter of 2025. Moving to our income statement. R&D expense was $13 million for the third quarter of 2024 compared to $70.5 million in the year-ago period. The decrease of $4.5 million was primarily due to lower noncash stock compensation expense and the strategic realignment and reduction in force announced during the fourth quarter of 2023, which delivered decreases in personnel costs and supplies. SG&A expense was $7.7 million for the third quarter of 2024 compared to $8.8 million in the year-ago period. The decrease of $1.1 million was primarily due to lower noncash stock compensation expense. Noncash items were $1.2 million for the third quarter of 2024 compared to $9 million last year. The decrease was primarily related to the fair value adjustment of the liability classified common warrants in the third quarter. Net loss was $201.5 million for the third quarter of 2024 compared to a net loss of $34.5 million in the year-ago period. The increase in net loss was due to the impairment of goodwill, resulting from a fair value assessment based on the decline of the stock price performed in the third quarter of 2024. Net loss, excluding goodwill, was $20 million for the third quarter of 2024 compared to a net loss of $34.5 million in the year-ago period, representing an improvement of $14.5 million year-over-year. For additional details about the financials for the third quarter of 2024, please refer to our press release and filings with the SEC. That concludes our financial discussion. Rory, now back to you for your closing remarks.

Thanks, Carlo, and Peter, for those updates. As we've discussed, the third quarter has been pivotal for Cibus in a number of ways. The strides we're making in rice combined with the advancements in our trait pipeline, particularly in canola and the groundwork we're laying for soybeans really showcase the breadth and depth of our capabilities. We're not just developing individual traits. We're building a comprehensive trait development platform that has the potential to transform multiple aspects of agriculture. So thanks so much for your attention and interest. We're looking forward to updating you again next quarter as we continue to hit our milestones and advance our mission. This concludes our remarks. Operator, could you open the call for questions?

Today's first question comes from Laurence Alexander at Jefferies.

Can you give an overview of the current state of legislative or policy support for gene editing? What has happened in Europe regarding rice, and what is the situation in China? Does anything need to change?

I completely understand. In the Americas, we're well-prepared to launch in the major countries. In Europe, the legislation has been passed, but they haven't yet finalized the tripartite agreement. It is expected that there will be updates every quarter, and with a new President coming into Poland in January, there's optimism that this will advance for Hungary this year. We are very confident that Europe will progress, as will Asia. Peter, do you want to add anything? The situation is constantly evolving, but I believe there is some allowance for China, Peter.

Yes. Let me add a little bit to that, Laurence. Thanks so much for the question. The regulatory frameworks around the world are harmonizing. There's no doubt. Just to confirm with what Rory said about the Americas, both North and South America are harmonizing a lot of their regulatory policies. It is happening in Asia as well. We're continuing to see positive movement in China, and gene editing is seen as indistinguishable from what occurs in traditional breeding programs, which is really important. I think the other side of it that Rory also mentioned, just to confirm that in Europe, early next year, we see a change in the EU Council presidency. From all accounts, that's going to be a very positive movement in that process and legislation completion in Europe, which is exciting for all of us.

And the only thing I would add to that is that for rice, which is our first big launch, all the countries we're launching in right away are all approved for us, and we're pretty excited about that.

Great. Can you remind me of the timeline for when we should expect to see rice commercial revenues reflected in the P&L? I'm particularly curious about rice and soy today. Additionally, to what extent is the gene editing platform becoming a situation where partners might incorporate their modifications into the seed instead of your own traits? When would we start to see that as a revenue opportunity?

That's great. It's addressing two key points. Peter will elaborate shortly. We recently released a new presentation on our website, which outlines the anticipated launch dates for each of our traits and expected markets. We made this information available to the public this quarter. The agreement we reached with Albaugh is significant because it initiates the timeline for herbicide traits. For rice, we need to conduct herbicide field trials and launch those traits. We expect to see some launches in Latin America around '26 or '27, as well as in Europe. In the United States, the timeline is a bit longer due to EPA regulations and the length of the approval process, but we anticipate U.S. launches in '27 or '28. Peter?

Yes. Just to add to that, Laurence, what's exciting for us is that the field testing this past summer and the summer before that have really allowed us to look at the specifications around what we need for the herbicide tolerant traits in rice. I can't stress enough how exciting it is to have Albaugh join us for the registration work for Clethodim, which is such a great herbicide. Just to add a little bit to that because Clethodim is a really important grass herbicide that is really key to killing some of the most troublesome weeds for rice farmers in the U.S. and in Latin America. One of them is called red rice. It's a cousin of rice. And it's become resistant to a lot of the herbicides that are currently used, so they can't get rid of it. They can't kill it. So that causes reduced yield and reduces quality. The ability to use Clethodim to spray over the top of the rice crop allows you to eliminate the red rice and have your crop go to full yield. I think that's an exciting option for weed management solutions for rice farmers in North and South America. So for us, we're on track for that commercial launch of '27, '28, and we're excited to see those agreements go forward and the field trials returning the results that we expect.

So as I was saying, for canola, we do think in the U.S., we expect '26 in Europe. We need for the rest of that, we need them to vote yes, and then behind that period. And soybean, we do still expect in this quarter to have the first proof of the platform. From that, we have GDM and other customers we're going to start putting the trait and launch. It will take a couple of years, but we do expect to have the approval to start working towards it.

Lastly, could you provide insight into how differentiated your solution is by discussing whether customers are willing to pay more for field trials to help you scale, instead of opting for a lower long-term royalty? Additionally, how much of your capacity are you currently utilizing, and if all your customers were enthusiastic, how much more could they potentially request from you?

It's pretty exciting. I'll start then Peter finishes. With each of these we are starting to edit all the crops. And this timeframe we're doing is, breeding takes longer. When they do it, they end up giving you seed that you can then plant in. We're giving them back their germplasm with the traits in it. And so that's what we think is going to be the system in rice. Especially in soybean, we see people saying, 'We have other ideas; couldn't we work with you on that?' All of our partners, I think, are looking at us to say if you can make these timelines. As we said in our talk, two of our traits in soybean, we've made the edits — they're going to the greenhouse, and we fully expect to have the results from that within 12 months of the edit, which is pretty cool. Is that helpful? Peter?

Yes. Let me add a little bit to that because Laurence's question is really important, as it speaks to the time that we need to get from an edited germplasm into the field and to launch. Working with seed companies, our customers and partners, we continue to get more demand, we continue to get a lot of interest from seed companies. They've recognized that if we can do this within 12 months and get it back to them in a really timely fashion, it fits into their breeding programs. As we move forward with our customers, they get to experience us delivering in a really time-bound and predictable manner, not just with a few elite genetics but a broader base of genetics that will go into their breeding program. I can't stress this enough because this is a different paradigm. We're educating people around why gene editing is so differentiated from traditional breeding and GMO technologies. GMO technologies took a long time; they were event-driven science and the ability to generate materials and elite genetics directly the way we do it through our single-cell methods and get it back to the customer quickly really changes the paradigm of when you're doing those field evaluations together. Hopefully, that's been helpful.

Maybe just — if I can just ask one last one then, to what extent, if you look at the total field trial validation licensing costs that a crop would entail for somebody from development to commercial sales to the farmer? Can you give a sense for roughly how much that cost is being shouldered by your partners? Or is it like a 50-50 split? Is it 70-30? Are they putting it all on you because you still have to prove yourselves? Can you just give us a sense for how the total cost pie is being split?

We have been transparent about the initial edits we are making for customers. The subsequent edits will encompass everything needed, which may include changing five or six lines from rice to soybean, among various other modifications. Customers are willing to pay for each edit we perform. We will demonstrate our capabilities, and all our discussions have centered around establishing a profitable business model that adjusts our timeline and costs to effectively introduce this trait into their crops. Does that provide clarity? They're doing it — they're not doing it that way right now; we're in rice. These are the first ones in rice. So rice will be a good experiment for that. So on rice... probably by 2026, we should see it flip to being a profitable cost-sharing business; that's the right way to think about it. Great way to think about it. It just means that the editing part of the business will pay for itself. And that doesn't come from the royalties you get for the trait itself. Our expectation is the editing part of this business will be a for-profit enterprise and allow you to really do things earlier on. We've got it so well down that you should be able to really — you'd heard us say we like for people to think of us as an extension of their operations to be able to speed up and make their things more efficient from a cost and time perspective.

And our next question comes from Austin Moeller at Canaccord.

Peter and Rory. Just my first question here, can you talk about the timelines and analytical process involved in evaluating the winter U.K. field trial results and the greenhouse results for Sclerotinia resistance in the third mode of action?

That's an excellent question. It's clearly one for Peter.

Thanks, Rory. Thanks, Austin. Look, let me start with Sclerotinia and then I'll go to the other trialing. But with Sclerotinia, we are beyond excited about the fact that we can bring different modes of action. As I mentioned in my remarks, durable resistance is all about having multiple modes of actions. We've spent quite a bit of time validating exactly how we evaluate the different edits and the different modes of action. This past year, we're excited to see really good Sclerotinia infection. I don't think farmers are excited about that, but through our trial and for that purpose that was great. We can see the differentiation between the edited and non-edited versions of our mode of action two. We are also seeing that mode of action three for us will have greenhouse results in the fourth quarter of this year. So that's where we are with this Sclerotinia. When it comes to the work we're doing in the U.K., again, we're working closely with our customer and partners in Europe. In the U.K., we've done our first season trials, and the PSR test had some really positive results, which was fantastic. One of the things about the winter oilseed rape, as it's called in Europe, is there's a quick turnaround. Within three or four weeks, we had to make some decisions. It was very easy when we saw our partners' genetics with the edits performing at a very strong level of Pod Shatter Reduction that we were able to replant those, and we'll have another full season of testing. You need to continue to have more testing to validate the trades, and customers can get to see it in their own genetics. It's an exciting moment for us.

That's helpful. And just a follow-up, are there any updates on sustainable ingredients and fragrances and the timeline there?

I can try, Peter. We're very encouraged. It's getting extended into next year, and we've made really good progress. Our expectations are that with the finishing of the soybean platform that we'll start to see results that we can announce within year-end next year. So we're really excited about where it's going. We're doing a really good job on the edits required for these things and the work really needs soybean done, so we control it to soybeans.

And our final question today comes from Matthew Venezia with Alliance Global Partners.

Firstly, I just wanted to ask about your 12-month germplasm to greenhouse and whether the evidence for that coming in HT2 and canola, whether that confirms your three- to five-year estimate for germplasm receipt to final product. And to that point, if you could speak a little bit to the benefits and drawbacks of — I know you mentioned it briefly, protoplast regeneration as the mode for industrializing the gene editing process.

Yes. Thanks, Matt. I think that's, again, if you think back on the last nine months and what we've achieved, it is, to my mind, one of the real breakthroughs that we've had at the Company. We've talked about our Trait Machine, and we're getting that operational. Some of the key technical breakthroughs you think about are the huge improvements in editing efficiency. That creates precision with our production. What that means is that for customers, they get their seeds back in their hands quickly. And so that is speed to market. It also allows you to get multiple genetics back to different customers. That efficiency of being time-bound and predictable really contrasts with what I mentioned before about traditional breeding and GMO technologies. The ability to deliver that back to customers allows you to think through the timeline of three to five years. It really allows you with the customer to get to those launches very quickly. We're talking about our weed management HT2 in North America by 2028. That's fantastic when you think about the process where we can start with customer genetics and get it to them in that sort of timeframe.

Adding one thing to that, Peter. One of the things that makes us so exciting is, I think the team didn't realize how accurate and precise and time-bound they thought their work was going to be. For many of these traits, if you get it right, we're going to show greenhouse results, and that's going to be within a year. The time frame sort of confirms that three to five is within reach and also gives the idea of how fast you could do, especially if we were working with customers. That's why we're so excited about this.

Great. And then just a follow-up on that same vein. Can you just compare and contrast protoplast regeneration to other forms and modes of regeneration that other competitors are using and how the Trait Machine differentiates itself from a process like what's going on at other companies?

Yes. So, Matt, I think you had that embedded in your first question, and I apologize, I didn't get to it. But protoplast system, you've heard through our remarks and our other, call it, reporting about multiple edits and multiple genes and multiple crops. That's a lot of multiples. But when you have a single cell, if you have a single cell method, you can deliver your reagents to make the edits; it allows you a lot of flexibility to do these very complex edits that we need for traits-like disease resistance. It really does differentiate because, one, you can do the complexity within a single cell. What's been great about the work we've done here at Cibus is the efficiency of getting back to a fully regenerated plant in a quick timeframe. We've applied that to canola. We had lots of different traits now, and we have also done it in so many different genetics. We've now transitioned that to rice. We've done it in rice before, and we're building the soybean platform, but it really differentiates from what other people are doing by not going through a single cell method. Their timelines are longer because of that. The differentiation is that they have to go through a segregation step genetically to get rid of some of the reagents that they've inserted into their genomes and their seeds, and we don't do that. It's faster, more efficient, and you're able to do more complex traits; the regulatory analysis of that and the framework around the world gives us a clearer path. Hopefully, that answers the question for you.

Very helpful, Peter. And finally, should we expect the company to operate similarly to Albaugh? Will they work on establishing herbicide labeling for the Latin America region, or is that unnecessary with Albaugh at this time?

Matt, that's exactly right. We will have — we've got a strong relationship with Albaugh. They're a global company, so we can go forward with other countries with Albaugh; our first agreement is with the U.S., and we have agreements in place where we know we can extend that.

This concludes our question-and-answer session. I'd like to turn the conference back over to Mr. Riggs for closing remarks.

Thanks, everybody, for listening. As you can tell, we're really excited about where we've gotten to. We had a lot of milestones to get through to this point. We're hitting our milestones; it's pretty cool. Efficiency and accuracy in time is something we didn't expect to quantify as much as we have now. We think this is a very good quarter, and we really look for having even bigger announcements over the next quarter. So thanks.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful evening.