All right. I think we'll get started. It is with great pleasure that not one but two days in a row I get to kick off my conference with the two most successful DuPont spins of all time. This is obviously my favorite. Don't tell John Kemp upstairs. This time it is Corteva, ticker CTVA. Today with us we have David Johnson is the CFO and future CFO of Viler, the seed spin, or seed and technology I suppose we should say. And Sam Ethington, who's the chief technology officer, and I think they added digital into your job title as well recently. So obviously a lot going on. I'm looking forward to discussing that. I've had the pleasure of knowing both David and Sam for many years, and I look forward to nerding out for the next half an hour on agriculture. Nothing gets my day started better than that. And I think when I sit down, we have some good news to share with the crowd. Excellent, excellent. So I'm going to drop the prepared questions. So we were joking. I personally thank Chuck for going over to Europe right now and talking to make sure the EU has now officially announced It is, I'd say, beginning to implement the approval of gene editing. Sam, you and I were just speaking. This is something we've waited for for maybe longer, for me, 10 years. It's amazing how things can take that long, and I'm feeling a little older, have a wife and kids now. But I would love to start off with that, what it means to you, what it means to Vylar, perhaps what it opens up in terms of the Vylar thesis. Obviously, there's a lot going on and we can circle back, but I'd love to hear initial thoughts on what I perceive as a great announcement.

Yeah, no, great. And thanks, Chris, for hosting us. Yeah, it is pretty exciting. Just a couple hours ago, the EU Parliament actually voted to accept their, what they call their NGT, so that's their gene editing policy. And this really starts the opportunity to bring gene edited products, not only just for importation but actually cultivation now in the european market so think about that they've had a gmo ban for 30 plus years and now they're actually getting on board with really the technology and the opportunities that gene editing unlocks and so we still got about two years of grinding through the implementation phase so there's a lot of stuff that still has to be written and how it gets done but this is a huge step forward versus like we were saying like 10 years ago when they basically banned gene editing also which was a real real slowdown to the technology and the opportunity what it really means to us is we've got a strong footprint over there in agriculture seeds so both our corn or oil seed rate business for example we've got gene edited products in corn for example one we talk about is our our multi-disease resistant product where we've used gene editing to enhance the disease resistant that's already in corn but we made it really a complete package so that a grower doesn't have to choose am I gonna select the hybrid that's resistant to southern rust or one that's resistant to gray leaf spot or something else and each year they're trying to make that choice if they're wrong then they've got to go out and manage that field differently and so we've been testing this concept now for about five or six years. We actually have a nice pipeline of multiple genes and concepts ready to go. And just to give you an example, last year U.S. had a really big southern rust infestation and farmers were spraying fields sometimes twice. If they didn't spray sometimes they were losing up to 80 bushels of yield per acre in their corn crop. This is like in my home state in Illinois and our disease super locus actually looked outstanding and we had lots of trials where it was 40 to 50 bushels above the control so think about that being available in your seed and you don't have to worry about how to spray when to spray what to spray for all that decision is really simple you just buy the right seed up front we can now bring that technology in theory to Europe right so bringing really enhanced genetic technology to Europe and corn and an oil seed rate that just we couldn't do before. So it's a pretty exciting time for the seed industry, I'd say, it's a great move for where Viler's going, gene editing's gonna be core to who we are. And I think, if you think about the bigger picture, a lot of countries look to Europe for the regulatory standards.

So this really changes the conversation, what's going on in China, for example, which is still, we need approval, because our grain moves around the world, so we gotta have import approval, so we still got some work to do but this really helps with the conversation in a lot of countries i think for those who like pictures a couple quarters ago we we actually had a picture of a one that had our gene edits in and one that didn't and if you look at that picture it's pretty clear that the technology capabilities one of the things i just wanted to very quickly go over and understanding we're pulling a bit of an audible this morning based on the positive news flow But could you just remind people in the audience and perhaps on this webcast today what gene editing actually is, what it's different than GMOs in terms of the old-school nomenclature? And then also, I don't want to spoil it, but you also have a very unique standing in terms of your intellectual property that has been longstanding, in some cases multi-decades long, in some cases within the last decade. So you're very firmly well-positioned in this, and I'd love for you to share your thoughts on that as well.

Oh, great. So yeah, good call out. We tend to sometimes forget where we're at. So GMOs, so genetically modified organisms, really back in the 90s was created. And this is where we took DNA from a different species and put it into our row crops. So think about corn and soybeans. This is how we got glyphosate resistance, insect resistance. We took genes from other species and moved those across into corn and soy cotton, as an example. in gene editing we only work with the genes and the variation that's already in that species right so we're not transgenic we're not bringing in genes from other species it's already there so think about our corn disease super locus those genes are already in corn somewhere around the world right all we did was use this technology to find them and then quickly integress them and move them into our germplasm so something we could have done with plant breeding and this is what's really helped in the conversation in Europe is like you could do this with plant breeding it's just now we can do it a lot faster a lot cleaner a lot better than what we could have done through traditional plant breeding procedures so that's been really the shift in the change now it gets a little muddy sometimes because you could use gene editing to do GMOs and all sorts of things but the simplest way is there's no foreign DNA it's really it's within the genetics that species already has yeah I would just remind people in the audience the first GMO crop that was for cultivation is 1997 I believe is Roundup Ready canola and so this is now probably perhaps one of the largest technological technological evolutions that we've seen in almost 30 years um so we will do the interesting thing is um we can do stuff with gene editing we were not successful at doing with gmos uh for example there are no gmo disease control products in the marketplace right uh we all spend a lot of money working on yield and stress and gmos and very little success in that technology yet we see in gene editing already success in disease we success products coming through our pipeline area with yield enhancements and improvements we've never seen before we think there's opportunities we think about insect control there's people working on herbicide control so are we control with herbicides so I think it's just actually going to open up the space of what genetics can solve and then you start rolling into it's it's a cheaper cost structure right if we don't have to go through all the regulatory hurdles and burdens that we do today we can actually work on additional product concepts there's a lot of concepts we leave behind because we return on them it's just not there so it's gonna be more concepts more crops more geography so it really expands our way to play as an industry I think one another point I want to make whenever you think about Corteva itself you have to have a base germplasm so all this technology is fantastic but you have to have something to edit and so when you look at something like Pioneer which is going to 100 years this year it is this year it's 100 years of germplasm so when we look at our ip and what do we think is you know one of the most important assets we have is corteva it's starting with that germplasm and then that allows or enables a lot of this technology and on the ip front um we branded this genlytics is the ecosystem that we're calling it um in september we'll update you it's amazing just in the last two years how much it's expanded but a lot of IP we're also doing lots of license we have a lot of collaborations we have a lot of third-party investment opportunities so we're taking a very broad look at the technology including a number of things we're doing with social acceptance and

really helping people feel like we're transparent and explaining what's going on and and not be afraid of the technology so let's take a step back to let's take it a step back to last September when you announced the spin so David I suppose we could focus this initially with you and Sam obviously feel free to you know chime in with anything incremental but you know what was the initial thesis you know 12 months ago in terms of where we stand today you're gonna do a couple CMDs in September basically a year in can you talk about how what you think and especially in your new role what the thesis is on the seed business for those of us that have covered this

as an integrated company whether you know pre-dow dupont or you know after as Corteva could you you know highlight a few thoughts there perhaps you know integrate what gene editing means so that what I perceive as optionality I would love to hear your thoughts on that thank you for the question I think when we think about the independent seed company or we'd like to call it a genetics company going forward because I think our aperture or thought process is a little bit broader than what the what the business is today but for me it's all around strategic kind of just focusing in on those growth opportunities around gene editing, our licensing business, some very exciting things like hybrid wheat, all these new opportunities we have. I look at it as more of a focus ability to have the separate company. I think there are some value unlocks that may be a little bit surprising to people, But whenever you look at Corteva today, by and large, the businesses are operating differently, even within the Corteva business today. Because when you look at CP, it's essentially a global specialty chemical company with an R&D element to it. So it operates as a global functional business. When you look at seed business, it's a very regional business. When you look at SANS R&D operation, it's many, many locations in every region around the world because you have to be able to develop and produce within that region. So when I talk about a value unlock for seed and CP, it's getting these organizational structures and the operations around that focus around either a global functional business or this regional business. And quite frankly, you know, Corteva today had some costs to keep that together. So I think that's a pretty exciting element. I think the other one is just focus on capital deployment and what we can do there. I think whenever you look at two separate businesses, I mean, I do believe in the CP business, there's going to be opportunities for more collaborations, more opportunities in that market. That maybe as a combined Corteva business, we'd focus a little bit more on the seed business given the returns and so on and so forth. So I think the jump balls for capital would typically go to, like, the seed business. I don't think that's appropriate. I think it's better whenever it's separate. And then for us, we don't know this yet, but as a separate seed company, I mean, could there be more independent seed companies that would be very much more interested in being part of VILOR? I think that that's an opportunity.

And then just seeing how far we can go with adjacencies and what have you, whenever you think about team editing broader than just row crops so I think you know around strategic focus capital deployment and a little bit of a value unlock are the main items I think about whenever we think about the separation and Sam when we take them once again take a step back and we look at the initial viler thesis and seed there but there's also a lot I don't want to dismiss anything that's going on the GMO side you've been working for once again perhaps well over a decade likely to further enhance the e3 platform there's some things in terms of replacements for the Chrome platform triple stacks

can cast it on Brazil there's I don't want to take away from the excitement that you likely you know contain there as well so I'd love to hear your initial thesis on that opportunity as well and then we can perhaps we can branch off from there no great and it's easy to sometimes to lose that but if you just roll the clock back right um as a company we in license most of our biotechnology traits we paid a lot of royalties we've been shifting that over time to where it's moving more to what's our own either co-developed or proprietary traits this will bring royalties down to essentially neutral positive this year and as we look forward we're actually moving to a higher percentage of proprietary developed trait so you mentioned we have a replacement for in Latin America conquesta is an insect control trait it's a really really important trait down there we've just launched it a few years ago will be a mid-teen percent already of market share on that trait and we've already got the next generation biotech trait ready to go that enhances durability and scope of that insect control looks fabulous it's in the field it's in varieties we're and et cetera, right? So that's already there. Same thing on the corn side, right? So you mentioned we have platforms like Chrome, insect control, we've got VORSI, we're now going to a new triple, but we've got actually new genes for above ground and below ground insect control for North American market and above ground control for Latin American market. And so these will now be 100% proprietary. They're kind of unique in some cases. is we got some of the genes out of actually ferns. So a lot of the history has been some sort of bacterial gene, maybe one or two RNAi genes, and we actually are going to be bringing some of the first genes from ferns out into the marketplace. And so those give us all sorts of new things to think about, well, what stack combinations do we want? How do we want to out-license those traits to other companies, and how do we want to deploy them in the market? And so that base of germplasm and biotech traits, we just see it getting stronger and stronger all the way out into the middle part of the next decade and then we get to build on hybrid wheat biofuels gene editing adjacent spaces so why we feel really good about where Biler's going and just you know you mentioned well first of all I just want to take a step back for something for the ones in the for those that aren't aware of it please correct me if I'm a little bit off but you're we're coming from a negative 850 million dollar like 700 million when we spun when you spun yeah and then if you look at today we're going to be neutral this year we actually said we're going to be slightly positive this

year so you think about that margin journey over a fairly short period of time that's why you see the the margins of the business going up into the upper 20s and then we also said that you know by mid next decade now we expect it to be like a billion dollar opportunity for filer so one of the things you did even prior to these announcements in terms of the biotech optionality and out you know out licensing was there's a litigation with buyer which you know obviously has lasted a very very long time of something that most of us just read once a year on age 210 of the 10k took some notes asked him a few questions and moved on could you basically speak to what that settlement seems like you've done a lot of cleaning up for this thesis and for the spin if you could take a step back and you know share your thoughts on that as well.

So when you think about the bear agreement it did a few things for us. One it give us a little bit more certainty about certain molecules after patent, so post patent opportunities there. So that enabled us to do a few things. We're able to introduce some new products like the triples literally in the next two years versus when we thought it'd be early 2030s okay so that was a big move up for us for that opportunity I think on the other side part of that equation is reducing the net in licensing expense so that was one that we saw a benefit also with that agreement and that's why we're now saying that we're going to be you know positive this year Chris which would be about 120 plus million dollars better than last year so a really nice increase in in margin and I think just generally speaking it reduces the uncertainty and puts everything kind of behind us whenever it comes to our relationship with bear yeah well just it removed some uncertainty it gave us some

clear paths of what we could do with some products it was financially a good deal for for Corteva and vilar and made sense to sort of clean up some of the past in terms of just you know perhaps wrapping up this topic and we can move on to a few other exciting things when you take a step back and look at and I'm not asking you to preview september fear not but when you take a step back and you look at the gene editing optionality in terms of you've had this pendulum you're swinging thus far very slightly into positive territory this year there's still some net licensee payments oh yeah going on uh for for sure and now you have this wonderful gmo portfolio step one and then kind of this step two in terms of really getting that pendulum into positive territory for you on the gene editing side could you speak to just perhaps kind of the balance of those two things are they roughly equal Is it too early to tell? I would love to hear your thoughts in terms of just the longer-term trajectory without it putting any dates on it.

In the simplest way, I'd put it this way, that we're still really very much a GMO sort of value equation, even well into the early part of the next decade, right, mid-decade, which means we have time to keep building all the gene editing stuff on top. from a research point of view since we're thinking about 10 years out we've made a much harder shift to hey how much is gene editing and how much is gmo but at the the product commercial space it'll be very heavy gmo and germplasm still for another five eight years so plenty of runway on that even well without the gene editing if we could still call it optionality perhaps but the pathway the

initial pathway that you've been discussing is basic GMO yeah got it in the way I'd like to think about when you think about the near-term financials like the next several years three four years whatever a lot of that is already somewhat predetermined you know we're talking about net licensing improvement we will still have our price mix we believe because Sam's group will continue to have improved yields that we're able to price off of and productivity improvements. So I like to think the near term, that playbook, very similar than what we've seen in the last several years. Now when you start talking about the mid-2030s, I know that's a long time for some of us, but that's when we start to see probably a real, I would say, hybrid wheat will be starting to become more material into the P&L. I would say things like biofuels, when you start thinking about the SAF requirements in Europe and some of the joint ventures we have made, what have you, we should see more of a material kind of accretion to the P&L in the mid-2030s for that. And then this continuation of the net out licensing, we'll probably continue to see that through 2035. Then probably gene editing and what have you is kind of even beyond that. So I like to think of it in three time phases.

I think the one very proven model we've had for a short period of time, we should you know see that as improvements year over year through the early 2030s it expectations on that I think three times in the last 18 months so I think we built a little conservative sometimes I'll take it all right so let's let's move on to the thesis I mean one things one of the biggest debates and I don't want to lead you in terms of the actual numbers but one of the debates has been the disenergies between the two platforms and this belief that oh everything has to be the integrated model which in my defense I never was with that even when you didn't like so I take a step back and look at this I don't want to give you a number but just how confident are

you in terms of just breaking out you already indicated that there are two separate R&D facilities two separate teams how should we think about that from both of your perspectives this is one of my favorite questions I will say because I think a lot of people are a little skeptical about how much we said it would cost to separate and then how much disenergies we would have because of separation. We've talked a little bit about it already, you know, the R&D facilities are separate. There's literally no overlap in operations whatsoever. There is a little bit in commercial but not the feet on the street. It's more the management layers and so on and so forth. So when we think about it, we initially said we'd have a net 100 million dollars of net EBITDA disenergies. And then we recently said we'd be a little bit favorable to that and we start talking about what does that mean the increased cost side is gonna be there we're gonna have two boards we have two executive teams we have you know some more IT licensing costs like all these sort of things will still be there although maybe a little bit less than what we initially thought Chris but really where we're making it up is on the opportunities to again right-size both businesses to their operating model like I had mentioned before we also said during our last earnings call right before that we had initiated a new restructuring program to be able to handle kind of how we're going to get these work structures put together so as we went through splitting out the 20 some thousand people and we get this

work structures we are able to save some of that money and so we will give an updated number at our next earnings call but i would say that and we're trending pretty significantly favorable to their initial estimate I always found to find it ironic that when Cortab was created you divested Stein and not a single cell cider wrote a note and said oh my gosh the R&D disenergies listen they're like what we want make any sense so that seems like it's going on track as well is there anything else just you know before you know kind of you know shift topics is there anything else that you there's obviously a lot to be excited about that but that particularly cites you about you know Sam you've obviously been behind a lot of the the launches that have enabled Cortava to steal a lot of market share But is there anything that's a particularly exciting that we haven't yet discussed here today.

I Mean look I wouldn't ignore our hybrid wheat product. It's it's a pretty incredible Technology and where it's going and look I've worked on hybrid wheat multiple times in my career and and there's always been this challenge of Can you get a system that's consistent that you can actually? you know make hybrids produce seed at the right cost get the purity and quality that a grower needs and that's why he's been the limit of the hybrid wheat system we spent decades solving that and we continues to look outstanding like we can really produce hybrids they yield more and we're running towards a launch here in 27 and so it'll take a little time obviously to change the market build the market think about where to deploy that and use that around the world but if you look at what a hundred years of hybrid corn did you know we're just about ready to unlock the same thing in wheat and so it's pretty cool and now you start to say gosh if hybrid wheat is the base well what do we get to do with gene editing in wheat and what do we get to do with seed treatments in wheat and who knows maybe we'll get back to GMOs and wheat so it's really building a whole new pillar for a crop that's on 500 plus million acres around the world to be So that was going to be my next question.

You've highlighted that as roughly a billion dollar opportunity, which is fantastic. And I can tell you from spending some time with Chuck over the years, when I asked a similar question, hey, what are people not talking about? It's number one response. So perhaps I need to write a little bit more. You know, one of the other things that is fascinating about the industry is, and we got back to it at the beginning of this conversation, but, you know, breeding is kind of still the core and, you know, having the base germplasm and the varieties and the hybrids matters more than what most investors believe. And I've been discussing that since 15 years ago. So one, and perhaps it's maybe in my eyes, the first, you know, innovation in this, I'm sure there've been 20 in the last, you know, 10 years or so, but AI, you know, has the potential potentially to shorten a lot of breeding cycles. It seems as though you would have based on your library a tremendous you know let's say competitive boat and optionality yourself in terms of because you have the access to the history but all others are I'm sure are gonna pop up in this and that and say well now we can basically try to catch the you know catch them and run you down how would you perceive that as an opportunity would you be perhaps one to share a risk or two however you're thinking about it would be great so maybe to unpack that so there's a as you mentioned there's tremendous amount of knowledge that we have I mean we're a hundred years of corn breeding history you know we we genotype you know billion markers a year

so we understand the genetics on that stuff we're running you know 15 million yield plots on this stuff every year like we characterize and understand this germplasm at the genetic level and at the phenotypic plant level like you can't imagine right it's one of the world's class biggest things out there and so then you get to add on okay so how do I use AI to enhance all that and we've been running a very large AI program and R&D David sometimes criticizes me for how much I spend on it but we've been pouring a lot to even historically things like machine learning languages were you know been around a long time they're very powerful what we can do in in the plant breeding program and now you look at the generative AI sort of stuff it's even more interesting we've actually enabled teams to run whole new breeding concepts we actually have AI agents that are plant breeders like they are running plant breeding programs right and so you think about how fast they can to make decisions and use all this information available to them, it's pretty cool. And we're watching what they can do and how they can do it. And then you throw on there gene editing. And I think this is something that maybe gets missed a little bit is the interplay between AI and gene editing. Because all of a sudden it's like I can use AI to today, we can, for example, with 95% accuracy predict the gene expression change based on the gene edits we're going to make now from our AI agents right and so upfront our geneticists and breeders are designing how they want those genes changed and what genes to work with and then how to use AI to design the actual gene edited construct and then on the back end you're sorting through genetic variability and complexity that you've never seen before with AI so we've used it really end-to-end we're seeing some incredible uplifts and efficiencies and capabilities and what I would say building the types of products and the product selection that we're getting we still yield test still got to go out in the field and prove it actually works it yields it looks right it behaves right a farmer is going to be happy with it we don't skip that stage right and we still got regulatory in a lot of cases that deal with but the front end and the power of the pipeline are just getting ramped up when you think about that combination of your germplasm capabilities and knowledge with gene entity and with AI it's a nice little triple plus up that's that's hard to replicate and just add one thing to them whenever you decide what you do want to produce the ability to produce at scale there's very few companies that can do

that and then we're also using AI to help us when's the best way to produce seed where when so on and so forth so I think that's a capability of violor going forward that a lot of people miss out they always spend a lot of time on the DNetits or the DML or the new hybrids or whatever but how do you actually get it to market that whole kind of piece of our business is the capability like I said probably only two companies can do in the world yeah we have a complete digital twin of our seed manufacturing process I tried to keep you and buyer separated today you're upstairs they're downstairs you know it's a safe distance first of all thank you but I want to give you the opportunity

answer one last question it's very simple but I want to give you an open floor when you think about the opportunities for Viola what does it look like five years ago ten years ago feel like you already had a couple highlights but you know what's your vision once this was you know publicly announced last September for me I go back to that short medium long term and so whenever you know Chuck talks about an overall genetics company kind of thinking a little bit differently I think that's kind of where where my mind goes.

So near term, maybe not a lot of difference, although pretty exciting to continue the journey we're on. Because at mid-decade, starting to think of a third crop like wheat, starting to think about things like SAF and all these different fuel options and what have you. I think that's super exciting. And then gene editing beyond that.

So to me, I think it's a pretty bright future. yeah I think David said it well and look as a plant breeder geneticist I wish I was 20 years younger because I think when we get 5 10 15 20 years out we're gonna look back at gene editing what it did to this entire plant space animal space and say holy cow like what look what it just did assuming we get all the regulatory and social stuff worked out which we're working hard on but the but the opportunity that's in the genetics of species to unlock that I mean we're we've got tools we've just never had before and capabilities we never had before I mean we're we're creating plant breeding genetic populations we've never the world has never seen right I mean that's that's where we're at today and what this innovation is doing so who knows what it's gonna unlock but it's gonna be pretty amazing as long as you promise not to change your geeks code to like biological you know or anything in healthcare will be good.

I'm looking forward to covering it. Thank you so much.

Thank you.