Company Quick10K Filing
Calyxt
Price6.01 EPS-1
Shares33 P/E-6
MCap198 P/FCF-14
Net Debt-68 EBIT-33
TEV130 TEV/EBIT-4
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-03-05
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-12
10-Q 2018-09-30 Filed 2018-11-13
10-Q 2018-06-30 Filed 2018-08-01
S-1 2018-05-15 Public Filing
10-Q 2018-03-31 Filed 2018-05-07
10-K 2017-12-31 Filed 2018-03-14
10-Q 2017-09-30 Filed 2017-11-13
10-Q 2017-06-30 Filed 2017-09-01
8-K 2020-05-22
8-K 2020-05-06
8-K 2020-04-14
8-K 2020-03-26
8-K 2020-03-05
8-K 2020-01-31
8-K 2020-01-21
8-K 2019-12-11
8-K 2019-11-06
8-K 2019-08-06
8-K 2019-06-25
8-K 2019-05-17
8-K 2019-05-07
8-K 2019-03-11
8-K 2019-02-26
8-K 2019-02-19
8-K 2019-01-17
8-K 2019-01-03
8-K 2018-11-13
8-K 2018-09-17
8-K 2018-09-11
8-K 2018-08-21
8-K 2018-08-01
8-K 2018-07-03
8-K 2018-06-15
8-K 2018-05-24
8-K 2018-05-17
8-K 2018-05-15
8-K 2018-05-07
8-K 2018-03-13

CLXT 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits
EX-31.1 clxt-ex311_8.htm
EX-31.2 clxt-ex312_7.htm
EX-32 clxt-ex32_6.htm

Calyxt Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
13010478522602017201820192020
Assets, Equity
3.0-0.6-4.2-7.8-11.4-15.02017201820192020
Rev, G Profit, Net Income
655035205-102017201820192020
Ops, Inv, Fin

10-Q 1 clxt-10q_20200331.htm 10-Q clxt-10q_20200331.htm

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020;

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to

Commission file number 001-38161

 

 

Calyxt, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

 

27-1967997

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

2800 Mount Ridge Road

 

 

Roseville, MN

 

55113-1127

(Address of principal executive offices)

 

(Zip Code)

(651) 683-2807

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

 

 

 

 

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange on which

registered

 

 

 

Common Stock (0.0001 par value)

  

CLXT

  

The NASDAQ Global Market

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

 

 

 

 

 

 

 

Large accelerated filer

  

  

Accelerated filer

  

Non-accelerated filer

  

  

Smaller reporting company

  

 

  

 

  

Emerging growth company

  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 6, 2020, there were 33,040,520 shares of common stock, $0.0001 par value per share, outstanding.

 

 


Table of Contents

 

 

 

 

 


Table of Contents

Terms

When we use the terms “we,” “us,” the “Company,” or “our” in this report, unless the context otherwise requires, we are referring to Calyxt, Inc. When we use the term “Cellectis,” we are referring to Cellectis S.A., our majority stockholder. Cellectis is a clinical-stage biotechnological company, employing its core proprietary technologies to develop best-in-class products in the field of immune-oncology.

We own the names and trademarks for Calyxt® and Calyno®; we also own or license other trademarks, trade names and service marks of Calyxt appearing in this Quarterly Report on Form 10-Q. The name and trademark Cellectis® and TALEN®, and other trademarks, trade names and service marks of Cellectis appearing in this Quarterly Report are the property of Cellectis. This Quarterly Report also contains additional trade names, trademarks and service marks belonging to other companies. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). We may also make forward-looking statements in other reports filed with the Securities and Exchange Commission, in materials delivered to stockholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements.

We have made these forward-looking statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “anticipates,” “believes,” “continue,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” or  the negative of these terms and other similar terminology. Forward-looking statements in this report include statements about the potential impact of the COVID-19 pandemic on our business and operating results, our future financial performance, product pipeline and development, commercialization efforts and sales of commercial products, regulatory progression, potential collaborations and partnerships and their contribution to our financial results, cash usage, growth strategies and anticipated trends in our business. These and other forward-looking statements are predictions and projections about future events and trends based on our current expectations, objectives and intentions and premised on current assumptions. Our actual results, level of activity, performance or achievements could be materially different than those expressed, implied, or anticipated by forward-looking statements due to a variety of factors, including, but not limited to: the severity and duration of the evolving COVID-19 pandemic and the resulting impact on macro-economic conditions; the impact of increased competition; disruptions at our key facilities; changes in customer preferences and market acceptance of our products; competition for collaboration partners and the successful execution of collaborations; the impact of adverse events during development, including unsuccessful field trials or disruptions in seed production; failures by third-party contractors; inaccurate demand forecasting; disruptions to supply chains, including transportation and storage functions; commodity price conditions; the impact of changes or increases in oversight and regulation; disputes or challenges regarding intellectual property; proliferation and continuous evolution of new technologies; management changes; dislocations in the capital markets; and other important factors discussed under the caption entitled “Risk Factors” in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 5, 2020 (our Annual Report) and our subsequent reports on Forms 10-Q (including under the caption entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report) and 8-K.

Any forward-looking statement made by us are based only on information currently available to us when, and speaks only as of the date, such statement is made. Except as required by securities and other applicable laws, we do not assume any obligation to update or revise any forward-looking statement as a result of new information, future developments or otherwise.

 

- 2 -


Table of Contents

Market Data

Unless otherwise indicated, information contained in this Quarterly Report concerning our industry and the markets in which we operate is based on information from various sources, including independent industry publications. In presenting this information, we have also made assumptions based on such data and other similar sources, and on our knowledge of, and our experience to date in, the potential markets for our product. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors” in our Annual Report and other subsequent reports on Forms 10-Q and 8-K filed with the SEC. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

Website Disclosure

We use our website (www.calyxt.com), our corporate Twitter account (@Calyxt_Inc) and our corporate LinkedIn account (https://www.linkedin.com/company/calyxt-inc) as routine channels of distribution of company information, including press releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website and our corporate Twitter and LinkedIn accounts in addition to following press releases, filings with the SEC and public conference calls and webcasts.

Additionally, we provide notifications of announcements as part of our website. Investors and others can receive notifications of new press releases posted on our website by signing up for email alerts.

None of the information provided on our website, in our press releases or public conference calls and webcasts or through social media is incorporated into, or deemed to be a part of, this Quarterly Report or in any other report or document we file with the SEC, and any references to our website or our corporate Twitter and LinkedIn accounts are intended to be inactive textual references only.

- 2 -


Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CALYXT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value and Share Amounts)

 

 

March 31, 2020 (unaudited)

 

December 31,

2019

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

7,385

 

$

58,610

 

Short-term investments

 

38,620

 

 

 

Restricted cash

 

388

 

 

388

 

Accounts receivable

 

841

 

 

1,122

 

Due from related parties

 

7

 

 

 

Inventory

 

3,198

 

 

2,594

 

Prepaid expenses and other current assets

 

1,594

 

 

808

 

Total current assets

 

52,033

 

 

63,522

 

Non-current restricted cash

 

1,045

 

 

1,040

 

Land, buildings, and equipment

 

22,902

 

 

23,212

 

Other non-current assets

 

441

 

 

324

 

Total assets

$

76,421

 

$

88,098

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

1,085

 

$

1,077

 

Accrued expenses

 

2,093

 

 

2,544

 

Accrued compensation

 

1,363

 

 

2,181

 

Due to related parties

 

554

 

 

977

 

Current portion of financing lease obligations

 

361

 

 

356

 

Other current liabilities

 

94

 

 

61

 

Total current liabilities

 

5,550

 

 

7,196

 

Financing lease obligations

 

18,194

 

 

18,244

 

Other non-current liabilities

 

141

 

 

150

 

Total liabilities

 

23,885

 

 

25,590

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 275,000,000 shares authorized; 33,090,799 shares issued and 32,990,647 shares outstanding as of March 31, 2020, and 33,033,689 shares issued and 32,951,329 shares outstanding as of December 31, 2019

 

3

 

 

3

 

Additional paid-in capital

 

186,859

 

 

185,588

 

Common stock in treasury, at cost; 100,152 shares as of March 31, 2020, and 82,360 shares as of December 31, 2019

 

(1,043

)

 

(1,043

)

Accumulated deficit

 

(133,120

)

 

(122,057

)

Accumulated other comprehensive income (loss)

 

(163

)

 

17

 

Total stockholders’ equity

 

52,536

 

 

62,508

 

Total liabilities and stockholders’ equity

$

76,421

 

$

88,098

 

 

See accompanying notes to these consolidated financial statements.

- 3 -


Table of Contents

CALYXT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in Thousands Except Shares and Per Share Amounts)

 

 

Three Months Ended March 31,

 

 

2020

 

 

2019

 

Revenue

$

2,377

 

 

$

157

 

Cost of goods sold

 

3,884

 

 

 

34

 

Gross margin

 

(1,507

)

 

 

123

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

2,787

 

 

 

2,219

 

Selling and supply chain

 

1,580

 

 

 

904

 

General and administrative

 

4,720

 

 

 

4,162

 

Management fees

 

62

 

 

 

361

 

Total operating expenses

 

9,149

 

 

 

7,646

 

Loss from operations

 

(10,656

)

 

 

(7,523

)

Interest, net

 

(398

)

 

 

172

 

Foreign currency transaction loss

 

(9

)

 

 

(24

)

Loss before income taxes

 

(11,063

)

 

 

(7,375

)

Income taxes

 

 

 

 

 

Net loss

$

(11,063

)

 

$

(7,375

)

Basic and diluted loss per share

$

(0.34

)

 

$

(0.23

)

Weighted average shares outstanding - basic and diluted

 

32,988,141

 

 

 

32,677,944

 

See accompanying notes to these consolidated financial statements.

- 4 -


Table of Contents

CALYXT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in Thousands Except Shares Outstanding)

 

Three months ended

March 31, 2020

 

Shares

Outstanding

 

 

Common

Stock

 

 

Additional

Paid-In

Capital

 

 

Shares

in

Treasury

 

 

Accumulated

Deficit

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Total

Stockholders’

Equity

 

Balance at December 31, 2019

 

 

32,951,329

 

 

$

3

 

 

$

185,588

 

 

$

(1,043

)

 

$

(122,057

)

 

$

17

 

 

$

62,508

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,063

)

 

 

 

 

 

(11,063

)

Stock based compensation

 

 

57,110

 

 

 

 

 

 

1,271

 

 

 

 

 

 

 

 

 

 

 

 

1,271

 

Shares withheld for net share settlement

 

 

(17,792

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(180

)

 

 

(180

)

Balance at March 31, 2020

 

 

32,990,647

 

 

$

3

 

 

$

186,859

 

 

$

(1,043

)

 

$

(133,120

)

 

$

(163

)

 

$

52,536

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2018

 

 

32,648,893

 

 

$

3

 

 

$

176,069

 

 

$

(230

)

 

$

(82,445

)

 

$

 

 

$

93,397

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,375

)

 

 

 

 

 

(7,375

)

Stock based compensation

 

 

43,296

 

 

 

 

 

 

1,556

 

 

 

 

 

 

 

 

 

 

 

 

1,556

 

Issuance of common stock

 

 

 

 

 

 

 

 

125

 

 

 

 

 

 

 

 

 

 

 

 

125

 

Balances at March 31, 2019

 

 

32,692,189

 

 

$

3

 

 

$

177,750

 

 

$

(230

)

 

$

(89,820

)

 

$

 

 

$

87,703

 

See accompanying notes to these consolidated financial statements.

- 5 -


Table of Contents

CALYXT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in Thousands)

 

 

Three Months Ended March 31,

 

 

2020

 

 

2019

 

Operating activities

 

 

 

 

 

 

 

Net loss

$

(11,063

)

 

$

(7,375

)

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

452

 

 

 

342

 

Stock-based compensation

 

1,271

 

 

 

1,556

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

281

 

 

 

(124

)

Due to/from related parties

 

(430

)

 

 

(1,114

)

Inventory

 

(604

)

 

 

(379

)

Prepaid expenses and other current assets

 

(786

)

 

 

(629

)

Accounts payable

 

8

 

 

 

(94

)

Accrued expenses

 

(451

)

 

 

(397

)

Accrued compensation

 

(818

)

 

 

(418

)

Other current liabilities

 

(156

)

 

 

(428

)

Other non-current assets

 

(120

)

 

 

(216

)

Net cash used by operating activities

 

(12,416

)

 

 

(9,276

)

Investing activities

 

 

 

 

 

 

 

Short-term investments

 

(38,620

)

 

 

 

Purchases of land, buildings, and equipment

 

(139

)

 

 

(346

)

Net cash used by investing activities

 

(38,759

)

 

 

(346

)

Financing activities

 

 

 

 

 

 

 

Repayments of financing lease obligations

 

(45

)

 

 

(59

)

Proceeds from the exercise of stock options

 

 

 

 

125

 

Net cash (used) provided by financing activities

 

(45

)

 

 

66

 

Net decrease in cash, cash equivalents and restricted cash

 

(51,220

)

 

 

(9,556

)

Cash, cash equivalents and restricted cash - beginning of period

 

60,038

 

 

 

95,288

 

Cash, cash equivalents and restricted cash - end of period

$

8,818

 

 

$

85,732

 

 

See accompanying notes to these consolidated financial statements.

- 6 -


Table of Contents

 

CALYXT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP or GAAP) for interim financial information and with the rules and regulations of the Securities and Exchange Commission (SEC) applicable to interim financial statements. In our opinion, the accompanying consolidated financial statements reflect all adjustments necessary for a fair presentation of our statements of financial position, results of operations and cash flows for the periods presented but they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Except as otherwise disclosed herein, these adjustments consist of normal recurring items. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole or any other interim period.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the consolidated financial statements and during the reporting period. Actual results could materially differ from these estimates.

Certain prior year amounts have been reclassified to conform to the current year presentation.

For further information, refer to the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 5, 2020. The accompanying Balance Sheet as of December 31, 2019 was derived from the audited consolidated financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2019.

Short-term investments

We consider investments with more than ninety days to maturity at issuance to be short-term investments. These short-term investments are considered trading securities and are carried at fair value with any unrealized gains and losses recorded in current earnings as a component of interest, net.

2. FINANCIAL INSTRUMENTS, FAIR VALUE, HEDGING ACTIVITIES, AND CONCENTRATIONS OF CREDIT RISK

The carrying values of cash and cash equivalents, restricted cash, due from related parties, accounts payable, due to related parties and all other current liabilities approximate fair value.

We measure certain assets and liabilities at fair value on a recurring basis, including short-term investments, financing lease obligations and commodity futures and options. The accounting guidance establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as of the measurement date as follows:

Level 1: Fair values are based on unadjusted quoted prices in active trading markets for identical assets and liabilities.

Level 2: Fair values are based on observable quoted prices other than those in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

- 7 -


Table of Contents

Level 3: Fair values are based on at least one significant unobservable input for the asset or liability.

Fair Value Measurements and Financial Statement Presentation

The fair values of our assets, liabilities, and derivative positions recorded at fair value and their respective levels in the fair value hierarchy as of March 31, 2020 and December 31, 2019, were as follows:

 

 

March 31, 2020

 

 

March 31, 2020

 

 

Fair Values of Assets

 

 

Fair Values of Liabilities

 

In Thousands

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Other items reported at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments

$

38,620

 

 

$

 

 

$

 

 

$

38,620

 

 

$

 

 

$

 

 

$

 

 

$

 

Commodity futures and options

 

603

 

 

 

 

 

 

 

 

 

603

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing lease obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,509

 

 

 

 

 

 

15,509

 

Total

$

39,223

 

 

$

 

 

$

 

 

$

39,223

 

 

$

 

 

$

15,509

 

 

$

 

 

$

15,509

 

 

 

December 31, 2019

 

 

December 31, 2019

 

 

Fair Values of Assets

 

 

Fair Values of Liabilities

 

In Thousands

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Other items reported at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing lease obligations

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

15,651

 

 

$

 

 

$

15,651

 

Commodity futures and options

 

62

 

 

 

 

 

 

 

 

 

62

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

62

 

 

$

 

 

$

 

 

$

62

 

 

$

 

 

$

15,651

 

 

$

 

 

$

15,651

 

The composition of our short-term investments at March 31, 2020 and December 31, 2019 were as follows:

 

As of March 31,

 

 

As of December 31,

 

In Thousands

2020

 

 

2019

 

Corporate debt securities

$

29,677

 

 

$

 

Commercial paper

 

8,943

 

 

 

 

Total

$

38,620

 

 

$

 

 

Commodity Price Risk

We enter into seed and grain production agreements (Forward Purchase Contracts) with settlement values based on commodity futures market prices. These Forward Purchase Contracts allow the counterparty to fix their sales prices at various times as defined in the contract. We are also engaged in the business of selling soybean oil and meal under a variety of pricing structures. We may enter hedging arrangements to either fix variable exposures or convert fixed prices to floating prices through commodity derivative contracts. As of March 31, 2020, we held commodity contracts with a notional amount of $23.6 million.

We have designated all our commodity derivative contracts as cash flow hedges. As a result, all gains or losses associated with recording commodity derivative contracts at fair value are recorded as a component of accumulated other comprehensive income (loss) (AOCI). We reclassify amounts from AOCI to cost of goods sold when we sell the underlying products to which those hedges relate. As of March 31, 2020, we expect the entire AOCI balance to be reclassified into earnings within the next eight months.

Certain amounts related to our hedging activities are as follows:

 

 

Amount of Gain (Loss)

Recognized in AOCI

 

 

Amount of Gain (Loss)

Reclassified to Earnings

 

 

For the Three Months Ended March 31,

 

 

For the Three Months Ended March 31,

 

In thousands

2020

 

 

2019

 

 

2020

 

 

2019

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity derivative contracts

$

(163

)

 

$

 

 

$

14

 

 

$

 

Total

$

(163

)

 

$

 

 

$

14

 

 

$

 

 

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Foreign Exchange Risk

Foreign currency fluctuations affect our foreign currency cash flows related primarily to payments to Cellectis. Our principal foreign currency exposure is to the euro. We do not hedge these exposures, and we do not believe that the current level of foreign currency risk is significant to our operations.

Concentrations of Credit Risk

We invest our cash, cash equivalents and restricted cash in highly liquid securities and investment funds and until late December 2019, also held deposits at a financial institution that exceeded insured limits. In the first quarter of 2020, we diversified this risk by shifting our investments to a diverse portfolio of short-dated, high investment-grade securities we classify as short-term investments that are recorded at fair value in our consolidated financial statements. We ensure the credit risk in this portfolio is in accordance with our internal policies and if necessary, make changes to investments to ensure credit risk is minimized. We have not experienced any counterparty credit losses.

3. RELATED-PARTY TRANSACTIONS

We have several agreements that govern our relationship with Cellectis, some of which require us to make payments to Cellectis. Pursuant to our management services agreement with Cellectis, we incurred management fee expenses of $62,000 for the three months ended March 31, 2020, and $361,000 for the three months ended March 31, 2019.

Cellectis has also guaranteed the lease agreement for our headquarters. Cellectis’ guarantee of our obligations under the lease will terminate at the end of the second consecutive calendar year in which our tangible net worth exceeds $300 million.

TALEN® is our primary gene-editing technology, and it is the foundation of our technology platform. TALEN® technology was invented by researchers at the University of Minnesota and Iowa State University and exclusively licensed to Cellectis. We obtained an exclusive license for the TALEN® technology for commercial use in plants from Cellectis. We also license other technology from Cellectis. We owe Cellectis royalties on any revenue we generate from sales of products less certain amounts as defined in the license agreement, as well as a percentage of any sublicense revenues. We have incurred $33,000 of license and royalty fees owed to Cellectis for the three months ended March 31, 2020, and $25,000 for the three months ended March 31, 2019.

We have entered into various agreements with the University of Minnesota, pursuant to which we have been granted both exclusive and non-exclusive license agreements that carry annual license fees, milestone payments, royalties, and associated legal fees. These agreements primarily relate to gene-editing tools, enabling technologies and germplasm. We have incurred $12,000 of costs pursuant to these agreements for the three months ended March 31, 2020, and $4,000 for the three months ended March 31, 2019.

4. NET LOSS PER SHARE

Basic and diluted loss per share was calculated using the following:

 

 

For the Three Months Ended March 31,

 

In Thousands, Except Share Data and Per Share Amounts

2020

 

 

2019

 

Net loss

$

(11,063

)

 

$

(7,375

)

Weighted average shares outstanding - basic and diluted

 

32,988,141

 

 

 

32,677,944

 

Basic and diluted loss per share

$

(0.34

)

 

$

(0.23

)

 

 

As of March 31,

 

 

2020

 

 

2019

 

Anti-dilutive stock options, restricted stock units, and performance stock units

 

5,328,268

 

 

 

4,385,595

 

All outstanding stock options and restricted stock units are excluded from the calculation since they are anti-dilutive.

We have not used the treasury method in determining the number of anti-dilutive stock options and restricted stock units in the table above.

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5. STOCK-BASED COMPENSATION

We use broad-based stock plans to attract and retain highly qualified officers and employees and to help ensure that management’s interests are aligned with those of our shareholders. We have also granted equity-based awards to directors, nonemployees, and certain employees of Cellectis.

In December 2014, we adopted the Calyxt, Inc. Equity Incentive Plan (2014 Plan), which allowed for the grant of stock options, and in June 2017, we adopted the 2017 Omnibus Plan (2017 Plan), which allowed for the grant of stock options, performance shares and other types of equity awards.

As of March 31, 2020, 1,976,394 shares were registered and available for grant under effective registration statements, while 2,770,295 shares were available for grant in the form of stock options, restricted stock, restricted stock units, and performance stock units under the 2017 Plan. Stock-based awards currently outstanding also include awards granted under the 2014 Plan, under which no further awards can be granted.

Stock Options

The estimated fair values of stock options granted, and the assumptions used for the Black-Scholes option pricing model were as follows:

 

 

Three Months Ended March 31,

 

 

2020

 

 

2019

 

Estimated fair values of stock options granted

$

5.19

 

 

$

9.45

 

Assumptions:

 

 

 

 

 

 

 

Risk-free interest rate

 

1.7

%

 

 

2.5

%

Expected volatility

 

77.4

%

 

 

78.9

%

Expected term (in years)

 

6.9

 

 

 

6.9

 

 

We estimate the fair value of each option on the grant date or other measurement dates if applicable using a Black-Scholes option-pricing model, which requires us to make predictive assumptions regarding future stock price volatility, employee exercise behavior and dividend yield. The risk-free interest rate for periods during the expected term of the options is based on the United States Treasury zero-coupon yield curve in effect at the date of grant. We estimate our future stock price volatility using the historical volatility of comparable public companies over the expected term of the option. Our expected term represents the period that options granted are expected to be outstanding determined using the simplified method. We have not paid dividends on our common stock and we do not currently plan to pay any cash dividends in the foreseeable future.

Option strike prices are set at 100 percent or more of the closing share price on the date of grant, and generally vest over six years following the grant date. Options generally expire 10 years after the date of grant.

Information on stock option activity is as follows:

 

Options

Exercisable

 

 

Weighted-

Average

Exercise

Price Per

Share

 

 

Options

Outstanding

 

 

Weighted-

Average

Exercise

Price Per

Share

 

Balance as of December 31, 2019

 

1,789,567

 

 

$

8.73

 

 

 

4,481,359

 

 

$

11.73

 

Granted

 

 

 

 

 

 

 

 

 

60,000

 

 

 

7.30

 

Forfeited or expired

 

 

 

 

 

 

 

 

 

(235,894

)

 

 

15.61

 

Balance as of March 30, 2020

 

1,890,357

 

 

$

8.97

 

 

 

4,305,465

 

 

$

11.46

 

 

Stock-based compensation expense related to stock option awards is as follows:

 

 

 

Three Months Ended March 31,

 

In Thousands

 

2020

 

 

2019

 

Stock-based compensation expense

 

$

1,006

 

 

$

768

 

 

At March 31, 2020, options outstanding and exercisable had no aggregate intrinsic value and the weighted average remaining contractual term was 6.6 years.

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Net cash proceeds from the exercise of stock options less shares used for minimum withholding taxes and the intrinsic value of options exercised were as follows:

 

Three Months Ended March 31,

 

In Thousands

2020

 

 

2019

 

Net cash proceeds

$

 

 

$

125

 

Intrinsic value of options exercised

$

 

 

$

353

 

 

As of March 31, 2020, unrecognized compensation expense related to non-vested stock options was $10.6 million. This expense will be recognized over 56 months on average.

Restricted Stock Units

Units settled in stock subject to a restricted period may be granted under the 2017 Plan. Restricted stock units generally vest and become unrestricted over five years after the date of grant.

Information on restricted stock unit activity is as follows:

 

Number of

Restricted Stock

Units Outstanding

 

 

Weighted-

Average Grant

Date Fair Value

 

Unvested balance at December 31, 2019

 

813,526

 

 

$

10.31

 

Vested

 

(51,973

)

 

 

9.80

 

Forfeited

 

(50,417

)

 

 

10.45

 

Unvested balance at March 31, 2020

 

711,136

 

 

$

10.33

 

 

The total grant-date fair value of restricted stock unit awards that vested is as follows:

 

 

Three Months Ended March 31,

 

In Thousands

 

2020

 

 

2019

 

Grant-date fair value

 

$

510

 

 

$

133

 

 

Stock-based compensation expense related to restricted stock units is as follows:

 

 

Three Months Ended March 31,

 

In Thousands

 

2020

 

 

2019

 

Stock-based compensation expense

 

$

155

 

 

$

787

 

 

We treat stock-based compensation awards granted to employees of Cellectis as deemed dividends. We recorded deemed dividends as follows:

 

 

Three Months Ended March 31,

 

In Thousands

 

2020

 

 

2019

 

Deemed dividends from grants to Cellectis employees

 

$

224

 

 

$

411

 

 

As of March 31, 2020, unrecognized compensation expense related to restricted stock units was $2.5 million. This expense will be recognized over 43 months on average.

Performance Stock Units

In June 2019, we granted 311,667 performance stock units under the 2017 Plan to three executive officers. The performance stock units will vest at 50%, 100% or 120% of the shares under the award at the end of a three-year performance period based upon increases in the value of our common stock from the grant price of $12.48. The performance stock units will be settled in restricted stock upon vesting, with restrictions on transfer lapsing on the second anniversary of the restricted stock issuance date.

Stock-based compensation expense related to performance stock units is as follows:

 

 

Three Months Ended March 31,

 

In Thousands

 

2020

 

 

2019

 

Stock-based compensation expense

 

$

110

 

 

$

 

 

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As of March 31, 2020, unrecognized compensation expense related to performance stock units was $1.9 million. This expense will be recognized over 51 months on average.

6. INCOME TAXES

We provide for a valuation allowance when it is more likely than not that we will not realize a portion of the deferred tax assets. We have established a full valuation allowance for deferred tax assets due to the uncertainty that enough taxable income will be generated in the taxing jurisdiction to utilize the assets. Therefore, we have not reflected any benefit of such deferred tax assets in the accompanying consolidated financial statements.

As of March 31, 2020, there were no material changes to what we disclosed regarding tax uncertainties or penalties as of December 31, 2019.

7. LEASES, OTHER COMMITMENTS, AND CONTINGENCIES

Litigation and Claims

We are not currently a party to any material pending legal proceeding.

Leases

We lease our headquarters facility, office equipment, and other items. Our headquarters lease involved the sale of land and improvements to a third party who then constructed the facility. This lease is considered a financing lease.

We also have an equipment financing arrangement that is considered a financing lease. This arrangement has a term of four years for each draw. We were required to deposit cash into a restricted account in an amount equal to the future rent payments required by the lease. As of March 31, 2020, this restricted cash totaled $1.4 million. We have the option to request the return of excess collateral annually in December.

Rent expense from operating leases was as follows:

 

 

 

Three Months Ended March 31,

 

In Thousands

 

2020

 

 

2019

 

Rent expense from operating leases

 

$

24

 

 

$

49

 

 

Other Commitments

As of March 31, 2020, we have noncancelable commitments to purchase grain from farmers and seed from growers at dates throughout 2020 aggregating $9.2 million based on current commodity futures market prices, other payments to growers, and estimated yields per acre. This amount is not recorded in the consolidated financial statements because we have not taken delivery of the grain as of March 31, 2020. If growers do not plant our soybeans, we allow the grain production contacts to be cancelled. Therefore, we do not include commitments to purchase grain as noncancelable commitment until the corresponding seed is planted.

8. EMPLOYEE BENEFIT PLAN

We provide a 401(k) defined contribution plan for all regular full-time employees who have completed three months of service. We match employee contributions up to certain amounts and those matching contributions vest immediately.

 

 

 

Three Months Ended March 31,

 

In Thousands

 

2020

 

 

2019

 

Employee benefit plan expenses

 

$

120

 

 

$

56

 

 

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9. SUPPLEMENTAL INFORMATION

Certain balance sheet amounts are as follows:

 

 

As of March 31,

 

 

As of December 31,

 

In Thousands

2020

 

 

2019

 

Inventory:

 

 

 

 

 

 

 

Raw materials

$

2,535

 

 

$

2,211

 

Work-in-process

 

445

 

 

 

272

 

Finished goods

 

218

 

 

 

111

 

Total

$

3,198

 

 

$

2,594

 

 

Certain statements of operations amounts are as follows:

 

 

Three Months Ended March 31,

 

In Thousands

2020

 

 

2019

 

Stock compensation expense:

 

 

 

 

 

 

 

Research and development

$

319

 

 

$

241

 

Selling and supply chain

 

(251

)

 

 

63

 

General and administrative

 

1,203

 

 

 

1,286

 

Total

$

1,271

 

 

$

1,590

 

 

 

Three Months Ended March 31,

 

In Thousands

2020

 

 

2019

 

Interest, net:

 

 

 

 

 

 

 

Interest expense

$

(372

)

 

$

(370

)

Interest income

 

(26

)

 

 

542