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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 June 30, 2021;

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

 

img90253576_0.jpg

 

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 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 August 5, 2021, there were 37,270,998 shares of common stock, $0.0001 par value per share, outstanding.

 

 


Table of Contents

 

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

4

 

 

 

 

 

Item 1. Consolidated Financial Statements

 

4

 

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

28

 

 

 

 

 

Item 4. Controls and Procedures

 

28

 

 

 

 

 

PART II. OTHER INFORMATION

 

29

 

 

 

 

 

Item 1. Legal Proceedings

 

29

 

 

 

 

 

Item 1A. Risk Factors

 

29

 

 

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

29

 

 

 

 

 

Item 6. Exhibits

 

30

 

 

 

 

 

SIGNATURE

 

31

 

 

 

 

 


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 biotechnology company employing its core proprietary technologies to develop best-in-class products in the field of immuno-oncology.

We own the names and trademarks 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 names and trademarks “Cellectis®” and “TALEN®”, and other trademarks, trade names, and service marks of Cellectis appearing in the Company’s Annual Report on Form 10-K are the property of Cellectis. This Quarterly Report on Form 10-Q 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 U.S. 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,” “targets,” “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; our business model and principal strategy for commercialization and sales of commercial products; regulatory progression; potential collaborations, partnerships and licensing arrangements and their contribution to our financial results, cash usage, and 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 licensees and the successful execution of collaborations and licensing agreements; the impact of adverse events during development, including unsuccessful field trials or developments trials or disruptions in seed production; the impact of improper handling of our product candidates by unaffiliated third parties during development, such as the improper aerial spraying of our high fiber wheat product candidate; failures by third-party contractors; inaccurate demand forecasting or milestone and royalty payment projections; the effectiveness of commercialization efforts by commercial partners or licensees; our ability to make grain sales on terms acceptable to us; the timing of our grain sales; our ability to collect accounts receivable; 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 heading “Risk Factors” in our filings with the Securities and Exchange Commission (SEC), included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 4, 2021 (our Annual Report) and our subsequent reports on Forms 10-Q and 8-K filed with the SEC.

 

Any forward-looking statements made by us in this Quarterly Report on Form 10-Q are based only on information currently available to us and speaks only as of the date of this report. Except as otherwise required by securities and other applicable laws, we do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change.

- 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.

- 3 -


Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CALYXT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value and Share Amounts)

 

 

June 30, 2021
(unaudited)

 

 

December 31,
2020

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

17,489

 

 

$

17,299

 

Short-term investments

 

 

 

 

11,698

 

Restricted cash

 

393

 

 

 

393

 

Accounts receivable

 

3,994

 

 

 

4,887

 

Inventory

 

2,468

 

 

 

1,383

 

Prepaid expenses and other current assets

 

629

 

 

 

3,930

 

Total current assets

 

24,973

 

 

 

39,590

 

Non-current restricted cash

 

598

 

 

 

597

 

Land, buildings, and equipment

 

21,998

 

 

 

22,860

 

Other non-current assets

 

207

 

 

 

280

 

Total assets

$

47,776

 

 

$

63,327

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

2,183

 

 

$

929

 

Accrued expenses

 

2,326

 

 

 

2,891

 

Accrued compensation

 

2,093

 

 

 

1,950

 

Due to related parties

 

128

 

 

 

766

 

Current portion of financing lease obligations

 

380

 

 

 

364

 

Other current liabilities

 

46

 

 

 

45

 

Total current liabilities

 

7,156

 

 

 

6,945

 

Financing lease obligations

 

17,682

 

 

 

17,876

 

Long-term debt

 

 

 

 

1,518

 

Other non-current liabilities

 

1,042

 

 

 

113

 

Total liabilities

 

25,880

 

 

 

26,452

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.0001 par value; 275,000,000 shares authorized; 37,305,625 shares issued and 37,205,473 shares outstanding as of June 30, 2021, and 37,165,196 shares issued and 37,065,044 shares outstanding as of December 31, 2020

 

4

 

 

 

4

 

Additional paid-in capital

 

204,663

 

 

 

204,807

 

Common stock in treasury, at cost; 100,152 shares as of June 30, 2021, and December 31, 2020

 

(1,043

)

 

 

(1,043

)

Accumulated deficit

 

(181,728

)

 

 

(166,893

)

Total stockholders’ equity

 

21,896

 

 

 

36,875

 

Total liabilities and stockholders’ equity

$

47,776

 

 

$

63,327

 

 

See accompanying notes to these consolidated financial statements.

- 4 -


Table of Contents

CALYXT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

$

11,880

 

 

$

2,307

 

 

$

16,282

 

 

$

4,684

 

Cost of goods sold

 

11,527

 

 

 

5,321

 

 

 

18,272

 

 

 

9,205

 

Gross margin

 

353

 

 

 

(3,014

)

 

 

(1,990

)

 

 

(4,521

)

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

2,844

 

 

 

2,825

 

 

 

5,894

 

 

 

5,612

 

Selling, general, and administrative

 

3,478

 

 

 

5,167

 

 

 

7,736

 

 

 

11,465

 

Management fees

 

15

 

 

 

42

 

 

 

45

 

 

 

104

 

Total operating expenses

 

6,337

 

 

 

8,034

 

 

 

13,675

 

 

 

17,181

 

Loss from operations

 

(5,984

)

 

 

(11,048

)

 

 

(15,665

)

 

 

(21,702

)

Gain upon extinguishment of Payroll Protection Program loan

 

1,528

 

 

 

 

 

 

1,528

 

 

 

 

Interest, net

 

(357

)

 

 

154

 

 

 

(703

)

 

 

(244

)

Non-operating expenses

 

6

 

 

 

(8

)

 

 

5

 

 

 

(19

)

Loss before income taxes

 

(4,807

)

 

 

(10,902

)

 

 

(14,835

)

 

 

(21,965

)

Income taxes

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(4,807

)

 

$

(10,902

)

 

$

(14,835

)

 

$

(21,965

)

Basic and diluted net loss per share

$

(0.13

)

 

$

(0.33

)

 

$

(0.40

)

 

$

(0.67

)

Weighted average shares outstanding - basic and diluted

 

37,199,349

 

 

 

33,039,338

 

 

 

37,168,018

 

 

 

33,013,739

 

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

 

5,223,327

 

 

 

5,140,153

 

 

 

5,223,327

 

 

 

5,140,153

 

 

See accompanying notes to these consolidated financial statements.

- 5 -


Table of Contents

CALYXT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in Thousands Except Shares Outstanding)

 

Three months ended
June 30, 2021

 

Shares
Outstanding

 

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Shares
in
Treasury

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Total
Stockholders’
Equity

 

Balance at March 31, 2021

 

 

37,163,187

 

 

$

4

 

 

$

203,565

 

 

$

(1,043

)

 

$

(176,921

)

 

$

 

 

$

25,605

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,807

)

 

 

 

 

 

(4,807

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,079

 

 

 

 

 

 

 

 

 

 

 

 

1,079

 

Issuance of common stock

 

 

42,286

 

 

 

 

 

 

19

 

 

 

 

 

 

 

 

 

 

 

 

19

 

Balance at June 30, 2021

 

 

37,205,473

 

 

$

4

 

 

$

204,663

 

 

$

(1,043

)

 

$

(181,728

)

 

$

 

 

$

21,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
June 30, 2020

 

Shares
Outstanding

 

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Shares
in
Treasury

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Total
Stockholders’
Equity

 

Balance at March 31, 2020

 

 

32,990,647

 

 

$

3

 

 

$

186,859

 

 

$

(1,043

)

 

$

(133,120

)

 

$

(163

)

 

$

52,536

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,902

)

 

 

 

 

 

(10,902

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,797

 

 

 

 

 

 

 

 

 

 

 

 

1,797

 

Issuance of common stock

 

 

49,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

122

 

 

 

122

 

Balance at June 30, 2020

 

 

33,040,520

 

 

$

3

 

 

$

188,656

 

 

$

(1,043

)

 

$

(144,022

)

 

$

(41

)

 

$

43,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30, 2021

 

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, 2020

 

 

37,065,044

 

 

$

4

 

 

$

204,807

 

 

$

(1,043

)

 

$

(166,893

)

 

$

 

 

$

36,875

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,835

)

 

 

 

 

 

(14,835

)

Stock-based compensation

 

 

 

 

 

 

 

 

(371

)

 

 

 

 

 

 

 

 

 

 

 

(371

)

Issuance of common stock

 

 

140,429

 

 

 

 

 

 

227

 

 

 

 

 

 

 

 

 

 

 

 

227

 

Balance at June 30, 2021

 

 

37,205,473

 

 

$

4

 

 

$

204,663

 

 

$

(1,043

)

 

$

(181,728

)

 

$

 

 

$

21,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
June 30, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,965

)

 

 

 

 

 

(21,965

)

Stock-based compensation

 

 

 

 

 

 

 

 

3,068

 

 

 

 

 

 

 

 

 

 

 

 

3,068

 

Issuance of common stock

 

 

106,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for net share settlement

 

 

(17,792

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(58

)

 

 

(58

)

Balance at June 30, 2020

 

 

33,040,520

 

 

$

3

 

 

$

188,656

 

 

$

(1,043

)

 

$

(144,022

)

 

$

(41

)

 

$

43,553

 

 

See accompanying notes to these consolidated financial statements.

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CALYXT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in Thousands)

 

 

Six Months Ended June 30,

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

Net loss

$

(14,835

)

 

$

(21,965

)

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

 

 

 

 

 

Gain upon extinguishment of Payroll Protection Program loan

 

(1,528

)

 

 

 

Depreciation and amortization

 

1,180

 

 

 

904

 

Stock-based compensation

 

(371

)

 

 

3,068

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

893

 

 

 

(1,289

)

Due to/from related parties

 

(638

)

 

 

(598

)

Inventory

 

(1,085

)

 

 

(2,688

)

Prepaid expenses and other current assets

 

3,301

 

 

 

(1,118

)

Accounts payable

 

1,254

 

 

 

(505

)

Accrued expenses

 

(555

)

 

 

(546

)

Accrued compensation

 

143

 

 

 

(888

)

Other

 

992

 

 

 

(26

)

Net cash used by operating activities

 

(11,249

)

 

 

(25,651

)

Investing activities

 

 

 

 

 

Sales and (purchases) of short-term investments, net

 

11,698

 

 

 

(29,942

)

Purchases of land, buildings, and equipment

 

(307

)

 

 

(525

)

Net cash provided by (used by) investing activities

 

11,391

 

 

 

(30,467

)

Financing activities

 

 

 

 

 

Proceeds from Payroll Protection Program loan

 

 

 

 

1,518

 

Repayments of financing lease obligations

 

(178

)

 

 

(130

)

Proceeds from the exercise of stock options

 

227

 

 

 

 

Net cash provided by financing activities

 

49

 

 

 

1,388

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

191

 

 

 

(54,730

)

Cash, cash equivalents, and restricted cash - beginning of period

 

18,289

 

 

 

60,038

 

Cash, cash equivalents, and restricted cash – end of period

$

18,480

 

 

$

5,308

 

 

See accompanying notes to these consolidated financial statements.

- 7 -


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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, 2020, filed with the SEC on March 4, 2021. The accompanying Balance Sheet as of December 31, 2020, 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, 2020.

Risks and Uncertainties

Considering factors such as our anticipated cash receipts from sales of grain and our product development and technology licensing efforts with partners, our anticipated cash burn rate, and our expense reduction efforts, we believe our cash, cash equivalents, and restricted cash as of June 30, 2021, will be sufficient to fund our operations for at least the next twelve months and into the second half of 2022.

We anticipate that we will continue to generate losses for the next several years before revenue is enough to support our operating capital requirements. Until we can generate substantial cash flow, we expect to finance a portion of future cash needs through cash on hand, commercialization activities, which may result in various types of revenue streams from seed sales and future development agreements, trait licenses, and technology licenses, including upfront and milestone payments, annual license fees, and royalties, government or other third-party funding, and public or private equity or debt financings. However, additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in enough amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of our activities. Failure to receive additional funding could cause us to cease operations, in part or in full. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders and increased fixed payment obligations, and these securities may have rights senior to those of our shares of common stock. Any of these events could significantly harm our business, financial condition, and prospects.

Net Loss Per Share

All anti-dilutive stock options, restricted stock units, and performance stock units are excluded from the calculation of net loss per share. Due to our net loss position for the three and six months ended June 30, 2021, and June 30, 2020, all of our outstanding stock options, restricted stock units, and performance stock units are considered anti-dilutive and excluded from the calculation of net loss per share. Accordingly, the treasury method was not used in determining the number of anti-dilutive stock options and restricted stock units. 

2. FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE AND CONCENTRATIONS OF CREDIT RISK

Financial Instruments Measured at Fair Value and Financial Statement Presentation

Financial instruments including cash and cash equivalents, restricted cash, accounts payable, and all other current liabilities have carrying values that approximate fair value. We measure short-term investments and commodity derivative contracts at fair value on a

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recurring basis. 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.

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 financial instruments measured at fair value and their respective levels in the fair value hierarchy as of June 30, 2021, and December 31, 2020, were as follows:

 

 

June 30, 2021

 

June 30, 2021

 

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity derivative contracts

$

1

 

 

$

 

 

$

 

 

$

1

 

$

 

 

$

 

 

$

 

 

$

 

Total

$

1

 

 

$

 

 

$

 

 

$

1

 

$

 

 

$

 

 

$

 

 

$

 

 

 

December 31, 2020

 

December 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

$

11,698

 

 

$

 

 

$

 

 

$

11,698

 

$

 

 

$

 

 

$

 

 

$

 

Commodity derivative contracts

 

467

 

 

 

 

 

 

 

 

 

467

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

12,165

 

 

$

 

 

$

 

 

$

12,165

 

$

 

 

$

 

 

$

 

 

$

 

The non-current portion of our financing lease obligations are also considered a financial instrument, which we measure at fair value for disclosure purposes. It is a Level 2 liability and had a fair value of $14.9 million as of June 30, 2021, and a fair value of $15.2 million as of December 31, 2020.

Commodity Price Risk

We enter into seed and grain production agreements with settlement values based on commodity futures market prices (Forward Purchase Contracts). These Forward Purchase Contracts allow the counterparty to fix their sales prices at various times as defined in the contract. Because we intend to take physical delivery under the Forward Purchase Contracts, we have grain inventory we will need to sell. We intend to sell these inventories at then-current market prices. As a result, when the Forward Purchase Contract counterparty fixes their grain prices, we enter hedging arrangements by selling futures contracts which converts our exposure to these fixed prices to floating prices. We expect to maintain these hedging relationships until such grain inventory is sold to help stabilize our margins. We do not account for these economic hedges as accounting hedges. We expect any gains or losses from these hedging arrangements to be offset by gains or losses on the grain inventories when such grain inventories are sold. As of June 30, 2021, we held commodity contracts with a notional amount of $8.0 million. As of June 30, 2021, those commodity contracts carried an unrealized loss of $1.0 million that had been recognized in earnings over the period from their acquisition to June 30, 2021, and that may be realized in the future depending upon the timing of the liquidation of those positions which is based on our future grain sales and changes in soybean prices.

Prior to August 1, 2020, we designated all our commodity derivative contracts as cash flow hedges based on the nature of our business activities. As a result, all gains or losses associated with recording those commodity derivative contracts at fair value were recorded as a component of accumulated other comprehensive income (loss) (AOCI). We reclassified amounts from AOCI to cost of goods sold when we sold the underlying products to which those hedges related. For the three and six months ended June 30, 2020, we reclassified an immaterial amount from AOCI to cost of goods sold, and there were no such reclassifications in the same period in 2021.

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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. We diversify the risk posed by exceeding deposit insurance limits by allocating from time-to-time certain investments to a diverse portfolio of short-dated, high investment-grade securities, which 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. As of June 30, 2021, we did not hold any short-term investments.

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 nominal management fee expenses for the three and six months ended June 30, 2021, and 2020.   

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, royalties on certain cumulative revenue thresholds, and a percentage of any sublicense revenues. We have incurred nominal license and royalty fees for the three and six months ended June 30, 2021, and 2020.  

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 incurred nominal expenses pursuant to these agreements for the three and six months ended June 30, 2021, and 2020.

4. 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, restricted stock units, performance stock units and other types of equity awards.

On February 19, 2021, James Blome ceased serving as our Chief Executive Officer. We recorded a benefit to earnings from a $2.5 million recapture of non-cash stock compensation expense from the forfeiture of Mr. Blome’s unvested stock options, restricted stock units, and performance stock units.

As of June 30, 2021, 1,634,125 shares were registered and available for grant under effective registration statements, while 5,950,199 shares were available for grant in the form of stock options, restricted stock, restricted stock units, and performance stock units under the 2017 Plan. On July 16, 2021, we filed a Registration Statement on Form S-8 with the SEC which registered an additional 4,299,904 shares of common stock that may be issued or delivered and sold pursuant to the 2017 Plan and 600,000 shares of common stock that may be issued or delivered and sold pursuant to the Calyxt, Inc. Employee Inducement Incentive Plan (the Inducement Plan). The Inducement Plan shares of common stock are issuable upon the settlement of performance stock units which were granted to Mr. Carr

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as a material inducement to accept employment as our President and Chief Executive Officer. Stock-based awards currently outstanding also include awards granted under the 2014 Plan, under which no further awards will 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:

 

 

Six Months Ended June 30,

 

 

2021

 

 

2020

 

Estimated fair values of stock options granted

$

4.54

 

 

$

5.19

 

Assumptions:

 

 

 

 

 

Risk-free interest rate

0.6% - 1.1%

 

 

 

1.7

%

Expected volatility

80.1% - 82.0%

 

 

 

77.4

%

Expected term (in years)

5.5 - 6.5

 

 

 

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 employee exercise behavior, future stock price volatility, and dividend yield. Our expected term represents the period that options granted are expected to be outstanding determined using the simplified method. We estimate our future stock price volatility using the historical volatility of comparable public companies over the expected term of the option. We estimate the risk-free interest rate based on the United States Treasury zero-coupon yield curve at the date of grant for the expected term of the option. We do not nor do we expect to pay dividends.

Option strike prices are set at 100 percent or more of the closing share price on the date of grant, and generally vest over three to 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, 2020

 

2,347,663

 

 

$

10.15

 

 

 

4,621,173

 

 

$

10.30

 

Granted

 

 

 

 

 

 

 

456,959

 

 

 

5.71

 

Exercised

 

 

 

 

 

 

 

(61,372

)

 

 

3.70

 

Forfeited or expired

 

 

 

 

 

 

 

(550,110