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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 September 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

 

img90256459_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 November 4, 2021, there were 38,505,678 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

 

17

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

32

 

 

 

 

 

Item 4. Controls and Procedures

 

32

 

 

 

 

 

PART II. OTHER INFORMATION

 

33

 

 

 

 

 

Item 1. Legal Proceedings

 

33

 

 

 

 

 

Item 1A. Risk Factors

 

33

 

 

 

 

 

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

 

33

 

 

 

 

 

Item 6. Exhibits

 

34

 

 

 

 

 

SIGNATURE

 

35

 

 

 

 

 


Table of Contents

Terms

When the terms the “Company” or “its” are used in this report, unless the context otherwise requires, those terms are being used to refer to Calyxt, Inc. When the term “Cellectis,” is used, it is being used to refer to Cellectis S.A., the Company's 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.

 

The Company owns the names PlantSpring and BioFactory. The Company also owns the trademarks Calyxt® and Calyno® and owns or licenses other trademarks, trade names, and service marks appearing in this Quarterly Report on Form 10-Q. The names and trademarks “Cellectis®” and “TALEN®,” along with any 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. The Company does not intend its 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 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). The Company may also make forward-looking statements in other reports filed with the Securities and Exchange Commission (SEC), in materials delivered to stockholders and in press releases. In addition, the Company's representatives may from time-to-time make oral forward-looking statements.

 

The Company has 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,” “intends,” “may,” “might,” “plans,” “predicts,” “projects,” “should,” “targets,” “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 its business and operating results; the Company's future financial performance, including its cash runway; its product pipeline and development; the Company's business model and strategies for the development, commercialization and sales of commercial products; commercial demand for its synthetic biology solutions; the development and deployment of its PlantSpring technology platform; its ability to deploy and leverage its artificial intelligence and machine learning (AIML) capabilities; the ability to scale production capability for its BioFactory production system; potential development agreements, partnerships, customer relationships, and licensing arrangements and their contribution to the Company's financial results, cash usage, and growth strategies; and anticipated trends in its business. These and other forward-looking statements are predictions and projections about future events and trends based on the Company's current expectations, objectives, and intentions and are premised on current assumptions. The Company's 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, including competition from a broader array of synthetic biology companies; disruptions at its key facilities, including disruptions impacting its BioFactory production system; flaws in AIML algorithms, insufficiency of data inputs required by such algorithms, and human error in interacting with AIML; changes in customer preferences and market acceptance of its products; changes in market consensus as to what attributes are required for a product to be considered “sustainable”; competition for customers, partners, and licensees and the successful execution of development and licensing agreements; the impact of adverse events during development, including unsuccessful pilot production of plant-based chemistries or field trials; the impact of improper handling of its product candidates during development; failures by third-party contractors; inaccurate demand forecasting or milestone and royalty payment projections; the effectiveness of commercialization efforts by commercial partners or licensees; disruptions to supply chains, including raw material inputs for its BioFactory; 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 the Company's filings with the Securities and Exchange Commission, included in Part I, Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 4, 2021 (the Annual Report), this report, and the Company’s subsequent reports on Forms 10-Q and 8-K filed with the SEC.

 

Any forward-looking statements made by the Company in this Quarterly Report on Form 10-Q are based only on currently available information and speak only as of the date of this report. Except as otherwise required by securities and other applicable laws, the Company does 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 the Company's industry and the markets in which it operates is based on information from various sources, including independent industry publications. In presenting this information, the Company has also made assumptions based on such data and other similar sources, and on its knowledge of, and its experience to date in, the potential markets for its product. The industry in which the Company operates 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 its 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 the Company.

Website Disclosure

The Company uses its website (www.calyxt.com), its corporate Twitter account (@Calyxt_Inc) and its 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 its disclosure obligations under Regulation FD. Accordingly, investors should monitor the Company's website and its corporate Twitter and LinkedIn accounts in addition to following press releases, filings with the SEC, and public conference calls and webcasts.

Additionally, the Company provides notifications of announcements as part of its website. Investors and others can receive notifications of new press releases posted on the Company's website by signing up for email alerts.

None of the information provided on the Company's website, in its 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 it files with the SEC, and any references to its website or to its 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)

 

 

September 30,
2021
(unaudited)

 

 

December 31,
2020

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

13,922

 

 

$

17,299

 

Short-term investments

 

 

 

 

11,698

 

Restricted cash

 

393

 

 

 

393

 

Accounts receivable

 

206

 

 

 

4,887

 

Inventory

 

1,674

 

 

 

1,383

 

Prepaid expenses and other current assets

 

1,057

 

 

 

3,930

 

Total current assets

 

17,252

 

 

 

39,590

 

Non-current restricted cash

 

598

 

 

 

597

 

Land, buildings, and equipment

 

21,476

 

 

 

22,860

 

Other non-current assets

 

195

 

 

 

280

 

Total assets

$

39,521

 

 

$

63,327

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

1,037

 

 

$

929

 

Accrued expenses

 

1,139

 

 

 

2,891

 

Accrued compensation

 

2,284

 

 

 

1,950

 

Due to related parties

 

149

 

 

 

766

 

Current portion of financing lease obligations

 

387

 

 

 

364

 

Other current liabilities

 

147

 

 

 

45

 

Total current liabilities

 

5,143

 

 

 

6,945

 

Financing lease obligations

 

17,582

 

 

 

17,876

 

Long-term debt

 

 

 

 

1,518

 

Other non-current liabilities

 

971

 

 

 

113

 

Total liabilities

 

23,696

 

 

 

26,452

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.0001 par value; 275,000,000 shares authorized; 37,401,876 shares issued and 37,301,724 shares outstanding as of September 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

 

205,899

 

 

 

204,807

 

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

 

(1,043

)

 

 

(1,043

)

Accumulated deficit

 

(189,035

)

 

 

(166,893

)

Total stockholders’ equity

 

15,825

 

 

 

36,875

 

Total liabilities and stockholders’ equity

$

39,521

 

 

$

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 September 30,

 

 

Nine Months Ended September 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

$

7,762

 

 

$

5,241

 

 

$

24,044

 

 

$

9,925

 

Cost of goods sold

 

8,281

 

 

 

7,060

 

 

 

26,553

 

 

 

16,265

 

Gross profit

 

(519

)

 

 

(1,819

)

 

 

(2,509

)

 

 

(6,340

)

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

2,579

 

 

 

2,204

 

 

 

8,473

 

 

 

7,816

 

Selling, general, and administrative

 

3,859

 

 

 

4,523

 

 

 

11,595

 

 

 

15,988

 

Management fees

 

 

 

 

68

 

 

 

45

 

 

 

172

 

Restructuring costs

 

 

 

 

436

 

 

 

 

 

 

436

 

Total operating expenses

 

6,438

 

 

 

7,231

 

 

 

20,113

 

 

 

24,412

 

Loss from operations

 

(6,957

)

 

 

(9,050

)

 

 

(22,622

)

 

 

(30,752

)

Gain upon extinguishment of Payroll Protection Program loan

 

 

 

 

 

 

 

1,528

 

 

 

 

Interest, net

 

(356

)

 

 

(324

)

 

 

(1,059

)

 

 

(568

)

Non-operating expenses

 

6

 

 

 

(102

)

 

 

11

 

 

 

(121

)

Loss before income taxes

 

(7,307

)

 

 

(9,476

)

 

 

(22,142

)

 

 

(31,441

)

Income taxes

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(7,307

)

 

$

(9,476

)

 

$

(22,142

)

 

$

(31,441

)

Basic and diluted net loss per share

$

(0.20

)

 

$

(0.29

)

 

$

(0.60

)

 

$

(0.95

)

Weighted average shares outstanding - basic and diluted

 

37,279,703

 

 

 

33,200,289

 

 

 

37,205,655

 

 

 

33,076,376

 

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

 

5,966,488

 

 

 

5,581,307

 

 

 

5,966,488

 

 

 

5,581,307

 

 

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 September 30, 2021

 

Shares
Outstanding

 

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Shares
in
Treasury

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Total
Stockholders’
Equity

 

Balance as of June 30, 2021

 

 

37,205,473

 

 

$

4

 

 

$

204,663

 

 

$

(1,043

)

 

$

(181,728

)

 

$

 

 

$

21,896

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,307

)

 

 

 

 

 

(7,307

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,236

 

 

 

 

 

 

 

 

 

 

 

 

1,236

 

Issuance of common stock

 

 

96,251

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2021

 

 

37,301,724

 

 

$

4

 

 

$

205,899

 

 

$

(1,043

)

 

$

(189,035

)

 

$

 

 

$

15,825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months September 30, 2020

 

Shares
Outstanding

 

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Shares
in
Treasury

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Total
Stockholders’
Equity

 

Balance as of June 30, 2020

 

 

33,040,520

 

 

$

3

 

 

$

188,656

 

 

$

(1,043

)

 

$

(144,022

)

 

$

(41

)

 

$

43,553

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,476

)

 

 

 

 

 

(9,476

)

Stock-based compensation

 

 

 

 

 

 

 

 

570

 

 

 

 

 

 

 

 

 

 

 

 

570

 

Issuance of common stock

 

 

202,641

 

 

 

 

 

 

211

 

 

 

 

 

 

 

 

 

 

 

 

211

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

38

 

Balance at September 30, 2020

 

 

33,243,161

 

 

$

3

 

 

$

189,437

 

 

$

(1,043

)

 

$

(153,498

)

 

$

(3

)

 

$

34,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021

 

Shares
Outstanding

 

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Shares
in
Treasury

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Total
Stockholders’
Equity

 

Balance as of December 31, 2020

 

 

37,065,044

 

 

$

4

 

 

$

204,807

 

 

$

(1,043

)

 

$

(166,893

)

 

$

 

 

$

36,875

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,142

)

 

 

 

 

 

(22,142

)

Stock-based compensation

 

 

 

 

 

 

 

 

865

 

 

 

 

 

 

 

 

 

 

 

 

865

 

Issuance of common stock

 

 

236,680

 

 

 

 

 

 

227

 

 

 

 

 

 

 

 

 

 

 

 

227

 

Balance at September 30, 2021

 

 

37,301,724

 

 

$

4

 

 

$

205,899

 

 

$

(1,043

)

 

$

(189,035

)

 

$

 

 

$

15,825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

Shares
Outstanding

 

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Shares
in
Treasury

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Total
Stockholders’
Equity

 

Balance as of December 31, 2019

 

 

32,951,329

 

 

$

3

 

 

$

185,588

 

 

$

(1,043

)

 

$

(122,057

)

 

$

17

 

 

$

62,508

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,441

)

 

 

 

 

 

(31,441

)

Stock-based compensation

 

 

 

 

 

 

 

 

3,638

 

 

 

 

 

 

 

 

 

 

 

 

3,638

 

Issuance of common stock

 

 

309,624

 

 

 

 

 

 

211

 

 

 

 

 

 

 

 

 

 

 

 

211

 

Shares withheld for net share settlement

 

 

(17,792

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

(20

)

Balance at September 30, 2020

 

 

33,243,161

 

 

$

3

 

 

$

189,437

 

 

$

(1,043

)

 

$

(153,498

)

 

$

(3

)

 

$

34,896

 

 

See accompanying notes to these consolidated financial statements.

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Table of Contents

CALYXT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in Thousands)

 

 

Nine Months Ended September 30,

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

Net loss

$

(22,142

)

 

$

(31,441

)

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

 

1,776

 

 

 

1,372

 

Stock-based compensation

 

865

 

 

 

3,638

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

4,681

 

 

 

(1,310

)

Due to/from related parties

 

(617

)

 

 

(498

)

Inventory

 

(291

)

 

 

(3,359

)

Prepaid expenses and other current assets

 

2,873

 

 

 

(707

)

Accounts payable

 

108

 

 

 

86

 

Accrued expenses

 

(1,742

)

 

 

1,717

 

Accrued compensation

 

334

 

 

 

(572

)

Other

 

1,029

 

 

 

183

 

Net cash used by operating activities

 

(14,654

)

 

 

(30,891

)

Investing activities

 

 

 

 

 

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

 

11,698

 

 

 

(20,802

)

Purchases of land, buildings, and equipment

 

(376

)

 

 

(1,253

)

Net cash provided (used) by investing activities

 

11,322

 

 

 

(22,055

)

Financing activities

 

 

 

 

 

Proceeds from Payroll Protection Program loan

 

 

 

 

1,518

 

Repayments of financing lease obligations

 

(271

)

 

 

(217

)

Proceeds from the exercise of stock options

 

227

 

 

 

211

 

Net cash (used) provided by financing activities

 

(44

)

 

 

1,512

 

Net decrease in cash, cash equivalents, and restricted cash

 

(3,376

)

 

 

(51,434

)

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

 

18,289

 

 

 

60,038

 

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

$

14,913

 

 

$

8,604

 

 

See accompanying notes to these consolidated financial statements.

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CALYXT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The unaudited consolidated financial statements of Calyxt, Inc. (Calyxt or the Company) 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 the Company's opinion, the accompanying consolidated financial statements reflect all adjustments necessary for a fair presentation of its statements of financial position, results of operations, and cash flows for the periods presented but they do not include all 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 the Company 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 the Company's 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 the Company's consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2020.

Risks and Uncertainties

 

Calyxt is an early-stage company and has incurred net losses since its inception. As of September 30, 2021, the Company had an accumulated deficit of $189.0 million. The Company's net losses were $22.1 million for the nine months ended September 30, 2021, and the Company used $14.7 million of cash for operating activities for the nine months ended September 30, 2021. The Company's primary sources of liquidity are its cash and cash equivalents.

 

As of September 30, 2021, the Company had $14.9 million of cash, cash equivalents, and restricted cash. The Company’s restricted cash is associated with its equipment financing leases and was $1.0 million as of September 30, 2021, with $0.4 million scheduled to be returned in December 2021. Current liabilities were $5.1 million as of September 30, 2021.

 

On September 21, 2021, the Company entered into an Open Market Sale AgreementSM (the ATM Facility) with Jefferies LLC (Jefferies), acting as sole selling agent. Under the terms of the ATM Facility, the Company may, from time-to-time, issue common stock having an aggregate offering value of up to $50.0 million. At its discretion the Company determines the timing and number of shares to be issued under the ATM Facility. As of the date of this report, the Company has issued approximately 1.2 million shares of common stock under the ATM Facility for proceeds of $3.7 million net of commissions and payments for other share issuance costs.

 

The Company’s current operating plans reflect a modest level of payments from customers from commercial activities in 2022, which when combined with planned spending and the current balance of cash and cash equivalents make it likely that it will require additional liquidity to continue operations under this business plan over the next 12 months. Absent payments from customers in excess of Calyxt’s operating plans or the ability to raise capital, the Company’s management believes it can implement various cost reduction and other cash-focused measures in order to manage liquidity for the next 12 months.

 

The Company anticipates that it will continue to generate losses for the next several years before revenue is enough to support its operating capital requirements. Until the Company can generate substantial cash flow, it expects to finance a portion of future cash needs through cash on hand, commercialization activities, which may result in various types of revenue streams from (i) product sales from its proprietary BioFactory production system, and (ii) future product development agreements and technology licenses, including upfront and milestone payments, annual license fees, and royalties; government or other third-party funding, public or private equity or debt financings, or the issuance of shares under the Company's ATM Facility. However, additional capital may not be available on reasonable terms, if at all. If the Company is unable to raise additional capital in a sufficient amount or on acceptable terms, it may have to

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significantly delay, scale back, or discontinue the development or commercialization of its activities. Failure to receive additional funding could cause the Company to cease operations, in part or in full. If the Company raises additional funds through the issuance of additional debt or equity securities, it could result in dilution to its existing stockholders and increased fixed payment obligations, and these securities may have rights senior to those of the Company's shares of common stock. Any of these events could significantly harm the Company's business, financial condition, and prospects.

 

Net Loss Per Share

Due to the Company's net loss position for the three and nine months ended September 30, 2021, and September 30, 2020, all its 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 receivable, accounts payable, and all other current liabilities have carrying values that approximate fair value. The Company measures short-term investments and commodity derivative contracts at fair value on a 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

As of September 30, 2021, the Company had no financial instruments measured at fair value. The fair values of the Company's financial instruments measured at fair value and their respective levels in the fair value hierarchy as of December 31, 2020, were as follows:

 

 

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 the Company's financing lease obligations are also considered a financial instrument, which it measures at fair value for disclosure purposes on a non-recurring basis. It is a Level 2 liability and had a fair value of $14.8 million as of September 30, 2021, and a fair value of $15.2 million as of December 31, 2020.

Commodity Price Risk

 

Under the Company's former go-to-market strategy for its soybean product line, it entered into seed and grain production agreements with settlement values based on commodity futures market prices (Forward Purchase Contracts). These Forward Purchase Contracts allowed the counterparty to fix their sales prices at various times as defined in the contract. Upon delivery, the inventory was carried at historical cost but sold at prevailing market prices. As a result, the Company entered into hedging arrangements by selling futures contracts which converted its market exposure to these fixed prices to floating prices. The Company would maintain these hedging relationships until such grain inventory was sold to help stabilize margins. The Company did not account for these economic hedges as accounting hedges. The Company expected that any gains or losses from these hedging arrangements would be offset by gains or losses

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on the grain inventories when such grain inventories were sold. As a result of the continued wind-down of the soybean product line, the Company held no commodity derivative contracts as of September 30, 2021.

Prior to August 1, 2020, the Company designated all of its commodity derivative contracts as cash flow hedges based on the nature of its 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). The Company reclassified amounts from AOCI to cost of goods sold when the underlying products were sold to which those hedges related. For the three and nine months ended September 30, 2020, the Company reclassified a nominal amount from AOCI to cost of goods sold, and there were no such reclassifications in the same periods in 2021.

Foreign Exchange Risk

Foreign currency fluctuations affect the Company's foreign currency cash flows related primarily to payments to Cellectis. The Company's principal foreign currency exposure is to the euro. The Company does not hedge these exposures, and it does not believe that the current level of foreign currency risk is significant to its operations.

Concentrations of Credit Risk

The Company invests its cash, cash equivalents, and restricted cash in highly liquid securities and investment funds. It diversifies 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 the Company classifies as short-term investments that are recorded at fair value in its consolidated financial statements. The Company ensures the credit risk in this portfolio is in accordance with its internal policies and if necessary, makes changes to investments to ensure credit risk is minimized. The Company has not experienced any counterparty credit losses. As of September 30, 2021, the Company did not hold any short-term investments.

3. RELATED-PARTY TRANSACTIONS

The Company is party to several agreements that govern its relationship with Cellectis, some of which require the Company to make payments to Cellectis. Pursuant to the Company's management services agreement with Cellectis, it incurred nominal management fee expenses for the three and nine months ended September 30, 2021, and 2020.

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

TALEN® is the Company's primary gene editing technology, and it is the foundation of its technology platform. TALEN® technology was invented by researchers at the University of Minnesota and Iowa State University and exclusively licensed to Cellectis. The Company obtained an exclusive license for the TALEN® technology for commercial use in plants from Cellectis. The Company also licenses other technology from Cellectis. Cellectis is entitled to royalties on any revenue the Company generates 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. The Company has incurred nominal license and royalty fees for the three and nine months ended September 30, 2021, and 2020.

The Company is also party to various agreements with the University of Minnesota, pursuant to which it has 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. The Company incurred nominal expenses pursuant to these agreements for the three and nine months ended September 30, 2021, and 2020.


4. STOCKHOLDERS’ EQUITY

 

ATM Facility

 

On September 21, 2021, the Company entered into an ATM Facility with Jefferies, who is acting as sole selling agent for the ATM Facility. Under the terms of the ATM Facility, the Company may, from time-to-time, issue common stock having an aggregate offering value of up to $50.0 million. At its discretion the Company determines the timing and number of shares to be issued under the ATM Facility.

 

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As of September 30, 2021, the Company had not issued any shares of common stock under the ATM Facility. As of the date of this report, the Company has issued approximately 1.2 million shares of common stock under the ATM Facility for proceeds of $3.7 million net of commissions and payments for other share issuance costs.

5. STOCK-BASED COMPENSATION

The Company uses 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 its shareholders. The Company has also granted equity-based awards to directors, nonemployees, and certain employees of Cellectis.

In December 2014, the Company adopted the Calyxt, Inc. Equity Incentive Plan (2014 Plan), which allowed for the grant of stock options, and in June 2017, it 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 the Company's Chief Executive Officer. The Company recorded a benefit to earnings from a $2.5