Woburn, Massachusetts, USA
November 10, 2021
Yield10 Bioscience, Inc. (Nasdaq:YTEN), an agricultural bioscience company, today reported financial and operational results for the three and nine months ended September 30, 2021.
“During the third quarter we continued to execute against our strategic objectives for 2021," said Oliver Peoples, Ph.D., Chief Executive Officer of Yield10 Bioscience. "We completed the harvest of Camelina in our 2021 spring field tests and seed scale up activities. We are pleased to report that following our successful scale up of our two prototype PHA bioplastic Camelina lines, we confirmed levels of PHA bioplastic in seed consistent with results obtained in field tests last year. We plan to move ahead with further scale up in 2022. The development of commercial lines with higher PHA bioplastic seed content is ongoing, and we are progressing outreach to partner prospects in the plastics sector. Our observations across our broader field test program suggest that our Camelina varieties displayed good heat tolerance in a season in North America that was very challenging for many commercial crops. This provides us with confidence that we will be able to report our overall findings when analysis of seed and oil samples are complete, which is anticipated in first quarter 2022. We will use this data set to finalize the plans for our 2022 spring field test and seed scale up program.
“We have obtained partial results to date from our field tests of E3902, a CRISPR edited Camelina line, and they are consistent with prior testing of this line. As a result, we will soon begin contra season seed scale up of E3902 to enable the production of additional seed inventory.
“Our elite winter Camelina varieties have the potential to provide a source of oil for biodiesel production, a rapidly growing market in the U.S. and Canada. Winter Camelina may have important advantages in use as a rotation crop in geographies which are more challenging for other oilseed crops or as a relay crop with soybean or corn. In both cases processing the winter Camelina seed would allow expansion of feedstock oil production to meet growing demand for low carbon biofuels while increasing protein production for feed. Our winter varieties performed well in the 2020-2021 winter planting therefore we are moving forward with the planting of our 2021-2022 winter field test and seed scale up program in the U.S. and Canada. As part of this program, we will be conducting field tests in various southern locations in the U.S. to characterize the range of geography possible for achieving target yields in our Camelina varieties.
“Our team is also making excellent progress deploying herbicide tolerance traits into our elite Camelina varieties and obtaining the data necessary to develop the regulatory strategy and timelines for producing omega-3 (DHA+EPA).
“We remain focused on identifying opportunities for expanded collaboration on the GRAIN platform and trait licenses, as well as for Camelina seed products including feedstock oil for biodiesel, omega-3 (DHA+EPA) oil and for PHA bioplastics. During the third quarter, we worked with Forage Genetics to extend their research license to traits for testing in forage sorghum. A top priority for our team is to secure revenue generating collaborations and non-dilutive funding as we continue to demonstrate the significant potential of Camelina as a new crop,” said Peoples.
COVID-19 Impact on Operations. The Company has implemented business continuity plans to address the COVID-19 pandemic and minimize disruptions to ongoing operations. To date, despite the pandemic, we have been able to move forward with the operational steps required to execute our 2021 field trials in Canada and the United States. However, it is possible that any potential future closures of our research facilities, should they continue for an extended time, or delays in receiving supplies and materials needed to conduct our field trials and research could adversely impact our anticipated time frames for evaluating and/or reporting data from our field trials and other work we plan to accomplish during 2021 and beyond.
THIRD QUARTER 2021 FINANCIAL OVERVIEW
Cash Position
Yield10 Bioscience is managed with an emphasis on cash flow and deploys its financial resources in a disciplined manner to achieve its key strategic objectives.
Yield10 ended the third quarter of 2021 with $18.5 million in unrestricted cash and investments; a net decrease of $2.1 million from unrestricted cash and investments of $20.6 million reported as of June 30, 2021. Net cash used by operating activities during the third quarter of 2021 was $2.0 million compared to $2.1 million used in the third quarter of 2020. The Company is revising its previous estimate of net cash usage for the full year 2021 to a lower range of $10.0 - $10.5 million.
The Company's present capital resources are expected to fund its planned operations into the second quarter of 2023. Yield10's ability to continue operations after its current cash resources are exhausted is dependent on its ability to obtain additional financing, including public or private equity financing, secured or unsecured debt financing, receipt of additional government research grants, as well as licensing or other collaborative arrangements.
Operating Results
Grant revenues for the third quarters of 2021 and 2020 were $0.1 million and $0.2 million, respectively, and were derived from the Company's Department of Energy sub-award with Michigan State University. Research and development expenses increased by $0.3 million from $1.3 million during the third quarter of 2020 to $1.6 million in the third quarter of 2021. This increase was primarily the result of higher employee compensation costs, including higher stock-based compensation expense, the Company's expanded 2021 crop field trials and related work at sites in the U.S., Canada and Argentina, and from greater use of research services provided by third parties. General and administrative expenses increased by $0.4 million from $1.1 million during the third quarter of 2020 to $1.5 million during the third quarter of 2021. This increase was primarily due to higher employee compensation and benefit expenses, including stock-based compensation expenses, and the greater use of consultants and other third parties to assist with early stage business development activities for the Company's Camelina plant varieties.
Yield10 reported a loss from operations of $3.1 million for the third quarter ended September 30, 2021, compared to a loss from operations of $2.2 million for the same quarter of 2020. The Company also reported a net loss after income taxes of $2.4 million, or $0.49 per share, for the three months ended September 30, 2021, in comparison to a net loss after income taxes of $2.2 million, or $0.87 per share, for the three months ended September 30, 2020. During the third quarter of 2021, Yield10 recognized a $0.7 million gain in other income (expense) from its 2002 investment in Tepha, Inc. ("Tepha"), a related party, as a result of Tepha's acquisition by Becton Dickinson in July 2021.
For the nine months ended September 30, 2021, the Company reported a loss from operations of $8.7 million in comparison to a loss from operations of $7.0 million during the same period of 2020. Net loss after taxes was $8.1 million and $7.6 million during the nine months ended September 30, 2021 and 2020, respectively. Year to date grant revenue earned through September 30, 2021 and September 30, 2020 was $0.5 million and $0.6 million, respectively. Research and development and general and administrative expenses were both $4.6 million during the nine months ended September 30, 2021. In comparison, research and development and general and administrative expenses were $3.9 million and $3.7 million for the nine months ended September 30, 2020. During the nine months ended September 30, 2021, Yield10 recognized the $0.7 million gain from its Tepha investment, as previously mentioned. During the first nine months of 2020, Yield10 reported a loss of $1.0 million within other income (expense) as a result of a change in the fair value of its warrant liability. The Company also reported $0.3 million of income from its forgiven PPP loan during this nine-month period.
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