Cibus targets $200M annual royalty revenue from rice traits as regulatory landscape evolves

Earnings Call Insights: Cibus, Inc. (CBUS) Q2 2025

MANAGEMENT VIEW

* Interim CEO Peter R. Beetham emphasized the company's "laser-focused" approach toward delivering targeted near-term revenues, noting "continued execution toward our commercial objectives with clear progress across our focus programs in rice and partner-funded and/or supported sustainable ingredients, including biofragrances that are positioning Cibus to begin recognizing initial revenue in 2026." He stated, "Our rice herbicide tolerance traits, HT1 and HT3, alone represent over $200 million in potential annual royalty revenue across our initial target geographies in the United States and Latin America." Beetham confirmed that these traits are on schedule for initial launches in Latin America in 2027 and the U.S. in 2028.
* The company announced a streamlined operational focus in July, concentrating resources on rice herbicide tolerance traits and sustainable ingredients programs. Beetham noted, "This calibrated focus is designed to reduce our annual cash usage to approximately a net $30 million by 2026, extending our runway while positioning us to capture the significant revenue opportunity ahead of us."
* Cibus signed an agreement with Semilano, marking its fifth rice seed customer in the Americas. Beetham said, "The greater penetration of Latin America is particularly exciting, both with large and small participants, as these markets have historically lacked access to advanced weed management solutions in rice."
* Partner-funded sustainable ingredients, specifically biofragrances, are expected to deliver "nominal revenues" later this year, with full commercial runs anticipated in 2026.
* Interim CFO Cornelis Broos stated, "Our cash and cash equivalents were $36.5 million as of June 30, 2025. Taking into account the $27.5 million in gross proceeds we raised from our public offering in June, along with the impact of implemented cost-saving initiatives, we expect that our existing cash and cash equivalents will be sufficient to fund planned operating expenses and capital expenditure requirements into the second quarter of 2026."

OUTLOOK

* Beetham reaffirmed the company's expectation to "begin recognizing initial revenue in 2026" from both rice trait launches and biofragrances, with the rice HT1 and HT3 traits expected to launch in Latin America in 2027 and the U.S. in 2028.
* The operational focus is on reducing annual net cash usage to $30 million by 2026, a target reiterated by management as "our target for 2026, and we will get there."
* Regulatory clarity is expected within the next six months in the EU, with Beetham stating, "We believe resolution will occur within the next 6 months."

FINANCIAL RESULTS

* Revenue for the second quarter was $933,000, compared to $838,000 in the year-ago period, attributed to increased partner-funded programs.
* Research and development expense for the quarter was $12.2 million, down from $13 million year-over-year. Selling, general, and administrative expenses decreased to $6.6 million from $9.3 million.
* Net loss for the quarter was $26.6 million, compared to $28.5 million in the year-ago period.
* Broos indicated, "We expect this rift to result in related one-time charges of approximately $0.5 million in the third quarter."

Q&A

* Matthew J Venezia, Alliance Global Partners: Asked if a recent germ plasm transfer provides a new set of company-specific field trials. Gregory F. Gocal responded, "So, this is a new customer that we're delivering back to for the U.S., and we're delivering back multiple lines with our HT3 trait. So, we're really excited because of their ability to use that in field trials going forward."
* Venezia inquired about timing of biofragrance revenue. Broos clarified, "We still see some nominal revenues this year as we scale up... And then in '26 is when we really start to do full commercial runs with regard to the biofragrances."
* Austin Nathan Moeller, Canaccord: Asked about EU regulatory hurdles. Beetham responded, "There are a number of detailed committee work streams... some of the questions... are with regard to labeling and patenting are 2 of the key issues that they have discussed."
* Sameer S. Joshi, H.C. Wainwright: Questioned about the $30 million OpEx target and timing. Broos confirmed, "It takes a bit of time, but we're focused on being ready early '26 with the number you mentioned."
* Alexander Noah Hantman, Sidoti: Queried about the biofragrance revenue ramp and customer concentration. Beetham responded, "We are very much focused on a single customer right now for 2026. Having said that, there are other opportunities out there."

SENTIMENT ANALYSIS

* Analysts displayed a neutral to slightly positive tone, focusing on revenue timing, regulatory progress, and cash burn reduction. Their inquiries were direct and sought clarity on operational execution and commercialization prospects.
* Management consistently projected confidence, with Beetham stating, "We are confident that in time, the gene editing opportunities will expand to many of the world's important food crops." The tone during prepared remarks was optimistic, while responses in Q&A remained steady and informative.
* Compared to the previous quarter, management's tone has shifted from emphasizing broad commercial validation to a more targeted focus on near-term revenue and operational discipline. Analyst sentiment remains cautiously optimistic.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter highlights a more granular focus on near-term revenues, specifically from rice herbicide tolerance traits and biofragrances, versus the broader commercialization strategy discussed previously.
* Guidance language is now more explicit on the $30 million cash usage target by 2026 and initial revenue recognition in 2026, compared to general statements on cost discipline and operational efficiency last quarter.
* Analyst questions continue to focus on the pathway to commercialization, regulatory updates, and cash burn, but now include more specific inquiries about customer concentration and revenue models.
* Management confidence remains strong, but the narrative has shifted from validation and technical progress to execution, revenue generation, and disciplined capital allocation.

RISKS AND CONCERNS

* Management cited the delay in EU regulatory trialogue but maintained confidence in eventual resolution.
* Operational risk remains around achieving the $30 million net cash usage target and timely commercialization of rice and biofragrance products.
* Analysts probed for risks associated with customer concentration in biofragrances and the timing of major revenue streams, as well as the dependency on evolving global regulatory frameworks.

FINAL TAKEAWAY

The management of Cibus emphasized its disciplined focus on commercial execution, targeting initial revenues from biofragrances in 2026 and aiming for $200 million in annual royalty revenue from rice traits as regulatory momentum builds globally. The company’s operational streamlining, reduction in cash usage, and expanding customer base in key markets position it to capitalize on near-term and long-term opportunities in agricultural gene editing. Continued progress on regulatory fronts and customer engagements are expected to drive value as Cibus advances towards commercialization milestones.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cbus/earnings/transcripts]

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