Cibus Inc (CBUS) 2024 Q3 法說會逐字稿

Good day, and welcome to the Cibus third quarter, 2024 Earnings Conference Call. All participants will be in listen-only mode.

(operator instructions) Please note, today's event is being recorded. I would now like to turn the conference over to Carlo Broos, Chief Financial Officer. Please go ahead. Thank.

Thank you, and good afternoon. I would like to thank you for taking time to join us for Cibus third quarter 2024 financial results and business update conference call and webcast.

Presenting with me today is Rory Riggs, our Co-Founder, Chief Executive Officer and Peter Beetham, Co-Founder, President and Chief Operating Officer.

Before we begin the call, I would like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and industry prospects are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call.

Please refer to see this SEC filings for a list of associated risks. This conference call is being webcast, the webcast link along with our press release and corporate presentation are available on the investor relations section of Cibus.com to assist you in your analysis of our business.

With that, I would now like to turn the call over to Mr. Riggs. Go ahead, Rory.

Thanks, Carlo, and good afternoon, everyone. Before I begin, I would like to recognize Carlo's participation on today's call as our Chief Financial Officer. Carlo has stepped in for Wade King following Wade's leave of absence. Although Carlo was new to the investment community, he is a skilled financial leader who brings nearly 14 years of experience at Cibus alone and decades in a variety of roles, including his role as head of finance for the Europe, Middle East and Africa region and Chief Financial Officer for Netherlands and Belgium and Syngenta as well as his work in audit during his early years at Deloitte. We are grateful for his ability to seamlessly step in for Wade and look forward to his contributions as a member of our executive team, as we look ahead to the future as a commercial enterprise.

With that, I would like to begin today's call with a high-level update on our business activities this quarter and year-to-date. Following my remarks, Peter will provide a more detail on our recent developments and how we are progressing within our crop platforms. Carlo will then conclude with a financial discussion as we reflect on the first nine-months of 2024. It is clear that this has been a transformative period for Cibus as we evolve from an R&D based business to the first commercial gene editing company in the industry. This continued transformation from an R&D-focused company to the first commercial stage gene editing company was essential to the streamlining of our organization to more efficiently focus our efforts on executing on our product launches with our herbicide-resistant traits in Rice and traits for Pod Shatter Reduction in Canola, while maintaining the ability to capitalize on our positive progress in developing our Soybean platform and advancing our traits for Sclerotinia resistance and herbicide tolerance, our HT2 traits.

Our evolution has been achieved. There was a series of successful milestones associated with 3 cornerstones of our business. The first cornerstone is the completion of our Trait Machine process and industrial technology breeding platform that creates a time-bound and predictable trait development process. The second cornerstone is operationalizing or scaling the trait machine platform to develop a multi trait pipeline with the goal of commercializing plant traits with multiple customers and with multiple crops. Our third cornerstone is represented by our ongoing collaborations with major seed company customers. With the goal to develop, to license and commercialize these traits in their seeds for trade fees or royalties. These 3 cornerstones are the foundation of this new technology business in agriculture for the development of productivity traits or traits that make farming more productive, economical and sustainable.

Our first cornerstone is the Trait Machine process. It is a paradigm shift in the breeding of complex traits. For each of our crop platforms in Canola and Rice, and for each of our traits. For these crops, we can now complete our edits and the customers each germ plasm and regenerate the edited germ plasm to a plant within just 12-months. This breakthrough in speed and predictability of technology-based breeding is foundational to developing each trait and to accelerate the timetable of commercialization for each trait once developed.

We believe that this timetable also accrued to our Soybean platform. A predictable timetable for integrating our traits into a customer's germplasm is a key part of the commercialization of a customer trait which begins with the receipt of a customer's germ plasm. Evidence of our ability to use the Trait Machine process to edit and deliver to the greenhouse in a time bound and predictable fashion can be seen in our recent announcement of successful greenhouse data for HT2 trait in Canola.

It took less than 12-months from edit to greenhouse results for this trade. We have also announced successful edits in our disease program with which we also expect greenhouse results within 12-months of the edit. We now have a pipeline of five different traits for each of these traits we have completed edits and have had either successful field trials or expected greenhouse results for each of those traits. Our ability to develop so many traits within a compressed time frame is a testament of the efficiency we develop with the Trait Machine process.

Our second cornerstone is operationalizing or scaling our Trait Machine process to develop a pipeline of traits. This is also a paradigm shift in breeding new trades. Our ability to industrialize the transfer of trades and the development of new traits shows the power of our Traits Machine process to shorten the development timeline commercialization timeline and the cost of developing new traits. The third quarter was a great quarter to show our ability to scale our Trait Machine process as an ongoing production system with multiple different crops and multiple traits. In Rice, we now have multiple customers each having multiple lines. The initial edit happened within a 12-month framework, and we expect the gene-edit the HT3 trait in multiple customer lines will all occur within this 12-month production target.

In winter oilseed rape with multiple customer germplasms. We completed the first field trials for a Pod Shatter Reduction trait. These trials were completed in the elite germplasm of several customers. These edits were completed in the greenhouse within a 12-month time frame. In addition, we had the first successful field trial with stack gene-edited traits using our HT1 and HT3 traits in Rice. We expect to develop a family of stacked herbicide tolerant traits for our customers in Rice. This ability to efficiently develop a family of stacked traits is a key strength of the Trait Machine process. It is expected that our spin resistant disease trade in Canola will consist of multiple modes of action which will be combined to form our speron resistant product. It is expected that we will offer multiple gene added herbicide traits across the entire industry.

We expect that these traits for scars and resistant will have a similar scale opportunity in slaving. We expect that our technology will be able to attain this scale in a similar time bound and predictable manner. This is what we mean by operationalizing the Trait Machine process.

Our third cornerstone is our collaboration with major seed company customers with the goal to develop to license and commercialize these trades in their seeds for trade fees or royalties.

This is an important validation of our technology as a commercial platform.

The development of gene editing as extension of the breeding programs for our seed company customers is a key part of the development of this new gene editing trade industry.

This cornerstone is about the use of the trait machine process as the key engine for the commercialization of our traits across multiple crops, multiple traits and multiple customer lines in an efficient time bound and predictable manner.

This is the underlying framework and validation of our commercial process model. For gene editing and agriculture. The speed of our Trait Machine process will enable materially faster commercialization timelines for new traits, as well as updates for new trades. Once launched this momentum with existing customers. With the goal of commercializing our traits and different customer germplasm and different crops continued in the third quarter. We have now established collaborations with major seed companies in each of our co platforms. In each case, we have received the elite germ plasm of each customer for a specific crop. Each of these corporations with seed companies are being made with the goal to develop license and commercialize a trade in their germ plasm for trade fees for Soybean. The goal right now is to develop the Trait Machine crop platform in Rice. Each of our collaborations are made with the goal of developing our herbicide resistant trait and their germ plasm for commercialization in the United States. We also signed an important agreement with ABA and RTDC to continue our collaboration for supplying collectin herbicide to support the expected launch of our custom tolerant on race trade. Our HT3 trade to our United States Rice seed customers utilizing avas reg herbicide registration and crop protection expertise. This partnership is a key part of the ongoing commercialization of herbicide tolerant traits. As an economic partnership between the seed company, the chemical company and the trade company. Our ongoing field trials for a pod chatter reduction trade in Canola and winter oilseed rape and customer germ plasm are also key elements of the commercialization of our pod chatter trade with seed company customers. And Soybean, our initial platform is being developed with GDM germplasm. This is established with the goal to develop a platform for the development and commercialization of selected traits in Soybean like our HT2 trade and our trait for Clarino.

The ongoing work with our traits and customers germplasm as part of their commercialization program is a model for how this new gene editing industry operates. As we enter the last quarter this year, we are excited about the technological and commercial base. We have built to establish the first commercial trade business. Through each cornerstone of our model, we are differentiating and establishing ourselves as an important element within the seed and trade industry that is able to drive value for our seed customers and the grower community.

Now, Peter would like to provide some more background on our commercial activities and technological updates. Peter.

Thank you, Rory and good afternoon to everyone. The last quarter and the first nine months of this year have highlighted our strong advances in gene editing globally for important traits and important crops.

As Rory mentioned, our CS team is focused on our product launches. We are streamlining our processes as we leverage efficiencies and synergies for our semi automated trade development process. We are ending the year well positioned to achieve several important milestones.

Before I summarize our advancements, I want to highlight the critical importance of our leadership in the agricultural gene editing industry. Just this past week in Iowa at the World Food Prize, Keynote address by Dr. Dong Liu, the Food and Agriculture Organization of the United Nations Director General, he identified some of the immediate challenges we face with rising food insecurity. And he clearly advocated for how important gene editing will be to solving these challenges. To quote Dr. Dong Liu, gene editing technology accelerates the breathing process significantly. It is faster than traditional breeding methods. It improves resistance to pests' diseases and environmental stresses. This includes tolerance to high temperatures, droughts, floods, and salinity among others.

For us at Cibus, it is abundantly clear that there is a global movement and a call to action for gene editing to be incorporated into seed company breeding programs.

Debu has been developing the fundamentals of gene editing from the ground up for over two decades. We are well positioned to capture this moment as we continue our transition to a commercial stage gene editing company. As we explained in our last quarterly update. This past year has seen an expansion of our Rice seed company customer base. Today, I would like to use our R platform as a case study to demonstrate what is possible with gene editing in agriculture and how Cibus is leading this effort.

Rice is one of the world's most important food crops. But historically, it has not benefited from the best non-selective herbicide tolerance traits due to the limitations of conventional breeding and GMO technologies. This is but one example where our gene editing capabilities come into play. Our Rice platform journey began with recognizing a critical need. Rice farmers globally and especially in Latin America were struggling with weed management and in some cases spend over $120 per acre on herbicides and their application. Without effective weed management solutions, farmers are sacrificing yield and grain quality leading to reduced profits. To address this, we leveraged our Trait Machine process to develop our herbicide tolerance traits HT1 and HT3, which allow Rice plants to survive herbicide application and provide the potential to reduce weed management costs significantly.

With these developed traits, we then moved edited plants into field trials to demonstrate the effectiveness of our traits. You can see striking photos on our website showing treated Rice field trials where elite genetics of Rice with our gene-edited traits thrive after herbicide application, while the unedited crops are devastated. Importantly for farmers, these trials have also shown excellent control of weeds that are impacting yield and quality. And as Rory shared, our next step has been the first ever development of stacked gene-edited herbicide tolerant traits in Rice where we observed positive field trial results furthering the promise of enhanced weed management options for farmers. These impressive results have led to commercial agreements with four major Rice seed companies in North and South America. We have received germ plasm from each customer and are now incorporating our traits into their elite germplasm.

In addition, we signed an agreement to continue our collaboration with Albaugh LLC and RTDC Company for supplying Clethodim herbicide to support Cibus' expected launch of its Clethodim, which we call HT3 trait in the United States. Marking an important milestone in the commercial development of HT3 in the United States.

We are working with our United States and Latin American customers to launch these traits in 2027 or 2028. We see an opportunity to potentially access approximately 9 million seeded Rice acres, which we estimate represents a market opportunity of approximately $200 million in potential annual royalties. We are now also looking to expand our Rice trades into Asia.

This is an enormous long-term opportunity starting in 2030, that even without including China could generate additional annual royalties of approximately $150 million.

This Rice case study demonstrates why and how Cibus is leading the gene editing effort in agriculture. We are addressing critical farmer needs using our trait machine process to develop traits quickly and cost effectively addressing problems that conventional breeding and GMO technologies could not solve. Our ability to state multiple traits is expected to provide comprehensive solutions for farmers, while our non-GMO approach is gaining regulatory acceptance globally opening markets previously closed to older technologies like transgenic biotechnology.

The fact that we are attracting major seed companies as partners affirms our technology and approach. The success we are seeing in Rice highlights the commercial potential of our trade development process across multiple crops. We are not just developing individual traits but pioneering a new paradigm in agricultural innovation.

Now moving to Canola and winter oilseed rate briefly as Rory had already highlighted that we have made significant strides in both our developed and advanced traits. As mentioned, the Pod Shatter Reduction (PSR) we have completed initial successful field trials for winter oilseed right in the United Kingdom. And more specifically, we have already completed planting of our expanded next set of European field trials with results expected in the fall of 2025.

We also continue to work closely with our North American customers through our initial commercial launch of Pod Shatter Reduction (PSR) in 2026. This work includes confirming key specifications for Pod Shatter Reduction (PSR) and the other agronomical or trade characteristics from our seed company customers for hybrid seed launch. While we are streamlining to focus our herbicide tolerance in Rice, our Pod Shatter Reduction (PSR) trait work and our Soybean platform. We are maintaining our ability to continue progress in other areas. This includes ongoing progression of our advanced traits which have started in Canola including initial editing greenhouse results and field trials. For our HT2 trait, we confirm second generation edits and initial data showing Canola with improved herbicide tolerance as compared to our first generation HT2.

This advanced traits potential multi crop applicability means that H2 could potentially be the first gene-edited traits to achieve $100 million acres of yearly use, representing one of our largest opportunities as we aim to earn royalties across multiple crops for the same trait.

In addition to HT2 in Canola, we have made substantial progress with our Sclerotinia resistance trait. Achieving multiple important milestones year-to-date, we have now done edits in 3 modes of action. Let me take a moment to provide context of why multiple modes of action are critical for crops to have disease resistance. Diseases like Sclerotinia, also known as white mold, can evolve quickly and Sclerotinia has complex life cycles. So, providing crops with multiple ways to defend themselves against disease, the defenses that we call modes of action is critical to address the evolving disease and environments.

The best resistance known as durable resistance, which is achieved using multiple modes of action. Our gene editing strategies provide an opportunity to provide this durable resistance for multiple crops.

While our progress with our advanced traits in Canola is exciting on its own. The advancements we have made in traits like Sclerotinia resistance and HT2 are laying crucial groundwork for our expansion into other crops including specifically our anticipated development of our Soybean platform. This advanced platform, one of the most challenging endeavors in plant biology is expected to be operational by the end of 2024. We have already improved the editing efficiency in Soybean cells. So, we have anticipated completing additional editing and achieving regeneration capabilities within this time frame. Representing a key inflection point that will enable us to enter what we believe is the Soybean market opportunity of over 200 million addressable acres. Beyond market size, the Soybean platform will further serve as one of the foundations for our sustainable ingredients business where we continue to pursue partner funded collaborations.

These achievements across our crop platforms and trade pipeline showcase our ability to develop complex, multi crop traits, addressing significant global agricultural challenges.

We are not just meeting our milestones. We are pioneering a more sustainable and productive future for global agriculture. And with that, I will hand over to Carlo for a financial update, Carlo.

Thank you, Peter.

Looking at our financials for the quarter, cash and cash equivalents were $28.8 million as of September 30, 2024. Taking into account the impact of cost saving initiatives once fully implemented, which we estimate will reduce our monthly cash usage by approximately 20%. Cibus expects that existing cash and cash equivalents will fund plant operating expenses and capital expenditure requirements through the first quarter of 2025.

Moving to our income statement, R&D expense was $13 million for the third quarter of 2024 compared to $17.5 million in the year ago period. The decrease of $4.5 million was primarily due to lower non-cash stock compensation expense and the strategic realignment and reduction in force announced during the fourth quarter of 2023. With delivered decreases in personnel cost and supplies.

SG&A expense was $7.7 million for the third quarter of 2024 compared to $8.8 million in the year ago period. A decrease of $1.1 million was primarily due to lower noncash stock compensation expense.

Non-cash items were $1.2 million for the third quarter of 2024 compared to $9 million last year. The decrease was primarily related to the fair value adjustment of the liability classified common warrants in the third quarter.

Net loss was $201.5 million for the third quarter of 2024 compared to net loss of $34.5 million in the year ago period. The increase in net loss was due to the impairment of goodwill resulting from a fair value assessment based on the decline of the stock pRice performed in the third quarter of 2024. Net loss excluding goodwill was $20 million for the third quarter of 2024 compared to a net loss of $34.5 million in the year ago period, representing an improvement of $14.5 million year-over-year.

For additional details about the financials for the third quarter of 2024. Please refer to our press release and findings with the SEC that concludes our financial discussion. Rory, now back to you for your closing remarks.

Thanks Carlo and Peter for those updates. As we have discussed, the third quarter has been pivotal for Cibus in a number of ways. The strides we are making in Rice combined with the advancements in our trade pipeline, particularly in Canola and the groundwork rel (inaudible) for Soybeans really showcase the breadth and depth of our capabilities. We are not just developing individual traits. We are building a comprehensive trade development platform that has potential to transform multiple aspects of agriculture.

So thanks so much for your attention and interest. We are looking forward to updating you again next quarter as we continue to hit our milestones and advance our mission. This concludes our remarks. Operator. Could you open the call for questions?

Absolutely. Well, I get the question-and-answer session. (operator instructions)

Today's first question comes from Laurence Alexander at Jefferies. Please go ahead.

Good afternoon. Can you just do a walk around the state of legislative or policy support for gene editing? What happened in Europe kind of with the discussion around the degree kind of the is the right policy in place in China. Does anything need to be changed? Just give a quick lay of the land.

Thanks. I totally appreciate that. See, in the Americas, we are pretty well set in the major countries. We are launching in Europe the legislation passed, but they have not been able to get something called a tripartite agreement, and the expectations is that they have a Presidents every quarter and they are going to have a new President from Poland in January and all the talk is about the new President is ready to move on this for the President of Hungary this year. So, we seem very confident Europe's going to move in Asia, Peter. Do you want it? It changes all the time, but I think China is allowing some form Peter.

Let me add a little bit to that Laurence. Thanks so much for the question. The regulatory frameworks around the world are harmonizing. There is no doubt. As just to confirm with what Rory said about the Americas, both North and South America are harmonizing a lot of their regulatory policies. It is happening in Asia as well. We are continuing to see positive movement in China. And gene editing has seen as indistinguishable from what occurs in traditional breeding programs, which is really important. And I think the other side of it that Rory also mentioned, just to confirm that early next year we are going to see a change in the presidency of the Council of the European Union, and it is going to be a very positive movement in that process and legislation completion in Europe, which is exciting for all of us.

And the only add to that. For Rice, which is our first big launch. All the countries where we are launching have approved us and we are pretty excited about it.

Great. And then can you just give a just remind on a timeline for kind of when you should be seeing kind of Rice commercial revenues flow through the PNL and maybe. Rice and soybean would be the two I am most curious about it today, but also to what extent the gene editing platform is becoming something where partners might give you seed to put their modifications into the feed rather than your own traits. And when would that start to show up as a revenue opportunity?

That is a great. And it is working on two points. I will get a little bit Peter Rice. We just put a new deck out is on the website which gives you the expected launch date for each of our traits and expected market. So that is how we decided this quarter to make it public. And on Rice, the deal with new is very important because that starts the clock for herbicide trade. So in Rice, we need herbicide field trials and launch. And so our expectation now that in 2,627 in Latin America, you will start to see some launches. And then in Europe, in the United States, it is a little bit longer because the EPA and the work of the process, but within 2,728 is where we expect the United States to launch, Peter.

Just to add to that, Laurence. What is exciting for us is that the field testing this past summer and the summer before that have really allowed us to look at the specifications around what we need for the herbicide tolerance traits in Rice? And I cannot stress enough how exciting it is to have all the join us for the registration work for Clethodim, which is such a great herbicide. And just to add a little bit to that because Clethodim is a really important grass herbicide that is really key to killing what some of the most troublesome weeds for Rice farmers in the United States and Latin America. One of them is called red Rice. And so it is a cousin of Rice and it is become resistant to a lot of the herbicides that are currently used. So they cannot get rid of it, they cannot kill it. And so that causes reduced yield, it reduces quality. And so the ability to use Clethodim to spray over the top of the Rice crop allows you to eliminate the red Rice and have your crop go to full yield. And I think that is an exciting option for weed management solutions for Rice farmers in North and South America. So for us, we are on track for that commercial launch of 2,728. And now, we are excited to see that agreements go forward and the field trials to returning the results that we expect.

Okay, great. And then you go to that last one. (multiple speakers) Go ahead.

I was going to say Canola. We do think in the United States, we expect 26 in Europe. We need for the rest of that. We need them to vote. Yes. And then behind that period. And so, we do still expect this quarter to have the first proof of a platform. And then from that, we have GDM and other customers. We are going to start putting the trades in launch, but it will take a couple of years, but we do expect to have the approval to start working towards it.

And then just lastly just in terms of like a way to maybe help ground. How differentiated your solution is. Can you talk about the degree to which customers are willing to or reaching out to discuss, maybe paying you more for the field trials to help you scale up your field trials as opposed to taking a slightly lower, longer-term royalty?

Second would be how much of your bandwidth is currently being used. If your customers were all enthusiastic, how much more could they ask you to do? Can you just help us on those 2 fronts?

it is pretty exciting. I will start the Peter finishes is that with each of these, we are starting to edit all the crops and this time frame we are doing is breeding takes longer and even when they do it, they end up giving you a seed that you can then plant in, we are giving them back their germ plasm with the trades in it, right? And so that is what we think is going to be the system in Rice and then in the other countries, especially in Soybean. We see people saying we have other ideas, could not we work with you on that? And for all of our partners, I think they are all looking at us to say if you can make these timelines. And so that means that what we said in our talk was that 2 of our traits in Soybean, we have made the edits, they are going to the greenhouse, and we fully expect to have the results from that edit within 12-months of the edits, which is pretty cool. Is that helpful Peter?

Let me add a little bit to that. Because I think Laurence's question is really important. Because it really speaks to the time that we need to get from an edited germplasm into the field and to launch. And I think working with seed companies now our customers and partners. We continue to get more demand. We continue to get a lot of interest from seed companies because of the speed. And I think that they have recognized that if you can do that within 12-months and get it back to them in a really timely fashion, it fits into their breeding programs. But also, then we work closely with them for doing some of the field evaluation work as soon as the edits are done. And so that again, as we move forward and with our customers, they get that experience with us and they also get to see us delivering in a really time bound and predictable manner, not just a few elite genetics, but a broader base of genetics that will go into their breeding program. And I cannot stress this enough Lawrence because this is a really different paradigm. We are really educating people around why gene editing is so differentiated from traditional breeding and GMO technologies. GMO technologies and were no time but no took a long time. They were event driven science and the ability to generate materials in elite genetics. Directly the way we do it through our single-cell methods and get it back to the customer quickly. Really changes the paradigm of when you are doing those field work together and validating it to get the launch. Hopefully, I have gone a little bit broader, but hopefully that is helped to answer that question.

Maybe just if I can just ask one last one, then is just, can you, to what extent if you look at the total field trial validation, licensing cost that a crop would entail to somebody from development to commercial sale to the farmer. It sounds as if there is, you can you give a sense for roughly how much that cost is being shouldered by your partners or is it like a 5,050 split is 7,030? Are they putting it all on you because you still have to prove yourselves? So you just give a sense for like how the total cost pie is being split.

We have been pretty open that for the first edits that we have been doing it for the customers and the follow-on edits. The whole point of this is you may have 5 or 6 lines and rights you want done and sla and they have so many different areas and that they will pay for each edit at that point. And so we put it in there and improve, we can do it and everybody's expecting. And all of our discussions have been to have it be a profitable business where we are changing our time and cost to be able to get this trade in their crops.

Is that helpful?

So that is the goal. But are they doing that now or is that the goal?

They are doing it. They are not doing it now right now. We are in Rice. So these are the first ones in Rice. So Rice will be a good experiment with that. So in Rice, we are starting.

To have by 2026 we should see it flip to being a profitable cost sharing business.

It is like the right way to think about it.

Great way to think about it. And it just means that the editing part of the business will pay for itself. And that is not, does not count for the royalties you get for the trade itself, but you are totally right. Our expectation is the editing part of this business will be a for profit enterprise and allow you to really even do things earlier on, right? And that we have gotten so well down that you should be able to really you heard us say we would like for people to think of us as an extension of their operations and to be able to speed up and make their things most more efficient from cost and time.

Got it. Okay. Great. Thank you.

Thank you. And the next question today comes from Austin Moeller at Canaccord. Please go ahead.

Hi, good evening. Peter and, and Rory. Just my first question here. Can you talk about the timelines and analytical process involved in evaluating the winter United Kingdom field trial results and the greenhouse results for Quain of resistance in the third mode of action?

That is excellent question. it is clearly one for Peter.

Thanks. Thanks Rory, thanks Austin. Let me start with Sclerotinia and then I will go to the other trialing but the Sclerotinia. Now, we are beyond excited about the fact that we can bring different modes of action. As I mentioned in the remarks that durable resistance is all about having multiple modes of action. So our field testing has spent we spent quite a bit of time validating exactly how we evaluate the different edits and the different modes of action. So this past year, we are excited to see really good Sclerotinia infection. I do not think farmers were excited about that, but through our trial and that purpose, that was great. So we can see the differentiation between the edited and nonedited versions of our mode of action too. We are also seeing the mode of action three for us is going to be greenhouse results in the fourth quarter of this year. So that is where we are with the Sclerotinia. When it comes to the work we are doing in the United Kingdom, again, we are working closely with our customer, and partners in Europe and in the United Kingdom, we have done our first season of trials and the Pod Shatter Reduction (PSR) test had some really positive results, which was fantastic. One of the things about the winter oilseed rape as it is called in Europe is there is a quick turnaround. So, within 3 or 4 weeks, we had to make some decisions and it was very easy when we saw our partner's genetics with the edits be performing at a very strong level of pod shadow reduction that we were able to replant those and we will have another full season of testing. You need to continue to have more testing to validate the trait. And so customers can get to see it in their own genetics. it is an exciting moment for us.

That is helpful, and just to follow up. Are there any updates on sustainable ingredients and fragrances in the timeline?

I can tell you go is we are very encouraged. it is going to send it in the next year. And we have made really good progress on our expectations is that with the finishing of the Soybean platform that we will start to see have results that we can announce within by year end next year. So we are really excited about where it is going. We are doing a really good job on the required for these things, and the work we need Soybean done so we can show it to you and Soybean.

That is excellent. I will pass.

Thank you. And our final question today comes from Matthew Venezia with Alliance Global Partners. Please go ahead.

Thank you for taking my questions. Firstly, I just wanted to ask about your 12-month germ plasm to greenhouse and whether the evidence for that coming in HT2 in Canola, whether that confirms your 3-to-5-year estimate for germplasm receipts to final product. And to that point, if you could speak a little bit to the benefits and drawbacks of. I know you mentioned it briefly protoplast regeneration as the mode for industrializing the gene editing process.

Here. You want to go.

Thanks. Mattew. I think that is again, if you think back of the last nine months, and what we have achieved. It is to my mind, one of the real breakthroughs that we have had at the company, we have talked about our Trait Machine and getting that operational. Some of the key technical breakthroughs you think about are the huge improvements in editing efficiency. That creates precision with our production and, what that means is that for customers, it gets their seeds back in their hands quickly. And so that is the speed to market. It also allows you to get multiple genetics back to different customers. And so that efficiency of being time bound, and predictable really is contrast to what I mentioned before about traditional breeding and GMO technologies. And so the ability to deliver that back to customers allows you to think through, when you think that that time period of 3 to 5 years, it really allows you with the customer to get to those launches very quickly. And then, we are talking about our weed management HT2 in North America by 2028. That is fantastic when you think about the process where we can start with customer genetics and get it to them in that sort of time frame.

And one thing that Peter, one of the things that makes it so exciting is. I think the team did not realize how accurate and precise and time bound. They thought their work was going to be, and so for many of these traits. If you get it right, we are going to show greenhouse results and that is going to be within a year. And so the time frame, it sort of confirms the 3 to 5 is within a reach and also gives the idea how fast you could do, especially if you are working with customers. it is really that is why we are so excited about this.

Great, thank you. And then just to follow up in that same [Vein]. Can you just compare and contrast protto plus regeneration to other forms and modes of regeneration that other competitors are using? And how the Trait Machine differentiates itself from a process like what is going on at pairwise.

As you guys have put off to you.

Sorry, [Matt]. I think you have had that embedded in your first question and I apologize. I did not get to it.

No, no worries.

The product plus system you have heard through our remarks. And our other, call reporting about multiple edits and multiple jeans and multiple crops and that is a lot of multiples. When you have a single cell, the ability. If you have a single-cell method, you can deliver your reagents to make the edits. It allows you a lot of flexibility to actually do these very complex edits that we need for traits like disease resistance.

And so it really does differentiate because it is one you can do that, the complexity within a single cell. And our what has been great about the work we have done here at Cibus is the efficiency of once you do that of getting back to a fully regenerated plant in a really quick time frame. We have applied that to Canola with lots of different traits now. And we have also done it in so many different genetics. And so, we are now to transition that to Rice, we have done it in Rice before. We are building the Soybean platform. But it really differentiates from what other people are doing by not going through a single-cell method and it is, their timelines are longer because of that. There is a differentiation is that they have to go through a segregation step genetically to get rid of some of the reagents that they have inserted into their genomes and their seeds. And we do not do that. So not only is it faster and more efficient and you are able to do more complex traits, the regulatory analysis of that and the framework around the world. We have a clearer path. Hopefully that is a good question.

Very helpful. Thank you, Peter. And then just finally, is there going to be a company, should we expect a company in the same vein as Alba that we would expect to come in to establish service a labeling for the Latin America region or is that not necessary with Albaugh? And at this point.

Peter can answer, I think we are. You go. Peter.

That is exactly right. We have got a strong relationship with Albaugh and they are a global company so we can go forward with other countries with the so for our first agreement is with the United States and then we have agreements in place where we know we can extend that.

Perfect.

All Latin America does not have the same EPA. I think.

Cool. Thanks for those questions. I appreciate it.

Thank you. And this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Riggs for closing remarks.

I thank everybody for listening. As you can tell, we are really excited about where we have gotten to, and we probably had a lot of milestones to get through to this point. And we hitting our milestones is pretty cool. but some of these things like the efficiency and the accuracy and time and some, I do not think we were able, thought we were going to be able to quantify as much of this now. (inaudible) So we think this is a very good quarter and we really look for having even a bigger announcement with the next quarter. So, thanks.

Thank you. This includes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful evening.