Calyxt, Inc.
Q1 2020 Earnings Call Transcript

Published: 8 May 2020

[Operator:]

Good morning, ladies and gentlemen, thank you for standing by. Welcome to Calyxt’s First Quarter 2020 Results Conference call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. [Operator Instructions]. The conference is being recorded today, May 7, 2020.At this time, I would now like to turn the conference over to Chris Tyson, Managing Director of MZ North America, Calyxt’s Investor Relations firm. Please go ahead, sir.

[Chris Tyson:]

Thank you and good morning. I would like to thank you all for taking time to join us for Calyxt First Quarter 2020 Business Update and Results Conference Call. Your hosts today are Jim Blome, Chief Executive Officer; Bill Koschak, Chief Financial Officer; Keith Blanks, Senior Vice President of Sales and Marketing; and Travis Frey, Chief Technology Officer. A press release detailing these results crossed the wires this morning at 8 o’clock Eastern today and is available on the company’s website calyxt.com.Before we begin the formal presentation, I’d 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 the company’s SEC filings for a list of associated risks. This presentation also includes a discussion of adjusted EBITDA and gross margin as adjusted, both are non-GAAP financial measures in Calyxt’s press release and its filings with the SEC, each of which is posted on the Calyxt website at calyxt.com.You will find additional disclosure regarding these non-GAAP measures. Reference to these non-GAAP financial measures should be considered in addition to GAAP financial measures. It should not be considered a substitute for results that are presented in accordance with GAAP. Finally, this conference call is being webcast. The webcast link is available in the Investor Relations section of our website at calyxt.com. At this time, I would like to turn the call over to Calyxt’s Chief Executive Officer, Jim Blome. Jim, the floor is yours.

[Jim Blome:]

Thank you, Chris. Thank you for joining us today for Calyxt First Quarter 2020 Results Conference call. Before I begin our First Quarter Review including how Calyxt is navigating through the current COVID-19 crisis, I would first like to give everyone a quick primer on our business. As the foundation built in 2019 has positioned Calix for success in 2020 and beyond.Calyxt is a technology company delivering plant-based solutions that are healthy and unsustainable. We are the first company in the world to bring a gene-edited food product to market and we intend to bring additional products to market focused on two important pillars, the first pillar is Health and Wellness where examples of product concepts we are working on include projects that are heart healthy, anti-inflammatory, higher in fiber, better tasting, or higher protein. The second pillar is sustainability. We’re bringing products to market that offer sustainability benefits including the potential to replace imported oils that may be driving deforestation and other climate change, replacing fossil fuels with plant-based solutions, and enabling differentiated production per acre to improve biodiversity. We believe this differentiates us from most of our competitors.We accomplished these objectives through our accelerated plant breeding technology called TALEN. Developed in part by Calyxt co-founder and Chief Science Officer, Dr. Dan Voytas, TALEN is an advanced breeding technology that allows for precision targeting of existing genes within a plant’s genome. Our scientists [indiscernible] desired characteristics, accelerated breeding in a fraction of time used in traditional methods and it mimics how plants could develop in nature. We can assess the viability of a trait in less than two years with as little as three more years and needed to reach commercialization.We have a robust development pipeline with 18 products at various stages of development, including several in both soybeans and hemp and projects in other crops including wheat, alfalfa, oats, and others. We intend to bring these products to market through collaboration or joint ventures with partners where we leverage our science and their commercial expertise to commercialize the product concept. This is an asset-light approach that is expected to result in non-dilutive financing for the company and a high-margin recurring revenue stream as projects are commercialized. We can also bring products to market through an integrated business model where we leverage third-party assets in the agricultural supply chain to process grains and sell the resulting products into the marketplace. However, this model requires more capital and is lower margin than the collaboration in joint venture model.Moving on to the first quarter of 2020 results. The COVID-19 pandemic has caused an unprecedented global crisis. I’m very proud of the dedication and resilience of the Calyxt team and of the actions we have taken in response to the COVID-19 pandemic to provide – to protect our employees and our business including having all workers who are able to work remotely do so since early in the crisis. Most of our laboratory workers remain on-site at our headquarters. Protecting our scientists and their projects is critical to our future and thus far, we have handled the – the transition without disruption. I really appreciate the actions of our team to help ensure we stay safe and on track.We had a strong start to the year and continue to execute on our business initiatives. During the first quarter, we began to see the impacts of COVID-19 pandemic across the country and its impact on the economy. The COVID-19 pandemic has had significant adverse impact on the food industry, especially in food service, which has substantially reduced food industry demand for vegetable oils. We have experienced lower demand for our high oleic soybean oil corresponding to the overall lowering of demand for all vegetable oils. We have seen the impact of the COVID-19 pandemic on the protein supply chain, which is likely to have an impact on the demand for our high oleic soybean meal and the price we may realize.In response to the changing demand, pricing pressure, and uncertainty among our customers and target customers caused by the COVID-19 pandemic, we have adjusted our short-term crush strategy and have canceled crushes scheduled for late May, June, and July 2020. This change is expected to shift product – shift product sales efforts into the second half of 2020 when potentially customer demand may partially recover depending on the timing and the extent of the resumption of normal operating activities among our customers.As a result of the COVID-19 pandemic, we have suspended our 2020 guidance for revenue and gross margin as adjusted and have developed plans to reduce expenses over the remainder of the year. We received a Small Business Administration’s paycheck protection program loan of $1.5 million in April recognizing that we are a small, early-stage enterprise with a single product that burns a significant amount of cash annually. In these unprecedented times, our access to capital has been impacted. We also compete with organizations that are much larger and better capitalized and to protect our team, we opted to take and expect to keep the loan proceeds. We will determine in the future whether we request forgiveness of any of the loan. We are pursuing sources of cash through high margin collaboration agreements and licensing opportunities and are reviewing all other cash flows. As a result of these actions, we updated our 2020 cash usage to between 30 and $34 million, and updated our cash runway to late 2021.We continue to evaluate additional strategies to further reduce our cash – our cash usage. We provided excellent service to our world-class customers who represent a substantial portion of our 2020 oil revenue. Deliveries of oil to our major industrial customer continue uninterrupted. We continue to sample and test our high oleic soybean oil with large consumer packaged-good companies. Our 2020 contracted acres achieved our 100,000 acre target and we sold out of seed for the 2020 crops. We are launching our five new seed varieties and expanding the states where we grow to five.We launched our e-commerce platform in April. This platform, which we are using as a pilot and can easily be leveraged across to other products, provides us with several benefits, including enabling consumers to purchase our oil directly any time of the day and obtain real-time feedback about the product.It is also an efficient way for us to distribute samples to influencers, growers, and investors and is in response to demand for our product from people who know about Calyxt and what it has done. We did not enter this pilot with the expectations of building a consumer brand or making a significant investment and as a result, do not expect significant revenues from the platform. We invite you to sample the oil at calyno.com.On the technology front, we continue to build out and improve our gene-editing technology suite, we licensed a brand new breakthrough from the University of Minnesota invented in Calyxt Co-Founder, Dr. Dan Voytas’ lab that will enable us to significantly reduce the time needed to develop trades in certain crops.I’m pleased with the four product candidate advancements in our development process in the quarter, especially considering the unique nature of each. Our innovative technology, continuous improvement, and robust scientific team of experts are what allows us to maintain a competitive edge and our headstart in the gene-editing space. In the near term, we expect to launch our first hemp product, improved plans to address key problems facing hemp growers, marking the launch of our second commercial product. We expect the velocity of our revenue opportunities to accelerate as we build up a robust portfolio of commercial products, addressing several different markets.For our efforts to secure new collaboration agreements with industry partners, we aim to sign multiple new agreements this year. We expect collaboration agreements to provide us with cash milestone payments to further support our liquidity and our vision that Calyxt is an innovation platform company.With this, I’d like to hand the call over to Chief Technology Officer, Dr. Travis Frey, for an update on innovation and our product pipeline.

[Travis Frey:]

Thank you, Jim. As Jim mentioned, we continue to have many scientific highlights culminating with our updated R&D pipeline and the licensing of new technologies to further improve our gene editing capabilities. On the R&D front, we’ve advanced four projects in our development process in the first quarter. In hemp, we expect to launch our first product in the second quarter, improved plans to address key problems facing hemp growers, marking the launch of our second commercial products.We were able to move quickly to bring this product to market by leveraging our patent-pending production system and analytics capabilities to solve the partners challenge. Using what we learned has helped us go faster on our other hemp projects as well. Our pipeline projects each address a significant opportunity in the respective markets and create new opportunities for us. One great example is our high-fiber wheat product in which we have been able to deliver at least three times more dietary fiber than traditional white wheat flour. We expect to launch this product as early as 2022.As of March 31, 2020, we had 18 projects at discovery stage or later across alfalfa, canola, hemp, oats, potatoes, soybeans, and wheat, with the majority in soybeans and hemp. We expect to launch at least six product candidates through 2024, including the hemp and wheat products I mentioned earlier and also including our alfalfa product candidate in 2021 and three additional product candidates, either via our integrated business model or in collaboration with third parties. This is particularly exciting as we continue to accelerate our efforts to develop rewarding collaboration agreements with industry-leading firms to bring our products to market in a high-margin, capital-light manner.I’m excited about our R&D pipeline and I am working to expand it along with others inside and outside our organization. Advancing our technology and expanding our IP portfolio, enabling us to continuously push the boundaries of what we previously thought was possible through TALEN. Through this, we will explore new target crops, traits, pathways, all while continuing to be innovators and pioneers in the plant gene-editing space. To support these actions, in the first quarter, we made two major technical advances. First, we licensed new technology from the University of Minnesota to help increase plant gene editing efficiency that enables us to eliminate the need for tissue culture in several crops.We anticipate that this will help us maximize our core TALEN technology to bring products to market faster while avoiding incremental R&D investments for those products. Second, we continue to expand our intellectual property portfolio with newly granted U.S. patents and applications for new patent families. Granted U.S. patents cover expansion of the core TALEN patent family with claims directed to methods for generating gene-edited plants as well as an additional soybean product concept. New provisional patent applications focus on expanding the portfolio of novel gene-editing tools and enabling technologies, new product concepts in both soybean and wheat, and additional germplasm varieties from our breeding program.In addition to our already disclosed products, we will continue to expand our pipeline to bring what could be blockbuster products to the marketplace. Some examples of products we’re aggressively pursuing are sustainable oil replacements where we will replace one oil with another more sustainable or healthier plant-based alternative; non-gluten alternatives; and in the areas of protein and flavor, where we’re exploring products and project ideas that improve the taste of proteins and plant-based proteins. We also have multiple projects underway in hemp, including several that enables us to leverage our plant-breeding genomics and then a little co-expertise to accelerate market introductions.In summary, we’ve had a strong start to 2020, setting the stage for an exciting rest of the year. And with this, I’d like to hand over the call to Keith Blanks, our Senior Vice President of Sales and Marketing for an update on our sales and marketing efforts for a high oleic soybean oil and meal [ph].

[Keith Blanks:]

Thank you. Travis. I would now like to discuss the progress made during the first quarter for our soybean products. We currently target sales of our high oleic soybean oil to food service, food manufacturing, animal nutrition, and industrial market segments. Most of our oil revenue in the quarter was from our world-class customer, active in all four of our premium oil market segments. We have enough oil on hand to supply their remaining orders now through the early fourth quarter.We are also now supplying our high oleic soybean oil to the top two food service distributors in the United States, though demand in this channel has suffered as a result of COVID-19. We are continuing to sample and test our high oleic soybean oil with the large consumer packaged goods companies, though they are focused right now on supplying their customers, not on making changes to products rolling out significant innovation.Our soybean meal customer base has been expanded both geographically and to additional protein production markets. We also have seen our average price premiums improve over the past quarter compared to the third and fourth quarters of 2019. Our 2020 contracted acres achieved our 100,000-acre target and represented a 278% growth over our 36,000 planted acres in 2019, surpassing our stated goal of doubling soybean acreage annually.We are also sold out of seed for the 2020 crop and seed distribution is underway. Deliveries of seed or are on schedule and we continued to monitor the distribution network. This includes the five new varieties we launched for 2020. Our estimate of our share of the 2020 high oleic soybean acres is 25%, acreage gains are driven by the expansion of distribution into Iowa, Nebraska, and Kansas, giving us access to where 45% of the soybean acres are planted in the United States.Turning now to the impacts of the COVID-19 pandemic, it has had a significant adverse impact on the food industry, which has substantially reduced food industry demand for vegetable oils. Beginning in the last weeks of the first quarter of 2020 and continuing into the second quarter of 2020, we have experienced lower demand for our high oleic soybean oil, corresponding to the overall lowering of demand for all vegetable oils.In addition, excess supply of vegetable oil has driven lower prices and we believe our high oleic soybean oil may be particularly impacted by – impacted by lower pricing within the premium oil category. Looking forward, we expect prices for premium oil to remain low and demand for vegetable oil to remain depressed into the second half of 2020 and possibly beyond. We currently target sales of our high oleic soybean meal to dairy, poultry, and pork producers. The COVID-19 pandemic has impacted protein processing facilities with several processing facilities temporarily closing or suspending operations, which is impacting the upstream operations in the industry.The COVID-19 impact on protein supply is likely to have a corresponding impact on the demand for our high oleic soybean meal. Looking forward, we expect prices for soybean meal to remain low and depending on herd sizes, the soybean meal demand may also be depressed into the second half of 2020 and possibly beyond. In response to changing demand, pricing pressure, and uncertainty among our customers and target customers caused by the COVID-19 pandemic, we have adjusted our short-term crush strategy and have canceled crushes scheduled for late May, June, and July 2020.This change avoids storage costs for oil and is expected to shift product sales efforts into the second half of 2020 when potentially customer demand may partially recover depending on the timing and the extent of resumption of normal operating activities among our customers. We are also accelerating the purchase of the remaining 2019 grain crop, which was originally expected to be purchased before August 31, 2020, enabling us to take advantage of current soybean grain prices.I will now hand this off to our CFO, Bill Koschak, who will give you an update on our first quarter financial results.

[Bill Koschak:]

Thank you, Keith. Today, we issued a press release describing our first quarter 2020 results and we also filed our Form 10-Q this morning, both of these documents are available on our Investor website. Our revenue from high oleic soybean oil and meal in the first quarter of 2020 increased $2.2 million to $2.4 million. Growth was driven by 1,440 points of volume, 44 points of favorable product mix, partially offset by 70 points of pricing.High oleic soybean meal was 87% of revenue in the first quarter of 2020 compared to 92% a year ago. Most oil revenue in the quarter was from our world-class customer that’s active in all four premium oil target market segments, is used as a plant-based alternative to synthetic fluids. Gross margin has reported decreased $1.6 million to a negative $1.5 million in the first quarter of 2020 reflecting the higher costs we are experiencing at this early stage of commercialization of our high oleic soybean products. Gross margin as adjusted for non-GAAP measure was a negative $1.2 million dollars or negative 49% as compared to negative $1.5 million or negative 63% as reported under GAAP.Our earnings release provides a discussion of gross margin as adjusted and a reconciliation of gross margin, the most comparable GAAP measure, to gross margin as adjusted. R&D expenses increased $568,000 to $2.8 million in the first quarter of 2020, driven by increased personnel cost, professional fees, and non-cash stock compensation expenses. We expect R&D expenses to remain stable or increase as we continue to focus on our technology and bringing projects developed with collaborators to market.Selling and supply chain expenses increased 676,000 to $1.6 million in the first quarter of 2020, driven by increased personnel costs and allocated expenses including $273,000 of Section 16 officer transition expenses, partially offset by $314,000 of lower non-cash compensation.Due to the impact of the COVID-19 pandemic, we generally expect a decrease in selling and supply chain expenses due to decreased sales and decreased marketing costs. We will also be targeting sales and supply chain expenses as part of our overall expense reduction efforts in response to the pandemic, which we expect to reduce selling and supply chain expenses for the balance of 2020 as compared to the first quarter of 2020.G&A expenses increased $558,000 to $4.7 million in the first quarter of 2020 driven by professional services expenses and increased depreciation. We will be targeting G&A expense as part of our overall expense reduction efforts in response to the pandemic, which we expect to reduce G&A expenses for the balance of 2020 as compared to the first quarter. Net loss increased by $3.7 million to $11.1 million in the first quarter of 2020. The net loss per share was $0.34 per basic and diluted share in the first quarter of 2020, an increase of $0.11 per diluted – basic and diluted share from the first quarter of 2019.Adjusted EBITDA, a non-GAAP measure, increased by $2.6 million to $8.2 million in the first quarter of 2020, driven by the changes in operating expenses and the increases in negative gross margins described above and a $570,000 decrease in interest expense, driven by lower rates, lower balances, and unrealized losses on short-term investments. Our earnings release provides a discussion of adjusted EBITDA and a reconciliation of that measure to net loss, the most comparable measure calculated under U.S. GAAP.Net cash used in the first quarter of 2020 was $12.6 million compared to $9.6 million in the first quarter of 2019, driven by the increase in net loss of $3.7 million, partially offset by a decrease in cash used for payments of operating liabilities, primarily the result of higher cash payments to suppliers and related parties in the first quarter of 2019. Cash, cash equivalents, short-term investments, and restricted cash totaled $47.4 million at March 31, 2020.Due to the COVID-19 crisis, we’ve observed changes in demand across the oil markets and declines in exchange-traded prices for both oil and meal. As a result, we paused our crushing and refining schedule and expect product sales efforts in the second quarter to shift to the second half of 2020. We are pursuing sources of cash through high margin collaboration agreements and licensing opportunities and are taking further action to increase financial flexibility and liquidity including reviewing operating expenses, adjusting the timing of grain purchases in the fourth quarter to the following year, and postponing non-essential capital expenditures.In April 2020, we received a $1.5 million loan under the Small Business Administration’s payroll protection program implemented as part of the CARES Act. After a thorough management review, we determined that the current economic uncertainty made the loan necessary to support our ongoing operations and allows us to continue employing our team members through this unprecedented time.On March 5, 2020, Calyxt issued 2020 financial guidance for revenue, adjusted gross margin, and cash usage, which did not consider the impacts of the COVID-19 pandemic. Due to the high degree of uncertainty created by the pandemic and the challenges of accurately predicting the specific extent or duration the COVID-19 pandemic may have on operations and financial results, Calyxt is withdrawing its guidance for 2020 and 2020 adjusted gross margin.In addition, considering the anticipated reduction in cash expenditures, Calyxt now expects cash usage in 2020 to be in the range of $30 million to $34 million, a reduction from previous 2020 cash usage guidance of $34 million to $38 million. These reductions extend into 2021 as well. With these actions, we expect our current cash runway to now extend to late 2021. We continue to evaluate additional strategies to further use – reduce our cash usage.I would now like to turn the call back to Jim.

[Jim Blome:]

Thank you, Bill. While the immediate future is uncertain. What is crystal clear is that Calyxt must act judiciously and decisively to succeed during this situation and after it is resolved. We have taken action delivered our cash expenditures both this year and into next, that enables us to extend our cash runway into late 2021. We continue to execute on our business initiatives for customer advancement and soybean margin optimization. Our agronomy and supply chain teams have worked to ensure our 2020 acres are able to be planted. We have maintained the pace of our meetings with some of the world’s best companies on product development opportunities.In our labs, we have improved our gene-editing platform, expanded our patent and IP portfolio, and have driven forward our R&D programs. I’m incredibly proud of our team and look forward to sharing more on our developing story at the upcoming BMO – BMO global farm-to-market virtual Conference on May 13 and then at a future date, providing more information about our technology and R&D pipeline.With that, I’d like to open up the call for any questions. Operator, please go ahead.

[Operator:]

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] We will pause momentarily to assemble the roster. Your first question comes from Ben Klieve from National Securities Corporation. Please go ahead.

[Ben Klieve:]

All right, thanks for taking my questions. Just a couple from me here. So, first, wondering if you can elaborate a bit on the kind of the cadence of the hemp initiatives that you’re describing. You talked about it being in the pilot stage this year with other projects and expected to launch in 2023, but does this imply that the – that this crop overall is going to effectively remain in the pilot stage for the next couple of years or – before it really accelerates in 2023 or do you expect kind of a material year-over-year increase between now and then

[Jim Blome:]

Thanks, Ben, this is Jim. Yes, we’re excited. This project came up and we’ll be launching here in the second quarter, but it’s really a standardization project for us to address the common issues or help build a chassis for the common issues facing hemp – hemp growers, so we want to assist in making hemp a broad-acre crops and so there are certain things that need to be done to assist in automatization and mechanization and other things that you need to be a broad-acre crop and similar to our high oleic soybean model, it really provides an alternate economic model for a crop in a model for U.S. farmers who are really looking for that.So that’s where the idea came, one of our soybean growers is a hemp grower with certain products – problems in that drop. And we believe our growing expertise in TALEN tools could be used to assist in future concepts, already focused on and discussed in today’s market, like the potential wellness attributes [indiscernible] the uber strong Green Building Materials used as [indiscernible] and used as a protein source and really looking at ways to reduce risk or provide new profiles for consumer products in this – in this big discussion about this emerging crop with plenty of white space and looking for a leader.So that’s basically our plan on hemp and were tickled to death to be getting started on it and we think this buildup and headstart and expertise in this – in this crop that’s looking for a leader is exciting for us and it also lets us leverage what we’re doing in soybeans, a lot of this R&D in the techniques have really helped us on both sides, but we really think that’s another reason why this will be a strong area for us.

[Ben Klieve:]

Perfect, thanks. Turning over to Calyno, maybe I missed the exact acreage number, but in the past you’ve given very exact numbers of acreage that was planted or contracted at the time of report. I heard the 100,000 number repeated today, did I miss the exact acreage number that – that you have contracted for this year and if so, what was it? And if not, is there a reason why – why you’re not able to provide that exact number?

[Jim Blome:]

We’ve shared with you before that we reached fairly early, I think in February, the 100,000 acre where we are ringing these five new varieties and we’ve replicated the seed in South America, got it back and ready to plant. So, we’ll have – always have some extra seed inventory for re-plants in case there is a weather event, but we are focused on that 100,000 and really with the increase over 36,000 last year, are comfortable with that number, but we’re planning it right now. So the reality is we’re less than half planted but we are way ahead of normal in last year for these areas that keep this kind of statistics at USDA, so we can’t predict the future, but we are really excited about getting this 100,000 acres in the ground.

[Ben Klieve:]

Okay. On the – on the commercialization front, I mean, I certainly – certainly understand the challenges in the current environment with commodity prices and the market overall. But I’m wondering if you can talk a bit about the – your ability to – how your ability to realize a premium for – for the meal and the oil has evolved over the past 12 months, maybe in advance of – in advance of COVID-19 really, really taking hold, were – was your – did you see pricing power improve over the past year, were you pricing higher than – substantially higher than commodity prices and commodity – commoditized alternatives or were you realizing pricing really kind of closer to that number and how did that number evolve here over the past 12 months or so.

[Jim Blome:]

I’ll start and then I’ll let Bill talk about margin numbers, but we are excited. It really seems that this focus on high oleic soybean as an alternative to import it in other less local traceable sustainable options is taking off. We saw a big demand coming into the year and some spot shortages of some of our competing products that really got us interested and got us exposed to a lot of customers. Unfortunately, now with the shutdown of the restaurant industry and other things, that’s alleviated some of those supply issues and so we’re back to now selling. So on the margin side, Keith and Bill, do you want to comment on that.

[Bill Koschak:]

Sure. I think as you know Ben, right, the changes in the commodity prices which are the base portion of the price that we capture, especially in the oil market have really fallen in the first quarter and we certainly saw that, but the premiums that Keith and his team were working to secure from a variety of potential customers were in the range of what we had been expecting from the beginning of the commercialization journey.On the meal side, we’ve – those prices also, as you know, we’ve been very volatile rate depending upon which week you picked in March, you could have been $40 different and we worked through our risk management strategies to protect the pricing expectations we have in our programs, which have proven to be successful and we were seeing nice pricing versus the board on the meal side as well, with a very steady supply – demand for the product. Keith anything you’d like to add.

[Keith Blanks:]

No, think you got it Bill.

[Jim Blome:]

Thanks, Ben.

[Ben Klieve:]

I think that that does it from me. Thanks guys. I’ll jump back in queue and better luck navigating the current environment here.

[Jim Blome:]

Thank you.

[Operator:]

Thank you. Your next question comes from Laurence Alexander from Piper Jaffray. Please go ahead.

[Unidentified Analyst:]

Hi, good morning, this is Kevin [indiscernible] on for Laurence actually from Jeffries. I just have one question. It’s regarding R&D collaboration, so I guess I’m just wondering if you guys have any updates there and maybe how coronavirus and of course economic uncertainties impacting your R&D collaboration with peers.

[Jim Blome:]

Sure, great question. We’re a futuristic company looking at concepts into the future and replacing current issues or projected issues in the marketplace. So our global customers are the players that we’re talking to who haven’t changed their mind about preparing for the future because we’re talking about something outside of 2021 – 2020 and hopefully this pandemic won’t take us that far, I’m pleased in that we’re pretty adept and the world is getting more adept at keeping meetings on the calendar, getting our video conferencing expertise in, and people really sometimes being even more accessible now that they are not traveling, so we are on track and really pleased with how we’re managing projects and project timelines on collaboration, even in the face of the COVID-19.

[Unidentified Analyst:]

Okay. Thank you.

[Operator:]

Thank you [Operator Instruction] and wait for your name to be announced your next question comes from Robert Leboyer from Ladenburg Thalmann. Please go ahead.

[Robert Leboyer:]

Good morning.

[Jim Blome:]

Good morning Robert.

[Robert Leboyer:]

You had mentioned the impact of the pandemic and the fact that pricing is down and the interruption in the food supply industry and in livestock and all of the different customer sources, could you quantify a little bit of what you’re expecting in terms of volume and just what the pricing movements have been as well as any kind of shift in the market that you might anticipate going forward and changing in consumer behavior.

[Keith Blanks:]

Hey, Robert, this is Keith, thanks – thanks for the question. We try to spread our – our segments and our channels out to sell our products, but with COVID-19, it’s somewhere probably at least around that 50%. As far as what’s been impacted in some channels, it is high as 90%, but I think using 50% as an indicator would probably be a good number.

[Robert Leboyer:]

Okay, great. And have you seen – you mentioned the impact on meal and livestock feed, is that something that you think is going to be contained to a particular quarter or further reduction going forward or any kind of indications or sense of what’s going on in the market.

[Jim Blome:]

So that’s a good question. But the reality is we don’t know how long this is going to happen – continue this – this and also we’re looking at opening up slaughtering houses again or not, right? This is just a great uncertainty around – around that and how that affects producers or what they’re doing with herd size is interesting as well as the soybean base price moving up and down. So Robert, it’s a great question, but if you can tell me how long this is going to last, I can give you a better indication, but it’s – it’s – we’re watching it and hoping for a quick recovery.

[Robert Leboyer:]

Okay. Well, as soon as I figure out how long it’s going to last. I’ll call you right away.

[Jim Blome:]

Let me give you my phone number.

[Robert Leboyer:]

Yes, yes. My Nobel Prize will be ready. The other thing is, just in terms of planting for – for this year and the postponement of the crushers and impact on sales, is there any indication that this is going to be contained to one year or follow-through or just too early to say.

[Jim Blome:]

No. What we do know is, we’re planning to plant this 100,000 acres this year and then we’ll see how long this macro-environment lasts and we’ll make decisions there. So what we do know is – what we’ve reported is that we’ve canceled our crushes through July, we’re planning – planning to plant acres of 100,000, we’ll see how the weather goes and then we’re going to watch this macroenvironment to make further decisions.

[Robert Leboyer:]

Okay, great. I guess that’s as much as anyone can estimate at this point.

[Operator:]

Thank you. [Operator Instruction] This concludes our question-and-answer session. I would now like to turn the call back over to Mr. Jim Blome for closing – my apologies, we have one question from Kenneth Zaslow from BMO Capital. Please go ahead.

[Vishal Patel:]

Hi, this is Vishal on for Ken. Could you talk a little bit about how your conversations with customers or prospective customers have changed, if they have all, over the last month in light of recent events and in terms of your e-commerce launch, did you notice any significant consumer interest relative to commercial, I was kind of surprised at the number of non-GMO cooking oil options that were available on Amazon after I saw that you launched an e-commerce platform, I was just wondering if you could comment on that. Thank you.

[Jim Blome:]

Yes, I’ll take the e-commerce question upfront and I’ll pass it off [indiscernible]. We were excited to launch the e-commerce, we didn’t spend a great deal of money putting it out there, but we have a great source of pride in rural America about cooking with their own oil and in some of the local restaurants and the local, the traceable, the University Minnesota, we had a lot of people wanting to do this. And so, there is something not just about non-GMO oil, but it’s something about this – this product of University of Minnesota, this upper Midwest technology – upper Midwest small company taking it to the market with growers who are right here and feeding all that in.So we really wanted them to be able to serve that pride up on their tables, it’s pretty interesting for them to look out into the fields of beans and then serve the oil on their tables in Minneapolis and in certain areas, It’s kind of like a virtual farmers market, we’re bringing local without – with proper social distancing, we’re still getting access to local and traceable products. So that’s been our experience on e-commerce and we’ll be reporting and data and what we’re learning from it in the future.

[Keith Blanks:]

Good morning. So, I’ll talk just a little bit about customers, what has been surprising to me is that they are still very engaged and they are still very interested, it’s just that COVID has changed some of their, what I would call, probably their priorities and where they are focusing their efforts, but I have been very surprised that we still stay engaged. We’re still doing testing, we’re still going through approval processes. So that part has – has been very positive.

[Vishal Patel:]

I appreciate it. Thank you, guys.

[Jim Blome:]

Thanks, Michelle.

[Operator:]

Thank you, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Jim Blome for closing remarks.

[Jim Blome:]

Yes, I want to say thanks to everyone for joining us on the call today. We have a really dedicated and hardworking team here at Calyxt who push themselves, really to further our mission every single day and a sincere thanks from all of our management to all of you, we couldn’t do it without you.And lastly, if we were not able to address all your questions on today’s call, please feel free to contact us or our Investor Relations Firm, MZ Group, who would be happy to answer them. We look forward to providing more updates at our Virtual Analyst Day coming up in the future. Thank you. Operator?

[Operator:]

Thank you. This does conclude today’s conference. Thank you for your participation, you may now disconnect.