Another 3 months have passed, and another earnings season is upon us!
While most synthetic biology companies are not profitable, or even have products, earnings calls can provide important insights into the company’s plans, priorities, and financial health. Here are the companies I am interested in hearing about among the CSSBI earnings calls, and what I’ll be looking for:
Commercial-stage
These are companies that are actively selling their products. Most will not be profitable overall due to continued R&D spend. Generally, we are looking for growing sales, improving margins (both gross and net), and clarity on future sales plans, collaborations, and product lines. All times ET.
Novozymes - October 21. Link
Sales growth above 3-4%
-3% YoY in Q3, down thanks to Bioenergy and Agriculture & Feed sectors
Maintaining or improving on 28% net margins
26% net margins, up from 23% in Q3 2019, but lower than the 27-28% historical numbers.
Any information on changing markets
No major information, all the markets are uncertain thanks to Covid.
Little overall change, but the numbers all moved in the wrong direction. Novozymes is still profitable (actually increased profits YoY) and has plenty of cash, but this could impact the dividend. Long-term, no major changes.
AquaBounty - November 3. Link
Strong start of sales of AquaBounty salmon to grocers and restaurants from the Indiana facility
Sales have not started of the salmon. Preparing for the first harvest.
Updates on future sales strategy
Sending initial samples to get customer feedback.
Updates on commercial production facilities
Building a large-scale farm soon, with ~10x the capacity of their current production facility. Identified a location and are beginning negotiations.
Financial health and runway
Have about 3 years in runway under current operations, but this could change positively or negatively as sales start and facility construction proceeds.
AquaBounty is driving its product towards the market at an encouraging rate. It will be very interesting to see how the market responds. This will be a huge test of the market’s appetite for a genetically-modified animal food product.
Amyris - 9:00 am, November 5. Link
Sales growth in Biossance line
Strong sales start to the Pipette and PureCane product lines
$12M in consumer brands sales, +203% YoY
Increasing gross margins, going above 40%
35% gross margins on products, 67% on consumer brands, getting higher
Improving net margins
Operating expenses down while sales up, shows improvement. Still a long ways to go, though.
Details on the vaccine adjuvant and other collaboration revenue timelines
No details here.
Financial health and runway
Cash is equal to about 1 quarter of losses. They will need to raise money soon. Their total debt has been reduced pretty aggressively over the past year, down around $125M (41%).
Their new strategy of consumer brands looks like a successful one, but they have a long way to go to be profitable, and are still in a rough financial position. It will be interesting to see how their brands do during the holiday season.
Calyxt - 4:30 pm, November 5. Link
Improving sales
+77% YoY, driven by a sale of the 2019 grain harvest. Might not be consistent revenue.
Gross margins trending towards positive
Still negative and getting worse. Now at -35%.
Future product sales strategy
All current inventory of soybean oil and meal has been sold.
Intending on targeting seed sales to large grain processors, representing at least $3 million in projected 2021 revenue.
Updates on products in the regulatory pipeline
Got an update on the timeline for future seeds and trait planting years. 2021 is when the next crop (alfalfa with improved digestibility, through a S&W Seed Company agreement.
Financial health and runway
Calyxt recently raised $15M in a secondary offering, giving them runway through Q2 2022.
Calyxt’s products are advancing towards the market smoothly, hopefully they will translate to sales. Current sales probably don’t tell you too much about the health of the company.
Berkeley Lights - 4:30 pm, November 12. Link
Sales growth as labs get restarted, especially service revenue
+16% YoY increase, +72% from Q2. Seems like things are going well. New cell therapy assay driving a lot of sales.
Continued strong gross margins, around 70%
70% on the dot.
Improving net margins
G&A expenses way up YoY lead to worse net margins. Getting further from profitable.
Updates on Ginkgo collaboration with expected payments
No updates here. Will depend on the success of developing new assays.
Financial health and runway
IPO proceeds plus a recent secondary offering leaves Berkeley Lights with plenty of cash to not only fund, but grow operations.
Berkeley Lights Revenues and Expenses
Berkeley Lights has nearly $500M in cash, while losing less than $50M per year. They must be preparing to expand aggressively, and with high gross margins, that means profitability could be coming quickly.
Twist Bioscience - November 23 (Fiscal year 2020 results). Link
General increasing revenue
Revenues up 66%.
Revenue % coming from standard product sales vs. Covid product sales vs. collaborations
Not broken down this way, but NGS revenue took over the first spot from synthetic genes, partially thanks to a $9M order from one customer, though all product categories improved.
Revenue % coming from non-Ginkgo customers
12%, down from 17% in 2019 and 34% in 2018.
Increasing gross margins, going above 30%
Gross margins at 32% from 13% in 2019.
Improving net margins
Improved to -131% from -200%. Revenues grew, while expenses stayed almost the same.
Emphasis on DNA products vs. other products for future revenue
NGS products expected to continue to dominate.
Financial health and runway
Have about 2.5 years of runway at current losses, though additional financing could happen sooner, in order to capture recent stock gains.
Twist Revenues and Expenses
Twist had a very impressive year, and are figuring out how to make money. They still have a long way to go towards profitability, and would have to keep this performance up for a while to get there. The big question - is there enough room in the market for them to get there?
GenScript - Reports semi-annually. No Q3 report.
Overall sales growth, with a focus on COVID products
Gross margins maintaining at around 65%
Improving net margins, approaching profitability
Information on licensing and co-development deals
In transition
These are companies that are changing their business strategy to focus more on therapeutics and human health applications. They may still be making revenue, but don’t expect growing sales from legacy business units. We are looking for updates on the transition process.
Codexis - 4:30 pm, November 5. Link
Information on their priorities during transition: will their future collaborations be more therapeutics- or industrial-focused?
Codexis is maintaining their old business segments while looking to grow in therapeutics collaborations. They have agreements with many top-20 biopharma groups. R&D spend has increased due to this.
Financial health and runway
Codexis has a few years of runway in which to manage their transition. Could be less if they decide to bring a therapeutic to market themselves.
The shift from industrial and agriculture focus to therapeutics will create less predictable revenue, as they rely more on milestone payments. Ultimately, therapeutics are more profitable.
Evogene - November 18. Link
Information on their priorities during transition: will their future collaborations be more therapeutics- or agriculture-focused?
Evogene will be advancing programs in both therapeutics and agriculture concurrently, but currently, these are mostly wholly-owned, not collaborations.
They expect the first commercialization of agriculture products in 2022.
Financial health and runway
Have about 2 years of runway, thanks to a large investment from ARK Financial Group.
Evogene has very promising technology and suite of potential products, but their arrival in the market is a ways off. We will see Evogene’s strategy going forward - whether they keep control or partner them off to defray costs.
R&D-Stage
Companies that do not have a product on the market, as they are working their way through the regulatory process. They may have revenue based on grants, licensing, or collaborations, but these are very consistent year-to-year, so large increases or decreases in revenue isn’t indicative of a long-term trend. They may offer updates on clinical trials or announce new deals, but that’s not likely. These announcements tend to be made as they occur. There isn’t much to look for on these calls, but it’s good to know the general financial health of the company to help predict if or when dilution may occur.
All therapeutics companies
Updates to clinical programs
Priorities or new indications they are pursuing
Announcements on new collaborations
Updates on existing collaborations
Financial health and runway