- Calyxt sells a premium soybean cooking oil Calyno
- TALEN gene-editing technology is a game-changer
- Strong management team with proven track record
What Calyxt does:
Founded in 2010, the Roseville, Minnesota-based company is doing what farmers and botanists have been doing for hundreds of years: choosing the best crops and breeding them to make higher-yielding plants. It accelerates that process with its TALEN gene-editing technology.
Developed in part by Calyxt co-founder and chief science officer Dan Voytas, Transcription Activator-Like Effector Nuclease — better known as TALEN — is an advanced breeding technology that allows for precision targeting of existing genes within a plant’s genome. That targeting allows Calyxt scientists to select desired characteristics, and precisely engineer beneficial crop traits, accelerating breeding at a fraction of the time it would normally take.
Unlike genetically modified (GMO) crops, Calyxt products contain no foreign DNA. The company simply harnesses the unique characteristics that naturally exist in the plant.
Next, it gets the seeds to growers who are a part of its premium producer program. The crops are traceable right to the county in which they were grown, thanks to the company’s Identity Preserved Program that tracks seeds all the way to the final product.
The company engages in the development of products, which include high fiber wheat, alfalfa, reduced browning potatoes, and high and low linolenic soybean products.
How is it doing:
Calyxt is shifting to an advanced go-to-market strategy focused on providing plant-based innovations. To that end, the company reached a deal in December to sell all 2020 grain production of its high oleic soybean to agricultural giant Archer-Daniels-Midland Company (NYSE:ADM).
In November, Calyxt’s third-quarter results showed growing revenue and narrowing losses, thanks to increased sales of its grain and other crops. For the period ended March 31, 2020, Calyxt posted a 77% jump in revenue to $5.2 million. The firm’s adjusted net loss improved by $2.6 million to $9.3 million from the third quarter of 2019.
Calyxt executed a commercial trait licensing agreement in October — the company’s first — with Colorado-based S&W Seed Company for its improved quality alfalfa seed in the US and other select geographies. The enhanced trait gives farmers the opportunity to produce alfalfa forage for livestock with improved digestibility, which may lead to greater animal performance. The deal could generate more than $10 million in revenue over the life of the trait’s pending patent, the company said.
Calyxt is expanding its portfolio with next-generation legumes and plants, including high oleic low linolenic (HOLL) soybean, developed using its TALEN gene-editing technology. With its TALEN platform, the company is exploring licensing agreements with partners about Calyxt-developed traits or products for upfront and milestone payments and potential royalties upon the commercial sale of products.
The company said it will be working with partners to accelerate its pipeline of high fiber wheat, low THC hemp for food, fiber and therapeutics, gluten-free and cold-tolerant oats, and pulses with improved flavor and protein profiles.
Calyxt has recently struck a research collaboration with NRGene that will see the company adopt NRGene’s cloud-based genomics platform to support key research projects. Calyxt says it will integrate NRGene’s genomic resources with its TALEN gene-editing technology to build out its predictive data analytics, which combines insights, scientific data, algorithms and data visualization tools to develop customized products. The NRGene’s genomics platform is expected to accelerate Calyxt’s trait discovery in hemp.
Calyxt has said it expects to launch at least six products between now and 2026, starting with a hemp product. The company's plans also revolve around the launch of a high-fiber wheat product targeted for early 2022.
- Traction from the launch of improved digestibility alfalfa
- Momentum with high oleic soybean meal and products
- Big upside potential in leveraging TALEN gene-editing technology
- Transition to go-to-market strategy
What the broker says:
On February 15, Canaccord Genuity Capital markets doubled its price target for the company from $8 to $16 and reiterated a "Buy" rating in a note to clients.
The firm’s increasingly bullish stance follows Calyxt’s decision in December to sell all 2020 grain production of its high oleic soybean to Archer-Daniels-Midland Company (NYSE:ADM).
“Our Buy recommendation is based on the company’s shift to a less capital-intensive, higher-margin model focused on seed sales and licensing revenue across an expanding seed and trait opportunity,” analyst Bobby Burleson wrote. “As mentioned in prior research, CLXT is well on its way to transitioning away from capital intensive grain sales, following an announced contract to sell its 2020 grain production ... .”
Canaccord noted that Calyxt should see “long-term profitable growth” from more than six potential seed and trait sales and/or licensing opportunities. The firm projects most revenue will come from seed sales, but licensing its genetic traits and technology would improve the company’s upside.
What the boss says:
"The third quarter of 2020 was marked by two key milestones: an initial validation of our licensing business model with the execution of our agreement for Calyxt’s alfalfa product candidate and the continued transition of our soybean products to a seed go-to-market strategy," said CEO Jim Blome in a statement.
"We expect to continue selling grain in the fourth quarter, and the overall transition timeline remains on track."
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