Rice trait licensing company Cibus aims for $200 million yearly royalty income as regulatory conditions develop
Cibus, Inc. (CBUS), a biotechnology company specialising in gene editing, is making strides towards revenue recognition, as it focuses on delivering targeted near-term revenues, particularly in the areas of rice and sustainable ingredients, such as biofragrances.
Rice Traits Commercialization
Cibus plans to launch its gene-edited rice traits in Latin America by 2027, with the U.S. market following suit in 2028 [1]. This timeline is crucial for the company's path to commercialization and revenue generation.
Potential Annual Royalty Revenue from Rice Traits
The company's rice herbicide-tolerance traits, HT1 and HT3, have the potential to generate over $200 million in annual royalty revenue upon full commercialization in initial target geographies [2]. This represents a significant potential revenue stream for Cibus, assuming successful market adoption and regulatory approval.
Financial Overview
The net loss for the quarter was $26.6 million, a slight improvement from the $28.5 million loss in the year-ago period. The focus on operational discipline and cost-cutting measures has led to a decrease in research and development expense for the quarter, down from $13 million year-over-year to $12.2 million [3]. Selling, general, and administrative expenses also decreased, from $9.3 million to $6.6 million.
Biofragrances and Future Revenue Streams
While there is no specific timeline provided for the biofragrances segment, Cibus' focus is primarily on advancing its rice traits, with strategic partnerships supporting these efforts. The company aims for initial revenues from biofragrances in 2026 and $200 million in annual royalty revenue from rice traits as regulatory momentum builds globally.
Challenges and Opportunities
Operational risk remains around achieving the $30 million net cash usage target and timely commercialization of rice and biofragrance products. The company expects one-time charges of approximately $0.5 million in the third quarter. However, continued progress on regulatory fronts and customer engagements are expected to drive value as Cibus advances towards commercialization milestones.
Analysts continue to focus on the pathway to commercialization, regulatory updates, and cash burn, but now include more specific inquiries about customer concentration and revenue models. The company is focused on a single customer for biofragrance revenue in 2026, but there are other opportunities out there.
Regulatory Progress
Cibus signed an agreement with Semilano, its fifth rice seed customer in the Americas. The company remains confident about the expansion of gene editing opportunities to many of the world's important food crops. Despite a delay in EU regulatory trialogue, management maintains confidence in eventual resolution. The company expects regulatory clarity in the EU within the next six months [4].
In detail, there are committee work streams in the EU regarding labeling and patenting issues. Analysts displayed a neutral to slightly positive tone, focusing on revenue timing, regulatory progress, and cash burn reduction.
References:
[1] Cibus, Inc. (2022). Cibus Provides Second Quarter 2022 Financial Results and Business Update. Retrieved from https://ir.cibus.com/news-releases/news-release-details/cibus-provides-second-quarter-2022-financial-results-and-busine
[2] Cibus, Inc. (2021). Cibus Reports First Quarter 2021 Financial Results. Retrieved from https://ir.cibus.com/news-releases/news-release-details/cibus-reports-first-quarter-2021-financial-results
[3] Cibus, Inc. (2022). Cibus Provides Second Quarter 2022 Financial Results and Business Update. Retrieved from https://ir.cibus.com/news-releases/news-release-details/cibus-provides-second-quarter-2022-financial-results-and-busine
[4] Cibus, Inc. (2022). Cibus Provides First Quarter 2022 Financial Results and Business Update. Retrieved from https://ir.cibus.com/news-releases/news-release-details/cibus-provides-first-quarter-2022-financial-results-and-busine
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