UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31, 2021;~~June 30, 2021;


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38161

Calyxt, Inc.

(Exact name of registrant as specified in its charter)


Delaware		27-1967997
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2800 Mount Ridge Road
Roseville, MN		55113-1127
(Address of principal executive offices)		(Zip Code)

~~(651)~~ (651) 683-2807

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act.

Title of each class

Trading

Symbol(s)

Name of each exchange on which

registered

Common Stock (0.0001 par value)

CLXT

The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑No

As of ~~May~~ 6,August 5, 2021, there were ~~37,200,473~~37,270,998 shares of common stock, $0.0001 par value per share, outstanding.

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PART I. FINANCIAL INFORMATION			4

Item 1. Consolidated Financial Statements			4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15

Item 3. Quantitative and Qualitative Disclosures About Market Risk			2528

Item 4. Controls and Procedures			2528

PART II. OTHER INFORMATION			2629

Item 1. Legal Proceedings			2629

Item 1A. Risk Factors			2629

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			2629

Item 6. Exhibits			2730

SIGNATURE			2831

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Terms

~~Terms~~

When we use the terms “we,” “us,” the “Company,” or “our” in this report, unless the context otherwise requires, we are referring to Calyxt, Inc. When we use the term “Cellectis,” we are referring to Cellectis S.A., our majority stockholder. Cellectis is a clinical-stage biotechnology company employing its core proprietary technologies to develop best-in-class products in the field of immuno-oncology.

We own the names and trademarks Calyxt® and Calyno®; we also own or license other trademarks, trade names, and service marks of Calyxt appearing in this Quarterly Report on Form 10-Q. The names and trademarks “Cellectis®” and “TALEN®”, and other trademarks, trade names, and service marks of Cellectis appearing in the Company’s Annual Report on Form 10-K are the property of Cellectis. This Quarterly Report on Form 10-Q also contains additional trade names, trademarks, and service marks belonging to other companies. We do not intend our use or display of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by these other parties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). We may also make forward-looking statements in other reports filed with the Securities and Exchange Commission, in materials delivered to stockholders, and in press releases. In addition, our representatives may from time to time make oral forward-looking statements.

We have made these forward-looking statements in reliance on the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “anticipates,” “believes,” “continue,” “estimates,” “expects,” “targets,” “intends,” “may,” “might,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” or the negative of these terms and other similar terminology.Forward-looking statements in this report include statements about the potential impact of the COVID-19 pandemic on our business and operating results; our future financial performance; product pipeline and development; our business model and principal strategy for commercialization and sales of commercial products; regulatory progression; potential collaborations, partnerships and licensing arrangements and their contribution to our financial results, cash usage, and growth strategies; and anticipated trends in our business. These and other forward-looking statements are predictions and projections about future events and trends based on our current expectations, objectives, and intentions and premised on current assumptions. Our actual results, level of activity, performance, or achievements could be materially different than those expressed, implied, or anticipated by forward-looking statements due to a variety of factors, including, but not limited to: the severity and duration of the evolving COVID-19 pandemic and the resulting impact on macro-economic conditions; the impact of increased competition; disruptions at our key facilities; changes in customer preferences and market acceptance of our products; competition for collaboration partners and licensees and the successful execution of collaborations and licensing agreements; the impact of adverse events during development, including unsuccessful field trials or developments trials or disruptions in seed production; the impact of improper handling of our product candidates by unaffiliated third parties during development, such as the improper aerial spraying of our high fiber wheat product candidate; failures by third-party contractors; inaccurate demand ~~forecasting;~~forecasting or milestone and royalty payment projections; the effectiveness of commercialization efforts by commercial partners or licensees; our ability to make grain sales on terms acceptable to us; the timing of our grain sales; our ability to collect accounts receivable; disruptions to supply chains, including transportation and storage functions; commodity price conditions; the impact of changes or increases in oversight and regulation; disputes or challenges regarding intellectual property; proliferation and continuous evolution of new technologies; management changes; dislocations in the capital markets; and other important factors discussed under the heading “Risk Factors” in our filings with the Securities and Exchange Commission (SEC), included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 4, 2021 (our Annual Report) and our subsequent reports on Forms 10-Q and 8-K filed with the SEC.

Any forward-looking statements made by us in this Quarterly Report on Form 10-Q are based only on information currently available to us and speaks only as of the date of this report. Except as otherwise required by securities and other applicable laws, we do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances ~~change, except as otherwise required by law.~~change.

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Market Data

Unless otherwise indicated, information contained in this Quarterly Report concerning our industry and the markets in which we operate is based on information from various sources, including independent industry publications. In presenting this information, we have also made assumptions based on such data and other similar sources, and on our knowledge of, and our experience to date in, the potential markets for our product. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors” in our Annual Report and other subsequent reports on Forms 10-Q and 8-K filed with the SEC. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

Website Disclosure

We use our website (www.calyxt.com), our corporate Twitter account (@Calyxt_Inc) and our corporate LinkedIn account (https://www.linkedin.com/company/calyxt-inc) as routine channels of distribution of company information, including press releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website and our corporate Twitter and LinkedIn accounts in addition to following press releases, filings with the SEC, and public conference calls and webcasts.

Additionally, we provide notifications of announcements as part of our website. Investors and others can receive notifications of new press releases posted on our website by signing up for email alerts.

None of the information provided on our website, in our press releases or public conference calls and webcasts, or through social media is incorporated into, or deemed to be a part of, this Quarterly Report or in any other report or document we file with the SEC, and any references to our website or our corporate Twitter and LinkedIn accounts are intended to be inactive textual references only.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CALYXT, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value and Share Amounts)


	March 31, 2021 (unaudited)			December 31, 2020			June 30, 2021 (unaudited)			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	16,386		$	17,299		$	17,489		$	17,299
Short-term investments		3,045			11,698			0			11,698
Restricted cash		393			393			393			393
Accounts receivable		1,354			4,887			3,994			4,887
Inventory		4,532			1,383			2,468			1,383
Prepaid expenses and other current assets		3,347			3,930			629			3,930
Total current assets		29,057			39,590			24,973			39,590
Non-current restricted cash		597			597			598			597
Land, buildings, and equipment		22,549			22,860			21,998			22,860
Other non-current assets		225			280			207			280
Total assets	$	52,428		$	63,327		$	47,776		$	63,327
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	959		$	929		$	2,183		$	929
Accrued expenses		3,058			2,891			2,326			2,891
Accrued compensation		1,764			1,950			2,093			1,950
Due to related parties		114			766			128			766
Current portion of financing lease obligations		372			364			380			364
Other current liabilities		45			45			46			45
Total current liabilities		6,312			6,945			7,156			6,945
Financing lease obligations		17,780			17,876			17,682			17,876
Long-term debt		1,518			1,518			0			1,518
Other non-current liabilities		1,213			113			1,042			113
Total liabilities		26,823			26,452			25,880			26,452
Stockholders’ equity:
Common stock, $0.0001 par value; 275,000,000 shares authorized; 37,263,339 shares issued and 37,163,187 shares outstanding as of March 31, 2021, and 37,165,196 shares issued and 37,065,044 shares outstanding as of December 31, 2020		4			4
Common stock, $0.0001 par value; 275,000,000 shares authorized; 37,305,625 shares issued and 37,205,473 shares outstanding as of June 30, 2021, and 37,165,196 shares issued and 37,065,044 shares outstanding as of December 31, 2020								4			4
Additional paid-in capital		203,565			204,807			204,663			204,807
Common stock in treasury, at cost; 100,152 shares as of March 31, 2021, and December 31, 2020		(1,043	)		(1,043	)
Common stock in treasury, at cost; 100,152 shares as of June 30, 2021, and December 31, 2020								(1,043	)		(1,043	)
Accumulated deficit		(176,921	)		(166,893	)		(181,728	)		(166,893	)
Total stockholders’ equity		25,605			36,875			21,896			36,875
Total liabilities and stockholders’ equity	$	52,428		$	63,327		$	47,776		$	63,327

See accompanying notes to these consolidated financial statements.

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CALYXT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in Thousands Except Shares and Per Share Amounts)


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2021			2020
Revenue	$	4,402		$	2,377		$	11,880		$	2,307		$	16,282		$	4,684
Cost of goods sold		6,745			3,884			11,527			5,321			18,272			9,205
Gross margin		(2,343	)		(1,507	)		353			(3,014	)		(1,990	)		(4,521	)
Operating expenses:
Research and development		3,050			2,787			2,844			2,825			5,894			5,612
Selling, general, and administrative		4,258			6,298			3,478			5,167			7,736			11,465
Management fees and royalties		30			62
Management fees								15			42			45			104
Total operating expenses		7,338			9,147			6,337			8,034			13,675			17,181
Loss from operations		(9,681	)		(10,654	)		(5,984	)		(11,048	)		(15,665	)		(21,702	)
Gain upon extinguishment of Payroll Protection Program loan								1,528			0			1,528			0
Interest, net		(346	)		(398	)		(357	)		154			(703	)		(244	)
Non-operating expenses		(1	)		(11	)		6			(8	)		5			(19	)
Loss before income taxes		(10,028	)		(11,063	)		(4,807	)		(10,902	)		(14,835	)		(21,965	)
Income taxes		0			0			—			—			—			—
Net loss	$	(10,028	)	$	(11,063	)	$	(4,807	)	$	(10,902	)	$	(14,835	)	$	(21,965	)
Basic and diluted net loss per share	$	(0.27	)	$	(0.34	)	$	(0.13	)	$	(0.33	)	$	(0.40	)	$	(0.67	)
Weighted average shares outstanding - basic and diluted		37,136,338			32,988,141			37,199,349			33,039,338			37,168,018			33,013,739
Anti-dilutive stock options, restricted stock units, and performance stock units		5,013,780			5,328,268			5,223,327			5,140,153			5,223,327			5,140,153

See accompanying notes to these consolidated financial statements.

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CALYXT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in Thousands Except Shares Outstanding)

Three months ended March 31, 2021	Shares Outstanding			Common Stock		Additional Paid-In Capital			Shares in Treasury			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Stockholders’ Equity

Three months ended June 30, 2021																					Shares Outstanding			Common Stock		Additional Paid-In Capital			Shares in Treasury			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at March 31, 2021																						37,163,187		$	4	$	203,565		$	(1,043	)	$	(176,921	)	$	—		$	25,605
Net loss																						—			—		—			—			(4,807	)		—			(4,807	)
Stock-based compensation																						—			—		1,079			—			—			—			1,079
Issuance of common stock																						42,286			—		19			—			—			—			19
Balance at June 30, 2021																						37,205,473		$	4	$	204,663		$	(1,043	)	$	(181,728	)	$	—		$	21,896

Three months ended June 30, 2020																					Shares Outstanding			Common Stock		Additional Paid-In Capital			Shares in Treasury			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at March 31, 2020																						32,990,647		$	3	$	186,859		$	(1,043	)	$	(133,120	)	$	(163	)	$	52,536
Net loss																						—			—		—			—			(10,902	)		—			(10,902	)
Stock-based compensation																						—			—		1,797			—			—			—			1,797
Issuance of common stock																						49,873			—		—			—			—			—			—
Other comprehensive income																						—			—		—			—			—			122			122
Balance at June 30, 2020																						33,040,520		$	3	$	188,656		$	(1,043	)	$	(144,022	)	$	(41	)	$	43,553

Six months ended June 30, 2021																					Shares Outstanding			Common Stock		Additional Paid-In Capital			Shares in Treasury			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at December 31, 2020		37,065,044		$	4	$	204,807		$	(1,043	)	$	(166,893	)	$	—		$	36,875			37,065,044		$	4	$	204,807		$	(1,043	)	$	(166,893	)	$	—		$	36,875
Net loss		—			—		—			—			(10,028	)		—			(10,028	)		—			—		—			—			(14,835	)		—			(14,835	)
Stock-based compensation		—			—		(1,450	)		—			—			—			(1,450	)		—			—		(371	)		—			—			—			(371	)
Issuance of common stock		98,143			—		208			—			—			—			208			140,429			—		227			—			—			—			227
Shares withheld for net share settlement		—			—		—			—			—			—			—
Balance at March 31, 2021		37,163,187		$	4	$	203,565		$	(1,043	)	$	(176,921	)	$	-		$	25,605
Balance at June 30, 2021																						37,205,473		$	4	$	204,663		$	(1,043	)	$	(181,728	)	$	—		$	21,896

Three months ended March 31, 2020	Shares Outstanding			Common Stock		Additional Paid-In Capital			Shares in Treasury			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Six months ended June 30, 2020																					Shares Outstanding			Common Stock		Additional Paid-In Capital			Shares in Treasury			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at December 31, 2019		32,951,329		$	3	$	185,588		$	(1,043	)	$	(122,057	)	$	17		$	62,508			32,951,329		$	3	$	185,588		$	(1,043	)	$	(122,057	)	$	17		$	62,508
Net loss		—			—		—			—			(11,063	)		—			(11,063	)		—			—		—			—			(21,965	)		—			(21,965	)
Stock-based compensation		—			—		1,271			—			—			—			1,271			—			—		3,068			—			—			—			3,068
Issuance of common stock		57,110			—		—			—			—			—			—			106,983			—		—			—			—			—			—
Shares withheld for net share settlement		(17,792	)		—		—			—			—			—			—			(17,792	)		—		—			—			—			—			—
Other comprehensive loss		—			—		—			—			—			(180	)		(180	)		—			—		—			—			—			(58	)		(58	)
Balance at March 31, 2020		32,990,647		$	3	$	186,859		$	(1,043	)	$	(133,120	)	$	(163	)	$	52,536
Balance at June 30, 2020																						33,040,520		$	3	$	188,656		$	(1,043	)	$	(144,022	)	$	(41	)	$	43,553

See accompanying notes to these consolidated financial statements.

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CALYXT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in Thousands)


	Three Months Ended March 31,						Six Months Ended June 30,
	2021			2020			2021			2020
Operating activities
Net loss	$	(10,028	)	$	(11,063	)	$	(14,835	)	$	(21,965	)
Adjustments to reconcile net loss to net cash used by operating activities:
Gain upon extinguishment of Payroll Protection Program loan								(1,528	)		—
Depreciation and amortization		585			452			1,180			904
Stock-based compensation		(1,450	)		1,271			(371	)		3,068
Changes in operating assets and liabilities:
Accounts receivable		3,533			281			893			(1,289	)
Due to/from related parties		(652	)		(430	)		(638	)		(598	)
Inventory		(3,149	)		(604	)		(1,085	)		(2,688	)
Prepaid expenses and other current assets		583			(786	)		3,301			(1,118	)
Accounts payable		30			8			1,254			(505	)
Accrued expenses		167			(451	)		(555	)		(546	)
Accrued compensation		(186	)		(818	)		143			(888	)
Other non-current liabilities		1,100			(9	)
Other		50			(89	)		992			(26	)
Net cash used by operating activities		(9,417	)		(12,238	)		(11,249	)		(25,651	)
Investing activities
Sales and (purchases) of short-term investments, net		8,653			(38,620	)		11,698			(29,942	)
Purchases of land, buildings, and equipment		(269	)		(317	)		(307	)		(525	)
Net cash provided by (used by) investing activities		8,384			(38,937	)		11,391			(30,467	)
Financing activities
Proceeds from Payroll Protection Program loan								—			1,518
Repayments of financing lease obligations		(88	)		(45	)		(178	)		(130	)
Proceeds from the exercise of stock options		208			—			227			—
Net cash provided by (used by) financing activities		120			(45	)
Net decrease in cash, cash equivalents, and restricted cash		(913	)		(51,220	)
Net cash provided by financing activities								49			1,388
Net increase (decrease) in cash, cash equivalents, and restricted cash								191			(54,730	)
Cash, cash equivalents, and restricted cash - beginning of period		18,289			60,038			18,289			60,038
Cash, cash equivalents, and restricted cash – end of period	$	17,376		$	8,818		$	18,480		$	5,308

See accompanying notes to these consolidated financial statements.

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CALYXT, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP or GAAP) for interim financial information and with the rules and regulations of the Securities and Exchange Commission (SEC) applicable to interim financial statements. In our opinion, the accompanying consolidated financial statements reflect all adjustments necessary for a fair presentation of our statements of financial position, results of operations, and cash flows for the periods presented but they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Except as otherwise disclosed herein, these adjustments consist of normal recurring items. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole or any other interim period.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the consolidated financial statements and during the reporting period. Actual results could materially differ from these estimates.

Certain prior year amounts have been reclassified to conform to the current year presentation.

For further information, refer to the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 4, 2021. The accompanying Balance Sheet as of December 31, 2020, was derived from the audited consolidated financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2020.

Risks and Uncertainties

Considering factors such as our anticipated cash receipts from sales of grain and our product development and technology licensing efforts with partners, our anticipated cash burn rate, and our expense reduction efforts, we believe our cash, cash equivalents, and restricted cash as of June 30, 2021, will be sufficient to fund our operations for at least the next twelve months and into the second half of 2022.

We anticipate that we will continue to generate losses for the next several years before revenue is enough to support our operating capital requirements. Until we can generate substantial cash flow, we expect to finance a portion of future cash needs through cash on hand, commercialization activities, which may result in various types of revenue streams from seed sales and future development agreements, trait licenses, and technology licenses, including upfront and milestone payments, annual license fees, and royalties, government or other third-party funding, and public or private equity or debt financings. However, additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in enough amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of our activities. Failure to receive additional funding could cause us to cease operations, in part or in full. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders and increased fixed payment obligations, and these securities may have rights senior to those of our shares of common stock. Any of these events could significantly harm our business, financial condition, and prospects.

Net Loss Per Share

All anti-dilutive stock options, restricted stock units, and performance stock units are excluded from the calculation of net loss per share. Due to our net loss position for the three and six months ended ~~March 31,~~June 30, 2021, and ~~March 31,~~June 30, 2020, all of our outstanding stock options, restricted stock units, and performance stock units are considered anti-dilutive and excluded from the calculation of net loss per share. Accordingly, the treasury method was not used in determining the number of anti-dilutive stock options and restricted stock units.

2. FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE AND CONCENTRATIONS OF CREDIT RISK

Financial Instruments Measured at Fair Value and Financial Statement Presentation

Financial instruments including cash and cash equivalents, restricted cash, accounts payable, and all other current liabilities have carrying values that approximate fair value. We measure short-term investments and commodity derivative contracts at fair value on a

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recurring basis. The accounting guidance establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as of the measurement date as follows:

Level 1: Fair values are based on unadjusted quoted prices in active trading markets for identical assets and liabilities.

Level 2: Fair values are based on observable quoted prices other than those in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3: Fair values are based on at least one significant unobservable input for the asset or liability.

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Fair Value Measurements and Financial Statement Presentation

The fair values of our financial instruments measured at fair value and their respective levels in the fair value hierarchy as of ~~March 31,~~June 30, 2021, and December 31, 2020, were as follows:


	March 31, 2021								March 31, 2021								June 30, 2021								June 30, 2021
	Fair Values of Assets								Fair Values of Liabilities								Fair Values of Assets								Fair Values of Liabilities
In Thousands	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Other items reported at fair value:
Short-term investments	$	3,045	$	—	$	—	$	3,045	$	—	$	—	$	—	$	—
Commodity derivative contracts		266		—		—		266		—		—		—		—	$	1	$	—	$	—	$	1	$	—	$	—	$	—	$	—
Total	$	3,311	$	—	$	—	$	3,311	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	1	$	—	$	—	$	—	$	—


	December 31, 2020								December 31, 2020
	Fair Values of Assets								Fair Values of Liabilities
In Thousands	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Other items reported at fair value:
Short-term investments	$	11,698	$	—	$	—	$	11,698	$	—	$	—	$	—	$	—
Commodity derivative contracts		467		—		—		467		—		—		—		—
Total	$	12,165	$	—	$	—	$	12,165	$	—	$	—	$	—	$	—

The non-current portion of our financing lease obligations are also considered a financial instrument, which we measure at fair value for disclosure purposes. It is a Level 2 liability and had a fair value of ~~$15.1~~$14.9 million as of ~~March 31,~~June 30, 2021, and a fair value of ~~$15.2~~$15.2 million as of December 31, 2020.

~~The composition of our short-term investments as of March 31, 2021, and December 31, 2020 were as follows:~~

As of March 31,

As of December 31,

In Thousands
2021

2020

Corporate debt securities
$
3,045

$
11,698

Commodity Price Risk

We enter into seed and grain production agreements with settlement values based on commodity futures market prices (Forward Purchase Contracts). These Forward Purchase Contracts allow the counterparty to fix their sales prices at various times as defined in the contract. Because we intend to take physical delivery under the Forward Purchase Contracts, we have grain inventory we will need to sell. We intend to sell these inventories at then-current market prices. As a result, when the Forward Purchase Contract counterparty fixes their grain prices, we enter hedging arrangements by selling futures contracts which converts our exposure to these fixed prices to floating prices. We expect to maintain these hedging relationships until such grain inventory is sold to help stabilize our margins. We do not account for these economic hedges as accounting hedges. We expect any gains or losses from these hedging arrangements to be offset by gains or losses on the grain inventories when such grain inventories are sold. As of March 31, 2021, we have $3.0 million of unrealized commodity derivative losses from hedging contracts sold to convert our fixed price grain inventories and fixed price Forward Purchase Contracts to floating prices. As of March 31,June 30, 2021, we held commodity contracts with a notional amount of ~~$10.4~~$8.0 million. As of June 30, 2021, those commodity contracts carried an unrealized loss of $1.0 million that had been recognized in earnings over the period from their acquisition to June 30, 2021, and that may be realized in the future depending upon the timing of the liquidation of those positions which is based on our future grain sales and changes in soybean prices.

~~We previously~~Prior to August 1, 2020, we designated all our commodity derivative contracts as cash flow hedges based on the nature of our business ~~activities under the prior go-to-market strategy.~~activities. As a result, all gains or losses associated with recording those commodity derivative contracts at fair value were recorded as a component of accumulated other comprehensive income (loss) (AOCI). We ~~reclassify~~reclassified amounts from AOCI to cost of goods sold when we ~~sell~~sold the underlying products to which those hedges ~~relate.~~related. For the three and six months ended ~~March 31,~~June 30, 2020, we reclassified an immaterial amount from AOCI to cost of goods sold, and there were no such reclassifications in the same period in 2021.

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Foreign Exchange Risk

Foreign currency fluctuations affect our foreign currency cash flows related primarily to payments to Cellectis. Our principal foreign currency exposure is to the euro. We do not hedge these exposures, and we do not believe that the current level of foreign currency risk is significant to our operations.

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Concentrations of Credit Risk

We invest our cash, cash equivalents, and restricted cash in highly liquid securities and investment funds. We diversify ~~this~~the risk posed by exceeding deposit insurance limits by allocating ~~our~~from time-to-time certain investments to a diverse portfolio of short-dated, high investment-grade securities, which we classify as short-term investments that are recorded at fair value in our consolidated financial statements. We ensure the credit risk in this portfolio is in accordance with our internal policies and if necessary, make changes to investments to ensure credit risk is minimized. We have not experienced any counterparty credit losses. As of June 30, 2021, we did not hold any short-term investments.

3. RELATED-PARTY TRANSACTIONS

We have several agreements that govern our relationship with Cellectis, some of which require us to make payments to Cellectis. Pursuant to our management services agreement with Cellectis, we incurred nominal management fee expenses for the three and six months ended ~~March 31,~~June 30, 2021, and 2020. ~~March 31, 2020.~~

Cellectis has also guaranteed the lease agreement for our headquarters. Cellectis’ guarantee of our obligations under the lease will terminate at the end of the second consecutive calendar year in which our tangible net worth exceeds ~~$300~~$300 million.

TALEN® is our primary gene editing technology, and it is the foundation of our technology platform. TALEN® technology was invented by researchers at the University of Minnesota and Iowa State University and exclusively licensed to Cellectis. We obtained an exclusive license for the TALEN® technology for commercial use in plants from Cellectis. We also license other technology from Cellectis. We owe Cellectis royalties on any revenue we generate from sales of products less certain amounts as defined in the license agreement, ~~as well as~~royalties on certain cumulative revenue thresholds, and a percentage of any sublicense revenues. We have incurred nominal license and royalty fees for the three and six months ended ~~March 31,~~June 30, 2021, and 2020. ~~and March 31, 2020.~~

We have entered into various agreements with the University of Minnesota, pursuant to which we have been granted both exclusive and non-exclusive license agreements that carry annual license fees, milestone payments, royalties, and associated legal fees. These agreements primarily relate to gene-editing tools, enabling technologies and germplasm. We incurred nominal expenses pursuant to these agreements for the three and six months ended ~~March 31,~~June 30, 2021, and ~~March 31,~~ 2020.

4. STOCK-BASED COMPENSATION

We use broad-based stock plans to attract and retain highly qualified officers and employees and to help ensure that management’s interests are aligned with those of our shareholders. We have also granted equity-based awards to directors, nonemployees, and certain employees of Cellectis.

In December 2014, we adopted the Calyxt, Inc. Equity Incentive Plan (2014 Plan), which allowed for the grant of stock options, and in June 2017, we adopted the 2017 Omnibus Plan (2017 Plan), which allowed for the grant of stock options, restricted stock units, performance stock units and other types of equity awards.

On February 19, 2021, James Blome ceased serving as our Chief Executive Officer. We recorded a benefit to earnings from a ~~$2.5~~$2.5 million recapture of non-cash stock compensation expense from the forfeiture ~~of certain~~ of Mr. Blome’s unvested stock options, restricted stock units, and performance stock units.

As of ~~March 31,~~June 30, 2021, ~~1,902,128~~1,634,125 shares were registered and available for grant under effective registration statements, while ~~6,202,032~~5,950,199 shares were available for grant in the form of stock options, restricted stock, restricted stock units, and performance stock units under the 2017 Plan. On July 16, 2021, we filed a Registration Statement on Form S-8 with the SEC which registered an additional 4,299,904 shares of common stock that may be issued or delivered and sold pursuant to the 2017 Plan and 600,000 shares of common stock that may be issued or delivered and sold pursuant to the Calyxt, Inc. Employee Inducement Incentive Plan (the Inducement Plan). The Inducement Plan shares of common stock are issuable upon the settlement of performance stock units which were granted to Mr. Carr

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as a material inducement to accept employment as our President and Chief Executive Officer. Stock-based awards currently outstanding also include awards granted under the 2014 Plan, under which no further awards will be granted.

Stock Options

The estimated fair values of stock options granted, and the assumptions used for the Black-Scholes option pricing model were as follows:


	Three Months Ended March 31,						Six Months Ended June 30,
	2021			2020			2021		2020
Estimated fair values of stock options granted	$	5.85		$	5.19		$	4.54	$	5.19
Assumptions:
Risk-free interest rate		0.6	%		1.7	%	0.6% - 1.1%			1.7	%
Expected volatility		85.0	%		77.4	%	80.1% - 82.0%			77.4	%
Expected term (in years)	5.7 - 6.2				6.9		5.5 - 6.5			6.9

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We estimate the fair value of each option on the grant date, or other measurement dates if applicable, using a Black-Scholes option-pricing model, which requires us to make predictive assumptions regarding employee exercise behavior, future stock price volatility, and dividend yield. Our expected term represents the period that options granted are expected to be outstanding determined using the simplified method. We estimate our future stock price volatility using the historical volatility of comparable public companies over the expected term of the option. We estimate the risk-free interest rate based on the United States Treasury zero-coupon yield curve at the date of grant for the expected term of the option. We do 0tnot nor do we expect to pay dividends.

Option strike prices are set at 100 percent or more of the closing share price on the date of grant, and generally vest over three to six years following the grant date. Options generally expire 10 years after the date of grant.

Information on stock option activity is as follows:


	Options Exercisable		Weighted- Average Exercise Price Per Share		Options Outstanding			Weighted- Average Exercise Price Per Share
Balance as of December 31, 2020		2,347,663	$	10.15		4,621,173		$	10.30
Granted						456,959			5.71
Exercised						(61,372	)		3.70
Forfeited or expired						(550,110	)		10.57
Balance as of June 30, 2021		2,412,501	$	10.49		4,466,650		$	9.89

Options
Exercisable

Weighted-
Average
Exercise
Price Per
Share

Options
Outstanding

Weighted-
Average
Exercise
Price Per
Share

Balance as of December 31, 2020

2,347,663

$
10.15

4,621,173

$
10.30

Granted

270,800

8.07

Exercised

(56,372
)

3.71

Forfeited or expired

(456,450
)

10.03

Balance as of March 31, 2021

2,369,997

$
10.38

4,379,151

$
10.27

Stock-based compensation expense related to stock option awards is as follows:


	Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
In Thousands	2021			2020		2021		2020		2021		2020
Stock-based compensation expense	$	(396	)	$	1,006	$	800	$	1,246	$	405	$	2,252

As of ~~March 31,~~June 30, 2021, options outstanding and exercisable had an aggregate intrinsic value of ~~$2.2~~$0.4 million and the weighted average remaining contractual term was ~~6.0~~5.8 years.

Net cash proceeds from the exercise of stock options less shares used for minimum withholding taxes and the intrinsic value of options exercised were as follows:


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
In Thousands	2021		2020		2021		2020		2021		2020
Net cash proceeds	$	208	$	—	$	19	$	0	$	227	$	0
Intrinsic value of options exercised	$	331	$	—	$	13	$	0	$	344	$	0

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As of ~~March 31,~~June 30, 2021, unrecognized compensation expense related to non-vested stock options was ~~$6.9~~$6.7 million. This expense will be recognized over 3028 months on average.

Restricted Stock Units

~~Units settled in stock subject to a~~We grant restricted ~~period may be granted under the 2017 Plan. Restricted~~ stock units which generally vest ~~and become unrestricted~~ over three to five years after the date of grant.

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Information on restricted stock unit activity is as follows:


	Number of Restricted Stock Units Outstanding			Weighted- Average Grant Date Fair Value		Number of Restricted Stock Units Outstanding			Weighted- Average Grant Date Fair Value
Unvested balance at December 31, 2020		547,807		$	9.49		547,807		$	9.49
Granted		68,000			8.05		234,504			5.61
Vested		(27,386	)		9.18		(69,323	)		9.25
Forfeited		(126,178	)		12.89		(133,348	)		12.49
Unvested balance at March 31, 2021		462,243		$	8.37
Unvested balance at June 30, 2021							579,640		$	7.26

The total grant-date fair value of restricted stock unit awards that vested is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
In Thousands	2021		2020		2021		2020
Grant-date fair value	$	390	$	660	$	641	$	1,170

Three Months Ended March 31,

In Thousands
2021

2020

Grant-date fair value
$
251

$
510

Stock-based compensation expense related to restricted stock units is as follows:


	Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
In Thousands	2021			2020		2021		2020		2021			2020
Stock-based compensation expense	$	(749	)	$	155	$	228	$	441	$	(521	)	$	596

As of ~~March 31,~~June 30, 2021, unrecognized compensation expense related to restricted stock units was ~~$1.7~~$2.1 million. This expense will be recognized over 2724 months on average.

We treat stock-based compensation awards granted to employees of Cellectis as deemed dividends. We recorded deemed dividends as follows:


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
In Thousands	2021		2020		2021		2020		2021		2020
Deemed dividends from grants to Cellectis employees	$	79	$	224	$	107	$	198	$	28	$	422

Performance Stock Units

In June 2019, we granted 311,667 performance stock units under the 2017 Plan to three executive officers. The performance stock units will vest at ~~50%~~50%, ~~100%~~100% or ~~120%~~120% of the shares under the award at the end of a three-year performance period based upon increases in the value of our common stock from the grant price of ~~$12.48.~~$12.48. The performance stock units will be settled in restricted stock upon vesting, with restrictions on transfer lapsing on the second anniversary of the restricted stock issuance date. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, we recognized a benefit from the forfeiture of 166,667 performance stock units held by Mr. Blome, our former chief executive officer.

Stock-based compensation expense related to performance stock units is as follows:


	Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
In Thousands	2021			2020		2021		2020		2021			2020
Stock-based compensation expense	$	(305	)	$	110	$	51	$	110	$	(255	)	$	220

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As of ~~March 31,~~June 30, 2021, unrecognized compensation expense related to performance stock units was ~~$0.7~~$0.6 million. This expense will be recognized over 3936 months on average.

5. INCOME TAXES

We provide for a valuation allowance when it is more likely than not that we will not realize a portion of the deferred tax assets. We have established a full valuation allowance for deferred tax assets due to the uncertainty that enough taxable income will be generated in the taxing jurisdiction to utilize the assets. Therefore, we have not reflected any benefit of such deferred tax assets in the accompanying consolidated financial statements.

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As of ~~March 31,~~June 30, 2021, there were no material changes to what we disclosed regarding tax uncertainties or penalties as of December 31, 2020.

6. LEASES, OTHER COMMITMENTS, AND CONTINGENCIES

Litigation and Claims

We are not currently a party to any material pending legal proceeding.

Leases

We lease our headquarters facility, office equipment, and other items. Our headquarters lease involved the sale of land and improvements to a ~~third party~~third-party who then constructed the facility. This lease is considered a financing lease.

We also have an equipment financing arrangement that is considered a financing lease. This arrangement has a term of four years for each draw. We were required to deposit cash into a restricted account in an amount equal to the future rent payments required by the lease. As of ~~March 31,~~June 30, 2021, restricted cash totaled ~~$1.0~~$1.0 million. We have the option to request the return of excess collateral annually in December, and the amount we expect to receive is reflected as a current asset.

Rent expense from operating leases was as follows:


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
In Thousands	2021		2020		2021		2020		2021		2020
Rent expense from operating leases	$	13	$	24	$	11	$	23	$	24	$	47

Other Commitments

As of ~~March 31,~~June 30, 2021, we have noncancelable commitments to purchase grain and seed from growers at dates throughout 2021 aggregating ~~$11.7~~$6.8 million based on current commodity futures market prices, other payments to growers, and estimated yields per acre. This commitment is not recorded in the consolidated financial statements because we have not taken delivery of the seed or grain as of ~~March 31,~~June 30, 2021.

7. SUPPLEMENTAL INFORMATION

Certain balance sheet amounts are as follows:


	As of March 31,		As of December 31,		As of June 30,		As of December 31,
In Thousands	2021		2020		2021		2020
Accounts Receivable:
Accounts receivable	$	1,107	$	4,317	$	3,819	$	4,317
Receivables from growers		247		570		175		570
Allowance for doubtful accounts		—		—		0		0
Total	$	1,354	$	4,887	$	3,994	$	4,887

We carry receivables related to amounts we are owed by growers from their purchases of seed. These amounts reduce the cost of the grain we ultimately purchase from the grower and are repaid either on current terms or on an extended payment basis. If a grower has elected extended payment terms, they will pay a higher price per unit and grant us the right to deduct the amount we are owed from the

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payment we make upon the purchase of their grain. As of ~~March 31,~~June 30, 2021, and December 31, 2020 all of the receivables from growers were on extended payment terms.

Certain statements of operations amounts are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
In Thousands	2021		2020		2021			2020
Stock compensation expense:
Research and development	$	417	$	488	$	809		$	807
Selling, general, and administrative		662		1,309		(1,180	)		2,261
Total	$	1,079	$	1,797	$	(371	)	$	3,068


	Three Months Ended June 30,						Six Months Ended June 30,
In Thousands	2021			2020			2021			2020
Interest, net:
Interest expense	$	(359	)	$	(371	)	$	(719	)	$	(743	)
Interest income		2			525			16			499
Total	$	(357	)	$	154		$	(703	)	$	(244	)

Three Months Ended March 31,

In Thousands
2021

2020

Stock compensation expense:

Research and development
$
392

$
319

Selling, general, and administrative

(1,842
)

952

Total
$
(1,450
)

$
1,271

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Three Months Ended March 31,

In Thousands
2021

2020

Interest, net:

Interest expense
$
(360
)

$
(372
)
Interest income

14

(26
)
Total
$
(346
)

$
(398
)

Certain balance sheet and statements of cash flows amounts are as follows:


	As of June 30,		As of December 31,		As of June 30,
In Thousands	2021		2020		2020
Cash, cash equivalents, restricted cash, and short-term investments:
Cash and cash equivalents	$	17,489	$	17,299	$	3,875
Restricted cash		393		393		393
Non-current restricted cash		598		597		1,040
Total cash, cash equivalents, and restricted cash		18,480		18,289		5,308
Short-term investments		0		11,698		29,942
Total	$	18,480	$	29,987	$	35,250

As of March 31,

In Thousands
2021

2020

Cash, cash equivalents, restricted cash, and short-term investments:

Cash and cash equivalents
$
16,386

$
7,385

Restricted cash

393

388

Non-current restricted cash

597

1,045

Total cash, cash equivalents, and restricted cash

17,376

8,818

Short-term investments

3,045

38,620

Total
$
20,421

$
47,438

8.8. SEGMENT INFORMATION

We operate in a single reportable segment, ~~agricultural products.~~the development and commercialization of products derived from plant cells. Products commercialized to date have included a soybean and its derivative products, including oil and meal. Our current commercial focus is North America. Our major product categories are high oleic soybean seed, grain, oil, and meal. In the three months ended March 31, 2021 we only sold grain. In the three months ended March 31, 2020, we only sold oil and meal.

9. LONG-TERM DEBT

Our long-term debt iswas comprised of a ~~$1.5~~$1.5 million promissory note pursuant to the Paycheck Protection Program (the ~~Paycheck Protection Program~~PPP loan) established by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) implemented by the U.S. Small Business Administration (SBA). We received the funds under the ~~Paycheck Protection Program~~PPP loan on April 19, 2020. The Paycheck Protection Program loan matures in April 2022 and bears interest at a per annum rate of 1 percent. The Paycheck Protection Program loan may be prepaid at any time prior to maturity with 0 prepayment penalties. ~~The Paycheck Protection Program loan contains customary events of default relating to, among other things, payment defaults and breaches of representations and~~ ~~warranties.~~ Subject to certain conditions, the ~~Paycheck Protection Program~~PPP loan and accrued interest ~~may~~were eligible to be forgiven in whole or in part by applying for forgiveness pursuant to the CARES Act and the Paycheck Protection Program. In order to be eligible for forgiveness, the proceeds of the ~~Paycheck Protection Program~~PPP loan ~~must~~were required to be applied to certain eligible expenses, including payroll costs, interest on certain mortgage obligations, rent payments on certain leases, and certain qualified utility payments, with not more than 40 percent of the amount applied to non-payroll costs.

We ~~have~~ applied the proceeds from the ~~Paycheck Protection Program~~PPP loan toward qualifying expenses. On October 21, 2020, as modified December 29, 2020, we applied for forgiveness of the full principal amount and all accrued ~~interest, and o~~interest. On April 8, 2021, we were notified by the SBA that the full principal amount and all accrued interest of ~~our Paycheck Protection Program~~the PPP loan had been forgiven. ~~We expect to record income~~ Accordingly, we recognized a gain upon the extinguishment of the PPP loan for $1.5 million in the ~~second quarter of 2021 for the full amount of the loan and the associated accrued interest.~~three months ended June 30, 2021.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes, which are included elsewhere in this Quarterly Report on Form 10-Q and with our 2020 Form 10-K, including the Consolidated Financial Statements and Notes incorporated therein.

EXECUTIVE OVERVIEW

We are a ~~technology~~plant-based biotechnology platform company focused on delivering innovations that revolutionize how the world uses plants. We use our advanced plant-based ~~innovations~~technology platform to generate innovative, high-value, and ~~solutions with substantial disruption potential across multiple industries. We are a leader in gene editing with exclusive access to proprietary TALEN~~^® ~~technology for use in plants, which~~sustainable materials and products. With our world-class and industry leading customers and partners, we ~~used~~became the first company to successfully commercialize ~~the first~~a gene edited food product in the United States. We leverage a number of technologies to accomplish these objectives, including tools and capabilities we have developed internally and our exclusive rights to use the TALEN® gene-editing technology and other intellectual property that we have licensed in from the University of Minnesota, Cellectis, and others. These technologies are supported by a ~~robust~~proprietary information technology platform and lab automation tools.

Our strategy is based on focusing on our core strengths in research and development, ~~pipeline that spans multiple crops~~including gene editing, plant breeding, and ~~that is focused on several important trends,~~trait development. We will continue to advance our technologies toward developing high value, sustainable, and plant-based innovations with substantial disruption potential.

We are experts at engineering plant metabolism. We have engineered plant metabolism into products including ~~functional nutrition, regenerative agriculture, sustainability,~~soybeans with improved fatty-acid profiles, an alfalfa able to be better digested by livestock to be commercialized by S&W Seed Company (Nasdaq: SANW), and wheat with a higher level of fiber content than traditionally bred varieties for which we are actively seeking partners. Among our other successes in engineering are a soybean with improved flavor to help enable wider adoption for plant-based protein applications, and controlling the production of storage sugars in potatoes to improve fry quality and reduce acrylamide.

We are also developing products which focus primarily on improving climate resilience and reducing greenhouse gas emissions during food and energy production. These product candidates include:



Hemp with improved characteristics for protein and oil production and for use in advanced materials. Hemp is a very high-quality protein and offers production benefits when compared to other protein or oil crops like soy, peas, or canola. Hemp can also service a wide variety of materials science needs including strengthening plastics, reducing petroleum-based content, and providing greater strength and longevity compared to other plant-based fabrics like linen or cotton. Our platform of traits and breeding advancements reduce hemp production risk, improve agronomics and yield, and drive quality protein and oil production as well as crop processing efficiency.



Winter Oats. Oat production depends on mild temperatures during a critical period called grain fill. Today, quality food-grade oats are only grown in northern latitudes like the Canadian prairies and northern Europe. As temperatures become more variable there, the production quality is expected to come into risk. We are working to winterize oats and shorten their growing season, so that they would grow in lower latitudes during the winter season. This has several benefits that include transitioning grain fill to the temperate spring, increasing the likelihood of high-quality harvests and enabling the production of oats in the winter season following a summer crop, creating a crop value-driven incentive for growers to practice winter cover. Winter cover practices sequester more carbon and prevent soil erosion and runoff.



High saturated fat soybeans are another trait we have under development, which could potentially be used as a U.S.-grown alternative to palm oil. There are significant sustainability and supply chain reliability challenges with palm oil, certain of which we believe could be overcome with this prospective oil alternative. We believe our innovation can be a replacement for palm oil which is today used as a food ingredient, in frying, in cosmetics and personal goods, in animal ~~nutrition,~~feed, and as an industrial ~~uses.~~

ingredient. We intend to optimize the saturated to unsaturated fat ratio, which gives soy a palm oil-like quality while maintaining agronomics and yield as well as delivering taste and performance improvements.

Our ~~capital-efficient business model comprises three differentiated~~baseline go-to-market strategies ~~as follows:~~include product development agreements, product license arrangements, and technology licensing agreements.

•	~~Trait Development and Licensing Arrangements~~: Through development and licensing agreements with downstream partners with respect to traits we develop in exchange for negotiated upfront, milestone, or annual payments and potential royalties upon the licensees’ commercial sale of products.

•	~~Seed Sale Arrangements: Through agreements for traited seed we have produced.~~

•	~~Technology Licensing Arrangements: Through technology licensing agreements with third parties in exchange for negotiated upfront and annual payments, and potential royalties upon the licensees’ commercial sale of products.~~

~~While we will opportunistically engage in arrangements under each of~~Under these go-to-market strategies, ~~we have determined to pursue trait development and licensing arrangements with respect to all of the products currently under development.~~

~~For technology and trait licensing arrangements,~~ we expect that our customers will primarily be seed companies, biotechnology companies, germplasm providers, large agricultural processors, others in the relevant crop’s supply chain, and growers, who would, in each case, utilize our technology and know-how for their own trait development in specified crops. We will seek to develop relationships with strategic customers where our product ~~candidates~~ are most likely to benefit from the counterparty’s deep agronomy, product management, and

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commercialization expertise. Placing our products ~~and traits~~ with such strategic customers will reduce our expenses and downstream risk exposure, while allowing us to pursue diversified growth across multiple revenue streams.

We believe that our primary focus on trait development and licensing provides a capital-efficient, lower-cost, and highly scalable approach. Our strategy is based on focusing on our core strengths in research and development, including gene editing, plant breeding, and trait development. We will continue to focus on advancing our technologies toward developing high value innovations and plant-based solutions with substantial disruption potential, while leveraging our partners and licensees to manage commercialization and the associated costs and risks. We believe that focusing our efforts on our technology and trait development expertise, while contracting with commercialization partners or licensees for downstream execution strikes a balance where we are best positioned for cost-efficient paths to market.

We are currently exploring product and partnership opportunities in various crops for potential applications across a variety of industries, including food, nutraceuticals, energy, and agriculture. Focusing primarily on our trait development and licensing go-to-market strategies, we are well positioned to ~~nimbly~~efficiently develop plant-based input solutions for specific downstream issues, including consumer preferences, sustainability, cost, quality, and regulatory compliance. ~~As of the date of this report,~~We have seven publicly disclosed products in development that have a target commercial planting year, and for which we are actively seeking partners in all cases but alfalfa, where we have ~~eight projects in later stage development, including two in Phase 3.~~

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executed a commercialization agreement with S&W Seed Company. A summary ~~of our product development~~ as of ~~March 31,~~June 30, 2021, is as follows:


~~PRODUCT~~¹CROP	~~DEVELOPMENT PHASE~~PRODUCT1	~~CROP~~	TARGET COMMERCIAL PLANTING YEAR
~~Improved Digestibility~~Alfalfa	~~Phase 3~~Improved Digestibility	~~Alfalfa~~	~~2021~~2022
~~High Fiber~~Wheat	~~Phase 3~~High Fiber	~~Wheat~~	2023
Soybean	High Oleic, Low Linolenic (HOLL)	~~Phase 2~~	~~Soybean~~	2023
~~Marketable Yield~~Hemp	~~Phase 1~~"Pollen-Proof" (Seedless)	~~Hemp~~	2023
~~Low THC~~Hemp	Stability for Food, Oil & Fiber ~~& Nutraceutical~~	~~Phase 1~~	~~Hemp~~	2024
~~Winter (Cold Tolerant)~~Oat	~~Phase 1~~Winter	~~Oat~~	2026
Soybean	High Saturated Fat (Palm Alternative)	~~Phase 1~~	~~Soybean~~	2026
~~Enhanced Protein Flavor~~	~~Phase 1~~	~~Soybean~~	~~2027~~

¹The agronomic and functional quality of our product candidates and the timing of development are subject to a variety of factors and risks, which are described in Part I, Item 1A, “Risk Factors” of our 2020 Form 10-K.

During the quarter we stopped development of our improved oil HOLL product, which was being developed with a target of higher HOLL oil content that was intended to reduce costs per pound of oil under our prior go-to-market strategy. During the quarter, we also determined to pursue trait development and licensing arrangements as our baseline go-to-market strategy. While we will opportunistically engage in seed sale arrangements, our intention is to license all products under development as traits. We intend to move our current ~~high oleic~~ soybean product from seed sales to ~~this~~a product license go-to-market strategy in 2022 and we are currently in discussions with potential licensors. ~~This transition further reduces~~

We will selectively continue to develop the products in the table above to enable development and commercial agreements to be reached, and our baseline go-to-market strategies support modest capital requirements for these products. When commercialized by the licensors, the products ~~and is~~are expected to deliver high margin royalty revenue streams.

We are also pursuing strategic product development opportunities. In these cases, our core strengths of research and product development are aligned with the commercialization and downstream execution capabilities of a potential partner. We anticipate that these partnerships will reduce our capital requirements for research and development, result in near-term cash inflow, and provide opportunities for additional revenue streams ~~when those traits are commercialized by the licensors in future years.~~over time, including high margin milestone and royalty or license payments.

Select Recent Achievements and Developments:



Appointed Michael A. Carr as our President, Chief Executive Officer, and member of our Board of Directors effective July 27, 2021. Mr. Carr brings more than 20 years of business, financial and operational leadership experience to our enterprise and will focus on advancing and monetizing our technologies. Most recently, he served as Vice President of M&A, Strategy, and Innovation at Darling Ingredients, Inc. Mr. Carr will assume the principal executive officer function for Calyxt as of August 6, 2021, upon the resignation of Dr. Ribeill as our Executive Chair.



With the expansion of our hemp breeding platform, we are demonstrating industry leadership in modernizing the species. We have successfully transformed the genome and produced "pollen-proof" (seedless) hemp with our triploid breeding technology. Combined, our hemp advancements offer significant advantages in innovation, crop management, and harvest potential. More broadly, we can now deliver hemp traits that benefit both growers and consumers who are increasingly looking for plant-based and sustainable foods, materials, cosmeceuticals, nutraceuticals, and more.



Completed the sale of more than 75% percent of the 2020 grain crop to date to Archer Daniels Midland (ADM), with the remaining grain projected to be sold throughout 2021. This series of transactions, which began in the third quarter of 2020, has generated $27 million in total cash since sales commenced.



Net cash used by operating activities improved by $11.6 million from the same period a year ago driven primarily by an improvement in our working capital investment associated with the change in our go-to-market strategy for our soybean product line and a lower net loss in the period driven by a reduction in our operating expenses following that change in go-to-market strategy.



Promoted Sarah Reiter to the newly created role of Chief Business Officer, effective May 1, 2021. In this role Ms. Reiter is responsible for all of our commercial activities, including securing strategic partners for the development and commercialization of our products. She is also responsible for our corporate communications and product marketing.

•

Completed preliminary composition analysis of our next generation soybean product’s fatty acid profile. We intend to partner with third parties to bring this product to market as an alternative to other premium oilseeds.

•

Achieved the successful completion of transformation of the hemp genome. The ability to transform hemp will enable further advancements, including trait delivery, gene editing, and advanced plant breeding, and is expected to accelerate hemp variety development.

•

~~Executed new seed sale agreement with an affiliate of a current grain customer, a continuation of the relationship established through their purchases of grain.~~

•

~~Sold more than 50 percent of the 2020 grain crop to Archers Daniels Midland (ADM), with the remaining grain projected to be sold throughout 2021 under existing contracts.~~

•

Promoted Sarah Reiter to Chief Business Officer, effective May 1, 2021. In this role Ms. Reiter will be responsible for all our commercial activities including finding partners for the development and commercialization of our traits and products, and she will also be responsible for communications activities, including corporate communications, public relations, and product marketing.

•

Appointed world-renowned plant-biochemistry experts to new Scientific Advisory Board chaired by our Co-Founder Dan Voytas, Ph.D. Appointees include including Anne Osbourn, Ph.D., Group Leader at the John Innes Center; Elizabeth Sattely, Ph.D., HHMI Investigator and Associate Professor of Chemical Engineering at Stanford University; and Paul Bernasconi, Ph.D., Former Global Function Head for Molecular Biology at BASF Biosciences. The Calyxt Scientific Advisory Board will focus on the identification of high value targets for development and commercialization.

•

On February 19, 2021, James Blome ceased serving as our Chief Executive Officer. Mr. Blome was entitled to compensation and benefits as part of this termination without cause, and in the first quarter of 2021 we recorded $2.3 million of cash expense for separation-related payments as well as an additional non-cash charge of $0.1 million from the acceleration of expense recognition of sign-on bonus paid to Mr. Blome in a prior period. The cash payments to Mr. Blome will be made over a period of 24 months, which began in March 2021. We recorded a benefit to earnings from a $2.5 million recapture of non-cash stock compensation expense from the forfeiture of certain of Mr. Blome’s unvested stock options, restricted stock units, and performance stock units.

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We are an early-stage company and have incurred net losses since our inception. As of ~~March 31,~~June 30, 2021, we had an accumulated deficit of ~~$176.9~~$181.7 million. Our net losses were ~~$10.0~~$14.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. We expect to continue to incur significant expenses and operating losses for the next several years. Those expenses and losses may fluctuate significantly from quarter-to-quarter and year-to-year. We expect that our expenses will be primarily driven by:



R&D expenses to develop innovative, sustainable and high-value products for our partners and customers as well as to advance and protect all aspects of our technological platform;



conducting additional breeding and field trials of our current and future products;



acquiring or in-licensing other products, technologies, germplasm, or other biological material;



maintaining, protecting, expanding, and defending our intellectual property portfolio;



making royalty and other payments under any in-license agreements;



seeking to attract and retain new and existing skilled personnel;



identifying strategic partners and licensees and negotiating agreements under the applicable go-to-market strategy; and



experiencing any delays or encountering issues with any of the above, including due to the COVID-19 pandemic and its impacts.

•

~~continuing to advance the R&D of our current and future products;~~

•	~~conducting additional breeding and field trials of our current and future products;~~

•	~~seeking regulatory and marketing approvals for our products;~~

•	~~acquiring or in-licensing other products, technologies, germplasm, or other biological material;~~

•	~~maintaining, protecting, expanding, and defending our intellectual property portfolio;~~

•	~~making royalty and other payments under any in-license agreements;~~

•	~~seeking to attract and retain new and existing skilled personnel;~~

•	~~identifying strategic partners and licensees and negotiating agreements under the applicable go-to-market strategy;~~

•	addressing the impacts of the ongoing COVID-19 pandemic, including implementing expense reduction efforts and seeking to bolster our liquidity position considering changing business needs and uncertain macro-economic conditions; and

•	~~experiencing any delays or encountering issues with any of the above, including due to COVID-19 and its impacts.~~

OUR RELATIONSHIP WITH CELLECTIS AND COMPARABILITY OF OUR RESULTS

We are a majority-owned subsidiary of Cellectis. As of ~~March 31,~~June 30, 2021, Cellectis owned ~~64.5%~~ 64.4% of our issued and outstanding common stock. Cellectis has certain contractual rights as well as rights pursuant to our certificate of incorporation and bylaws, in each case, as long as it maintains threshold beneficial ownership levels in our shares.

We hold an exclusive license from Cellectis that broadly covers the use of engineered nucleases for plant gene editing. This intellectual property covers methods to edit plant genes using “chimeric restriction endonucleases,” which include TALEN®, CRISPR/Cas9, zinc finger nucleases, and some types of meganucleases.

Cellectis has also guaranteed the lease of our headquarters facility.

FINANCIAL OPERATIONS OVERVIEW

Revenue

For the three and six months ended ~~March 31,~~June 30, 2021, we recognized revenue from the sales of high oleic soybean ~~seed grain.~~grain and seed.

Cost of Goods Sold and Inventory

Certain grain costs, net of the benefit from our seed activity, are capitalized to inventory. Additional costs or benefits are recognized as incurred. Any valuation adjustments to inventory are recognized as incurred. Until the fourth quarter of 2020, cost of goods sold included crush and refining losses that are expensed as incurred since they do not add to the value of the finished products. Gains and losses resulting from commodity derivative contracts sold to convert our fixed price grain inventories and fixed price Forward Purchase Contracts to floating prices are recorded in current period cost of goods sold. Because we expect to sell grain at market prices, the economic effects of the hedges being recognized currently are expected to be fully offset when we sell the grain in a future period.

Research and Development Expense

Research and development (R&D) expenses consist of the costs of performing activities to discover and develop products and advance our intellectual property. We recognize R&D expenses as they are incurred.

Our R&D expenses consist primarily of employee-related costs for personnel who research and develop our product candidates, fees for contractors who support product development and breeding activities, expenses for trait validation, purchasing material and supplies for our laboratories, licensing, an allocation of facility and information technology expenses, and other costs associated with owning and operating our own laboratories. R&D expenses also include costs to write and support the research for filing patents.

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Selling, General, and Administrative Expense

Selling, general, and administrative (SG&A) expenses consist primarily of employee-related expenses for selling and licensing our products and employee-related expenses for our executive, legal, intellectual property, information technology, finance, and human resources functions. In periods prior to 2021, these expenses also included employee-related and other expenses for selling soybean oil and meal, soybean acreage acquisition, and managing the soybean product supply chain. Other SG&A expenses include facility and

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information technology expenses not otherwise allocated to R&D expenses, professional fees for auditing, tax and legal services, expenses associated with maintaining patents, consulting costs and other costs of our information systems, and costs to market our products.

Interest, net

Interest, net is comprised of interest income resulting from investments of cash and cash equivalents, short-term investments, unrealized gains and losses on short-term investments, and interest expense on our financing lease obligations. It is also driven by balances, yields, and timing of financing and other capital raising activities.

Non-operating expenses

Non-operating expenses are expenses that are not directly related to our ongoing operations and are primarily comprised of gains and losses from foreign exchange-related transactions and disposals of land, buildings, and equipment.

Anticipated Changes Between Revenues and Costs

As we execute upon our ~~streamlined~~product development and licensing business model, we expect the composition of our revenues and costs to evolve. Product-related revenues from selling soybean grain, seed, oil, and meal will decline, and negative margins we experienced selling those products will no longer occur. The significant working capital investment to support those activities will also decline.

Future cash and revenue-generating opportunities are expected to primarily ~~arise from seed sales, trait development and licensing activities, and licensing arrangements. Under trait development and licensing activities, revenues are expected to~~ arise from up-front, annual or milestone, and royalty payments upon the licensees’ commercial sale of products. ~~Under licensing arrangements,~~These revenues are ~~expected~~anticipated to ~~arise from up-front, annual, and royalty payments upon the licensees’ commercial sale of products.~~have high margins over time.

Because our strategy is based on focusing on our core strengths in research and development, gene editing, and trait development, we expect R&D expenses to be the primary area of increase in our expenses. At the same time, because our streamlined business model relies on third parties assuming responsibility for agronomy infrastructure, product management, and commercialization, we expect that SG&A expense will decline as the new models are fully implemented.

Recent Developments – COVID-19 Update

As previously reported, our operations in Minnesota are classified as critical sector work under the State of Minnesota’s COVID-19 executive orders. Accordingly, most of our laboratory workers have continued to work onsite at our headquarters throughout the pandemic, and our ~~R&D~~ programs and ~~seed distribution~~ activities have not experienced material delays. In accordance with our COVID-19 Preparedness Plan, Minnesota executive order requirements, and guidelines promoted by the Centers for Disease Control and Prevention, we ~~have~~ implemented health and safety measures for the protection of our onsite workers, ~~have~~ maintained remote work arrangements for our non-laboratory personnel, and ~~have~~ implemented, as necessary, appropriate self-quarantine precautions for potentially affected laboratory personnel. On May 28, 2021, nearly all Minnesota COVID-19 restrictions came to an end, including all capacity limits and distancing requirements - both indoors and outdoors. Our non-laboratory personnel returned to working onsite in mid-July 2021.

During the ~~quarter~~six months ended ~~March 31,~~June 30, 2021, the COVID-19 pandemic did not have a material impact on our operations. However, a resurgence or prolonging of the COVID-19 pandemic, governmental response measures, and resulting disruptions could rapidly offset such improvements. Moreover, the effects of the COVID-19 pandemic on the financial markets remain substantial and broader economic uncertainties persist, which may make obtaining capital challenging and have exacerbated the risk that such capital, if available, may not be available on terms acceptable to us. There continues to be significant uncertainty relating to the COVID-19 pandemic and its impact, and many factors could affect our results and operations, including, but not limited to, those described in Part I, Item 1A, “Risk Factors” of our 2020 Form 10-K.

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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~MARCH 31,~~JUNE 30, 2021 COMPARED TO THE THREE MONTHS ENDED ~~MARCH 31, 2021~~JUNE 30, 2020

A summary of our results of operations for the three months ended ~~March 31,~~June 30, 2021, and 2020 follows:


	Three Months Ended March 31,												Three Months Ended June 30,
	2021			2020			$ Change			% Change			2021			2020			$ Change			% Change
Revenue	$	4,402		$	2,377		$	2,025			85	%	$	11,880		$	2,307		$	9,573			415	%
Cost of goods sold		6,745			3,884			2,861			74	%		11,527			5,321			6,206			117	%
Gross margin		(2,343	)		(1,507	)		(836	)		(55	)%		353			(3,014	)		3,367			112	%
Research and development expense		3,050			2,787			263			9	%		2,844			2,825			19			1	%
Selling, general, and administrative expense		4,258			6,298			(2,040	)		(32	)%		3,478			5,167			(1,689	)		(33	)%
Management fees and royalties		30			62			(32	)		(52	)%
Management fees														15			42			(27	)		(64	)%
Gain upon extinguishment of Payroll Protection Program loan														1,528			—			1,528		NM
Interest, net		(346	)		(398	)		52			13	%		(357	)		154			(511	)		(332	)%
Non-operating expenses		(1	)		(11	)		10			91	%		6			(8	)		14			175	%
Net loss	$	(10,028	)	$	(11,063	)	$	1,035			9	%	$	(4,807	)	$	(10,902	)	$	6,095			56	%
Basic and diluted net loss per share	$	(0.27	)	$	(0.34	)	$	0.07			21	%	$	(0.13	)	$	(0.33	)	$	0.20			61	%
Adjusted EBITDA ¹	$	(6,827	)	$	(8,237	)	$	1,410			17	%	$	(5,814	)	$	(6,501	)	$	687			11	%

¹See “Use of Non-GAAP Financial Information” elsewhere in this report for a discussion of Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and a reconciliation of Adjusted EBITDA to Net loss, the most comparable GAAP measure.

NM - not meaningful

~~Revenue~~

Revenue

Revenue was ~~$4.4~~$11.9 million in the ~~first~~second quarter of 2021,, an increase of ~~$2.0~~$9.6 million, or 85415 percent, from the ~~first~~second quarter of 2020. The increase was driven by ~~sales~~ the volume and mix of ~~a portion~~ product sold in the quarter, as we sold seed and 25 percent of the 2020 grain crop in the second quarter of 2021 as compared to the ~~first~~second quarter of 2020, when we were selling soybean oil and meal. ~~As of March 31, 2021, we had sold over 50 percent of the 2020 grain crop.~~

Cost of Goods Sold

Cost of goods sold ~~were $6.7~~ was $11.5 million in the ~~first~~second quarter of 2021,, an increase of ~~$2.9~~$6.2 million, or 74117 percent, from the ~~first~~second quarter of 2020. The increase was driven by higher volumes of product sold and higher average prices paid for grain ~~as a result of~~due to increases in commodity market prices for ~~soybeans,~~soybeans. These increases were partially offset by the benefits resulting from the move to sell grain compared to selling oil and ~~$0.2~~meal, as well as a $2.9 million year-over-year decrease in net realizable value adjustments to inventory as the year ago period included costs to write down excess seed inventory and also reflected the margin profile of selling soybean oil and meal compared to selling grain, and $0.5 million of unrealized commodity derivative ~~losses~~gains from hedging contracts sold to convert our fixed price grain inventory and fixed price Forward Purchase Contracts to floating prices to link them to market, consistent with how we expect to sell the grain. ~~These increases were partially offset~~

Gross Margin and Adjusted Gross Margin

Gross margin was $0.4 million, or 3 percent, in the second quarter of 2021, an increase of $3.4 million or 112% percent from the second quarter of 2020. The improvement was primarily driven by the benefits resulting from the ~~advancement of our soybean product line go-to-market strategy.~~

~~Gross Margin~~move to sell grain compared to selling oil and ~~Adjusted Gross Margin~~

~~Gross margin was a negative $2.3~~ ~~million, or~~ ~~negative 53 percent, in the first quarter of 2021, a decrease of $0.8~~ ~~million or~~ 55 ~~percent from the first quarter of~~ ~~2020, driven by higher volumes of product sold, higher cost of product sold~~meal, as well as a ~~result~~$2.9 million year-over-year decrease in net realizable value adjustments to inventory as the year ago period included costs to write down excess seed inventory and also reflected the margin profile of ~~increases in commodity prices for soybeans,~~selling soybean oil and ~~$0.2~~ meal compared to selling grain, and $0.5 million of unrealized commodity derivative ~~losses~~gains from ~~futures~~hedging contracts sold to ~~hedge~~convert our fixed price grain inventory and fixed price Forward Purchase ~~Contracts. These increases were partially offset by higher selling~~Contracts to floating prices ~~and benefits from~~to link them to market, consistent with how we expect to sell the ~~advancement of our soybean product line go-to-market strategy.~~grain.

Adjusted gross margin, a non-GAAP measure,, was ~~negative $1.3~~ ~~million, or~~ ~~negative 31~~ ~~percent, in the first quarter of 2021, compared to~~ negative $1.2 million, or negative 4910 percent, in the ~~first~~second quarter of 2021, compared to negative $0.8 million, or negative 34 percent, in the second quarter of 2020. The improvement on a percentage basis was driven by benefits resulting from the ~~advancement~~move to sell grain compared to selling oil and meal.

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Table of ~~our soybean product line go-to-market strategy.~~Contents

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted gross margin and a reconciliation of gross margin, the most comparable GAAP measure, to adjusted gross margin.

Research and Development Expense

R&D ~~expenses~~ ~~were $3.1~~ expense was $2.8 million in the ~~first~~second quarter of 2021,~~, an increase of $0.3~~ ~~million, or nine percent,~~ ~~from~~ essentially flat compared to the ~~first~~second quarter of ~~2020~~2020.~~. The increase was driven by~~ ~~an increase in non-cash stock compensation and third-party R&D expenses.~~

Selling, General, and Administrative Expense

SG&A ~~expenses were $4.3~~expense was $3.5 million in the ~~first~~second quarter of 2021, a decrease of ~~$2.0~~$1.7 million, or 3233 percent, from the ~~first~~second quarter of 2020.

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The decrease was driven by lower personnel costs and non-cash stock compensation expense ~~of $2.8 million from the recapture of non-cash stock compensation from forfeitures of unvested stock awards, lower personnel costs~~ as a result of the reduction in cost following the ~~advancement~~move to sell grain compared to selling oil and meal, as well as other reductions in operating expenses.

Management Fees

Management fees were nominal for the three months ended June 30, 2021, and 2020.

Gain Upon Extinguishment of Payroll Protection Program Loan

On April 8, 2021, we were notified by the SBA that the full principal amount and all accrued interest of the ~~go-to-market strategy for our soybean product line,~~PPP loan had been forgiven and ~~other cash expenses also decreased from~~in the ~~first~~second quarter of ~~2020. These decreases were partially offset by~~2021 we recognized a gain upon the extinguishment of the PPP loan of $1.5 million.

Interest, net

Interest, net was an ~~increase~~expense of ~~$2.4~~$0.4 million in ~~Section 16 officer transition expenses and increase in certain insurance costs.~~

~~Management Fees and Royalties~~

~~Management fees and royalties were $30,000 in~~ the ~~first~~second quarter of 2021, a decrease of ~~$32,000,~~$0.5 million, or ~~52 percent.~~

~~Interest, net~~

~~Interest, net for~~332 percent from the ~~first~~second quarter of ~~2021~~2020. The decline was ~~essentially flat compared to the first quarter of 2020.~~driven by lower balances and lower rates on our invested cash balances.

Net Loss and Adjusted Net Loss

Net loss was $~~10.0~~$4.8 million in ~~first~~the second quarter of 2021, an improvement of $~~1.0~~$6.1 million, or ~~nine~~56 percent, from the ~~first~~second quarter of 2020. The improvement in net loss was driven by ~~$2.7 million of lower~~ ~~non-cash stock compensation expenses~~ ~~as a result of a recapture~~ of ~~non-cash stock compensation expense from the forfeiture of unvested stock awards, fewer stock awards granted, and lower stock award values, partially offset by a~~ ~~$2.4~~ ~~million~~ ~~increase in Section 16 officer transition~~improved gross margins, reduced operating expenses, and ~~a $0.8~~ ~~million~~ ~~decrease in gross margin.~~the gain upon the extinguishment of the PPP loan.

Adjusted net loss was ~~$8.8~~$7.8 million in the ~~first~~second quarter of 2021, an improvement of ~~$2.0~~$0.8 million, or 189 percent, from the ~~first~~second quarter of 2020. The improvement in adjusted net loss was driven by the benefits resulting from the ~~advancement of our soybean product line go-to-market strategy~~move to sell grain compared to selling oil and ~~other~~meal and reductions in operating expenses.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted net loss and a reconciliation of net loss, the most comparable GAAP measure, to adjusted net loss.

Net Loss Per Share and Adjusted Net Loss Per Share

Net loss per share was ~~$0.27~~$0.13 in the ~~first~~second quarter of 2021, an improvement of ~~$0.07~~$0.20 per share, or 2161 percent, from the ~~first~~second quarter of ~~2020.The~~2020. The improvement in net loss per share was driven by the change in net ~~loss.~~loss and the year-over-year increase in the weighted average share count.

Adjusted net loss per share was ~~$0.24~~$0.21 in the ~~first~~second quarter of 2021, an improvement of ~~$0.09~~$0.05 per share, or 2719 percent, from the ~~first~~second quarter of 2020. The improvement in adjusted net loss per share was driven by the change in adjusted net ~~loss.~~loss and the year-over-year increase in the weighted average share count.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted net loss per share and a reconciliation of net loss per share, the most comparable GAAP measure, to adjusted net loss per share.

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Adjusted EBITDA

Adjusted EBITDA loss was ~~$6.8~~$5.8 million in the ~~first~~second quarter of 2021, an improvement of ~~$1.4~~$0.7 million, or 1711 percent, from the ~~first~~second quarter of 2020. The improvement was driven by the benefits resulting from the ~~advancement of our soybean product line go-to-market strategy~~move to sell grain compared to selling oil and ~~other~~meal and reductions in operating expenses.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted EBITDA and a reconciliation of net loss, the most comparable GAAP measure, to adjusted EBITDA.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2020

A summary of our results of operations for the six months ended June 30, 2021, and 2020 follows:


	Six Months Ended June 30,
	2021			2020			$ Change			% Change
Revenue	$	16,282		$	4,684		$	11,598			248	%
Cost of goods sold		18,272			9,205			9,067			99	%
Gross margin		(1,990	)		(4,521	)		2,531			56	%
Research and development expense		5,894			5,612			282			5	%
Selling, general, and administrative expense		7,736			11,465			(3,729	)		(33	)%
Management fees		45			104			(59	)		(57	)%
Gain upon extinguishment of Payroll Protection Program loan		1,528			—			1,528		NM
Interest, net		(703	)		(244	)		(459	)		(188	)%
Non-operating expenses		5			(19	)		24			126	%
Net loss	$	(14,835	)	$	(21,965	)	$	7,130			32	%
Basic and diluted net loss per share	$	(0.40	)	$	(0.67	)	$	0.27			40	%
Adjusted EBITDA 1	$	(12,641	)	$	(14,738	)	$	2,097			14	%

1 See “Use of Non-GAAP Financial Information” elsewhere in this report for a discussion of Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and a reconciliation of Adjusted EBITDA to Net loss, the most comparable GAAP measure.

NM- not meaningful

Revenue

Revenue was $16.3 million in the first six months of 2021, an increase of $11.6 million, or 248 percent, from the first six months of 2020. The increase was driven by sales of a portion of the 2020 grain crop as compared to the six months of 2020, when we were selling soybean oil and meal. As of June 30, 2021, we had sold over 75 percent of the 2020 grain crop.

Cost of Goods Sold

Cost of goods sold was $18.3 million in the first six months of 2021, an increase of $9.1 million, or 99 percent, from the first six months of 2020. The increase was driven by higher volumes of product sold and higher average prices paid for grain as a result of increases in commodity market prices for soybeans. These increases were partially offset by the benefits resulting from the move to sell grain compared to selling oil and meal, as well as a $2.8 million year-over-year decrease in net realizable value adjustments to inventory as the year ago period included costs to write down excess seed inventory and also reflected the margin profile of selling soybean oil and meal compared to selling grain, and $1.1 million of unrealized commodity derivative gains from hedging contracts sold to convert our fixed price grain inventory and fixed price Forward Purchase Contracts to floating prices to link them to market, consistent with how we expect to sell the grain.

Gross Margin and Adjusted Gross Margin

Gross margin was a negative $2.0 million, or negative 12 percent, in the first six months of 2021, an improvement of $2.5 million, or 56 percent from the first six months of 2020. The improvement was driven by the benefits resulting from the move to sell grain compared to selling oil and meal, as well as a $2.8 million year-over-year decrease in net realizable value adjustments to inventory as the year ago period included costs to write down excess seed inventory and also reflected the margin profile of selling soybean oil and meal compared to selling grain, and $1.1 million of unrealized commodity derivative gains from hedging contracts sold to convert our fixed price

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grain inventory and fixed price Forward Purchase Contracts to floating prices to link them to market, consistent with how we expect to sell the grain.

Adjusted gross margin, a non-GAAP measure, was negative $2.5 million, or negative 15 percent, in the first six months of 2021, compared to negative $2.0 million, or negative 42 percent, in the first six months of 2020. The improvement on a percentage basis was driven by benefits resulting from the move to sell grain compared to selling oil and meal.

Research and Development Expense

R&D expense was $5.9 million in the first six months of 2021, an increase of $0.3 million, or 5 percent, from the first six months of 2020. The increase was driven by an increase in personnel costs, partially offset by a decrease in third-party R&D expenses.

Selling, General, and Administrative Expense

SG&A expense was $7.7 million in the first six months of 2021, a decrease of $3.7 million, or 33 percent, from the first six months of 2020. The decrease was driven by lower non-cash stock compensation expenses of $3.4 million from the recapture of stock compensation from forfeitures of unvested stock awards primarily from the departure of our former CEO, lower personnel costs as a result of the reduction in cost following the move to sell grain compared to selling oil and meal, and other reductions in operating expenses. These decreases were partially offset by an increase of $2.3 million in Section 16 officer transition expenses.

Management Fees

Management fees were nominal for the first six months of 2021 and 2020.

Gain Upon Extinguishment of Payroll Protection Program Loan

On April 8, 2021, we were notified by the SBA that the full principal amount and all accrued interest of the PPP loan had been forgiven. Accordingly, we recognized a gain upon the extinguishment of the PPP loan of $1.5 million.

Interest, net

Interest, net was expense of $0.7 million in the first six months of 2021, a $0.5 million decrease, or 188 percent, compared to the first six months of 2020. The decline was driven by lower balances and lower rates on our invested cash balances.

Net Loss and Adjusted Net Loss

Net loss was $14.8 million in first six months of 2021, an improvement of $7.1 million, or 32 percent, from the first six months of 2020. The improvement in net loss was driven by improved gross margins, reduced operating expenses, and the gain upon the extinguishment of the PPP loan.

Adjusted net loss was $16.7 million in the first six months of 2021, an improvement of $2.7 million, or 14 percent, from the second quarter of 2020. The improvement in adjusted net loss was driven by the benefits resulting from the move to sell grain compared to selling oil and meal and reductions in operating expenses.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted net loss and a reconciliation of net loss, the most comparable GAAP measure, to adjusted net loss.

Net Loss Per Share and Adjusted Net Loss Per Share

Net loss per share was $0.40 in the first six months of 2021, an improvement of $0.27 per share, or 40 percent, from the first six months of 2020. The improvement in net loss per share was driven by the change in net loss and the year-over-year increase in the weighted average share count.

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Adjusted net loss per share was $0.45 in the first six months of 2021, an improvement of $0.14 per share, or 24 percent, from the first six months of 2020. The improvement in net loss per share was driven by the change in net loss and the year-over-year increase in the weighted average share count.

Adjusted EBITDA

Adjusted EBITDA loss was $12.6 million in the first six months of 2021, an improvement of $2.1 million, or 14 percent, from the first six months of 2020. The improvement was driven by the benefits resulting from the move to sell grain compared to selling oil and meal and reductions in operating expenses.

See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted EBITDA and a reconciliation of net loss, the most comparable GAAP measure, to adjusted EBITDA.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our primary source of liquidity is our cash and cash equivalents, with additional liquidity accessible, subject to market conditions and other factors, from the capital markets. As of ~~March 31,~~June 30, 2021, we had a total of ~~$20.4~~$18.5 million of cash, cash equivalents, restricted cash, and short-term ~~investments, and restricted cash. Short-term investments consist~~investments. As of ~~corporate debt securities and commercial paper with more than 90 days to maturity at issuance.~~June 30, 2021, we did not have any short-term investments. All of these amounts are convertible to cash within 90 days except for $1.0 million of restricted cash associated with our financing ~~leases.~~leases which will be returned to us over the next 18 months. Current liabilities were ~~$6.3~~$7.2 million as of ~~March 31,~~June 30, 2021. Accordingly, we have cash and cash equivalents ~~and short-term investments~~ sufficient to fund all short-term obligations as of that date.

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Our liquidity funds our non-discretionary cash requirements and our discretionary spending. Working capital is our principal non-discretionary funding ~~requirement.~~requirement, which we anticipate will decline over the remainder of 2021 as we wind-down our grain purchases and associated sales. In addition, we have contractual obligations related to our recurring business operations, primarily related to ~~lease obligations.~~our headquarters and laboratory facilities and a diminishing amount of grain purchases associated with our former go-to-market strategy for soybean products. Our principal discretionary cash spending ~~includes~~is for capital expenditures.

Gene editing is a highly regulated activity, and we incur significant expense related to our monitoring of, and compliance with, applicable regulatory requirements in the United States. To the extent that we opportunistically pursue business arrangements that bring innovations developed for North America to new territories, we would be required to incur significant additional regulatory costs in order to comply with applicable regulatory requirements outside the United States.

We incurred losses from operations of ~~$9.7~~$6.0 million for the three months ended ~~March 31,~~June 30, 2021, and ~~$10.7~~$15.7 million for the ~~three~~six months ended ~~March 31, 2020.~~June 30, 2021. As of ~~March 31,~~June 30, 2021, we had an accumulated deficit of ~~$176.9~~$181.7 million and expect to continue to incur losses in the future.

We have $1.5 million outstanding under our Paycheck Protection Program loan as of March 31, 2021. We have applied the proceeds from the Paycheck Protection Program loan toward qualifying expenses and on October 21, 2020, as modified December 29, 2020, applied for forgiveness of the full principal amount and all accrued interest. OnOn April 8, 2021, we were notified by the SBA that the full principal amount and all accrued interest of ~~our Paycheck Protection Program~~the PPP loan had been forgiven. ~~We expect to record income in~~Accordingly, we recognized a gain upon the ~~second quarter of 2021 for the full amount~~extinguishment of the PPP loan ~~and the associated accrued interest.~~for $1.5 million.

Cash Flows from Operating Activities


	Three Months Ended March 31,												Six Months Ended June 30,
In Thousands	2021			2020			$ Change			% Change			2021			2020			$ Change			% Change
Net loss	$	(10,028	)	$	(11,063	)	$	1,035			9	%	$	(14,835	)	$	(21,965	)	$	7,130			32	%
Gain upon extinguishment of Payroll Protection Program loan														(1,528	)		—			(1,528	)	NM
Depreciation and amortization expense		585			452			133			29	%		1,180			904			276			31	%
Stock-based compensation		(1,450	)		1,271			(2,721	)		(214	)%		(371	)		3,068			(3,439	)		(112	)%
Changes in operating assets and liabilities		1,476			(2,898	)		4,374			151	%		4,305			(7,658	)		11,963			156	%
Net cash used by operating activities	$	(9,417	)	$	(12,238	)	$	2,821			23	%	$	(11,249	)	$	(25,651	)	$	14,402			56	%

NM- not meaningful

Net cash used by operating activities ~~decreased by $2.8~~was $11.2 million ~~primarily~~in the first six months of 2021, an improvement of $14.4 million, or 56 percent, from the first six months of 2020. The decrease was driven by a ~~$4.4~~$12.0 million improvement in cash used by operating assets and liabilities ~~primarily due~~as we converted a substantial amount of inventory and accounts receivable to cash in 2021 compared to the ~~severance recorded following the departure of Mr. Blome~~same period in 2020, and ~~$1.0~~a $7.1 million decrease in net loss. These improvements were partially offset by a ~~$2.7~~$3.4 million ~~change~~decrease in ~~the impact from~~ non-cash stock compensation, ~~expense,~~ primarily the result of the forfeiture of unvested stock ~~awards.~~awards, and the $1.5 million non-cash gain upon the extinguishment of the PPP loan.

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We expect net cash used by operating activities over the remainder of 2021 to be lower than the second half of 2020 as a result of working capital improvements and expense reductions following the ~~advancement of the business model for our soybean product line.~~move to sell grain compared to selling oil and meal.

Cash Flows from Investing Activities


	Three Months Ended March 31,											Six Months Ended June 30,
In Thousands	2021			2020			$ Change		% Change			2021			2020			$ Change		% Change
Sales and (purchases) of short-term investments, net	$	8,653		$	(38,620	)	$	47,273		122	%	$	11,698		$	(29,942	)	$	41,640		139	%
Purchases of land, buildings, and equipment		(269	)		(317	)		48		15	%		(307	)		(525	)		218		42	%
Net cash provided by (used by) investing activities	$	8,384		$	(38,937	)		47,321		122	%	$	11,391		$	(30,467	)	$	41,858		137	%

Net cash provided by investing activities ~~increased by $47.3 million.~~was $11.4 million in the first six months of 2021, an increase of $41.9 million, or 137 percent, from the first six months of 2020. This increase was driven by changes in purchases and sales of short-term ~~investments. In~~investments, as the first ~~quarter~~six months of 2020 ~~we invested~~saw us invest our cash ~~and cash equivalents~~ in short-term investments while the first six months of 2021 reflects the draw-down of those short-term investments to ~~diversify counterparty credit risk.~~fund operations.

We expect net cash used for purchases of land, buildings, and equipment in the remainder of 2021 to be largely for capital expenditures, and for those levels to be comparable to ~~2020, and proceeds from short-term investments to continue during 2021 as we continue to use those investments to fund operations.~~the first six months of 2021.

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Cash Flows from Financing Activities


	Three Months Ended March 31,												Six Months Ended June 30,
In Thousands	2021			2020			$ Change			% Change			2021			2020			$ Change			% Change
Proceeds from Paycheck Protection Program loan													$	—		$	1,518		$	(1,518	)		(100	)%
Repayments of financing lease obligations	$	(88	)	$	(45	)	$	(43	)		(96	)%		(178	)		(130	)		(48	)		(37	)%
Proceeds from the exercise of stock options		208			—			208		NM				227			—			227		NM
Net cash provided by (used by) financing activities	$	120		$	(45	)	$	165			367	%
Net cash provided by financing activities													$	49		$	1,388		$	(1,339	)		96	%

NM – not meaningful

Net cash provided by financing activities ~~increased by $0.2~~was nil in the first six months of 2021, a decrease of $1.3 million, ~~primarily~~or 96 percent, from the first six months of 2020. The decrease was driven by ~~proceeds from stock option exercises.~~

~~We expect net cash from financing activities in 2021 to be less than 2020 due to~~ the cash inflows from the $1.5 million ~~Paycheck Protection Program~~PPP loan received in ~~2020.~~ ~~On April 8, 2021, we were notified~~the first six months of 2020, partially offset by cash flows from the ~~SBA that the full amount~~exercise of ~~our Paycheck Protection Program loan had been forgiven.~~stock options.

CAPITAL RESOURCES

Operating Capital Requirements

Considering factors such as ~~cash raised in October 2020,~~ our~~anticipated cash burn rate, our anticipated expense reduction efforts, our expectations regarding an effective advancement of our go-to-market soybean strategy, and~~ anticipated cash receipts from sales of grain and our product development and technology licensing efforts with partners, our anticipated cash burn rate, and our expense reduction efforts, we believe our cash, cash equivalents, ~~short-term investments,~~ and restricted cash as of ~~March 31,~~June 30, 2021, will be ~~enough~~sufficient to fund our operations for at least the next twelve months and into the second half of 2022.

We anticipate that we will continue to generate losses for the next several years before revenue is enough to support our operating capital requirements. Until we can generate substantial cash flow, we expect to finance a portion of future cash needs through cash on hand, ~~public or private equity or debt financings, government or other third-party funding, and~~ commercialization activities, which may result in various types of revenue streams from seed sales and future development agreements, trait licenses, and technology licenses, including upfront and milestone payments, annual license fees, and ~~royalties.~~ royalties, government or other third-party funding, and public or private equity or debt financings. However, additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in enough amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the development or commercialization of our activities. Failure to receive additional funding could cause us to cease operations, in part or in full. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders and increased fixed payment obligations, and these securities may have rights senior to those of our shares of common stock. Any of these events could significantly harm our business, financial condition, and prospects.

Our financing needs are subject to change depending on, among other things, the success of our product development efforts, the effective execution of our streamlined business model, our revenue, and our efforts to effectively manage expenses. The effects of the COVID-19 pandemic on the financial markets and broader economic uncertainties may make obtaining capital through equity or debt financings more challenging and have exacerbated the risk that such capital, if available, may not be available on terms acceptable to us.

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In response to current economic conditions, we have postponed non-essential capital expenditures and undertaken other efficiency efforts. In addition, the headcount reductions undertaken in connection with our ~~business model advancement~~move to sell grain compared to selling oil and meal will contribute to our cost-saving initiatives. We will continue to review our operating expenses and to take actions that support efficient operations, financial flexibility, and optimized liquidity.

CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES

As of ~~March 31,~~June 30, 2021, there were no material changes in our commitments under contractual obligations as disclosed in our Annual Report, except that our Forward Purchase Contracts, which consist of commitments to purchase grain and seed, have decreased to ~~$11.7~~$6.8 million at June 30, 2021, from $21.2 ~~million. During the quarter,~~million at December 31, 2020, and that as of June 30, 2021 we ~~recorded $2.3 million of cash expense for separation-related payments~~have a remaining severance obligation primarily to Mr. Blome, our former ~~chief executive officer. The cash payments to Mr. Blome will be made over a period~~CEO, of ~~24 months, which began in March 2021.~~$2.2 million.

CRITICAL ACCOUNTING POLICIES

The preceding discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the related disclosures, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different

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assumptions or conditions. We believe the policies discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, are the most critical to an understanding of our financial condition and results of operations because they require us to make estimates, assumptions, and judgments about matters that are inherently uncertain.

As of ~~March 31,~~June 30, 2021, there have been no significant changes to our critical accounting policies disclosure reported in “Critical Accounting Estimates” in our Annual Report.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-02, “Leases (Topic 842)” (ASU 2016-02). Under ASU 2016-02, an entity will be required to recognize assets and liabilities for the rights and obligations created by leases on the entity’s balance sheet for both finance and operating leases. For leases with a term of 12 months or less, an entity can elect to not recognize lease assets and lease liabilities and expense the lease over a straight-line basis for the term of the lease. Because we are an emerging growth company, the requirements of the new standard are effective for annual reporting periods beginning after December 15, 2021, and interim periods within those annual periods. We are in the process of analyzing the impact of this standard on our results of operations and financial position.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)” (ASU 2016-13). ASU 2016-13 creates accounting requirements on how to account for credit losses on most financial assets and certain other instruments. This will require the estimation of lifetime expected credit losses and corresponding recognition of allowance for losses on trade and other receivables, loans, and other instruments held at amortized cost. The ASU requires certain recurring disclosures and is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2023. We are in the process of analyzing the impact of this standard on our results of operations.

USE OF NON-GAAP FINANCIAL INFORMATION

To supplement our audited financial results prepared in accordance with GAAP, we have prepared certain non-GAAP measures that include or exclude special items. These non-GAAP measures are not meant to be considered in isolation or as a substitute for financial information presented in accordance with GAAP and should be viewed as supplemental and in addition to our financial information presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures. In addition, other companies may report similarly titled measures, but calculate them differently, which reduces their usefulness as a comparative measure. Management utilizes these non-GAAP metrics as performance measures in evaluating and making operational decisions regarding our business.

We present adjusted gross margin, a non-GAAP measure that ~~excludes~~reflects adjustments necessary to present the ~~effects~~underlying gross margin of our soybean product line, including (i) unrealized gains and losses associated with commodity derivatives entered into to hedge the change in value of fixed price grain inventories and fixed price ~~Forward Purchase Contracts as~~forward purchase contracts that should be recognized in the ~~expected impact from these contracts will be fully offset~~future when

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the underlying ~~grain~~inventory is sold, (ii) gains and ~~excludes~~losses from commodity derivatives realized in prior periods but associated with inventory sold in the ~~impact of any~~current period, (iii) net realizable value adjustments to inventories occurring in the period, which ~~would~~ otherwise ~~have been recorded as an adjustment to value in a prior period or~~ would have been ~~recorded~~recognized in athe future ~~period as~~when the underlying ~~products are sold.~~inventory is sold, and (iv) net realizable value adjustments recognized in prior periods but associated with inventory sold in the current period.

We provide in the table below a reconciliation of gross margin, which is the most directly comparable GAAP financial measure, to adjusted gross margin. We provide adjusted gross margin because we believe that this non-GAAP financial metric provides investors with useful supplemental information at this stage of commercialization as the amounts being adjusted affect the period-to-period comparability of our gross margins and financial performance.

The table below presents a reconciliation of gross margin to adjusted gross margin:


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
In Thousands	2021			2020			2021			2020			2021			2020
Gross margin (GAAP measure)	$	(2,343	)	$	(1,507	)	$	353		$	(3,014	)	$	(1,990	)	$	(4,521	)
Gross margin percentage		(53	)%		(63	)%		3	%		(131	)%		(12	)%		(97	)%
Non-GAAP adjustments:
Unrealized mark-to-market loss		211			—
Net realizable value adjustment to inventories		787			334
Commodity derivative impact, net								(658	)		—			(447	)		—
Net realizable value adjustments to inventories								(859	)		2,221			(72	)		2,555
Adjusted gross margin	$	(1,345	)	$	(1,173	)	$	(1,164	)	$	(793	)	$	(2,509	)	$	(1,966	)
Adjusted gross margin percentage		(31	)%		(49	)%		(10	)%		(34	)%		(15	)%		(42	)%

We present adjusted net loss, a non-GAAP measure, and define it as net loss ~~excluding~~including adjustments necessary to present the ~~effects~~underlying gross margin of our soybean product line, including (i) unrealized gains and losses associated with commodity derivatives entered into to hedge the change in value of fixed price grain inventories and fixed price Forward Purchase Contracts asthat should be recognized in the ~~expected impact from these contracts will be fully offset~~future when the underlying ~~grain~~inventory is sold, ~~any~~(ii) gains and losses from commodity derivatives realized in prior periods but associated with inventory sold in the current period, (iii) net realizable value adjustments to inventories occurring in the period, which ~~would~~ otherwise ~~have been recorded as an adjustment to value in a prior period or~~ would have been ~~recorded~~recognized in a

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the future ~~period as~~when the underlying ~~products are~~inventory is sold, and (iv) net realizable value adjustments recognized in prior periods but associated with inventory sold in the current period, and excluding Section 16 officer transition expenses, the recapture of non-cash stock compensation ~~expense~~ primarily associated with the departure of Section 16 officers, the gain upon the extinguishment of the PPP loan, and non-operating expenses, which are primarily gains and losses on foreign exchange transactions and losses on the disposals of land, buildings, and equipment.

We provide in the table below a reconciliation of net loss, which is the most directly comparable GAAP financial measure, to adjusted net loss. We provide adjusted net loss because we believe that this non-GAAP financial metric provides investors with useful supplemental information at this stage of commercialization as the amounts being adjusted affect the period-to-period comparability of our net losses and financial performance.

The table below presents a reconciliation of net loss to adjusted net loss:


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
In Thousands	2021			2020			2021			2020			2021			2020
Net loss (GAAP measure)	$	(10,028	)	$	(11,063	)	$	(4,807	)	$	(10,902	)	$	(14,835	)	$	(21,965	)
Non-GAAP adjustments:
Unrealized mark-to-market loss		211			—
Net realizable value adjustment to inventories		787			334
Commodity derivative impact, net								(658	)		—			(447	)		—
Net realizable value adjustments to inventories								(859	)		2,221			(72	)		2,555
Section 16 officer transition expenses		2,721			360			13			77			2,734			437
Recapture of non-cash stock compensation		(2,540	)		(471	)		—			—			(2,540	)		(471	)
Gain upon extinguishment of Payroll Protection Program loan								(1,528	)		—			(1,528	)		—
Non-operating expenses		1			11			(6	)		8			(5	)		19
Adjusted net loss	$	(8,848	)	$	(10,829	)	$	(7,845	)	$	(8,596	)	$	(16,693	)	$	(19,425	)

We present adjusted net loss per share,, a non-GAAP measure, and define it as net loss per share ~~excluding~~including adjustments necessary to present the ~~effects~~underlying gross margin of our soybean product line, including (i) unrealized gains and losses associated with commodity derivatives entered into to hedge the change in value of fixed price grain inventories and fixed price Forward Purchase Contracts asthat should be recognized in the ~~expected impact from these contracts will be fully offset~~future when the underlying ~~grain~~inventory is sold, ~~any~~(ii) gains and losses from commodity derivatives realized in

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prior periods but associated with inventory sold in the current period, (iii) net realizable value adjustments to inventories occurring in the period, which ~~would~~ otherwise ~~have been recorded as an adjustment to value in a prior period or~~ would have been ~~recorded~~recognized in athe future ~~period as~~when the underlying ~~products are~~inventory is sold, and (iv) net realizable value adjustments recognized in prior periods but associated with inventory sold in the current period, and excluding Section 16 officer transition expenses,the recapture of non-cash stock compensation ~~expense~~ primarily associated with the departure of Section 16 officers, the gain upon the extinguishment of the PPP loan, and non-operating expenses, which are primarily gains and losses on foreign exchange transactions and losses on the disposals of land, buildings, and ~~equipment~~equipment..

We provide in the table below a reconciliation of net loss per share, which is the most directly comparable GAAP financial measure, to adjusted net loss per share. We provide adjusted net loss per share because we believe that this non-GAAP financial metric provides investors with useful supplemental information at this stage of commercialization as the amounts being adjusted affect the period-to-period comparability of our net losses per share and financial performance.

The table below presents a reconciliation of net loss per share to adjusted net loss per share:


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2021			2020
Net loss per share (GAAP measure)	$	(0.27	)	$	(0.34	)	$	(0.13	)	$	(0.33	)	$	(0.40	)	$	(0.67	)
Non-GAAP adjustments:
Unrealized mark-to-market loss		0.01			—
Net realizable value adjustment to inventories		0.02			0.01
Commodity derivative impact, net								(0.02	)		—			(0.01	)		—
Net realizable value adjustments to inventories								(0.02	)		0.07			—			0.08
Section 16 officer transition expenses		0.07			0.01			—			—			0.07			0.01
Recapture of non-cash stock compensation		(0.07	)		(0.01	)		—			—			(0.07	)		(0.01	)
Gain upon extinguishment of Payroll Protection Program loan								(0.04	)		—			(0.04	)		—
Non-operating expenses		—			—			—			—			—			—
Adjusted net loss per share	$	(0.24	)	$	(0.33	)	$	(0.21	)	$	(0.26	)	$	(0.45	)	$	(0.59	)

We present adjusted EBITDA, a non-GAAP measure, and define it as net loss excluding interest, net, depreciation and amortization expenses, non-cash stock-based compensation expenses including the recapture of non-cash stock compensation ~~expense~~ primarily associated with the departure of Section 16 officers,, the effects of commodity derivatives entered into to hedge the change in value of fixed price grain inventories and fixed price Forward Purchase Contracts as the expected impact from these contracts will be fully offset when the underlying grain is sold, any net realizable value adjustments to inventories occurring in the period, which would otherwise have been recorded as an adjustment to value in a prior period or would have been recorded in a future period as the underlying products are sold, Section 16 officer transition expenses, the gain upon the extinguishment of the PPP loan, and non-operating expenses, which are primarily gains and losses on foreign exchange transactions and losses on the disposals of land, buildings, and ~~equipment.~~equipment, and including adjustments necessary to present the underlying gross margin of our soybean product line, including (i) unrealized gains and losses associated with commodity derivatives entered into to hedge the change in value of fixed price grain inventories and fixed price Forward Purchase Contracts that should be recognized in the future when the underlying inventory is sold, (ii) gains and losses from commodity derivatives realized in prior periods but associated with inventory sold in the current period, (iii) net realizable value adjustments to inventories occurring in the period, which otherwise would have been recognized in the future when the underlying inventory is sold, and (iv) net realizable value adjustments recognized in prior periods but associated with inventory sold in the current period.

We provide in the table below a reconciliation of net loss, which is the most directly comparable GAAP financial measure, to adjusted EBITDA. Because adjusted EBITDA excludes non-cash items and discrete or infrequently occurring items, we believe that adjusted

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EBITDA provides investors with useful supplemental information about the operational performance of our business and facilitates the period-to-period comparability of our financial results where certain items may vary significantly independent of our business performance.

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The table below presents a reconciliation of net loss to adjusted EBITDA:


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
In Thousands	2021			2020			2021			2020			2021			2020
Net loss (GAAP measure)	$	(10,028	)	$	(11,063	)	$	(4,807	)	$	(10,902	)	$	(14,835	)	$	(21,965	)
Non-GAAP adjustments:
Interest, net		346			398			357			(154	)		703			244
Depreciation and amortization expenses		585			452			595			452			1,180			904
Stock-based compensation expenses		(1,450	)		1,271			1,079			1,797			(371	)		3,068
Unrealized mark-to-market loss		211			—
Net realizable value adjustment to inventories		787			334
Commodity derivative impact, net								(658	)		—			(447	)		—
Net realizable value adjustments to inventories								(859	)		2,221			(72	)		2,555
Section 16 officer transition expenses		2,721			360			13			77			2,734			437
Gain upon extinguishment of Payroll Protection Program loan								(1,528	)		—			(1,528	)		—
Non-operating expenses		1			11			(6	)		8			(5	)		19
Adjusted EBITDA	$	(6,827	)	$	(8,237	)	$	(5,814	)	$	(6,501	)	$	(12,641	)	$	(14,738	)

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk that affect us, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of Part II of the Annual Report. There have been no material changes in information that would have been provided in the context of Item 3 from the end of the preceding year until ~~March 31,~~June 30, 2021. However, we do provide risk management discussion in various places in this Quarterly Report on Form 10-Q, primarily in Note 2. Financial Instruments, Fair Value, Hedging Activities, and Concentrations of Credit Risk.

Item 4. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of our management, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, were effective as of ~~March 31,~~June 30, 2021.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~March 31,~~June 30, 2021, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material pending legal proceedings as of ~~March 31,~~June 30, 2021. From time to time, we may be involved in legal proceedings arising in the ordinary course of business.

Item 1A. Risk Factors

There have been no material changes in risk factors in the period covered by this report. See the discussion of risk factors in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company did not repurchase any shares of stock or have any unregistered sales of equity ~~securities~~.securities.

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Item 6. Exhibits

(a) Index of Exhibits

Exhibit

Number

~~(a)~~

~~Index of Exhibits~~

~~Exhibit~~ ~~Number~~		Description
3.1		Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on September 1, 2017)
3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2018)
10.1†		Employment Agreement between Calyxt, Inc. and Mr. Michael A. Carr, dated July 13, 2021 ~~Short Term Incentive Plan~~ (incorporated by reference to Exhibit 10.1 of the ~~Company’s~~Company's Current Report on Form 8-K filed with the SEC on ~~March 18,~~July 15, 2021)
10.2†		Calyxt, Inc. 2021 ~~Executive Severance~~Employee Inducement Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on ~~March 18,~~July 15, 2021)
~~10.3*†~~10.3†		~~Notice~~Form of ~~Compensation~~Performance Stock Unit Agreement under the Calyxt, Inc. 2021 Employee Inducement Incentive Plan (incorporated by reference to ~~Executive Chair~~Exhibit 10.3 of the ~~Board, dated March 18, 2021~~Company’s Current Report on Form 8-K filed with the SEC on July 15, 2021)
~~10.4*†~~10.4†		~~Separation~~Participation Agreement ~~between Calyxt, Inc. and James Blome, dated March 18,~~of Mr. Michael A. Carr under the 2021 Executive Severance Plan (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the SEC on July 15, 2021)
~~10.5*†~~10.5†		~~Employment Agreement between~~ Calyxt, Inc. Form of Non-Competition, Non-Solicitation, Confidentiality and ~~Ms. Sarah Reiter, dated October 13, 2020~~Inventions Agreement (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed with the SEC on July 15, 2021)
31.1*		Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act
31.2*		Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act
32*		Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2021, has been formatted in Inline IXBRL

*Filed herewith

† Indicates management contract or compensatory plan.

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SIGNATURE

~~SIGNATURE~~

Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on ~~May 6, 2021~~August 5, 2021..



	CALYXT, INC.

	By:		/s/ Yves J. Ribeill, Ph.D.
	Name:		Yves J. Ribeill, Ph.D.
	Title:		Executive Chair of the Board of Directors (Principal Executive Officer)

	By:		/s/ William F. Koschak
	Name:		William F. Koschak
	Title:		Chief Financial Officer (Principal Financial and Accounting Officer)

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