Good afternoon, everybody. Today, I have the pleasure of having Rory Riggs with me from Cibus, and he is the CEO, and he will be taking us through the presentation. We have about 30 minutes, including the Q&A, and if you have any questions, you can submit them at the Q&A function at the bottom of your screen. With that, I will hand it over to you, Rory.
Thanks, Asani. As she said, I'm Rory Riggs. I'm the CEO and co-founder of Cibus, and I wanna just start by giving a little background on Cibus. We're the leaders in gene editing in agriculture, and gene editing is a pretty well-established science. But gene editing is different in agriculture than it is in the human applications. In agriculture, gene editing is an industrial science. We use gene editing to put attributes in seeds that make the seeds easier to farm, by getting rid of diseases or to manage weeds.
It was an industry that was essentially started by Monsanto years ago with the GMO technologies, and their big breakthrough was a weed technology that allowed that changed the practice of farming by having the ability to spray crops and kill the weeds without killing the plants. The problem with GMOs were they used foreign materials to generate the traits, and then there was a big global backlash to that, and it was effectively banned or severely regulated in many areas. The big thing about gene editing is the traits we develop are indistinguishable from nature. So globally, around the world, where they are approving our technology and voting to regulate them like conventional breeding, and that's the big area here.
We already have developed a six-trait pipeline, and it's a royalty-based business. It's a business where we license the seed companies. We're not a seed company. They sell their bags of seeds with our traits in, and they pay us a per-bag royalty for those traits. Licensing traits to seed companies is a big business. Monsanto, as I said, started this thing. They get billions a year for traits they've put in seeds. Harry Stine, Harry Stine is the richest guy in Iowa, 23rd richest guy in America, globally, and it's all from germplasm, traits he's done that he licenses to the corn and soybean industry, and this gives you an idea of how big this industry can be. We have a really well-established management team. I've been in biotech my whole career.
I was a co-founder and chairman of Royalty Pharma, the largest pharmaceutical royalty business. I ran a business called Biomatrix, where we, we were the guys who pioneered the idea of replacing your synovial fluid around surgeries. And I started a company way back when, one of the first cancer companies called Sugen, which was the first kinase inhibitor. So I've been doing this for a long time, and I've always said, "This is gonna be the biggest thing I've ever gonna do," because of the just the size of this seed business. Peter Beetham, he wrote his first paper in 1999, a long time ago. He's really one of the pioneers in this whole gene-editing technology, and his team, we've all been together for well over 20 years.
And then Wade King is a doctor, but he was my lead analyst when I was at Biomatrix and he came over to become our CFO. The trait business is a very straightforward business. Seeds don't have anything other than a gene edit. They don't have organs. They don't have hearts. They don't have bones. So all you can do in the seed business is modify the genes to make the seeds more efficient. You do one of two things. You do what Harry Stine did to make it yield greater, or you do what Monsanto did and give it traits that make farming practice easier, and that's the business we're in. Our fundamental target is the same target as Monsanto.
And what's good about this industry is once you develop a trait in one crop, it's pretty normal that the same trait would be relevant in other crops. Weed management's a perfect example. They all need them, but there are a bunch of crops, because GMOs were banned, that never got the benefit of GMO traits, so that's a big focus for us. But 'cause once you have a herb management program, they always go to 80%-90% of that seed. And the whole point of traits is farming productivity, and what you see in this chart is when Monsanto was growing, when GMO traits were growing, productivity was growing every year by a lot, and when it started to get banned, the productivity curve slowed down.
The whole point of our technology is the ability to regrow that curve, and that's what our focus is. And when you see our traits, when you do field trials, it's very easy to see what their effect is. This is a good example of a herbicide management trait in rice. The crop on the left didn't have a herbicide trait. The crop on the right did have one, and what you see, if you spray it with herbicides, the plants die. And if you spray it with a herbicide-resistant trait, they live, and that's the nature of our business. The big idea here, though, is that we're gonna industrialize plant breeding, that we can now develop traits in 3-5 years versus, you know, GMO breeding, although that still, despite how expensive it is, it does still exist.
But it takes, on average, 16.5 years and $115 million, rather than 3-5 years and $2 million. So the idea that you can develop traits in a short period of time is really the big story here. That's why we already have a 6-trait pipeline. Our business model is very straightforward. We have a family of traits, and we have a family of crop platforms, and we have a semi-automated technology such that when we launch a weed management program like we're doing, everybody in that industry in rice can send us their plant, and then you're gonna watch it in real time. We can take those plants and put the seed, put the trait in it, so that they can manage weeds.
The idea of multi-crop traits is a big business, and, you know, it's just for Bt. Bt is a protein. You put it in a plant, and when worms eat that plant, it kills them. Just in corn alone, we estimate they get over $2 billion of royalties for these traits. And available in corn, almost $700 million. They're just starting to get into cotton and soy. That's the idea of having big acreage across multiple crops. I always look at my business and think of $10 an acre times 10 million acres, and I'd be doing pretty well. You can see this is a trait where they think they're getting well over $10 an acre, and they're on over 300 million acres.
And this chart just shows you how globally everybody has started, everyone agreeing, has started to change their regulations to regulate us like conventional breeding. And our big story was last February when the European Union voted to treat us as conventional breeding, and they haven't finished that legislation, but it's really a big milestone in this industry of new traits. The business we're in is three big platforms, and it's crop by crop. The idea of having a herbicide management program in a non-GMO crop is a big idea. You know, every crop where you've had this, the whole industry has had to adopt it because it fundamentally changes how you manage farming. You used to have to put herbicides on the ground before you launch a trait.
You couldn't really spray during the year 'cause they would die, and this allows them to change and make farming much more efficient. So we're pretty excited about it. We have two traits in it. We now just put a press release out a couple of weeks ago, just showing that we could stack traits. We already have approximately 40% of the industry signed up, and by year-end, we think we'll be well over 50% of the industry signing up. Canola is one of the biggest crops in Europe. It's called winter oilseed rape, and then our whole idea was to use canola, we have 11 customers in it, to launch all of our principal traits.
We already have pod shatter in it, that we're putting in people's crops as we speak, and our next two traits, which is gonna be for disease and for another herbicide, we'll launch in canola and then move it over to soybean and to other crops. Soybean is the big story. There's 200 million acres, 80% in just the U.S. and Brazil. Those 200 million acres are controlled by roughly four customers, and we think they'll all be customers of ours. And then it's the size and magnitude of that industry starting to change, that we're this close to having our platform, which is where we can take a single cell and grow it into a plant.
When we have it, I think it's, for most people, it's really a point of inflection for us and a point of inflection in our value. This gives you an idea of how we'd look at the value of these traits. In rice, the herbicide platform, we think just in North America and South America, there's roughly 6 million accessible acres. We think we'll get over $20 an acre for a trait fee, and so there's a real potential market of $120 million of royalties. If you go to Europe and Asia, which we don't have in these numbers, the numbers get really large very quick. Canola. Canola is probably 50 million acres between the U.S. and Europe. Pod shatter is a really important trait for keeping,
allowing the plants to not be brought down in bad weather. It's the whole idea of keeping the pods from shattering. Disease, that's gonna be our first disease trait for sclerotinia or white mold. It's the biggest killer in canola, and then another herbicide, which they would like. But together, you know, we see canola as the first crop that'll have multiple gene-edited traits, and that in total, they're well over, we believe, a $500 million royalty opportunity. And in soybean, you know, we think soybean is a $1 billion-plus royalty opportunity. Our first two traits themselves are well over $500 million, but it gives you the scale, the size of this business, the scale of putting traits in crops in this new industry with gene-edited traits. And we're all waiting for soybean. You're gonna see the growth.
Soybean, it used to be corn was the crop. Soybean's quickly becoming the crop, and really big in Latin America, too. We're already working with a company called GDM, who's the largest in Latin America, with over 50 million acres, and they're the first we'll start putting our traits into. But this whole magnitude of having a crop like this as fueling our growth is our big story. And if you look at this business going forward, you'll realize the future of this business is, in each of these crops, is just being a breeding partner with them. Think of us as an outstretched arm of their breeding operations. We're not challenging them. We're just allowing them to develop traits in a quicker manner.
And you'll notice from Bayer and from Nutrien, the people who have put out releases with us, have explained that in these crops, they're working with us to try to develop a family of traits within these crops, and that's how this business is gonna unfold in the future, crop by crop. And then we have most of the big companies in canola already as customers. We're signing them up in rice, and we're pretty comfortable in soybean, and we'll get most of the big companies as customers. That's the business we're trying to grow, and that's why I've always said this will probably be the largest business I do. So with that, that's the presentation, and it's a really this big opportunity for us to be able to build these fundamental platforms that are large and go across crops.
Thanks, Asahi. Sashi, sorry.
Thank you. Thank you for the presentation, Rory. I have a couple of questions, and I want to start with one of the questions that is on soybean. It looks like it's going to be a big crop, and something that you are stepping, going to start towards. So can you give us some guidance on that, and where do you see yourself and the company moving towards in the soybean business?
Yeah, so soybeans is one of the big GMO crop fields. It's a really 200 million acres, which is very concentrated with ownership, and the whole of our technology is this idea that we can take a single cell from a customer's seed and grow it into a plant in really less than a year. And so once you have this, it just gives you the magnitude that we'll have, you know, sclerotinia will be, we think, demanded in at least 25% of these crops, the these acres in soybean.
So you start to get a sense of the size of this business, and once we get this platform built, it's not just a platform, it's a platform with two really important trait categories, so we're totally excited about that, and I think it's a big changing point for this company, Sashi.
Right, and can you give us some insights on disease and how that's going to change the crop industry, and also how Cibus is in position to take benefit from that?
Oh, thank you. That's a great question. You know, we're so excited about disease. BT is a big area. The fact that they're able to put this protein in and be able to fundamentally change how you manage the problem of worms in all the major crops, and the same thing Sclerotinia. They've never been able to crack the disease, mold industry with either breeding or with GMOs, and so it'll look a lot like BT. We're gonna end up creating traits that cover different modes of action for soybean and for canola. We're really seeing canola. We've already done field trials on two modes of action, which hopefully we'll have an announcement soon on field trials we're doing right now, and we're gonna have our third mode of action in the greenhouse this year.
And so we think this is the big new category in crop protection, the fact that somebody can finally put into a crop a disease trait. And usually when you have a disease like Sclerotinia, the farmer waits for a disease to happen, then sprays the fungicide, and usually it's a little bit too late. So this is like a big insurance policy. If you can suddenly put a trait in a crop that really doesn't get white mold that often, this is a really, really big opportunity for the seed and a giant opportunity for us. So thanks, Sashi.
Right, and also if you can just elaborate on weeds in a similar manner, and also talk about how you are doing it different from the competition. Do you have any real competition who's dealing with a similar situation and similar gene editing process, or is it just Cibus right now?
Oh, it's a great question. It's really Cibus and Calyxt. We are really, between the two of us, we ended up getting all the principal foundational traits in gene editing. And so this idea that we've built, we call the Trait Machine, this idea that you can send us your plant, and we can, in a year, put an edit in your plant and give it back to you, is really a big thing in the trait business. We have well over 500 patents on the process itself, but you also get to patent your products themselves, and so it's a really industry that's really well protected by IP.
We think it really puts a moat around this business and this fundamental business of creating traits in plants. So, thanks.
Correct. And like, as my final question, I would just wanted to, want to understand if you can just take us through your growth strategy for the next 3-5 years.
Our growth strategy. Thanks. Our head is down. My investors want is they want me to make money. So we're focused on these traits and getting them in the marketplace. So the reason rice is so big, this is a well-developed trait. They have to get a labeling for the chemicals, but this is a business that is just gonna roll out. And then we think we'll get to over 80% of the rice industry as customers, and one by one, they're sending us their seeds. We're returning the seeds to them, and so our first growth strategy is to get these seeds into their customers and get them launching. We think rice itself would take us into profitability.
We really think soybeans happening very soon, and soybean is really our explosion of growth. So the next couple of years, you'll see the rice rather grow, you'll see soybean grow, and canola, pod shatter is, you know, we expect by probably 2020, 2025, 2026, you'll see the first acres of canola being launched, but you'll suddenly see these traits come in there. So our goal is... And we've also been working with some big consumer product companies to try to make soybeans that can replace some of the lauric oils, which have had environmentally challenging profiles. And so our goal is all four of these traits, our growth strategy is get all four of these going. Get them all going, and we get to breakeven, and then once they go, they just grow.
It's really a skyrocketing thing of multiple traits across multiple crops. Thank you, Sashi. It's totally exciting. That's why I get up every morning.
Wow, that's, that's really amazing. But can you, like... So do you plan to get into one of different crops after soybean, or do you think right now getting more traits is something that you're looking forward to? Like, which direction do we see growth more towards, like another crop or another trait?
... as there is, our focus is, there's five big crops: corn, soybean, rice, wheat, and canola. And our job right now is let's get those traits going with multiple traits across them all. We out of nowhere, we were able to build a wheat platform, and we've told people by year-end, we'll have, start having wheat customers, and we'll have a trait. But wheat's a perfect example of another non-GMO crop that never had herbicide management, so we think that's like rice. You know, you're talking hundreds of millions of acres with a huge crop, and we think we knew things like glucose-free wheat. But also-
Right
... corn's a big crop. So we haven't really started a platform, but we think we'll get that one faster, and so we'll go into corn. So when you go out the 3-5 years, we'd expect to have all 5 crops platforms moving and with multiple traits.
Well, I cannot wait for cleaner carbs, I must say.
Thanks. You know, what you really want to see is we're gonna do a non-allergenic peanut for you.
Yes. No, definitely.
Mm-hmm.
Another question that brings me is, are you looking at growth through M&A, or that's not something that you'd look at right now? And if you can just give us a geographical breakdown of are you completely based in U.S., or are you planning an international expansion anytime soon?
Those are great questions. First, my investors want me to make money, so if you leave with anything, my job is to get these traits in the business and get people paying me royalties. We do think we have an opportunity to do some M&A around the industry to strengthen our moat, and we will do it, but this is a total global business. We have European employees. Europe, when Europe finally finishes their regulations, they have 100 million acres that have never had traits across five crops, and their big crops are canola and wheat, and so we're really excited. United Kingdom or England allowed you to treat us like normal breeding, so we're now able to do field trials in England for European crops, and so we're finally able to start doing some development.
Their crops are a little bit different than we have. They call it winter oilseed rape versus spring, but we intend to be a total global company. And we don't really talk about how big rice is gonna be outside of the North American market and South American market because that alone will make us a pretty profitable company. But when you start looking at India and China, you realize that there are hundreds of millions of acres of rice, and we totally expect to get royalties on them.
Yeah. No, I definitely understand that. And, like, in terms of commercial pipeline, are you thinking about in-house or outsourced sales teams, and will it be directly to consumers, or will you be going through sales channels?
Our focus so far, except for these, these sustainable ingredients-
Right
... our focus so far has been to make the seed companies more efficient. So our business has really been to, like Monsanto, make traits that make these seeds more efficient to farm. And in large part, they change total farming practices because you no longer wait for disease to happen, or you now can spray during the year, and so it's really neat to see how that changes. So there's a big business in consumer products, but our focus is right now on really cementing a moat around a really important category in the whole global economy. You know, farming can't get much bigger than farming in the global economy, and if you have traits that make everybody more efficient, it's...
Besides getting rid of chemicals, we are one of the big linchpins of food sustainability on a global basis, and you get there by putting traits in plants. Is that helpful?
Right. No, definitely very helpful. And just as my final question, I wanted to understand what your cash on hand is and how much will you need to raise, or do you even need to raise any capital in the near future?
Thanks. No, we said we printed our Q. We ended the Q with $30 million in cash, and what we said is, you know, we're still a pre-revenue company, but the good news about my company is my traits are being launched. So there's a finite runway to get to breakeven, and that's what we're excited about, and so it's a very quantifiable period between now and our traits starting to be launched. And then we don't have really any CapEx left anymore because we've built a platform, and now we're just getting these traits out there so we can start generating cash. Is that helpful?
Yeah. No, very helpful. Thank you so much. Thank you for your time today, Rory. We really appreciate it.
Well-
Thank you so much for coming to the Sidoti conference.
Oh, thanks for having us. Bye.
Thank you. Bye-bye.