CBUS - NASDAQ

Good day, and welcome to the Cibus Third Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Carlo Broos, Chief Financial Officer. Please go ahead.

Thank you, and good afternoon. I would like to thank you for taking the time to join us for Cibus third quarter 2024 financial results and business update conference call and webcast. Presenting with me today is Rory Riggs, our Co-Founder, Chief Executive Officer and Chairman; and Mr. Beetham, Co-Founder, President and Chief Operating Officer. Before we begin the call, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and future operational goals and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to Cibus SEC filings for a list of associated risks. This conference call is being webcast. The webcast link along with our press release and corporate presentation are available on the Investor Relations section of cibus.com to assist you in your analysis of our business. With that, I would now like to turn the call over to Mr. Riggs. Go ahead, Rory.

Thanks, Carlo, and good afternoon, everyone. Before I begin, I'd like to recognize Carlo's participation on today's call as our Chief Financial Officer. Carlo has stepped in for Wade King following Wade's leave of absence. Although Carlo was new to the investment community, he is a skilled financial leader who brings nearly 14 years of experience at Cibus alone and decades in a variety of roles, including his role as Head of Finance for the EMEA region and CFO for Netherlands and Belgium at Syngenta as well as his work and audit during his early years at Deloitte. We are grateful for his ability to seamlessly step in for Wade and look forward to his contributions as a member of our executive team as we look ahead to the future as a commercial enterprise. With that, I'd like to begin today's call with a high-level update on our business activities this quarter and year-to-date. Following my remarks, Peter will provide more detail on our recent developments and how we are progressing within our crop platforms. Carlo will then conclude with the financial discussion. As we reflect on the first nine months of 2024, it's clear that this has been a transformative period for Cibus as we evolve from an R&D-based business to the first commercial gene editing company in the industry. This continued transformation from an R&D-focused company to the first commercial stage gene editing company was essential to the streamlining of our organization to more efficiently focus our efforts on executing on our product launches with our herbicide-resistant traits in rice and traits for Pod Shatter Reduction in canola, while maintaining the ability to capitalize on our positive progress in developing our soybean platform and advancing our traits for Sclerotinia resistance and herbicide tolerance, our H2 traits. Our evolution has been achieved. There were a series of successful mile tones associated with three cornerstones of our business. The first cornerstone is the completion of our Trait Machine process and industrial technology breeding platform that creates a time-bound and predictable trait development process. The second cornerstone is operationalizing or scaling the Trait Machine platform to develop a multi trait pipeline with the goal of commercializing plant traits with multiple customers and with multiple crops. Our third cornerstone is represented by our ongoing collaborations with major seed company customers with the goal to develop, to license and commercialize these traits in their seeds for trait fees or royalties. These three cornerstones with the foundation of this new technology business in agriculture for the development of productivity traits or traits that make farming more productive, economical and sustainable. Our first cornerstone is the Trait Machine process. It is a paradigm shift in the breathing of complex traits. For each of our crop platforms in canola and the rice, and for each of our traits for these crops, we can now complete our edits on the customer's elite germplasm and regenerate the edited germplasm to a plant within just 12 months. This breakthrough and speed and predictability of technology-based breeding is foundational to developing each trait and to accelerate the timetable to commercialization for each trait once developed. We believe that this timetable also accrue to our soybean platform. A predictable timetable for integrating our traits into a customer's germplasm is a key part of the commercialization of a customer trait, which begins with the receipt of a customer's germplasm. Evidence of our ability to use the Trait Machine process to edit and deliver to the greenhouse in a time-bound and predictable fashion can be seen in our recent announcement of successful greenhouse data for our HT-2 trait in canola. It took less than 12 months from edit to greenhouse results for this trait. We have also announced [indiscernible] our disease program with which we also expect greenhouse results within 12 months of the edit. We now have a pipeline of five different traits. For each of these traits, we have completed edits and have had either successful field trials or expected greenhouse results for each of those traits. Our ability to develop so many traits within a compressed time frame is a testament of the efficiency we develop with the trait machine process. Our second cornerstone is operationalizing or scaling our trait machine process to develop a pipeline of traits. This is also a paradigm shift in breeding new traits. Our ability to industrialize the transfer of traits and the development of new traits shows the power of our Trait Machine process to shorten the development time line, commercialization time line and the cost of developing new traits. The third quarter was a great quarter to show our ability to scale our Trait Machine process as an ongoing production system with multiple different crops and multiple traits. In rice, we now have multiple customers, each having multiple lines. The initial edit happened within a 12-month framework, and we expect that gene edited the HT3 trait in multiple customer lines will all occur within this 12-month production target. In winter oilseed rape with multiple customer germplasm, we completed the first field trials for our Pod Shatter Reduction trait. These trials were completed in the elite germplasm of several customers. These edits were completed in the greenhouse within a 12-month time frame. In addition, we had the first successful field trial with stack gene edit traits using our HT1 and HT3 traits in rice. We expect to develop a family of stacked herbicide tolerant traits for our customers in rice. This ability to efficiently develop a family of stack traits is a key strength of the Trait Machine process. It's expected that our Sclerotinia-resistant disease trait in canola will consist of multiple modes of action, which will be combined to form our Sclerotinia resistant product, is expected that we will offer multiple gene edit herbicide traits across the entire industry. We expect that these traits with sclerotinia resistance will have a similar scale opportunity in soybean. We expect that our technology will be able to attain the scale in a similar time bound and predictable manner. This is what we mean by operationalizing the Trait Machine process. Our third cornerstone is our collaboration with major seed company customers with a goal to develop, to license and commercialize these traits in their seeds for trade fees or royalties. This is an important validation of our technology as a commercial platform. The development of gene editing as extension of the breeding programs for our seed company customers is a key part of the development of this new gene editing trait industry. This cornerstone is about the use of the Trait Machine process as the key engine for the commercialization of our traits across multiple crops, multiple traits and multiple customer lines and efficient time bound and predictable manner. This is the underlying framework and validation of our commercial process model for gene editing in agriculture. The speed of our Trait Machine process will enable materially faster commercialization time lines for new traits as well as updates for new traits once launched. This momentum with existing customers with the goal of commercializing our traits in different customer germplasm in different crops continued in the third quarter. We have now established collaborations with major seed companies in each of our crop platforms. In each case, we have received the elite germplasm of each customer for a specific crop. Each of these cooperations with seed companies are being made with the goal to develop, license and commercialize the trait in near germplasm for trait fees. For soybeans, the goal right now is to develop the Trait Machine crop platform. In rice, each of our collaborations were made with the goal of developing our herbicide-resistant trait and near germplasm for commercialization. In the U.S., we also signed an important agreement with Albaugh and RTDC to continue our collaboration for supplying Clethodim herbicide to support the expected launch of our custom tolerant on rice trait, our HT-3 trait to our U.S. rice seed customers, utilizing Albaugh's herbicide registration and crop protection expertise. This partnership is a key part of the ongoing commercialization of herbicide-tolerant traits as an economic partnership between the seed company, the chemical company and the trait company. Our ongoing field trials for our Pod Shatter Reduction trait in canola and winter oilseed rape in customer germplasm are also key elements of the commercialization of our Pod Shatter trait with seed company customers. In soybean, our initial platform is being developed with GDM germplasm. This was established with the goal to develop a platform for the development and commercialization of selected traits in soybeans, like our HT2 trait and our trait for sclerotinia. The ongoing work with our traits and customers' germplasm as part of their commercialization program is a model for how this new gene editing industry operates. As we entered the last quarter this year, we're excited about the technological and commercial base we have built to establish the first commercial trait business. Through each cornerstone of our model, we are differentiating and establishing ourselves as an important element within the seeds and trait industry and is able to drive value for our seed customers and the grower community. Now Peter would like to provide some more background on our commercial activities and technological updates. Peter?

Thank you, Rory, and good afternoon to everyone. The last quarter and the first nine months of this year have highlighted our strong advances in gene editing globally for important traits and important crops. As Rory mentioned, our Cibus team is focused on our product launches. We are streamlining our processes as we leverage efficiencies and synergies for our semi-automated trait development process. We are ending the year well positioned to achieve several important milestones. Before I summarize our advancements, I want to highlight the critical importance of our leadership in the agricultural gene editing industry. Just this past week in Iowa at the World Food Prize keynote address by Dr. Dongyu, the Food and Agriculture Organization of the United Nations Director General, he identified some of the immediate challenges we face with rising food and security, and he clearly advocated for how important gene editing will be to solving these challenges. To quote Dr. Dongyu, gene editing technology accelerates the breathing process significantly. It's faster than traditional breeding methods. It improves resistance to pests, diseases and environmental stresses. This includes tolerance to high temperatures, droughts, floods and salinity, among others. For us at Cibus, it is abundantly clear that there is a global movement and a call to action for gene editing to be incorporated into seed company breeding programs. Cibus has been developing the fundamentals of gene editing from the ground up for over two decades. We are well positioned to capture this moment as we continue our transition to a commercial-stage gene editing company. As we explained in our last quarterly update, this past year has seen an expansion of our rice seed company customer base. Today, I'd like to use our rice platform as a case study to demonstrate what's possible with gene editing in agriculture and how Cibus is leading this effort. Rice is one of the world's most important food cups. But historically, it has not benefited from the best nonselective herbicide tolerance traits due to the limitations of conventional breeding and GMO technologies. This is the one example where our gene editing capabilities come into play. Our rice platform journey began with recognizing a critical need. Rice farmers globally and especially in Latin America, was driving with weed management and, in some cases, spend over $120 per acre on herbicides and their application. Without effective weed management solutions, farmers have sacrificed in yield and grain quality leading to reduced profits. To address this, we leveraged our Trait Machine process to develop our herbicide tolerance traits HT1 and HT3, which allow rice plants to survive herbicide application and provide the potential to reduce weed management costs significantly. With these developed traits, we then moved edited plants into field trials to demonstrate the effectiveness of our traits. You can see striking photos on our website, showing treated rice field trials where elite genetics of rice with our gene edited traits thrive after herbicide application, while the unedited crops are devastated. Importantly for farmers, these trials have also shown excellent control of weeds that are impacting yield and quality. And as Rory shared, our next step has been the first ever development of stack gene-edited herbicide tolerant traits in rice, where we observed positive field trial results furthering the promise of enhanced weed management options for farmers. These impressive results have led to commercial agreements with four major rice seed companies in North and South America. We've received germplasm from each customer and are now incorporating our traits into their elite germplasm. In addition, we signed an agreement to continue our collaboration with Albaugh, LLC and RTDC company to supplying Clethodim herbicide to support Cibus's expected launch of its Clethodim, which we call HT3 trait in the U.S., marking an important milestone in the commercial development of HT3 in the U.S. We are working with our U.S. and Latin American customers to launch these traits in 2027 or 2028. We see an opportunity to potentially access approximately 9 million seeded rice acres, which we estimate represents a market opportunity of approximately $200 million in potential annual royalties. We are now also looking to expand our rice traits into Asia. This is an enormous long-term opportunity starting in 2030. But even without including China, could generate additional annual royalties of approximately $150 million. This rice case study demonstrates why and how is Cibus is leading the gene editing effort in agriculture. We are addressing critical pharma needs using our Trait Machine process to develop traits quickly and cost effectively, addressing problems that conventional breeding and GMO technologies couldn't solve. Our ability to stack multiple traits is expected to provide comprehensive solutions for farmers while our non-GMO approach is gaining regulatory acceptance globally, opening markets previously closed to older technologies like transgenic biotechnology. The fact that we're attracting major seed companies as partners affirms our technology and approach. The success we're seeing in rice highlight the commercial potential of our trait development process across multiple crops. We're not just developing individual traits, but pioneering a new paradigm and agricultural innovation. Now moving to canola and winter oilseed rape briefly, as Rory had already highlighted that we have made significant strides in both our developed and advanced traits. As mentioned, the Pod Shatter Reduction, PSR, we've completed initial successful field trials for winter oilseed rape in the U.K. And more specifically, we have already completed planting of our expanded next set of European field trials with results expected in the fall of 2025. We also continue to work closely with our North American customers through our initial commercial launch of PSR in 2026. This work includes confirming key specifications for PSR and the other agronomic or trait characteristics from our seed company customers for hybrid seed launch. While we are streamlining to focus our herbicide tolerance in rice, our PSR trait work and our soybean platform, we are maintaining our ability to continue progress in other areas. This includes ongoing progression of our advanced traits, which have started in canola, including initial editing, greenhouse results and field trials. For our HT2 trait, we confirmed second-generation edits and initial data showing canola with improved herbicide tolerance compared to our first-generation HT2. This advanced trait potential, multi-crop applicability means that HT2 could potentially be the first gene edited traits to achieve 100 million acres of year use, representing one of our largest opportunities as we aim to earn royalties across multiple crops for the same trait. In addition to HT2 in canola, we have made substantial progress with our Sclerotinia resistance trait, achieving multiple important milestones year-to-date. We have now done edits in three modes of action. Let me take a moment to provide context of why multiple modes of action are critical for crops to have disease resistance. Diseases like Sclerotinia, also known as white mold can evolve quickly. And Sclerotinia has complex life cycles, so providing crops with multiple ways to defend themselves against disease, defenses that we call modes of action, is critical to address the evolving disease and environments. The best resistance known as durable resistance, which has achieved using multiple modes of action. So for Cibus, our gene editing strategies provide an opportunity to provide this durable resistance for multiple crops. While our progress with our advanced tracing canola is exciting on its own, the advancements we have made in traits like Sclerotinia resistance in HT2, are laying crucial groundwork through our expansion into other crops, including specifically our anticipated development of our soybean platform. This advanced platform, one of the most challenging endeavors in Plant Biology is expected to be operational by the end of 2024. We have already improved the editing efficiency in the soybean cells. We've anticipated completing additional editing and achieving regeneration capabilities within this time frame, representing a key inflection point that will enable us to enter what we believe is a soybean market opportunity over 200 million addressable acres. Beyond market size, the soybean platform will further serve as one of the foundations for our sustainable ingredients business where we continue to pursue partner-funded collaborations. These achievements across our crop platforms and trait pipeline showcase our ability to develop complex multi-crop traits addressing significant global agricultural challenges. We're not just meeting our milestones, we're pioneering a more sustainable and productive future for global agriculture. And with that, I'll hand over to Carlo for a financial update. Carlo?

Thank you, Peter. Looking at our financials for the third quarter. Cash and cash equivalents were $28.8 million as of September 30, 2024. Taking into account the impact of cost-saving initiatives, once fully implemented, which we estimate will reduce our monthly cash usage by approximately 20%. Cibus expects that existing cash and cash equivalents will fund planned operating expenses and capital expenditure requirements through the first quarter of 2025. Moving to our income statement. R&D expense was $13 million for the third quarter of 2024 compared to $70.5 million in the year ago period. The decrease of $4.5 million was primarily due to lower noncash stock compensation expense and the strategic realignment and reduction in force announced during the fourth quarter of 2023, which delivered decreases in personnel costs and supplies. SG&A expense was $7.7 million for the third quarter of 2024 compared to $8.8 million in the year ago period. The decrease of $1.1 million was primarily due to lower noncash stock compensation expense. Noncash items were $1.2 million for the third quarter of 2024 compared to $9 million last year. The decrease was primarily related to the fair value adjustment of the liability classified common warrants in the third quarter. Net loss was $201.5 million for the third quarter of 2024 compared to a net loss of $34.5 million in the year ago period. The increase in net loss was due to the impairment of goodwill, resulting from a fair value assessment based on the decline of the stock price performed in the third quarter of 2024. Net loss, excluding goodwill, was $20 million for the third quarter of 2024 compared to a net loss of $34.5 million in the year ago period, representing an improvement of $14.5 million year-over-year. For additional details about the financials for the third quarter of 2024, please refer to our press release and filings with the SEC. That concludes our financial discussion. Rory, now back to you for your closing remarks.

Thanks, Carlo, and Peter, for those updates. As we've discussed, the third quarter has been pivotal for Cibus in a number of ways. The strides we're making in rice combined with the advancements in our trait pipeline, particularly in canola and the ground work we're laying for soybeans really showcase the breadth and depth of our capabilities. We're not just developing individual traits. We're building a comprehensive trade development platform that has potential to transform multiple aspects of agriculture. So thanks so much for your attention and interest. We're looking forward to updating you again next quarter as we continue to hit our milestones and advance our mission. This concludes our remarks. Operator, could you open the call for questions?

[Operator Instructions] Today's first question comes from Laurence Alexander at Jefferies.

Can you -- maybe just to start, can you just do a walk around the state of legislative or policy support for gene editing? What's happened in Europe, kind of with the discussion around rice, the degree kind of the -- right policy in place in China? Does anything need to be changed? Can you just give a quick [indiscernible]?

I totally appreciate that. In the Americas, we're pretty well set in the major countries we're launching. And in Europe, the legislation passed, but they haven't been able to get something called the tripartite agreement. And the expectations are that presence every quarter, and they're going to have a new President from Poland in January, all talk is that the new President is ready to move on this for Hungary [indiscernible] year. So, we're seeing very confident Europe is going to move and Asia. Peter, do you want to -- it changes all the time, but I think China is allowed in some form, Peter?

Yes. Let me add a little bit to that, Laurence. Thanks so much for the question. The regulatory frameworks around the world are harmonizing. There's no doubt. Just to confirm with what Rory said about the Americas, both North and South America are harmonizing a lot of their regulatory policies. It is happening in Asia as well. We're continuing to see positive movement in China and gene editing has seen as indistinguishable from what occurs in traditional breeding programs, which is really important. And I think the other side of it that Rory also mentioned, just to confirm that Europe, early next year, we see a change in the EU Council presidency. And from all accounts, that's going to be a very positive movement in that process and legislation completion in Europe, which is exciting for all of us.

And the only add to that is that for rice, which is our first big launch, all the countries we're launching in right away are all approved for us, and we're pretty excited about that.

Great. And then can you just remind on a time line for kind of when you should be seeing kind of rice commercial revenues flow through the P&L? And maybe just, I guess, rice and soy would be the two, I'm most curious about this today. But also, to what extent the gene editing platform is becoming something where partners might give you seed -- put their modifications into the seed rather than your own traits? And when would that start to show up as a revenue opportunity?

That's great. And it's working on two points. I'll give a little bit for Peter. Rice, we just put a new deck out around the website, which gives you the expected launch dates for each of our traits and expected market. So that's -- we decided this quarter to make it public. And rice, the deal we did with Albaugh was really important because that starts the clock for herbicide trait. So in rice, we need herbicide field trials and launch. And so our expectation in '26, '27 in Latin America, you'll start to see some launches in Europe. In the United States, it's a little bit longer because of the EPA and number of the process but within '27, '28 is where we expect the U.S. to launch. Peter?

Yes. Just to add to that, Laurence, what's exciting for us is that the field testing this past summer and the summer before that, have really allowed us to look at the specifications around what we need for the herbicide tolerant traits in rice. And I can't stress enough how exciting it is to have Albaugh join us for the registration work for Clethodim, which is such a great herbicide. Just to add a little bit to that because Clethodim is a really important grass herbicide that is really key to killing what some of the most troublesome weeds for rice farmers in the U.S. and in Latin America. One of them is called red rice. And so it's a cousin of rice. And it's been -- it's become resistant to a lot of the herbicides that are currently used. So they can't get rid of it. They can't kill it. So that causes reduced yield, it reduces quality. And so the ability to use Clethodim to spray over the top of the rice crop allows you to eliminate the red rice. And have your crop go to full yield. And I think that's an exciting option for weed management solutions for rice farmers in North and South America. So for us, we're on track for that commercial launch of '27, '28. And we're excited to see that agreements go forward and the field trials returning the results that we expect.

So as I was saying, canola, we do think in the U.S., we expect '26 in Europe. We need for the rest of that, we need them to vote yes and then behind that period. And soybean, we do still expect in this quarter to have first proof of the platform. And then from that, we have GDM and other customers we're going to start putting the trait and launch. It will take a couple years, we do expect to have the approval to start working towards it.

And then just lastly, just in terms of like a way to maybe help ground how differentiated your solution is. Can you talk about the degree to which customers are willing to or reaching out to discuss maybe paying you more for the field trials to help you scale up your field trials as opposed to taking a slightly lower longer-term royalty? Second would be how much of your bandwidth is currently being used? And like how much -- depending on how much -- if your customers were all enthusiastic, how much more could they ask you to do? Can you just help us on those two fronts?

It's pretty exciting. I'll start then Peter finishes. It's that with each of these we are starting to edit all the crops. And this time frame we're doing is, breeding takes longer. And when they do it, they end up giving you seed that you can then planned in, we're giving them back their germplasm with the traits in it, right? And so that's what we think is going to be the system in rice. And then in the other countries, especially in soybean, we see people saying, we have other ideas, couldn't we work with you on that. And for all of our partners, I think they're all looking at us to say if you can make these time lines. And so that means that we said in our talk was that two of our traits in soybean, we've made the edits, they're going to the greenhouse, and we fully expect to have the results from that within 12 months of the edit, which is pretty cool. Is that helpful? Peter?

Yes. Let me add a little bit to that because I think Laurence's question is really important because it really speaks to the time that we need to get from an edited germplasm into the field and to launch. And I think working with seed companies, our customers and partners, we continue to get more demand. We continue to get a lot of interest from seed companies because of the seed. And I think that they've recognized that if you can do that within 12 months and get it back to them, in a really timely fashion, it fits into their breeding programs. But also then we work closely with them for doing some of the field evaluation work as soon as the edits are done. And so that, again, as we move forward and with our customers, they get that experience with us and they also get to see us delivering in a really time-bound and predictable manner. Not just a few elite genetics, but a broader base of genetics that will go into their breeding program. And I can't stress this enough, Laurence, because this is a really different paradigm. We're really educating people around why gene editing is so differentiated from traditional breeding and GMO technologies. GMO technologies were time -- took a long time, they were event-driven science and the ability to generate materials and elect genetics directly the way we do it through our single-cell methods and get it back to the customer quickly really changes the paradigm of when you're doing those field work together and validating it to get to launch. Hopefully, that's -- I've gone a little bit broader, but hopefully, that's helped to answer that question.

Maybe just -- if I can just ask one last one then is just to what extent, if you look at the total field trial validation licensing costs that a crop would entail to somebody from development to commercial sales to the farmer. It sounds as if there's -- can you give a sense for roughly how much that cost is being shouldered by your partners? Or is it like a 50-50 split? Is it 70-30? Are they putting it all on you because you still have to prove yourselves? Can you just give us a sense for like how the total cost pie is being split?

We've been pretty open that for the first edits that we've been doing for the customers. And the follow-on edits, they're all going to -- the whole point of this is you may have five or six lines in rice, you want done in soybean. They have so many different areas. And they'll pay for each edit at that point. And so we put it in there and prove we can do it, and everybody is expecting -- and all of our discussions have been to have it be a profitable business where we're changing our time and cost to be able to get this trait in their crops. Is that helpful?

So that's the goal, but are they doing that now? Or is that the goal?

They're doing it -- they're not doing in that. Right now, we're in rice. So these are the first ones in rice. So rice will be a good experiment to that. So on rice...

Probably by 2026, we should see it flip to being a profitable cost sharing business? That's the right way to think about it?

Great way to think about it. And it just means that the editing part of the business will be -- will pay for itself. And that doesn't come for the royalties you get for the trait itself. But you're totally right. Our expectation is the editing part of this business will be a for-profit enterprise and allow you to really even do things earlier on, right? And we've got it so well down that you should be able to really -- you heard us say, we'd like for people to think of us as an extension of their operations and to be able to speed up and make their things most more efficient from a cost and time.

And our next question today comes from Austin Moeller at Canaccord.

Peter and Rory. Just my first question here, can you talk about the time lines and analytical process involved in evaluating the winter U.K. field trial results and the greenhouse results for Sclerotinia resistance in the third mode of action?

That's an excellent question. It's clearly one for Peter. Peter?

Thanks, Rory. Thanks, Austin. Look, let me start with Sclerotinia and then I'll go to the other trialing. But the Sclerotinia, we are beyond excited about the fact that we can bring different modes of action. This is -- as I mentioned in my -- in the remarks, that durable resistance is all about having multiple modes of actions. So our field testing has spent -- we've spent quite a bit of time validating exactly how we evaluate the different edits and the different modes of action. So this past year, we're excited to see really good Sclerotinia infection. I don't think farmers are excited about that, but through our trial and for that purpose that was great. So we can see the differentiation between the edited and non-edited versions of our mode of action two. We are also seeing the mode of action three for us is going to be greenhouse results in the fourth quarter of this year. So that's where we are with this Sclerotinia. When it comes to the work we're doing in the U.K., again, we're working closely with our customer and partners in Europe. And in the U.K., we've done our first season trials and the PSR test had some really positive results, which was fantastic. So one of the things about the winter oilseed rape as it's called in Europe, is there's a quick turnaround. So within three or four weeks, we had to make some decisions. And it was very easy when we saw our partners' genetics with the edits be performing at a very strong level of Pod Shatter Reduction that we were able to replant those, and we'll have another full season of testing. You need to continue to have more testing to validate the trades. And so customers can get to see it in their own genetics. It's an exciting moment for us.

That's helpful. And just a follow-up, are there any updates on sustainable ingredients and fragrances and the time line there?

I can try, Peter. We're very encouraged. It's going to -- it's getting extended into next year, and we've made really good progress. And our expectations is that, that with the finishing of the soybean platform that we'll start to see results that we can announce within by year-end next year. So we're really excited about where it's going. We're doing a really good job on the edits required for these things and the work really needs soybean done, so we control it to in soybeans.

And our final question today comes from Matthew Venezia with Alliance Global Partners.

Firstly, I just wanted to ask about your 12-month germplasm to greenhouse and whether the evidence for that coming in HT2 and canola, whether that confirms your three- to five-year estimate for germplasm receipt to final product. And to that point, if you could speak a little bit to the benefits and drawbacks of -- I know you mentioned it briefly, protoplast regeneration as the mode for industrializing the gene editing process.

Yes. Thanks, Matt. I think that's, again, if you think back on the last nine months and what we've achieved, it is, to my mind, one of the real breakthroughs that we've had at the Company. We've talked about our Trait Machine and we're getting that operational. Some of the key technical breakthroughs you think about are the huge improvements in editing efficiency. That creates precision with our production. And what that means is that for customers gets their seeds back in their hands quickly. And so that's a speed to market. It also allows you to get multiple genetics back to different customers. And so that efficiency of being time-bound and predictable really in contrast to what I mentioned before about traditional breeding and GMO technologies. And so the ability to deliver that back to customers allows you to think through when you think that time period of three to five years, it really allows you with the customer to get to those launches very quickly. And we're talking about our weed management HT2 in North America by 2028. That's fantastic when you think about the process where we can start with customer genetics and get it to them in that sort of time frame.

Adding one thing to that, Peter. One of the things that makes us so exciting is, I think the team didn't realize how accurate and precise and time bound, they thought their work was going to be. And so for many of these traits, if you get it right, we're going to show greenhouse results, and that's going to be within a year. And so the time frame, it sort of confirms that three to five is within a reach and also gives the idea how fast you could do, especially if we were working with customers. It's really -- that's why we're so excited about this.

Great. And then just a follow-up on that same vein. Can you just compare and contrast protoplast regeneration to other forms and modes of regeneration that other competitors are using and how the Trait Machine differentiates itself from a process like what's going on at [indiscernible]?

Yes. So, Matt, I think you had that embedded in your first question, and I apologize, I didn't get to it. But protoplast system, you've heard through our remarks and our other, call it, reporting about multiple edits and multiple genes and multiple crops. And that's a lot of multiples. But when you have a single cell, the ability -- if you have a single cell method, you can deliver your reagents to make the edits. It allows you a lot of flexibility to actually do these very complex edits that we need for traits-like disease resistance. And so it really does differentiate because it's, one, you can do the complexity within a single cell. And now what's been great about the work we've done here at Cibus is the efficiency of once you do that of getting back to a fully regenerated plant and a really quick time frame. We've applied that to canola. We had lots of different traits now and we have also done it in so many different genetics. So we've now transitioned that to rice. We've done it in rice before. We're building the soybean platform, but it really differentiates from what other people are doing by not going through a single cell method. And it's their time lines are longer because of that. There's -- the differentiation is that they have to go through a segregation step genetically to get rid of some of the reagents that they've inserted into their genomes and their seeds and we don't do that. So not only is it faster and more efficient and you're able to do more complex traits, the regulatory analysis of that and the framework around the world we have a clearer path. Hopefully, that answers the question for you.

Very helpful, Peter. And then just finally, is there going to be a company, should we expect the Company in the same vein as Albaugh does. We would expect to come in to establish herbicide labeling for the Latin America region? Or is that not necessary with Albaugh at this point?

Matt, that's exactly right. We will have -- we've got a strong relationship with Albaugh. They're a global company, so we can go forward with other countries with Albaugh, first agreement is with the U.S. and then we have agreements in place where we know we can extend that.

This concludes our question-and-answer session. I'd like to turn the conference back over to Mr. Riggs for closing remarks.

Thanks, everybody, for listening. As you can tell, we're really excited about where we've gotten to. And we had a lot of milestones to get through to this point. And we're hitting our milestones, just pretty cool to some of these things. Like the efficiency and the accuracy and time [indiscernible]. I don't think we were able to -- thought we were going to be able to quantify as much as it is now. So we think this is a very good quarter. And we really look for having even a bigger announcement over the next quarter. So thanks.