Calyxt, Inc. IPO Preview

 

Company:       Calyxt, Inc.
Symbol:           CLXT
Description:     They are a consumer-centric, food- and agriculture-focused company. By combining their leading gene-editing technology and technical expertise with their innovative commercial strategy, they are pioneering a paradigm shift to deliver healthier specialty food ingredients, such as healthier oils and high fiber wheat, for consumers and agriculturally advantageous crop traits, such as herbicide tolerance, to farmers.
Shares:            6 million
Price Range:   $15.00-$18.00
Trade Date:     7/20
Underwriter(s):  Citigroup, Jefferies, Wells Fargo Securities
Co-Manager: BMO Capital Markets, Ladenburg Thalmann
Link to S-1/A Prospectus

Investor Access: This deal can be accessed via the three main underwriters and the two co-managers.

Business: Their technology enables them to precisely and specifically edit a plant genome to elicit the desired traits and characteristics, resulting in a final product that has no foreign DNA. Consumers are emphasizing a healthier lifestyle and a desire for nutritionally rich foods, leading to an increase in the demand for higher valued, premium segments of the food industry, such as higher fiber, reduced gluten and reduced fat products. Legacy agriculture companies have historically focused on increasing yields, profit margins and market share. They have developed a robust product pipeline with their proprietary technology. Their first product candidate, which they expect to be commercialized by the end of 2018, is a high oleic soybean designed to produce a healthier oil that has zero trans fats and reduced saturated fats. They are also developing a high fiber wheat to create flour with up to three times more dietary fiber than standard white flour while maintaining the same flavor and convenience of use. Another product candidate they are developing is a herbicide tolerant wheat designed to provide farmers with better weed control options to increase yields and profitability. Using their proprietary technologies and expertise, they edit the genome of food crops by using their “molecular scissors” to precisely cut DNA in a single plant cell, use the plant’s natural repair machinery to make their desired edit and finally regenerate the single cell into a full plant.

 

Their technology positions them to assess the probability of success early on in the research and development process, potentially eliminating expensive late stage failures and allowing for a larger breadth of products to be developed.

Market Opportunity:  An unhealthy diet is a contributor to three of the ten leading causes of death: heart disease, diabetes and stroke, and a 2010 study suggested that poor diet and diet-related risk factors, such as high blood pressure and high cholesterol, were linked to 63% of deaths. Beginning in 2018, the FDA’s will ban partially hydrogenated oils in foods, the primary artificial source of trans fat in processed foods. The USDA gained significant oversight of the federal school lunch program and holds the authority to set new, healthier standards for food sold in U.S. schools. The premium oil market segment could potentially generate approximately $8 billion in annual revenue. Assuming the market grows at a 5% CAGR, which assumes 2% growth for inflation and 3% population growth, they believe this market opportunity could grow to approximately $13 billion in the next ten years. High oleic soybean acreage and oil production is expected to more than double year upon year, resulting in 9.3 billion pounds of available soybean oil within the next decade. Accordingly, they believe the oil generated from their soybean product candidate targets a potential multi-billion dollar market. Assuming an average price of approximately $15 per cwt they believe the premium wheat market could represent a potential multi-billion dollar market opportunity. They intend to initially focus commercialization of their high fiber wheat product candidate in North America. They believe there would be potential in being able to export their high fiber wheat to other countries with conducive regulatory frameworks with respect to their products.

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