Yield10 Bioscience, Inc. (NASDAQ:YTEN) Q2 2022 Earnings Conference Call August 10, 2022 4:30 PM ET
Company Participants
Lynne Brum – VP, Planning & Corporate Communications & Secretary
Oliver Peoples – Co-Founder, President, CEO & Director
Kristi Snell – VP, & Chief Science Officer
Charles Haaser – VP, Finance, CAO & Treasurer
Conference Call Participants
Anthony Vendetti – Maxim Group
Benjamin Klieve – Lake Street Capital Markets
Sameer Joshi – H.C. Wainwright & Co.
Operator
Welcome to the second quarter 2022 Financial Results and Business Update Conference Call for Yield10 Bioscience. During this call, participants will be in a listen-only mode. The presenters will address questions from the analysts today. [Operator Instructions].
I would now like to turn the conference over to your host, Yield10 Vice President of Planning and Corporate Communications, Lynne Brum. Thank you. You may begin.
Lynne Brum
Thank you, Rob, and good afternoon, everyone. Welcome to the Yield10 Bioscience Second Quarter 2022 Conference Call. Joining me on the call today are President and CEO, Dr. Oli Peoples; Vice President of Research and Chief Science Officer, Dr. Kristi Snell; and Chief Accounting Officer, Chuck Haaser. Earlier this afternoon, Yield10 issued our second quarter 2022 financial results. This press release as well as slides that accompany today’s presentation are available on the Investor Relations Events section of our website at yield10bio.com.
Let’s now turn to Slide 2. Please note that as part of today’s discussion, management will be making any forward-looking statements. These statements are not guarantees of future performance, and therefore, you should not place undue reliance on them. Investors are also cautioned that statements are not strictly historical constitute forward-looking statements and such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks include risks and uncertainties detailed in Yield10’s filings with the SEC. The company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this conference call.
And with that, I’ll turn the call over to Oli.
Oliver Peoples
Thanks, Lynn. Good afternoon, everyone, and thanks for joining our call. As 2022 is progressing, we’re making solid progress executing our commercial plan to launch Camelina as a platform crop with a near-term focus on the biofuel feedstock market. Today, we will provide an update on our recent accomplishments as well as provide an update on our market development efforts to contract 1,000 acres for winter grain production. We’ll also provide an update on our spring field trials with a focus on our herbicide tolerance studies, review key drivers in the biofuel feedstock oil market, present the second quarter financials and summarize key milestones. We will then open the call to questions.
Now let’s turn to Slide 3, Yield10’s crop innovation platform. Our innovation platform, the Trait Factory is centered around the oilseed Camelina, to increase carbon capture and direct increased carbon to the seed, to produce decarbonizing seed products. We are currently working to establish Camelina as a new platform crop, to produce low carbon petroleum replacements and food products.
Let’s turn to Slide 4, Yield10’s business model. Our business model is to provide farmers with a new growing opportunity, by building elite Camelina varieties to produce seed products for new markets. Central to our plan is to develop elite Camelina seed varieties, contract production of Camelina grain with farmers and supply customers in the renewables and food space under offtake agreements. With our current elite varieties progressing towards commercialization and our true proprietary value-added Camelina seed product trade and development, we are positioned to establish and grow a large seed products business. Our lead product is low carbon feedstock oil, to meet increased demand from the biofuel sector.
Here, we are in the early commercial stage and working steadily on partner [indiscernible] offtake agreements. We believe this will be followed by the launch of omega-3 Camelina to produce omega-3 oils for nutrition and PHA bioplastic Camelina, to supply the growing demand, provide degradable zero waste plastic packaging. Combined, these products represent a significant revenue opportunity.
Let’s now turn to Slide 5, advancing the business. We are making solid progress executing our plan to launch our Camelina seed products business. Our commercial team is engaging with potential supply chain partners to form alliances that will support our capital-light business model and reaching out to growers for a contract planting for winter 2022-2023. This fall, we plan to contract more than 1,000 acres of grain production in areas of Southern Canada and the Northwest regions of the U.S. We are also ramping up quality seed production in the winter season in the U.S. and Canada, as well as in contra-season for our spring varieties for future grade production contracts. As we build our business around Camelina, our research team has done an outstanding job progressing new seed varieties and a strong pipeline of trades.
In 2022, we had an intensive effort underway for field testing, herbicide tolerance and downy mildew resistance traits. As Kristi will describe today, we remain on track to achieve the very important milestone towards selecting herbicide tolerance spring Camelina lines, for seed scale-up and future commercialization. Our winter fuel program is reaching a successful conclusion, with a 17-acre field in Saskatchewan granted last fall, scheduled to be harvested next week. The ’21-’22 program is expected to provide us with important data on winter and spring varieties, grown in a range of geographies, as well as seat for additional seed production over this upcoming winter. Our extensive spring field test program is nearing harvest in the U.S. and Canada, which will allow us to generate further proof points in our traits and identify new Camelina lines for commercial development.
I will now pass the call over to Kristi.
Kristi Snell
Thanks, Oli, and good afternoon, everyone. Before I provide a high-level update on our ongoing field program, let’s start with an overview of our early commercial Camelina lines.
Please turn to Slide 6. We have 3 early commercial Camelina lines. genome edited Spring line E3902, and winter lines WDH2 and WDH3 that were produced using net breeding procedure. We are continuing to ramp up key-production of each of these lines, to make planting seed available to growers under contract. In winter 2022-2023, we anticipate that WDH2, our winter cold-tolerant line will be available to participating growers, where we are targeting more than 1,000 total contracted acres.
Let’s turn to Slide 7; our spring field testing program consists of germplasm variety trials in small plots. We conducted the trials at 9 locations shown on the map. Our 6 sites in Canada, span the provinces of Alberta, Saskatchewan and Manitoba, and our 3 sites in the U.S. are located in Montana, Idaho and North Dakota, all regions well-suited for growing Camelina. Currently, plants are at the stage of late seed set or maturity at all 9 of our sites. I’m pleased to report that depending on location, most fields have been rated good or excellent over the course of this growing season. Two sites will provide little to no data due to emergency issues at the site.
In the photo of our Montana site, the plants that are yellow, this indicates the plants are maturing and are nearing harvest. The mid-July photo of our Idaho field shows healthy plants before flowering. If the weather stays on track into harvest, we believe our trials will produce a robust agronomic performance data sets, that will supplement the data that we obtain from the spring 2021 trials. This data package will be used to select germplasm for development and breeding purposes.
Let’s turn to Slide 8; Camelina growers made a robust herbicide package that provides over-the-top spring wheat control for broad leaf and grassy-wheats, as well as tolerance to soil residues of group 2 herbicides left from the growth of the previous crop. Over the next several slides, I will outline our progress and plans to generate Camelina lines to provide farmers with the herbicide tolerance package that they need. As part of our spring program, we are evaluating candidate Camelina lines, that we have engineered for tolerance to over-the-top spray of the commercial broadleaf weed herbicide.
I’m pleased to say that in our field testing to date, we have observed good herbicide tolerance to an established broadleaf herbicide at 1x or 2x the spray rate that is typically commercially applied to herbicide intolerant canola. For over-the-top spraying, we applied 2 spray applications of the broadleaf herbicides, at different times of the Camelina growth cycle. The drone pictures on the top of the slide illustrate good growth of plots with Camelina lines containing herbicide tolerance, and little to no growth of control lines that do not have herbicide tolerance. The red dots on the photos indicate the field location of the control lines, which you can see are highly susceptible to herbicide. All of our herbicide tolerance events tested are showing good tolerance, including events produced in the E3902 germplasm background. After seed harvest, we will collect seed yield and oil content data for these trials to identify the best events to bring forward in our pipeline.
Camelina is also highly susceptible to the presence of Group II herbicide residues in soil. Group II herbicides mainly in Imidazolinone or IMIs and sulphonylureas or SUs are used extensively in the regions we are currently targeting for Camelina production. Soil residues persistent in the soil and compare the emergence and growth of Camelina. We have in hand a line obtained from a third party, that has tolerance to IMIs. In the photos on the bottom of Slide 8, we have demonstrated that the IMI tolerant line has normal growth in the presence of IMI soil residues, supplied to the soil at 1x or 2x to commercially used rates. In contrast, the control line has impaired growth.
The results of our trials to date indicate that we are well on track to identify lead and backup lines for broadly herbicide tolerance for commercial development and regulatory approval. Once these lines are identified, we plan to accelerate these candidates into a contra-season seed scaleup this winter and put them on the path to regulatory approval.
Let’s turn to Slide 9. The timeline on this slide shows our progress towards producing over-the-top spray broadleaf weed control and testing a herbicide for grassy-weed control in Camelina. The yellow boxes indicate work that is in progress or completed. In 2022, we verified broadleaf herbicide tolerance in our engineered Camelina events, both in the greenhouse and the field. We have also ramped up regulatory efforts for our over-the-top herbicide tolerant lines, based on the positive test results we’ve obtained this year. The white boxes describe the anticipated next steps in the development program, including contra-season field work this winter for product development trials and seed scale-up and 2023 Springfield work for product development and herbicide label amendments for Camelina.
Let’s turn to Slide 10. As mentioned previously, group II herbicides, such as IMIs and SUs, can persist in soil for months following application, and will negatively affect growth in Camelina. In Slide 8, we demonstrated tolerance for IMI from the field. We are now developing broader Group II herbicide soil residue tolerance for both IMis and SUs that will expand the acreage for Camelina growth. We are stacking these traits for group II soil residue tolerance with the traits for over-the-top herbicide spray tolerance described in the previous slide.
To date, we have successfully stacked herbicide tolerance traits into our best germplasm and we’ll be soon conducting IMI and SU soil residue tests in the greenhouse. If we are successful at identifying stack herbicide tolerant plants, we plan to initiate a regulatory process and move plants into field trials in 2023.
Let’s turn to Slide 11. In the second half of the year, we plan to initiate planting for multisite 2022-2023 winter field trials, including conducting germplasm variety trials in different locations, and expanding our winter germplasm breeding program. Our key targets for this work are developing lines suitable for integration with corn and soy with higher yields. In addition, we plan to conduct winter contra season seed production for spring varieties for our Yield10 herbicide tolerant lines, and conduct additional testing and seed scale up of the best events. We will also test the herbicide that is currently used to control grassy weeds with other crops. It is quite likely that Camelina is naturally common for this herbicide, so we will test it in the coming months to confirm this activity.
As a wrap-up, I’d like to acknowledge the Yield10 R&D team. They’ve put in a tremendous effort over the last 1.5 years, generating herbicide tolerant events in Camelina and testing them in the greenhouse and in field trials.
I’ll now hand the call back over to Oli. Oli?
Oliver Peoples
Thanks, Kristi and congratulations to the team for their significant accomplishments executing the spring program and generating positive preliminary data on herbicide tolerance in our Camelina lines.
Now let’s turn to Slide 12, 2022 commercial winter seed production priorities. Our seed production activities are focused on 2 goals: first, the ramp-up of contracted acres for green production for processing the feedstock oil and protein meal Second, high-quality seed production for winter Camelina lines WDH2, WDH3 and the ramp up of contracted acres in fall of 2023 and beyond. We are also planning contra-season seed production for spring varieties, including E3902 and our herbicide tolerant lines.
Let’s now turn to Slide 13, tailwinds for biofuel feedstocks, and we all love a good tailwind. Our strategy to build shareholder value is to commercialize Camelina as a platform crop to produce renewable products focused on feedstock oils for biofuels in the near term, and to leverage our advances in crop development to launch a elite Omega-3 Camelina varieties and PHA Camelina varieties for PHA bioplastics in the future. Over the past 24 months, we have pivoted to focus on the near-term commercial opportunity for Camelina, as a source of biofuel feedstock oil, and we are now well positioned to take advantage of major tailwinds in this market.
Let’s turn to Slide 14, the expansion of R&D facilities of RD renewable diesel facilities in North America. Production of renewable diesel alone is projected to go to 6 billion gallons annually in the next 5 years from an estimated 1 billion gallons in 2021. These investments are necessary to meet regulations such as the California Low Carbon Fuel Standards and similar standards extending to other states in Canada. This new demand will have to be met mostly from increased use of vegetable oil, and this in turn is placing further pressure on vegetable oil prices, resulting in opportunities for new crops like Camelina to expand production.
Let’s turn to Slide 15, the climate bill and increasing global fuel demand. In early August, the U.S. Senate approved the Inflation Reduction Act of 2022. This legislation represents an unprecedented investment in addressing U.S. energy security, clean energy infrastructure and climate change. This still provides extensions for renewable diesel and clean fuel tax credits, as well as create sustainable aviation fuel tax credit, both essential to reducing greenhouse gas emissions in the transportation sector. Our winter Camelina cover crop will support demand for decarbonizing feedstock oil for biofuels.
The bill also provides funding support for climate smart agricultural practices to incent growers on new cover crops. And the technology accelerator will focus investment into building resilient rural communities, prime places for Camelina production and grain processing. And on top of all this, we have overall growing global demand for decarbonizing transportation fuels. Based on all this, we have concluded that this market is going to be constrained by the feedstock oil supply, creating a major opportunity for our Camelina products business.
Let’s turn to Slide 16, recent cover cropping partnerships. As many of you know, the oil sector likes to focus on securing, owning and replenishing their own reserves, or as we like to refer to, owning the well. The ag value chain doesn’t lend itself to that model, but what we are seeing are partnerships along the value chain, and including seed companies. The most recent of these was Bayer, an early round investor in the cover crop company CoverCress, acquiring a majority share with [indiscernible] Bunge, and a large oil biofuel player, Chevron, also being shareholders.
Let’s turn to Slide 17, establishing the Camelina value chain. We established a leadership position in Camelina, we are prioritizing development of Camelina lines with herbicide tolerance and disease resistance to enable larger acreage production. Our performance rates for yield and oil will be stacked into these lines as we progress. In 2022 to 2023, we plan to execute speed scale up activities to enable planting for grain production in the range of 1,000 to 20,000 acres. We are moving forward with our current non-regulated varieties and will progress the regulatory path for new varieties as needed. We also have ongoing discussions with key players across the value chain, where, as stated, our goal is to secure partnerships and offtake agreements.
Let’s turn to Slide 18, our long-term vision for Camelina. Although laser-focused, and biofuel feedstock markets in the near term, our vision is to establish Winter Camelina as a platform crop to produce new seed products. To achieve this, we are working to provide the farmer with convenience and production and the highest financial returns per acre. The investments we are making now in improved germplasm, herbicide disease tolerance, will provide the foundation varieties for our food proprietary seed products in the future, PHA bioplastics and Omega-3 oils. In the case of PHA bioplastics we will be coproducing feedstock oil in the seed. Our analysis indicates that allocation of the significant carbon savings from replacing petroleum plastic to the feedstock oil, as the potential to drive the oil CI or cabin intensity below 0, further enhancing our value proposition. Keep in mind, this entire market is about decarbonizing our economy and transportation in particular.
Let’s turn to Slide 19 for a summary of the PHA bioplastics Omega-3 programs. Although primarily focused on biofuel feedstocks, we continue to make progress in our 2 new seed product rates. In the PHA bioplastic area, our efforts are focused on optimizing the PHA trait to enable PHA bioplastic production in the Camelina seeds, which could be processed to produce 3 seed products: PHA bioplastic, biofuel feedstock oil and protein mill. Our prototype Camelina line C3015, has been growing at acre scale this year to produce Camelina grain for process and business development processes. The R&D team is continuing activities related to trade optimization.
Fish oil and the omega-3 markets, although more a specialty market, Camelina has proven to be an excellent platform producing DHA+EPA omega-3 oils and there’s a large opportunity in the Omega-3 fish oil market, driven by reduced supply of oil from harvesting ocean fish, and growing demand in aquaculture feed and nutraceutical markets. We continue to support our partners at Rothamsted and are very pleased to see the recently published patent application describing significant improvements to the original technology. If granted, this IP could extend patent protection through 2040.
Now let’s turn to Slide 20, our licensing opportunities. We have non-exclusive research license agreements placed with Bayer, GM, for genetics and supply to best of trade to various commercial crops. Each company is evaluating, chasing their target crop with the option to negotiate a commercial license. The arrows on the slide indicate the duration of these agreements. We’re also following up on industry interest in oil content traits, including C3007 for soybean and canola, and we are seeking partners to test for traits in corn. The grain platform also represents a unique collaborative opportunity driven by interest in identifying novel performance traits.
I will now turn the call over to Chuck to discuss the second quarter financials.
Charles Haaser
Thanks, Oli, and good afternoon, everyone. Let’s please turn to Slide 21. We ended the second quarter with $10.2 million in cash, cash equivalents and investments, and we expect that our cash on hand, together with expected revenue from our current government grant, will support our operations into the first quarter of 2023. We continue to have no debt on our balance sheet.
Our net operating cash usage was $2.5 million in the second quarter of 2022 as compared to $2.1 million for the second quarter of a year ago. For the full year 2022, we estimate total net cash usage of $12 million to $12.5 million to fund our operations, including our expanded research and development activities and our preparations for the future commercial launch of our Camelina products.
Now let’s review the second quarter 2022 operating results. For the second quarter of 2022, the company reported a net loss after taxes of $3.4 million as compared to a net loss after taxes of $3.1 million for the second quarter of 2021. Total research grant revenues in the second quarter of 2022 were $103,000 as compared to $174,000 in the second quarter of 2021. The decrease was a result of allocating greater resources to support other Camelina research and development initiatives.
In the second quarter of 2022, R&D expenses were $2 million as compared to $1.7 million in the second quarter of 2021. G&A expenses were $1.5 million for the second quarter this year as compared to $1.6 million in the second quarter of last year. And for the 6 months ending June 30, 2022, grant revenue was $252,000, R&D expenses totaled $3.8 million and G&A expenses totaled $3.2 million. Our net loss after taxes was $6.8 million. For more information and details on our financial results, please refer to our earnings release and our 10-Q.
Oli, back to you.
Oliver Peoples
Thanks, Chuck. Now let’s turn to Slide 22, the upcoming milestones. As you can see, our technology team has made terrific progress this year, executing on the development and scale up of new Camelina lines for commercial production. We’re very excited to be well aligned with the strong tailwinds in biofuels. As we progress into the second half of 2022, we will continue to focus on executing our key milestones, including expanding our commercial activities targeting the biofuels market, continue to build our differentiated elite Camelina germplasm collection, collecting and analyzing data from our 2022 field testing program and executing a seed scale-up program, and advancing the optimization of our PHA bioplastic and progressing the commercial launch plan for Camelina Omega-3 oils. We are very busy in business development, reach to prospective partners across the entire value chain, with the goal of executing strategic industry collaborations, and we continue to build on our intellectual property portfolio.
With that, I’d like to turn the call back to Lynne for questions.
Question-and-Answer Session
Operator
[Operator Instructions]. Our first question comes from Anthony Vendetti with Maxim Group.
Anthony Vendetti
Yes, it sounds like you’re making a lot of progress on a number of different fronts here. Specific to the Camelina line, you have this agreement with Rothamsted, and you expect that to extend the patent protection for this technology through 2040. Can you also talk about — and it says they have an exclusive option to this technology. Can you talk about what the agreement with Rothamsted could mean in terms of collaboration, potential contract revenues? Maybe just give us a little more color around the agreement with Rothamsted Research?
Oliver Peoples
That’s a pleasing set of questions. So I’m going to take it one at a time. I think in regard to Rothamsted, we have this exclusive option agreement with Rothamsted. We’ve been working and cooperating with them, I would say, over the last 2 years now. Although Yield10 managed to sort of work pretty much throughout the entire COVID situation. Rothamsted’s internal activities were impaired, because the U.K. was in a much more aggressive shutdown mode. But the team there led by Jonathan Napier, actually made some great progress, particularly on this improved technology and by improved technology, I mean, essentially significantly increasing the levels of EPA in one line to, I would say, 25% to 30% of the oil.
It’s a pretty interesting market, and it opens up some interesting, I think, path to near-term commercialization. We are currently working internally on the regulatory front and also with Rothamsted on the path forward. So there’s that. In terms of the — and that’s really a product that we’ve had — it’s not really so much for aquafeed, but there is a number of pharmaceutical products out there that are basically purified — so EPA. In other words, they just a purified form of EPA Omega-3 asset, in the cardiovascular disease area. Obviously, purifying EPA from fish oil is a lot more complex with about 10% EPA, plus all the wonderful things you get when you harvest fish from the ocean, and essentially separating it from something that’s closer to 30% EPA in the pure oil form without all the residual contaminants from ocean harvesting.
So we’re pretty excited about that. We’re working on it, how big that market could get, we will have — have to do more diligence and that diligence is actually underway. On the broader front, that also includes progress on increasing the levels of EPA PHA and the lines as well. And I think there’s also a second feed component in there, particularly relevant to salmon production, which includes astaxanthin. So it’s a combination of increased EPA PHA oil production with essentially coproducing astaxanthin, which is another one or more expensive ingredients in aquaculture. So that’s going to take a little bit longer just from a [indiscernible] perspective, et cetera. But what you see is, you see the potential to have a sequential launch of a series of products from that platform.
We are working with the Rothamsted folks pretty much on a weekly basis, and we interact with them in that way. Elated with their progress, and I think we are feeling that we now have a path forward to begin the commercial scale-up of this technology, and that’s something that we’re getting under way.
Now keep in mind that Yield10 is a relatively small company. We also have this modest opportunity in biofuel in front of us, and as you see in the presentation, we are pretty heavily focused on building that revenue stream in the near term. So we’ll be very judicious in how we approach this. We are making sure that we progress this in a very systematic way, and as we bring in additional resources, we will expand or accelerate the development of the Omega 3. But when you look at the market and you look at where aquaculture is going, there’s probably $0.5 billion to $1 billion oil opportunity there. And obviously, we believe Camelina, for whatever biological reason, is extremely well suited to be a major source of that oil going forward. So we’re very excited about it. But near-term priority is on biofuel.
Anthony Vendetti
Just maybe one follow-up to — so the biofuel feedstock opportunity, which — you’re positioning for contracting on 1,000 acres for the winter Camelina, right? So that’s expected to be planted by early 2020 — October of ’22. That harvest for processing Camelina for oil and protein is anticipated in second quarter ’23.
Oliver Peoples
Likely early second quarter 2023. Of course, that could eventually (technical difficulty) but as you see in those trials, we planned the winter Camelina all the way from Georgia to the North Central Saskatchewan, which is pretty far up. That includes the large — the 17 acres of seed scale-up of our WDH2 line, which is going to be the genetics we use for that 1,000 acres. So that’s going to be harvested sometime this week, I believe. And then obviously, go through a seed cleaning process and a QC process, so that we can put it in bags and make it a high enough quality to provide to growers.
So Georgia was many months ago. But obviously, as you move north, that season changes. And so when we talk about cover cropping; cover cropping is somewhat different in context, depending on what latitude you’re at. So further north, it’s really about putting a crop down over the winter, you may not plan a second crop once you harvest the winter Camelina, whereas in the corn belt and further south, you may be — you’ll likely be double cropping. And so the cover cropping values are same, the difference is that what you integrate it with, in terms of is different.
Anthony Vendetti
So maybe just last question on that. Assuming that goes well, how does that enable you to strike or sign contracts that will result in revenue from Camelina?
Oliver Peoples
Yes. So I mentioned we’re very busy across the value — the entire value chain. I think that’s the first time I have ever used the entire value chain, in any disclosure. So we are in partnering discussions from [indiscernible] in this space. Obviously, that includes some of the major grain processors. Yield10 is not going to become an ADM, Bunge or Cargill type company. That’s not really what we’re about. So we are talking to folks in that space, without giving any names, about basically contract processing of that. And then, of course — the people with a real problem, are the folks who are investing in these renewable diesel facilities, or renewable aviation biofuel, they are the ones with the need to secure supply. And so we are talking to a significant number of players in that area as well. So it’s complicated and there’s a partner prospects all across that value chain. And we are having, we believe, productive conversations with all of them.
Anthony Vendetti
Okay. So to sum it up, a significant number of players really across the entire value chain. So you see a significant opportunity based on those comments, correct?
Oliver Peoples
Yes. And I think, obviously, what we — our goal as a company, and I think we’ve been very clear about emphasizing the capital light, also includes working capital light. We don’t plan to sort of build a store lots of inventory. I think we are feeling that based on conversations we were having, that there are definitely opportunities to essentially get offtake agreements in place, so that we have a smooth transfer from farmer bin to some kind of an elevator or a railway station and ultimately into a processing facility and then off into the biofuel players. So we are working hard to put those things in place and we will scale the acreage depending on securing those things. We won’t just simply grow Camelina on spec at very large scale. I think we’re feeling this is a necessary step. I think we can feel it at the next step. But the rest of it, the goal is to have it contracted.
Operator
Our next question is from Ben Klieve with Lake Street Capital Markets.
Benjamin Klieve
First, I have a couple of questions around the 1,000 acres of planting expected here later this year. First of all, I believe you just started seeking partners for that like 6 weeks ago in late June. Can you update us just on kind of the number of acres that are already secured, and kind of what farmer reception has been so far in the early stages of this initiative?
Oliver Peoples
Yes. So without going into too many specifics, I would say we’re feeling — we’ve definitely been able to attract more interest, than 1,000 acres. But the key now is, of course, transferring interest into the contracts, right? And so we are working on now translating what we believe are the lead growers in specific areas into contracts, and that’s obviously the key to the whole thing. Having lots of prospects in those sales as I learned with metabolics, means you have no sales. So we are very focused on getting contracts in place with the leaf growers, making sure that we are in a position to really support those growers, because the key here is to build strong working relationships with farmers, and make sure that the farmers are in this as our partners for the long haul because with time, we believe we can further improve Camelina to make it a very high-value opportunity for growers.
Benjamin Klieve
Got it. Perfect. Well, I look forward to hearing more about that, on the next quarter call. Another question, and this is — maybe we’re getting a little ahead of ourselves here, but one of the slides you referred to scaling up activities to enable move from 1,000 to 20,000 acres. So did that refer to your — what you believe you have inventory secure to plant in the fall of ’23. Do you expect to have 1,000 acres of Camelina planted in the fall of ’22 and the 20,000 acres in the fall of ’23?
Oliver Peoples
I think right now, obviously, where we are and obviously, the 17 — the 1,000 acres depends on harvesting and cleaning the 17 acres, which, quite frankly, with some of the hailstorms that were harming that part of the country, was getting a little nervous about that. Obviously, we have seed cleaning and QC all lined up in order to take care of it as well. But I think that 1,000 acres, I think we feel we’ll be in good shape to supply high-quality clean seed, and that’s pretty important. We will be in a position to plant tens of thousands of acres next year. We are scaling up quality seeds to go through a QC process to be bagged and process and QC to be able to do that. Obviously, as we move forward, we need to make sure that we continue to work on the grower network.
Now I would say the interest from growers has been — interest from growers, and I think the interest from, I would say, agricultural media in those regions has been really very positive. I’m not sure how many interviews Lynn has coupled together and forced me to do over the last few weeks, but we seem to be getting an awful lot of interest from, I would say, industry newsletters and blogs and podcasts and all these types of things, and that continues to build interest. But ultimately, with growers, what we find is, it’s really about getting in a truck and driving to the farmers’ field and standing in the field with the grower to discuss the proposition with them.
And Darren Greenfield, has got very muddy boots from doing that now. He’s been at it for the last several weeks. He has been very busy. He’s making a lot of progress, and he seems to be getting quite a bit of interest in — primarily, the initial focus is really in , while we have spanning interest in the Dakotas, Montana, Idaho and Saskatchewan. So we’re feeling that we’re getting a lot of interest. Certainly, some of the drivers for that were not quite what I expected. For example, in some of those areas like Alberta, because of the high heat that some have experienced in some summers, having a crop that sort of matures and can be taken off long before that happens, is very attractive to growers. And so that’s been one of the drivers that I didn’t quite anticipate.
I think the other aspect was growers seeing a potential revenue stream that have come in way before their normal harvest at the time when their sort of cash outlay has been maximized, also seems to be another very positive thing. And now, all of this happened before the climate bill and as you understand it, and we’ll have to wait and see. In the U.S., there’s going to be more incentives for cover cropping, and it looks like Canada is also moving in that direction still to be determined. But guess what, the cover cropping, we believe, is going to be a very major supported activity in the U.S. and Canada going forward.
Benjamin Klieve
Got it. Yes. I think that as a rabid consumer of agricultural media, certainly, this is a hot topic, basically, any source I see. So that does not surprise me. One more question, and then I will get back in queue, and that’s related to your research agreements and the timing. I understand these agreements are very fluid in nature and the research stage really is moving targets that are really out of your control. I get that. But I’m curious, because 3 of the 4 agreements here have a targeted date ending this year. And so my question to you is, if you have any real visibility that any of these 3 agreements are going to reach a conclusion this year, either with a commercial relationship or without?
Oliver Peoples
Yes. The challenge there, of course, is players want — these companies want to see more than 1 year of field data. So I think until we’ve seen that second year at data, which they’re currently generating, it’s hard to say where these will go. And then of course, we have — in those agreements, those same companies have restrictions on what we can tell you. And so we remain very optimistic, but that remains to be determined, and it remains to be seen in the eyes of our partners, and if that happens, then obviously that would be great.
However, I will say that just like those tailwinds for biofuel or driving interest in Camelina, those same tailwinds are driving interest in new oil traits, oil content, obviously, because that’s such a huge value driver in soybean and canola, and yield trends. And so we’re seeing, I would say, a resurgence of broad interest in the major seed class in new technologies, innovation and genetic traits that can improve or enhance what they’re offering to growers and give them some differentiation. So it’s — we’re feeling that the industry is catching up with us.
Benjamin Klieve
Well, best luck with those agreements and then with all the various initiatives you guys are working on here over the next couple of months.
Operator
Our next question is from Sameer Joshi with H.C. Wainwright.
Sameer Joshi
Maybe this is a naive question, but for the herbicide tolerant variety, what is the mechanism of action? The reason for this question is, does it absorb the herbicide, but it doesn’t react to it and doesn’t like — the plant doesn’t die, which could have implications on the seed itself? Or does it not absorb the herbicide itself?
Oliver Peoples
That’s a very technical question, Sameer, you want to take a go at that?
Kristi Snell
Yes. So the plant certainly absorbs the herbicide, just like other plants. We’ve engineered it to be resistant to that herbicide that it has absorbed. So that’s why it can continue to grow.
Sameer Joshi
And are there any implications if this is used for food purposes?
Kristi Snell
No. The herbicide that we’ve chosen to use is broadly used in food. And so it’s found to be safe in multiple crops. So there is no…
Oliver Peoples
I think one thing we need to know here, Sameer, we’re not reinventing the wheel here. The industry has done a great job over the last 26 years of derisking specific herbicide, chemistries for use with herbicide tolerant crops. And we are in a situation where we’re able to simply build off of that by transferring it to Camelina and that’s what we’re doing in the initial basis. And so we’re not really — what we are really doing is, we’re accelerating the deployment of Camelina of known technology that’s well proven, well worked out and for which the regulatory authorities have a lot of experience. We’re not doing anything new here.
Sameer Joshi
Understood. Coming to this 1,000 acres, 1,000-plus acres that you are planning, two questions on this. Maybe we have discussed this in prior calls, but how many gallons of oil do you think this relates to? And part 2 of that question is, you are finding farmers and growers to do this right now for the next harvest season. But are there offtakers like crushers or even producers who are also being contracted for this particular 1,000 plus acres?
Oliver Peoples
Yes. Let me be very clear. I think, obviously, what the industry is interested in is tanker loads on trade heading into their facilities now. So they’re really looking for hundreds of thousands of tons of oil. But obviously, to get to that, we have to go through this first set of stats. So that’s really what the industry is looking for. They are looking for — if you’re going to put in 5 billion gallons, you need an additional 5 billion — essentially, you need an additional 5 billion gallons of vegetable oil.
So that’s a lot of oil. And so right now, I mean, just crude numbers, if you assume 8 pounds of oil per gallon, and about approximately 600 pounds of oil per acre, that would give you kind of a reasonable sort of midrange estimate of too many gallons. But as I said, I think let’s be clear, this is commercial development that we’re in. We’re not — I mean it’s full commercialization. What we really want to think about, is this, on 1 million acres or 5 million acres. That’s — but to get there, we got to do — we have to do 17, now we have to do 1,000, and we have to do tens of thousands. And then we have to have the herbicide to go to hundreds of thousands, and then they’ll just have to expand that to 1 million. So it takes time, — so you just have to go through it. There’s no way around it.
Sameer Joshi
Understood. Understood. So this initial stage, at least this 1,000 — maybe not the 20,000, but the 1,000 acres will be funded by Yield10, not by any offtaker or crusher?
Oliver Peoples
No, I wouldn’t say that. I would say that those conversations are ongoing. And so our goal is — this is — for the 1,000 acres, that’s something that we’re going to be committed to because we — again, our goal is to really build strong relationships with the growers. So that we are committed to. However, we already are in conversations about essentially processing an offtake of that. So the goal is not to be growing and storing Camelina grain. We don’t want to do that. Nor do I think we have to. I think there’s some broad interest in such enormous demand for these feedstocks, that we believe we should be able to move this forward and offload it within a short period of time of actually getting everything into bins. I mean, that’s the goal.
Sameer Joshi
Got it. And then one last one actually sort of a corollary to the first question I asked about the herbicide. This picture on Page 8, how big is this farm, where this trial has been conducted or was conducted?
Kristi Snell
I think you could estimate, it’s somewhere between 0.5 acre and an acre. I don’t know the exact size, but that’s where we are with that trial.
Sameer Joshi
Okay. And is that size good enough to prove out your — I mean you can see the results right there at the bottom of the screen, but is this enough?
Kristi Snell
These are replicated plots. So they are done in replicates, so that we can get site data and figure out which events are best. So this is sufficient to get that kind of data, yes.
Oliver Peoples
I think, Sameer, I mean, unlike yields, it’s just much more complicated. The good thing about herbicide tolerance, is either the plant dies or it doesn’t time. And as you can see, the [indiscernible]. And now, of course, the next phase is obviously, does that treatment in any way, shape or form, impair seed oil content or yield. Obviously, Kristi and her team are going to be working on defining all of that data and then selecting the lines that have the best tolerance or resistance, as well as essentially the best yields in oil content. And those are the ones that will go forward into the commercial development pipeline.
Sameer Joshi
It looks very nice on — the results are very nice.
Operator
We have reached the end of the question-and-answer session. I would now like to turn the call over to Lynne Brum.
Lynne Brum
Yes. Thanks, Rob, and I’ll turn the call back to Oli for closing remarks.
Oliver Peoples
So I’d like to personally thank all of you for joining us on the call tonight, and especially our shareholders for your continued support. This is an exciting time for Yield10 as we focus on preparing for the launch of Camelina for the biofuel space. We’re engaging growers to participate in our winter program and scaling up seed production to enable ramp-up of contracted acres in 2023. Developing a robust herbicide tolerance package is key to accessing large acreage for Camelina. And then with the data we’ve described to date, we are well on track to achieve this important development milestone.
I want to thank everyone at Yield10 for contributions that are keeping us on track to reach our goals. Have a nice evening, everyone. Thank you.
Operator
Thanks, everyone. You may now disconnect from the conference.
Be the first to comment