Biotech Values

[dangerM]

CLLS / Calyxt IPO

> makes this an opportune time for CLLS to act

Very much so! Especially when one thinks of the different capital costs for biotech vs. "agriculture". I am a bit mean here since I am somewhat sceptical about the consumer part of Calyxt's strategy. Quoted from the S-1:

Our commercial strategy ...

For our consumer-centric products, we intend to repurpose and leverage existing supply chain capacity by contracting, tolling or partnering with players in the existing supply chain, such as seed production companies, farmers, crushers, refiners or millers, which we expect will allow us to apply our resources to maximizing innovation and product development while minimizing our capital expenditures and overhead.

For our farmer-centric products, we intend to broadly out-license our products to the seed industry.

[... somewhat later, more on the consumer-centric products ...] Given trends in consumer preferences, we envision selling specialty ingredients such as healthier oils, high fiber flours and ingredients with reduced allergen and carcinogen content to the food industry.

[... again later ...] The following chart shows our plans for commercializing our consumer-focused product candidates:

Seed Production ==> Grain Production ==> Processing ==> Food Industry Customers --> Consumers

["==>" are arrows with Calyxt over - only the last step from the food producer to the customer does not have Calyxt involved]

Simply put, one part of the strategy is becoming a baby-Monsanto/Syngenta (selling seeds to farmers). The other part of the strategy is becoming a "little" Cargill or Bunge corporation; so somewhere in the process quite some many, many tons of soy beans (not seeds, but the final food product) will go through their "hands" (again I am mean, it will go through their processor's factories and hopefully be financed by some appropriate trade finance deal & hedged against fluctuations of the soy bean price).

They hired someone from Cargill as COO, so this makes this strategy somehow credible (cf. http://www.calyxt.com/wp-content/uploads/2017/03/03-21-17-PR-Calyxt-New-CCO.pdf).

However, IMHO in spite of the chances this gives some extremely stark contrast when you compare biotech cost of capital vs. expected profits for a Cargill/Bunge. I might have prefered a split into three companies Calyxt seeds, Calyxt food and Cellectis