Thousand Oaks, California, USA
January 13, 2015
- Sorghum plantings for 2014-15 season largely completed
- Company receives go ahead for biotech trait evaluations in Brazil
Ceres, Inc. (Nasdaq: CERE), an agricultural biotechnology company, announced today financial results for the three months ended November 30, 2014 and provided an update on its business.
The company reported progress across a number of market opportunities for its breeding and genetic technologies, including sorghum seed and biotech traits. In Brazil, plantings of the company's sorghum hybrids for the 2014-2015 sorghum growing season have been largely completed with more than 50 customers, including mills and mill suppliers.
The company also reported last week favorable results from its biotech corn evaluations in China, where a second year of field trials demonstrated double-digit percentage yield advantages under normal and drought conditions. Corn provides an additional out-licensing opportunity for traits that Ceres is developing for use in sorghum and other crops.
"We have made key progress across our business and product development pipeline and are reaching an exciting point in the commercial roll-out of our products," said Ceres President and CEO Richard Hamilton. "We continue to align our business with areas of the market that provide the most encouraging and near-term growth opportunities."
Ceres Chief Financial Officer Paul Kuc reported that the company has a number of upcoming milestones, including seeds sales in the U.S. forage market, the roll-out of its Persephone bioinformatics software and the continued advancement of traits for crops like corn and sugarcane. "While lower oil prices have created a more challenging environment for bioenergy, we have a number of market opportunities that are being driven by global prosperity trends separate from energy commodity cycles, such as increasing consumption of meat, dairy and sugar, as well as a growing market for bioinformatics software solutions in the life sciences. The extent to which we achieve these milestones should indicate which areas have the greatest momentum, and where we will prioritize our working capital," said Kuc.
Business Highlights and Outlook
- For the 2014-2015 growing season in Brazil, total plantings of the company's sorghum products cover more than 4,000 hectares compared to approximately 1,000 hectares planted the previous season. The increase in planted area is due primarily to increased demand for high biomass sorghum for power generation. Following a dry start to the growing season, which delayed some plantings, growing conditions have been generally favorable to date across most evaluation regions, including adequate rainfall. Overall plantings were lower than the company's original forecast of 5,000 hectares due to some weather delays at the beginning of the season, which provided less time to plant, and the company's subsequent decision not to plant outside its recommended timeframe.
- In Brazil, Ceres has received a permit to evaluate its biotech traits in sorghum from the National Technical Commission of Biosafety, or CTNBio, the Brazilian government's commission that regulates biotechnology crop traits. Field evaluations of these traits are planned for later this year.
- Ceres reported last week that its multi-gene combinations in corn achieved an approximately 25% yield advantage over controls in many of its research-scale field evaluations. Field evaluations represent a critical stage in the development of biotech crop traits, as they provide greater insight into how traits may perform in an agricultural setting. Favorable results from a research setting are not a guarantee of future commercial performance, and further evaluations will be necessary to confirm results. The company has selected its best multi-gene combinations for broader field evaluations in 2015.
First Quarter Financial Results
Total revenues for the quarter ended November 30, 2014 were $0.4 million compared to $0.8 million for the quarter ended November 30, 2013. Collaborative research and government grant revenue decreased by $0.3 million primarily due to the completion of work scheduled under various grants and collaborations. The company expects to recognize the majority of product revenues for the 2014-2015 season in Brazil during its fiscal third and fourth quarters, when harvests are completed.
Total cost and operating expenses decreased by $2.6 million to $6.4 million for the quarter ended November 30, 2014 compared to the same period last year.
Cost of product sales decreased by $0.9 million to $0.4 million for the quarter ended November 30, 2014 compared to the same period last year. The decrease was primarily due to reduced operating expenses of $0.5 million and reduced personnel and related expenses in the U.S. of $0.4 million.
Research and development expenses decreased by $1.9 million to $2.5 million for the quarter ended November 30, 2014 compared to the same period last year. In the U.S., research and development expenses decreased by $1.4 million primarily due to reduced personnel and related expenses as well as reduced external research and development expenses. In Brazil, research and development expenses decreased by $0.5 million primarily due to reduced personnel and related expenses, and from a reduction in the number of research trials being conducted.
Selling, general and administrative expenses increased by $0.2 million to $3.4 million for the quarter ended November 30, 2014 compared to the same period last year. The increase was primarily due to increased personnel and related expenses in Brazil.
For the quarter ended November 30, 2014, Ceres reported a net loss of $6.0 million, or $0.12 per share, compared to a net loss of $8.2 million, or $0.33 per share, for the quarter ended November 30, 2013.
At November 30, 2014, cash and cash equivalents and marketable securities totaled $21.6 million.
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