Q4 2023 Cibus Inc Earnings Call
Participants
Wade King; CFO; Cibus, Inc.
Rory Riggs; CEO, Co-Founder, and Chairman; Cibus, Inc.
Peter Beetham; Co-Founder, President, and COO; Cibus ,Inc.
Bobby Burleson; Analyst; Canaccord Genuity Group, Inc.
Sameer Joshi; Analyst; H.C. Wainwright & Co.
Presentation
Operator
Good afternoon and welcome to the Stabilus Fourth Quarter 2023 Results Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. And at this time, I'd like to turn the conference call to Wade King, Chief Financial Officer. Sir, please go ahead.
Wade King
Thank you and good afternoon. This is Wade King, Chief Financial Officer of Cibus. I would like to thank you for taking time to join us for Steve as Fourth Quarter 2023 Financial Results and Corporate Update Conference Call and Webcast. Presenting with me today is Rory Riggs, our Co-Founder and Chief Executive Officer and Chairman; and Peter 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 CVS.com to assist in your analysis of the business. With that, I would now like to turn the call over to Mr. Riggs.
Rory Riggs
Go ahead, Laurey base with a welcome to everyone on the call today, I will provide a high-level overview of our progress in 2023 and how the events of the last year differentiates us in this emerging industry, and Peter will walk you through our recent commercial progress with our products and some milestones we expect to achieve this year. Lastly, Wes will finish with a brief discussion of the financials. Our goal is to help you better understand our business so you can measure and track our progress and achievements on both a corporate and a commercial basis above all 2023.
For the year, we transformed from an R&D focused company to a commercial stage gene editing company, a company focused on the production and commercialization of the family of genes edited trait products. Our transformation began with the first transfers of our partners edited to lead germplasm in early 2023 in both canola and rice. These transfers mark, the beginning of the time to the commercialization of our pipeline of develop.
Great. In parallel, we opened the industry's first standardized semi-automated, high throughput kinetic facility that we call the trait machine. This facility is a huge breakthrough in the improvement of the precision speed and scale of gene, a great product for us. And frankly, for the industry, what has made this breakthrough trait development, even more significant is the progress we have seen in global regulations to regulate the trade from gene editing similar traits from conventional breeding. This shows there's increasing global support for this new gene and the industry to address the major sustainability challenges in our global food supply.
Before Peter provide specifics on our products and their progress, I'd like to briefly discuss how our commercial progress has occurred in parallel with the evolution in the Company and our vision. I'm a commercial stage gene editing company in plants, which we define as an integrated commercial business model that connects the research and the development of new traits to a standardized semiautomated trait production facility. And lastly, through the commercial trade transfers into seed company customers for commercialization and sale of our traits. We stated more simply a commercial company focused on gene edited trait products, but operates a gene editing traits supply system, assistant builds industrial scale process until liver multiple trades from multiple customers across multiple crops.
Above all, our first transfers of opening of the treatment team represents the face of our transformation to this vision of a commercial stage company in our vision, technology based trade companies operate as an extension of the seed companies breeding operations in this model. C, This augments the seed companies breeding operation with important new complex traits in so doing accelerate the seed and trait development of our customers. Importantly, because our trader is doing virtual from traits derived from conventional breeding or nature more and more countries and regions have move to adopt new regulations to occur.
See that the goal of these new regulations is to courage gene gene-editing by treating with trades for MG. two, similar to trade through conventional breeding in those states and South America with the leaders of adapting to new regulations, an important moment in the ongoing development of new industry happened in February 2024 and even the EU. voted to regulate trades from GT. technology similar to trade from conventional break free, bringing the EU in mind that the United States, South America and many others, these adoptions country-by-country have shown the importance of our technology in achieving a sustainable global food.
These new regulations for clean, I think, represent a real point of inflection for new regulations or globally, enabling this new era of standardized type we would treat develop in the seed industry traits are critical basis of competition. The need for faster scalable methods for breeding cannot be understated, establishing global regulatory standards and important part of this process because of the scale speed enabled by our stabilized high throughput trait development technology. This moment this cargo referred to as agriculture's analog to digital moments. In other words, this era is going to materially speed up new trait development and enable new trait bill payment time lines in a fraction of the time and cost of conventional breeding or GMO methodologies.
This is why we believe that our vision for commercial stage sheet as a company is the future creating the future commercial crop development. As discussed, the centerpiece of our commercial strategy is the advancement of commercial pipelines integrated with our standard load high throughput facility and the initial transfer or traits to leading seed companies for commercialization. This is why 2023 is a major point of inflection for our business and for the industry. Now Peter will buy more specifically our pipeline and our patented virtualization support, which provides some background and trade products infusions. Peter?
Peter Beetham
Thank you, Lori, and good afternoon, everyone. Has already highlighted. Our commercialization efforts are well underway and are focused on launching our three developed productivity traits with customers per share reduction or as we call it PSR in canola and our herbicide tolerance traits in rice that we call HT. one and HD. three. Before I launch into the product discussion, I would like to explain how we define developed traits and why there are significant advantages to working with these traits in customers' elite genetics. Essentially, this helps to frame our vision for our developed trade products.
We define develop traits as having completed multiple years of successful field testing for the traits of mass. Our service product specifications and the traits have completed a product stewardship assessment, which includes quality assurance regulatory and intellectual property documentation. These develop traits are in customer elite genetics, providing service customers with a significant time advantage to move traits to market and the potential to accelerate their pre-commercial breed plant breeding activities. Essentially, we are an extension of their own plant breeding programs. This acceleration is also impactful to any of our follow-on products that mature from our advanced trait development.
This integration of genetics and traits highlights why we see this analog-to-digital moment Rory mentioned previously, let me continue by further describing our first developed productivity trait PSR in canola PSR strengthens the pod shape around canola or winter oilseed rape seeds protecting the crop yield in many typical to extreme weather conditions at harvest in canola, farmers are moving to what they call direct harvest where they can harvest canola without the need to lower down. First. This saves on fuel costs and allows greater flexibility to manage the timing of harvest on their farms model years of our field trials, including the most recent 2023 results have shown that outright across many genetic background has similar efficacy to the leading competitor has a product that is currently on the market.
We have already achieved significant commercial traction with our PSR traits demonstrated by our engagements with 10 seed company customers to have services PSR trait into their elite germplasm. We believe this current customer base, which includes names such as buyer, new seed and Nutrien, represents over 20 million acres or approximately $150 million of potential annual royalties from canola and winter oilseed rape. We achieved a major milestone in 2023 by completing transfers to multiple customers signaling that PSR is getting closer to generating revenue for our company.
We enter 2024 with significant momentum. And by the end of the year, we expect seven to eight out of our 10 power customers in canola will have their elite germplasm containing services trade either transferred or ready to be transferred back to them. As a reminder, the transfer of elite germplasm contain the CBS trade enables the start of the commercialization process.
Moving on to our other two developed productivity traits. It's T. one and HT. three and right, this is another multinational expansion opportunity to see this these HT. traits targeting weed management in rice, a fully developed and validated like our work in PSR and our current customer base represents 3 million acres for approximately $70 million in potential annual royalties to help frame this opportunity in the U.S. Take, for example, the success of GMO based traits have had in major crops such as canola, soybean and corn. Over 95% of these crops currently utilize GMO based HT. traits to weight management.
This is amazing penetration that speaks to the value those traits provide reduces. However, the rice industry has yet to achieve similar success. Having only had conventionally produced HT. systems struggle to have the success of GMO based H. two traits. This void presents a significant opportunity for CBS' trade solutions, which have been shown to be very effective as demonstrated in our 2023 field trial results. As indicated, both HT. one and HT. three met or exceeded performance expectations when evaluated with proposed commercial herbicide application, right?
These field trials are an important step in proving the effectiveness of our technology and helping to drive commercial progress. To that point, we have secured agreements with three major rice seed company customers, including Nutrien and interop to have CBS's HT. one and AST. three traits incorporated into their elite germplasm. Excitingly, we have also successfully completed the first transfers of customers elite germplasm containing our XT. one and AST. three traits. This marks the beginning of commercialization for our rice traits. Our commercial team is working hard to expand our customer base for canola and Rice with all three of our existing developed productivity traits, and we expect to secure additional customer agreements in 2024.
Let's move to progress of advanced strengths. In addition to the incredible achievements within our developed traits we continue to make progress with our two advanced traits clarity, new resistance, also known as white mold resistance and our herbicide tolerance. HT. two trial both are multi crop traits meaning that they have potential efficacy across multiple crop types, including canola, winter, oilseed, rape and soybean. This is an important distinction as we have the commercial opportunity to earn royalties across multiple crop types based on same trait.
Let's start with the first advanced treatment splitting the resistance. Sclera tenure is the most economically significant disease in canola and one of the major diseases impacting soybean in canola alone. We estimate that approximately 30 million acres could be impacted by a 13-year clarity is a fungal pathogen that causes significant disease known as STEM Ross in crops, it affects 14% to 30% of canola and winter oilseed rape fields annually. And in 2016, the canola Council of Canada reported that potentially up to 90% of the Canadian canola crop was affected. 13-year can reduce ethanol yields by 7% to 15%, with yield losses per infected plant being as well as 50% Technology Council of Canada calls for over 10 years then brought the most economically significant canola disease in Canada.
He's also a significant diseases, soybean with a prevalence of the fungal pathogen detected in soybean production regions of between 33.3% in 2015 and 78.3% in 2020 to be durable. This resistance trait like other disease traits need to address multiple parts of the disease condition, meaning it needs multiple modes of action. In 2023, we achieved a milestone is taking two different modes of action against clarity in canola, and we were able to successfully prove effectiveness in greenhouses this year. We expect greenhouse results for third mode of action for Celerity resistance in canola. We are also currently developing a plan to integrate 30 new resistance into soybean.
Once that editing platform is fully developed when successful, this would be the first major disease trait that would be applicable to multiple crops across canola and soybean alone. We believe this represents over $800 million of future annual royalty payments. Let's move to our next advanced trait HT. to many ways have become resistant to herbicides ever as a result of their extensive use over the last 20 years. Thus for crops like canola soybean, there is huge demand for broad-spectrum herbicide and associated herbicide traits that target broadleaf weeds. This is where our HT. two trait can make a real difference in improving productivity.
In farming, we completed the successful edits of HT. two in canola in 2023, demonstrating continued progress in its development because of demand in canola and soybean. We believe HT. two has the potential to be the first gene-edited trait to achieve 100 million acres obviously use. For the full perspective, the industry estimates that GMO based herbicide-tolerant traits are utilized currently on over 300 million planted acres. So there is a clear precedent demonstrating adoption of value enhancing traits, which represents an immense opportunity for us.
We are excited to see the important greenhouse results for this trait this summer, combined, our three developed and to advance productivity traits represent a potential target market of over 250 million accessible acres, which translates to well over $1 billion in potential annual royalties. I would emphasize that we are just scratching the surface of what we have the potential to achieve with this business. Let's move on to other platforms and sustainable ingredients.
Now I'll touch on the development progress of our other core platforms and our sustainable ingredients business, utilizing a set of quality traits that we are working on we announced in January that we made a major industry breakthrough in completing what we believe to be the world's first successful regeneration of wheat plants from single cells of a lead weed germplasm. This amazing accomplishment demonstrates our Company's continued success in developing scalable, high throughput screening platform that can operate as extensions of seed company breeding programs.
We believe this new platform opens the potential for developing various productivity and sustainable traits that work to address the most significant challenges faced by wheat farmers globally. I'm extremely proud of our entire R&D and technical teams for making this breakthrough as success was completed well ahead of schedule, and we expect to demonstrate initial edits toward developing productivity traits for wheat this year. Turning to our soybean single cell regeneration platform. This is clearly one of the toughest cell biology challenges many institutions have faced.
However, we continue to make progress on this challenge by refining many steps in this process to be successful for our standardized high throughput trait machine. We expect the platform to be operational and have initial editing completed in 2024, continued development of our soybean platform is a key strategic initiative and is the foundation of our emerging sustainable ingredients business, which is focused on the development of plant-based alternative oils for downstream customer applications. We anticipate completing discovery efforts for alternative oils this year, an initial step toward developing solutions utilizing our quality traits that increase our customers' ability to meet their sustainability targets.
What's particularly exciting for us is that we already have existing engagements with many of the world's land sea companies across other crops and projects as we continue to build trust and demonstrate value with these customers. We are also sowing the seeds for our future soybean platform as well, which we think really demonstrates the thoughtful approach that we've brought to our business model commercialization of our three developed traits and the progression of our two advanced rates remained a central focus of our corporate strategy. As such, we intend to track the progression of each trait as it is deployed into our customers' lists germplasm, the progress of which will be central to our quarterly updates going forward, as each tried by crop combination starts generating royalty revenue I'll now pass the call to Wade to briefly review our financials. Wade?
Wade King
Thank you, Peter. Looking at our financials for the fourth quarter, cash and cash equivalents were $32.7 billion as of December 31, 2023. From a cash flow perspective, for the three month period ended December, we used $17.1 million of cash for operations which are tied to a monthly burn rate of approximately $5.7 million. Meanwhile, we've been working hard on optimizing our resources and have implemented cost-saving measures that have reduced our operating cash flow burn rate down to $5 million per month.
We believe this represents the appropriate level of cash burn needed to fund planned operating expenses and capital expenditure requirements going forward, this should extend our current cash runway into the early third quarter of 2024. In terms of financing activities, we raised $20.3 million of gross proceeds via a registered direct offering in the fourth quarter and have also been successful in raising additional proceeds via regular equity sales in the first quarter.
Moving to our income statement which I'd like to remind everyone isn't directly comparable to that of the prior year. Given the merger with Calyxt that closed in May of 2023. Please keep this in mind as I make reference to the prior year results, R&D expense was $14.2 million for the fourth quarter of 2023 compared to $2.3 million in the year-ago period. The increase was primarily related to increased lab supply and facility expenses, an increase in employee headcount and an increase in stock-based compensation expense for restricted stock awards cash. G&a expense was $6.8 million for the fourth quarter 2023 compared to $1 million in the year ago period.
The increase was primarily related to an increase in headcount, increased consulting and legal fees and an increase in stock-based compensation expense for restricted stock grants. Royalty liability interest expense was $8.1 million for the fourth quarter of 2023 compared to no expense last year. This was related to the liability assumed in the May 31st, 2023 merger with CBS global LLC, not operating income was $0.1 million for the fourth quarter of 2023 compared to nonoperating income of $0.5 million in the year-ago period. The decrease was due to $0.8 million received in the fourth quarter of 2022 from a legal settlement. This was partially offset by a $0.3 million change in the fair value of the liability classified Class A. common stock warrants net loss was $277.2 million for the fourth quarter of 2023 compared to net loss of $2.8 million in the year ago period.
The increase in backlog was primarily the result of a $249.4 million, noncash goodwill and intangible assets impairment charge that we recorded in the fourth quarter that was associated with our May 2023 merger with Calyxt for additional details about our financials for the fourth quarter of 2023. 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.
Rory Riggs
Thanks, Wade, and many thanks to everyone for listening in. I hope we actively trade our excitement about our progress. The incredible commercial momentum we have achieved so far is a really strong endorsement of our industry leading gene editing technology, which uniquely positions us to partner with the breeding operations of some of the largest seed companies in the world. Furthermore, as Peter mentioned, our expected milestones for 2024 will further show our commercial progress with our customers for our developed products and the key milestones for our advanced trades and new platform.
Together, they show our business vision of building a large, high-margin agricultural trait royalty business based on a family of our high-value trade products and our proprietary technology platform that will enable us to develop and deliver on an ongoing basis multiple complex trades for multiple seed companies across multiple crops. I hope this is evident that Chivas is leading the charge into the new gene editing era. We truly believe that we are at the forefront of agricultural analog digital moments. We are excited about our continued commercial success in the months and quarters to come. We look forward to updating you. Operator, that concludes our prepared remarks. Thank you.
Question and Answer Session
Operator
(Operator Instructions) Bobby Burleson, Canaccord Genuity.
Bobby Burleson
Hi. Thanks for taking my questions. So yes, just curious if you think about the cash runway and the milestones that you guys have kind of set out for 2024, which ones do you think are kind of first half milestones? What can you kind of execute on prior to needing that infusion of cash to happen? Riggs?
Rory Riggs
Hi, Bobby. Think a very ambitious goal and the big milestone that we expect to do and it's just taken. So long is trying to get soybean complete. It's been we keep making progress as is one of the toughest projects in biology. And I think we're really close together. And if we can accomplish this. It not only opens up toward 50 million acres, but it really opens up the sustainable ingredients business. The ability to take soybeans and Procter & Gamble's work with us. We have others working with us to be able to start that whole industry.
So does the one from most the big milestone that we focus on the others as we are shipping as much as we can and are working to get our traits out of the marketplace. And and to me those the de-risking moments for us is to be able to get into people's hands, their germ plasm and our traits locally creative.
Bobby Burleson
Yes. And then I guess just trying to understand the importance to your partners of the programs you're working on, especially as you have successes and kind of prove out, it's the viability of the platform. Are there any kind of maybe qualitative things you can highlight in terms of how that's helping your business development efforts. You see access to your your prospective partners, existing partners or things. Are you seeing building momentum there based on some tracking your successes and the overall kind of derisking of the viability of the platform?
Rory Riggs
All it's a great question is easy. We have two big things. One is because of our platform, we're able to make these products. And so we actually have three developed products and they've been through their field trials. So before anybody says their sees, they've already gone to the fields. They've seen the products work, and that's the trait development business, right? The big part of our business where you see this amazing progress is the industrialization of the trait business. So once we have the trade, you don't hand it to.
We have this trade machine, which allows them to bring germplasm to us and at it and give it back to them and and what we see is real momentum for the big seed companies to work with us so that each ongoing season they can they can look at us as a cost effective way of updating their traits and getting them into the field. We weren't quite expecting this type of of momentum this quickly. And you saw by having Nutrien, are there come out and say that they were working with us. And what that meant was they were working with us more than just a trace. We gave them.
They were working with us as a seed partner and they're getting their crops ready. That's how we'd look at it. And the fact that the industry itself was accepting this model that we can take their lead elite germplasm and traits and then give it back to a timely and cost-effective basis. I think when we first met you, Bob, I don't think we could have told you it would have happened SaaS, it's clear that the industry is as you start to second and third launches are really putting induced model of us. We're able to cost effectively make these ads and get better products that make sense. Yes, making a lot of sense.
Bobby Burleson
And maybe I can just squeeze one more in on the royalty opportunity. You talked about some pretty big hundreds of millions and perspective royalties and just kind of scratching the surface there. But maybe can you revisit the kind of split that you're assuming in terms of farmer germplasm owner and you see a value enhancer and be your role in terms of how you arrive at that market? What's the kind of rough math you guys are thinking in terms of how that value creation is split amongst shareholders.
Rory Riggs
Thanks. I'm going to trial. This is one of the harder questions for us to answer in general about this business because the trade businesses have been around for a long time. So between the seed companies, there's two $4 billion trades. Everybody's developed things in the interim license, strategic pillar and pay royalties or the knowledge base that royalties our quantifiable. So when you search for productivity traits, when you notice that if you put it traded and you can quantify the cost benefit and your share was the seed company was it was a farmer and with us that for each of our traits, but there really hasn't been much of a dispute as to what type of royalty you would have and have a lump sum.
And so we've been for fairly encouraged by how well they've they've adopted it. We won't know until we launch some of the factors for each of the traits that are we have we are getting them into their hands and they have a real model for which their pricing, these things and number occurs it says it's not going to be tried farmer by farmers, but we are encouraged that each of their crops, these are traits that they need like a BT. three, you need that at every acre, right that we're encouraged that the the these these these traits are going to be into this fourth session. Our first three traits of our customers, germplasm or so things like Spirit tenure, we don't think they'll be more than a third of the acres or 50% of the acres, but we're pretty conservative. I've looked at the Peter, do you want to add into that? The one thing for both peers talking every day to the seed companies and pricing and launching, Peter?
Peter Beetham
Yes. Thanks, Rory, and Thanks, Bobby I think there's no great question around how we developed with our customers and you have a pricing strategy that that makes sense in the marketplace. As already said, this is a market that has really understood the value of our productivity traits. Farmers are finding every day to manage the input costs. And so being able to bring productivity traits to market with our customers allows us to really understand that value proposition very clearly. So I think when you you hear that he's with very large annual royalty payments, it's for us that is the addressable market and the opportunity. And we continue to get on and customers money wanting more and more of their generics through our system.
And the only other thing I'll add is the excitement around the fact that we're integrating into the plant breeding programs at a level which they haven't had before. It's some people, very excited of being able to penetrate the market and very quickly so that, you know, being able to put edits and therefore tried into a broad genetic base means that you can get the Trident into more product lines more quickly. And so that's something we're looking forward to to see how that pans out over the next few years with growth looking further out, I think, are for that to randomize to robustly with Bobby because that's okay.
Bobby Burleson
So that was that was perfect. Thank you both say thanks.
Peter Beetham
Thank you.
Operator
Sameer Joshi, H.C. Wainwright.
Sameer Joshi
Hey, guys. Thanks for taking my questions. On the European front is the time line for the European Council Council and the European Commission coming together still in that July time frame? Or do you have some additional color on that?
Rory Riggs
Thanks, Sameer, and thanks for your support, which is really our big story, right? Because once they once they come through this done. The rest of the world will start to follow them. So it's exciting. As you probably know, there's a there's a final council vote that hasn't happened yet. And so the debate we have is once that happens, it could be any day now, which combines the groups. And from that we can put timetables together is a big question for all appear to have courage.
It more is it seems quite clear that there will be a bill pass that says for our type technology that that is going to be treated in a certain basis, but there's a bunch of fine tuning to that regulation that we're hoping to have completed by year end. And that's the debate we're waiting for Pierre, you want to add to that that could have.
Sameer Joshi
Yes, I think that's clear enough. Right.
Peter Beetham
I know that just to add, I need a little bit to that because I think that Roy stated that the process has started and no, there is no no. As I went through the process, there was a lot of amendments that have to finalize and what the council vote is they they're discussing that as we speak. The bottom line is I would like to make sure that people understand this process. We will go to completion and that will be an avenue for gene edited crops into Europe or into the EU. here in the foreseeable future. So that is the exciting part of you have the UK already out with all the laws implemented on and we're hearing already so far, companies are putting field trial applications into the EU, and that is exciting also.
So and it is a process and it is going in the right direction and you're actually turning we'll do the field trials so far have met with I know you were probably hoping we just commit to European being done, but we're working with it is pretty pretty exciting where it is.
Sameer Joshi
Great, great. Meaning the next gate it gets through, then you can use your existing American technologies out there won't be any new process that begins from scratch?
Rory Riggs
No, that's an encouraging thing is that we told the story about the bridge right in the paper there. They they they totally get oligo nucleotide directly mutagenesis. And as you know, in their safety study wasn't just Gene, I think, was safe. It said oligonucleotides, is it safe and so we're pretty comfortable that our technology by itself is a spotlight of these new regulations, and we're encouraged that the traits we have a new crop wheat or oilseed rape is different. So we're starting to do field trials in England, which would be really helpful because that's the trade itself that we're really encouraged by by some of the leaders in Europe that's a big product for us also. But we're we don't see a risk in the trade itself. I think we've actually had really positive encouragement on that.
Sameer Joshi
Understood. And then just following up on Bobby's question related to the royalty. So the 250 million acres for the developed and advanced our three this is resulting in $1 billion annual product priorities to you or does this mean that that that the total savings are additional productivity is our yield is up two to $3 billion on this two 50 million acres is that I'm just trying to triangulate some numbers here.
Rory Riggs
Well, I know I presume you've heard us often I'm going to take the soft side. We let Peter take the hard side of it. But any revenues we have by definition, the result in direct savings to the farmer where we're dealing with Rice have never had a gene-edited trade for herbicide traits. And so this is a big savings in rice and bean pod shatter. It's been an immensely powerful new trait. And if we can do Spirit tenure, it is the toughest crop in Europe and definitely in canola and soybean that everything every dollar we get results in a drug in a direct increase or decrease in costs for the firm period. Wanted anything to us.
Peter Beetham
I know yesterday, I'm Thanks, Sameer, for the question because I think that as Rory stated in his remarks, we were really fortunate with our technology to try to address. What I see is multi crop multi traits, Mark, I am stackable trades to July it into very different geographies. And I think that's the areas that we see the huge value drivers. So when you think about stacking trades and going across different crops, you can look at the market and even conservatively see these large numbers generated over time as with royalties just like we've seen in the market with the GMO traits.
As we've stated before, Bob noted, they continue to generate and billions of dollars of royalties every year. So when you have compelling traits and you're able to get them into multiple crops and multiple geographies that you create a huge amount of value.
Sameer Joshi
Yes, yes. No, it's a remarkable. The market size as well as your progress in trying to get to it. It's really amazing. I just had one last one maybe for David. Is the goodwill impairments sort of out of the range? Or should we I mean, should we see gain at the end of next year, some a mark-to-market or some revaluation there?
Rory Riggs
Well, thanks for the question, Tom. I think you can expect us every fourth quarter to reevaluate the goodwill impairment of this year was unusual in that following the merger. Several things happened number one, and you may recall the stock price at the time of the merger was up above 30s. And then we did the impairment analysis in the fourth quarter. It was actually closer to 10 Com, so that had a dramatic impact on the goodwill impairment analysis. And then secondly, as you know, come back in the fall in October specifically, and we've rightsized our spending plans based on the near term trade opportunities among those things contributed the majority of the impact to the goodwill impairment charge.
And so I think every year we'll reevaluate this. I think I would expect this to be the one that's most significant by far that jumps out. And it obviously was largely related to a lot of merger dynamics and us rightsizing our spending. Our plans going forward and so on, once again, in the fourth quarter every year, going forward, we'll expect to reevaluate test, um and um, and who will take it one step at a time in that regard.
Sameer Joshi
And yes, I think the rightsizing of spending was what I was missing in my thought process. Thanks to it. Thanks for taking my question.
Rory Riggs
Thank you.
Peter Beetham
Thank you.
Operator
There are no further questions at this time. I would like to hand the floor back over to Mr. Wade for any closing comments.
Wade King
And thanks so much. This has been such a big year for us. And I think the thing we're most excited about is that we set out some really aggressive milestones that we thought were based on our technology and what we should accomplish. And we're pretty excited that we hit us and that we set out some great milestones for next year, which will cement us big commercial. These customers having their traits having a couple of new platforms. And so hopefully our treatment not just us there phrase that signify where the industry is moving and the ability for the industry to actually have this extension of a conventional breeding that's being done in facilities like the trade business.
So we're we'd like to be known for having aggressive ourselves, but hitting them and so Itis, thank you for your support, and we're really looking forward to this year as another year of amazing progression in the development of this industry.
Rory Riggs
Thanks, team.
Operator
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
