Lynne Brum - VP, Planning & Corporate Communications Oliver Peoples - President & CEO Kristi Snell - VP of Research & CSO

Welcome to the Fourth Quarter Financial Results Conference Call for the Yield10 Bioscience. [Operator Instructions]. I would now like to turn the conference over to your host, Yield10 Vice President of Planning and Corporate Communications, Ms. Lynne Brum.

Great, thank you, Tim and good afternoon, everyone. Welcome to Yield10 Bioscience year-end 2016 conference call. Joining me on the call today are President and CEO, Dr. Olly Peoples; Vice President of Research and Chief Scientific Officer, Dr. Kristi Snell; and Chief Accounting Officer, Chuck Haaser. Earlier this afternoon, we issued our year-end and fourth quarter 2016 news release. This release as well as slides to accompany this presentation are available on the Investor Relations section of our website yield10bio.com. Now turn to Slide 2; please note that as part of our discussion today, management will be making 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 that are not strictly historical constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause the actual results to differ materially from those anticipated. These risks include risks and uncertainties detailed in Yield 10's filings with the SEC, including the company's most recent 10- 10-Q and we plan on filing our first 10-K as Yield 10 next week. 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. I'll now turn to call over to Olly.

Thanks, Lynne. Hello everyone and thanks for joining our call tonight so please turn to slide 3 and we will cover a few financial highlights starting with the balance sheet. We ended 2016 with 7.3 million of cash, we expect that cash on hand together with revenue expected under current government grants will support our operations into fourth quarter of 2017. We estimate cash uses in 2017 to offer Yield 10 will be approximately 7.5 million to 8 million including anticipated payments restructuring cost due this year. We will continue to identify ways to access capital for the financial markets, generate revenue through grants and collaborations and manage our expense base. On our P&L let's review the financial results that are reported discontinuing operations for the operating result capture a crop science related activities as well as administrative and infrastructure support for the Yield 10 business. We reported a net loss for continuing operations of 9.2 million for the full year of 2016 of $0.33 per share. Our net loss for the fourth quarter was 1.6 million and reflect the requirements for operating is Yield 10. We reported 1 million in R&D expenses, 800,000 in G&A fourth quarter. We also reported 300,000 in grant revenue. At the end of the year we had 20 full time Yield 10 employees. We believe that with this profile we can achieve a 2017 milestones by managing with a leading organizational footprint. For more details on our financial results please refer to the earnings release. Now let's turn to slide four, over the last two years we developed a new strategy to take our crop science programs forward but announced the Yield 10 bio-science business last September focused on developing technologies to enable step changes in crop yield in the order of 10% to 20%. Crop yield is a fundamental driver of value for farmers and the key decision variable for [indiscernible] and this impact with revenues and market share of the major seed companies. Yield 10 is targeting a critical unmet need in agriculture with a global population expected to exceed 9.6 billion by 2050 there is need to increase global food production by around 70% in this time period. This will need to be achieved in the face of increased pressure on land and water resources in addition to increasingly variable weather patterns. Solving this problem is a major global challenge requiring new crop innovation and technologies at a time when the sector is undergoing its own structuring. In fourth quarter 2016 we named the management team for Yield 10 and set the stage rename and rebrand as Yield 10 Bioscience with a new ticker symbol YTEN which we executed in early January. In 2016 we conducted a field test with our C3003 yield trait gene in Camelina and in early 2017 we reported results. In the best performing lines [ph] we saw an increase of upto 23% increase in [indiscernible]. The significance of this result is that it shows that our technology approach can produce step change increases in yield. Earlier this month we also reported promising greenhouse results for our second generation C3003 yield trait gene in Camelina. We also outlined our plans for Spring 2017 field test of our C3003 trait in Camelina and Canola. We expect that this will start in the second quarter. We also announced that we have executed an exclusive option with the University of Missouri to evaluate a promising gene editing target or [indiscernible]. We also expanded our scientific team with two key hires Dr. Karen Bohmert-Tatarev, Dr. Frank Skraly, as Senior director of Metabolic Engineering. In addition we have Richard Hamilton to our Board of Directors, Richard brings more than 20 years of experience in agricultural biotechnology, genomics, strategic partnerships and finance. I am looking forward to his contributions to Yield 10. As we have transitioned to Yield 10 I would like to thank [indiscernible] and Celeste Mastin for their service on our Board. As part of the transition they stepped down from the Board in the first quarter. So we're off to a good start in 2017. Now turn to slide 5, we are focused on achieving our milestones for 2017 and helped us build significant value in the business. Yield 10 has a strong pipeline of crop yield trait genes derived from our two discovery platforms, the Smart Carbon Grid for Crops and the T3 platform. These platforms were developed over the last five years as part of our efforts to increase carbon fixation in plants. As expected we will be taking our C3000 yield trait gene forward the studies with Camelina, Canola, soybean and rice. We also plan to progress a number of Yield 10's additional trade genes in Camelina, Canola, soybean, rice and corn and corn for example we plan to leverage third party services for the resources and infrastructure are already in place. We will also seek to partner for different crops on the place where it makes sense. Genome editing in crops is a potential to significantly reduce development costs and regulatory timelines for crop trait development, at least that is the current view based on the recent Dupont USDA announcements on an edited corn line, and regulatory rule changes as the company been developed by USDA [indiscernible]. Yield 10 has identified on-door in-license number of interesting gene targets for genome editing in crops. We've also made substantial progress in deploying the CRISPR-cas9 technology against the first of these targets in Camelina. We expect to increase our level of effort in this area and other crops particularly Canola over the course of this year. Securing ag industry collaboration's is something we will continue to work on. We'll continue the work we've been doing with our academic partners and expect much of the work will be published in academic journals. Intellectual property and patents are very important to the success of Yield 10 so we will continue to build multiple barriers around our key trade technologies. So overall you can see we're expecting a very productive 2017. Let's now turn to slide six, we have used our two technological platforms for discovering novel yield trait genes and our Smart Carbon Grid for Crops we're leveraging some of the discoveries made in the last 10 years in industrial and algo biotech space which identified UN's metabolic activities in non-plant systems that can be leveraged to debottleneck in carbon limitations in crops. Some of the biology challenges around yield and crops are well understood, and the accessing capabilities of crops simply don't have today and introducing them from algo and microbial species to address those limitations. Our T3 platform is a computational process to identify small numbers of very powerful global transcription factor genes or master switches, here we are mining big data sets to identify yield gene targets of a masters switches or global regulators that could pretty much over-ride the crops microcontroller systems and essentially boost the entire system up in the crop. The idea here was that if you wanted to increase biomass then you had to increase the entire plant system. We experimentally tested three lead gene targets at switchgrass and achieved average increases of over 40% and for synthetic carbon fixation [indiscernible] through central metabolism and biomass level. These are our C4001 to C4003 trends. To create value from our discoveries we need to get our trait genes into major crops or testing in the field. Firstly go into Camelina because this can be done relatively quickly to generate additional data and then parallel [ph] to begin the process of deploying real genes into canola, soybean, corn and rice. At Yield 10 Bioscience we see it is our job to discover potentially breakthrough Yield 10 gene technologies for step change increases in [indiscernible] prove they work and optimize in the field using our Camelina field testing system and to progress in canola, soybean and corn to develop data for the seed sector. So we're positioned in the translation phase. There we are assessing the potential of Camelina as well as commercial crops. The commercialization fees we expect to partner with ag industry players so we will focus on what we're good at which is discovery and innovation. Let's now turn to slide 7, there are different genetic engineering technologies that can be used for deploying of yield gene traits. We are frequently asked by investors to rate these technologies to the regulatory process. So let's start by looking at the left hand side of slide 7, we have four scenarios for making changes to the plant genome. The first scenario is crop reading where the performance of the crop is increased, genetic engineering is not used and no new DNA is introduced. In this example the plant would all be regulated. Research also shows that this approach is unlikely to solve the crop yield gap which is essential for global food security. An example too which is more similar to [indiscernible] crops we have plan for just through genetic engineering with a non-plant gene or a gene from different plants species or foreign DNA. This is considered GM and is regulated by USDA interests. For example [indiscernible] for we can envision improving cost through genetic engineering but a plant gene from the same species is inserted with no foreign DNA or a plant gene is deleted or assumption knocked out using genome editing. In each case we see the potential for improving crops in a system that is outside of historical regulatory process. We expect to produce yield improvements that will be regulated or GM, but we also see the potential to bring forward for exposed in gene editing are using only genes and DNA from the same plant, let me fall outside of regulation and this has the potential to streamline back to commercialization. I expect suspect industry where we were looking for field targets this fall outside of regulations to rapidly expand performance that can be offered to farmers in the near term. Let's now turn to slide 8, our crop size program was in stealth mode for about five years and produced a number of truly exciting yield trait genes for crops. Some of these by definition are really achievable through genetic engineering with results in GM in addition others maybe unregulated. So for example C3003 is going to be by definition GM. So we're selecting this target for investment, the real issues will devalue increase be large enough to offset the costs of getting approval. Some of the targets are amenable to genetic engineering without adding foreign DNA and also the control sequences for these treaties and/or introduce additional copies [indiscernible]. Some of these studies could result in a significant increase in other value. Some are relative targets are suitable for genome editing. One example of this is a gene editing target we have options from University of Missouri, C3007, C3007 is a gene whose activity can be reduced to enable [indiscernible] to produce more oil which happens to be a key value driver for Canola production. C3004, C3007 and C4004 are gene traits that are amenable to genome editing. We are currently editing C3004 and C3007 in both Camelina and Canola in our operations at Saskatoon, Canada. Let's now turn to slide 9, we have multiple opportunities in the pipeline, limited resources and lack the capability to move or yield trait genes forward in all crops simultaneously. So we asked a question does it bring new science to enrol yield limitation. Is this the really unique piece of technology? Acreage potential is really, really important here. You don't want to invest a lot of money in developing something for a small interest crops. Will the new trait be effective for transferred all of the germplasm and plant varieties, and of course there are a lots of varieties used in different geographies throughout the United States same for soybean. We also consider those states could become a franchise state, similar to Roundup Ready. The Roundup Ready trades has been translated into a number of major crops, Canola, Soyabean, Corn or [indiscernible] sugar beets simply because the microbial gene used enable the plant to do something it could not otherwise have done at the time it was developed and leveraged third party resources on other things that Yield 10 is going to do and has been doing is being very effective at leveraging third party resources and capabilities on the fee for service basis. We also look at the economic potential based on the results to achieve their study. And I think the final decision criteria which is can you achieve the result by gene editing such as using CRISPR-cas9 or related technologies where the regulatory hurdles are potentially much, much lower. Let's now turn to slide 10, in terms of value creation there are different ways of looking at this and obviously it's a lot more complicated than what's on this particular slide. But the bottom line is if you are going to increase Canola by 20% keeping in mind we've demonstrated 23% for Camelina, if we can translate that into canola it is a very, very meaningful economic impact in that sector. We calculate the value of Canola production based on a 2016 harvest of 9.6 billion, 20% increase over time represents 1.92 billion of additional value capture per year. So I haven’t used much larger in terms of acreage, there are 80 million acres planted in the U.S. it's about $10 for the [indiscernible] which is about 40 billion of market value last year. So 20% yield increase represents a 8 billion potential added value. These are C3 for synthetic crops, for a C3003 yields traits we believe it has a pretty good chance of having a significant impact in these [indiscernible] crops. Corn is a little different, so we're not yet sure whether C3003 will work there or not but we do have other trades and development from the C4000 series or the [indiscernible]. A 10% increase in corn yield which is about 18 bouchels an acre would an additional 5.16 billion in value annually. It's also obvious we're not going to be capturing this level of economics all by ourselves, but I hope this example illustrates that we can build significant value for our business, testing our traits in our model systems and then translating the most promise increase into agriculturally significant crops. So our goal is to generate proof points in Canola, soybean and corn. I will turn the call over to Kristi.

Thanks, Olly. Let's now turn to slide number 11. We have been progressing our work with the C3003 gene aggressively over the last two years. C3 photosynthesis is the key photosynthetic pathway in crops like canola, soybean, rice and potato but has a very well-known limitation or inefficiency. The inefficiency has caused by a side reaction of the carbon capturing mechanism which results in about half of the carbon capture being lost again and that has significant yield and hence economic consequences for C3 crops. For example models suggest that C3 photosynthesis which is the primary driver of yield could improve by 12% to 55% in the absence of the side reaction and that a 5% reduction in this side reaction could result in about an additional $500 million a year of economic value just in soybean and wheat in North America alone. So obviously addressing this particular scientific problem, solving or reducing its impact could have enormous economic benefits. Let's now turn to slide number 12, C3003 was a scientific discovery from a university laboratory it's very unique and Yield 10 has been fortunate enough to capture the exclusive worldwide license to C3003 and has worked to build a patent portfolio around this discovery. We tested Camelina engineered with the C3003 trait in the field and reported the results early this year. Camelina is an industrial oil seed crop which is really useful for trade development because you can progress from the initial genetic engineering to field trials fairly quickly. Keep in mind quickly is a relative term in agriculture. We believe it's also a very reliable system for testing and optimizing our gene traits in field test in addition to being a very good model system for studying new yield trait genes for oil seeds. We found a 23% increase in seed yield and field tests in our best field line which is dramatic given the challenges in the sector. We also found that the plant matures six days faster giving a six day faster growing cycle which as you get into Northern Canada is a big deal since the growing season is quite short and the growing season limits how far north you can plant some of these crops which will limit the potential acreage. There were however some other consequences with the C3003 gene which are not necessarily beneficial. While the seed yield increase since a number of seeds per plant went up the size of the individual seed is exactly smaller. This is something that we need to address. What we're able to do is use modern analytical tools that allow us to study what's going on in these plants at the genomic level across the entire plant system and identify additional genes that are switched on and maybe causing these effects. In the case of C3003 gene and Camelina one of the key genes whose activity was affected was the C3004 gene. The C3004 gene is involved in controlling the flow of carbon from leaves tissue into seed tissue. It looks like what is happening in the engineered C3003 plant is that the plant recognises it has more carbon available and the control systems downstream respond by turning down the flow part of the seed. Obviously we have been developing next generation versions of the C3003 trait to optimize performance. We not only want to get the right seed size and weight attributes but also to maximizing the yield potential of C3003. C3004 is a good target for medication for this purpose using genome editing and may complementary C3003 further increasing the yield delivered by this trait. Our genome editing activity on C3004 is already underway. We plan to test second generation versions of the C3003 trait in Camelina and we plan to test the first generation of C3003 canola this spring and based on this schedule we would anticipate reporting data towards the end of this year. Olly back to you.

Thanks, Kristi. Now let's turn to slide 30, in terms of the development timelines each of these crops is a different timeline related to the technology used for making gene modifications. Recognizing this we actually started working with C3003 in all of these crops almost in parallel with Camelina furthest ahead followed by canola and soybean. We expect the field test a second generation version of the C3003 gene trait in Camelina this spring but are also working on the third generation. So its like software engineering where we are essentially operating the software. We're removing some of the bugs and improving the performance of the actual product. In terms of canola for the first generation C3003 we will be reporting some of the greenhouse studies fairly shortly and with the field tested at some time at the end of the year. We're also working to get the second generation or the third generation versions of the C3003 gene into canola. We have progressed both the first and second generation versions of C3003 in soybean as well as rice. Rice was on it because rice is 50% of the green consumed by humans and also has the C3004 system. The potential in rice is pretty large and we have been fortunate that we have the in-house capability to engineer rice so that is moving forward. We're doing the Camelina and Canola and rice with in-house capabilities, the soybean work is been outsourced to the third party and so we're dependent on the partner to meet these standards. We expect to see some greenhouse data from soybean for both the first and second generation version of C3003 either at the end of this year or early next. Let's turn to slide 14, we mentioned earlier that we have identified a number of target genes for genome editing to improve crop performance from a T3 platform. Let me share with you how a number of these were identified. As an example, slide 14 shows the data from using genetic engineering to increase the activity or expression over C4003 gene trait which is a global regulator. The increased activity of C4003 switchgrass had some remarkable impacts, an increase of over 40% of synthetic carbon capture along with similar levels of increase in certain carbon metabolism and biomass production. Having these high yielding plants which we extract carbon faster at hand, we really high speed throughput analytics to identify all the other switchgrass activity or expression was significantly changed. Not surprisingly it's a lot, 682 genes to be exact. We've been working with a subset focused on 40 genes in coding downstream regulators or transcription factors whose activity was significantly changed, 72 were increased or upregulated and 16 were down regulated. The hypothesis is that regulator genes turned on in high yielding clients are potentially negative controllers of plant growth more or less a braking system. Currently genome editing is best used for removing or reducing the activity of genes in plants so negative controller should be good targets, so that's the impact of modifying one of these potential negative controllers because it is technically efficient to do the opposite experiment first. And this was to use genetic engineering to increase the activity of one of these potential negative regular genes in our switchgrass system, in right then increasing the activity of this gene should reduce plant growth and result in smaller plants. The picture on the top right of this slide shows that’s exactly what happens. Now switchgrass is not a food crop, it also begin to develop engineered rice using the C4003 yield gene trait. We are still early stage you can see that the engineered rice is behaving similar to what we observe with switchgrass with a large increase in biomass. Once we approve the develop these rice plants we will be coming up with same type of genomic analysis to identify additional rice specific genome editing targets. So we think of gene editing targets promising and we conduct further studies in 2017 with the goal of identifying [indiscernible] genes for editing for specific crops. Now we have covered a lot of grain [ph] tonight but let's turn to slide 15 to wrap up. I believe we're off to a good start in 2017. The Yield 10 organization is aligned in size to achieve our upcoming milestones. However with the C3003 yield trait gene produced encouraging results in the 2016 field test and Camelina and paves the way for additional fuel test in Camelina and canola. At the same time we are working to deploy the trade in soybean and rice. Our work in our T3 platform has led to identification of several promising additional gene editing targets and we will be working to further characterize these targets or impact of CGL or through biomass [ph] according to the crop we're studying. Taking this all together we have a very clear vision for our business which is to solve the crop yield problem and make a positive contribution to enabling global food security. So with that I would like to turn the call over to Lynne for questions. A - Lynne Brum: We will now cover three questions, the first one goes to Kristi. We have heard you say that the C3003 yield trait gene comes from algae, how did Yield 10 come up with this approach?

Algae or ancient photosynthetic organisms that live in water and plants evolved from algae. As the ag biotech industry has shown non-plant DNA can provide plants with new functionality. It's part of a collaboration involving Dr. Danny Schnell and our scientists which was funded by RPE, the team looked at new ways to improve photosynthetic efficiency in plant using our algo genes and out of that C3003 was discovered. We eventually took a global exclusive license to the technology from the University of Massachusetts at Amherst. As our data in Camelina suggest this novel yield trait gene is allowing increased carbon capture, is impacting photo restoration and is resulting in higher seed yield. We look forward to continuing to work with Danny and to deploying the trait into several crops.

The second question goes to Olly, in the presentation today you referred to Roundup Ready and yield guard [ph] as franchise traits and a criteria for evaluating traits to work on Yield 10, do you think C3003 has the potential to become a franchise trait?

So we're not ready for harvest zero tolerance and yield guard, both resistance are both based on the successful deployment of bacterial genes to provide crops with new functionality. These traits were broadly applicable to different crops and that's where the franchise crops comes from. We are in early stages with C3003 for sure but what we're trying to find is C3003 effects a common pathway in C3 for synthetic plants that leads to step changes in seed yield. We have seen promising results in Camelina and now we're working to generate results in other crops and rice. We plan field test we expect to generate data in canola this year. I think there is a potential to increase yield across many C3 crops but in a relatively short time I think you will have day and time for the question about the potential for C3003 to be a franchise trait.

The last questions goes to Kristi, can you tell us more about the C3007 trait as a possible yield trait for oil seed crops?

Yes. We had an interest in this technology out of the University of Missouri for a while. So earlier this year we took an exclusive option to license it. It's another good example of an academic group discovering a basic scientific principle that can be used to improve seed yield. In this case they discovered a previously unknown mechanism which controls fatty acid in oil production and seed. The way it works is when it's activated it turns down the first step in the production pathway so we think knocking it out through editing will enable the plants to produce more oil in their seeds. As we progress forward we could potentially then combine the edited C3007 plants with C3003 plants in for example canola and make a high yield high oil content variety. The option is intended to give us some time this year to conduct some experiments with it. So this will be a data driven decision to license in the technology.

We will now go to Olly for concluding remarks.

I'd like to thank everyone for joining us on the call tonight. Thank you also to our colleagues who worked so hard to launch Yield 10 and getting us off to a great start in 2017 and thank you as well to all the stockholders. We will work hard to continue earning your support and we look forward to talking with you again on our next call. Good night.

You can now disconnect.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time. Have a wonderful evening.