GMO company Cibus investigated for deceiving investors

The pioneering gene-editing firm Cibus Inc., which only a few months ago made it onto a prestigious list of the “World’s Most Innovative Companies of 2024”,[1] is now under investigation by a whole series of US law firms[2] for deceiving investors. This follows a research report[3] for investors that argued they had been duped by company claims for its “over-hyped” gene-editing technology.

Up till now, Cibus and the other US firm that it merged with in 2023 – Calyxt Inc. – have been the two companies most often cited by GMO promoters needing concrete examples of the breakthroughs gene editing can supposedly deliver. That’s because, despite the permissive regulatory systems in the US and Canada, Cibus and Calyxt were until relatively recently the only firms with any gene-edited products (a herbicide-tolerant canola and a soybean with an altered fat profile) actually on the market.

This led to Cibus, following its merger with Calyxt, styling itself an “industry leading precision gene editing” company, amidst claims that crops that took old-style genetic engineering 15 years to produce at huge expense, Cibus could develop in just three years at a fraction of the cost. As a result, Cibus’s clients were said to include industry giants like Bayer, Nutrien, and Procter & Gamble.[4]

But this whole narrative was thrown into serious doubt when a company called Bonitas Research issued a report stating that it “found no evidence that Cibus’ gene-editing technology brings desirable new crops to market”. What Bonitas did report finding evidence of was “farmer complaints of lower crop yields and lost revenues, along with multiple examples of large seed manufacturers and distributors walking away from joint ventures and partnerships with Cibus for a variety of seed types and seed traits”.[5] Block & Leviton is among the US law firms that have said they are now “investigating these allegations”.[6]

An obvious conclusion is that investors may not be the only ones to have been duped. Policymakers who argue that gene editing should be deregulated in order to improve the efficiency and sustainability of food and farming have also been repeatedly fed the Cibus narrative. And attacks by GMO promoters on EU regulation for blocking rapid approvals of Cibus's products[7] also now look seriously misplaced.

GMWatch cited

In its report, Bonitas prominently cited research by GMWatch and Genewatch UK. Specifically, it cited a GMWatch article in which we quoted Dr John Fagan, who developed a detection test for Cibus’s gene-edited canola, only to have Cibus turn around and say the canola wasn’t gene edited after all. Cibus had initially claimed that it had developed the canola using its proprietary gene editing “Rapid Trait Development System” (RTDS),[8] but later changed its story and said the trait was the result of an accidental mutation.[9] Bonitas highlighted Dr Fagan’s comment on this: “It is highly preposterous that a company that has invested tens of millions in developing a particular method of gene editing would turn around and claim that its first commercial product made using this gene-editing method was not actually the result of that method but happened accidentally via random mutagenesis.”

If true, Cibus’s claim that its canola was all down to an accident in a petri dish would obviously make a nonsense of its boosterish assertions that its gene editing method is precise.[10]  Bonitas underlined this point by quoting GMWatch: “Assuming that Cibus’ claims about the canola being a product of random mutation are true, it would raise serious questions about whether it has misled investors… hope and speculation based on an unreliable and poorly controlled technology seems an unconvincing business model.”

Cibus’s canola, launched in North America after gaining approval in 2014, had disappeared without trace from the market by 2022.[11] The company’s flagship product, which it had touted as a “breakthrough” demonstrating the ability of gene editing to provide farmers with “marked, sustainable benefits to their crops”[12] had failed. The outcome confirmed the sceptics’ view that gene editing was an over-hyped technology that will not deliver on its promises.

Another failure: gene-edited soybean

The “maybe gene-edited, maybe not” canola is not the only approved GMO owned and controlled by Cibus. Cibus’s merger with Calyxt meant that the former inherited the latter’s gene-edited high oleic acid “Calyno” soybean, which was engineered to avoid the creation of unhealthy trans fats during high temperature frying of the soy oil. But this crop, just like Cibus’s gene-edited canola, failed in the marketplace. Low crop yields led to poor take-up by farmers and the company ran into financial problems, which led to the merger with Cibus.

The investment magazine Seeking Alpha concluded in 2020, “The first gene edited crop to be commercialised in the United States has been a flop.”[13] But that hasn’t stopped GMO promoters continuing to claim it as a success. A discussion paper published by the Institute of Economic Affairs in December 2022, entitled Harvest time: Why the UK should unleash the power of gene editing, cited the Calyxt soybean as a key example of how “Countries that have liberalised their crop gene-editing rules are beginning to see the benefits this powerful technology can unlock”.[14] Similarly, a UK National Farmers Union guide to What you need to know about gene editing in agriculture, updated in January 2024, cites the now Cibus-owned Calyno soybean as one of only two examples of approved gene-edited crops currently used in agriculture and horticulture.[15]

Cibus’s current predicament makes it virtually certain that the gene-edited soybean will not resurface and that it is unlikely to be succeeded by successful products made with new GM technologies such as gene editing.

History of failure

Bonitas summarised Cibus’s history of failure as follows:
• “Failed product launches and failed partnerships with little/no revenues”
• “Fierce competition already exists” for the company’s projected 2025 release of its canola shatter-proof pod trait
• “US$ 250 million overpayment to insiders for assets: At the time of its 2023 reverse merger, Cibus’ technology was valued at US$ 750 million for goodwill and R&D intangible assets, yet unexpectedly in its first year as a public company Cibus wrote-down the carrying value of its intangible assets by US$ 250 million. If Cibus’ technology is so good, why did Cibus write-down 33% of the value of its R&D and trait pipeline within its first year as a public company?!?”
• “Chairman accused of misleading investors: Cibus’ Chairman and CEO Rory B. Riggs (‘Riggs’) has a history being listed as a defendant in multiple lawsuits alleging insider trading, unjustly enrichment, misleading investors, and breaches of fiduciary duties. We think that Riggs is up to his old tricks of pumping Cibus stock. In addition to pledged CBUS [Cibus] shares for personal indebtedness, in March 2024, Riggs adopted a trading arrangement to sell up to 300,000 shares by July 12, 2024.”

Bonitas added that a report published by the Greens/EFA in the European Parliament found that “in cases where speed is important, gene editing is not the quickest or most reliable way to produce crops with desired traits. In contrast, conventional breeding has proven highly efficient and successful in producing such crops.”[16]

Investors “duped”

Bonitas concluded, “We think investors have been duped into believing a promotional management team about an over-hyped technology previously tried, tested, and failed by some of the world’s largest seed manufacturers and distributors to provide exit liquidity for early-stage Cibus investors. As of 1Q’24 [first quarter of 2024], Cibus burned ~US$ 5 million in cash per month and generated less than ~US$ 200,000 in monthly revenues. With less than ~US$ 24 million in cash as of March 31, 2024, we calculate that CBUS will need to either generate significant revenues or raise capital to satisfy ongoing operating expenses by September 2024. With little/no revenues from its technology, we are short CBUS and think that its stock is going significantly lower towards ‘zero’.”[17]  

Lessons learned

Cibus is among those who have lobbied for the deregulation in the UK and the EU of new gene-edited GMOs. It claims that deregulation – which would abolish or reduce safety checks, traceability and labelling for a new generation of GMOs – will enable “the products of new genomic techniques (NGTs) to contribute to more sustainable agriculture, climate resilience, and food security”.[18]

The documented failure of Cibus’s gene-edited products suggests that the company has not just misled investors, but also UK and EU policymakers who have been persuaded that giving gene editing a free regulatory pass will deliver greater productivity and sustainability to European farmers. We recommend that when it comes to assessing the potential of new GM techniques such as gene editing, policymakers start paying less attention to the hollow hyperbole of the GMO industry.

Notes

1. Rainey C (2024). This platform, dubbed the Trait Machine, reduces the gene-editing process from 15 years to 3. Fast Company, 19 Mar. https://www.fastcompany.com/91033146/cibus-most-innovative-companies-2024 ; Cibus Inc (2024). Cibus named to Fast Company’s annual list of the World’s Most Innovative Companies of 2024. ft.com, 19 Mar. https://markets.ft.com/data/announce/full?dockey=1330-9065646en-2L16IMADOQDFV9CTQUK6NGF1PS
2. GlobeNewswire.com (2024). Shareholder alert: Cibus, Inc. Investigated for securities fraud; Block & Leviton encourages investors who have lost money to contact the firm. GlobeNewswire.com, 10 Jun. https://www.globenewswire.com/news-release/2024/06/10/2896188/0/en/SHAREHOLDER-ALERT-Cibus-Inc-Investigated-for-Securities-Fraud-Block-Leviton-Encourages-Investors-Who-Have-Lost-Money-to-Contact-the-Firm.html/ ; Johnson Fistel, LLP (2024). Breaking news: Johnson Fistel, LLP investigates Cibus following short report. https://www.johnsonfistel.com/investigations/cibus-inc ; BusinessWire (2024). Glancy Prongay & Murray LLP, a leading securities fraud law firm, announces investigation of Cibus, Inc. (CBUS) on behalf of investors. 5 Jun. https://www.businesswire.com/news/home/20240605581184/en/Glancy-Prongay-Murray-LLP-a-Leading-Securities-Fraud-Law-Firm-Announces-Investigation-of-Cibus-Inc.-CBUS-on-Behalf-of-Investors ; GlobeNewswire (2024). Investigation into Cibus, Inc. (CBUS) announced by Holzer & Holzer, LLC. 5 Jun. https://www.einpresswire.com/article/717539600/investigation-into-cibus-inc-cbus-announced-by-holzer-holzer-llc
3. Bonitas Research (2024). Cibus Inc. https://www.bonitasresearch.com/wp-content/uploads/dlm_uploads/2024/06/BonitasResearch-Short-Cibus-Nasdaq-CBUS-June-4-2024.pdf
4. Rainey C (2024). This platform, dubbed the Trait Machine, reduces the gene-editing process from 15 years to 3. Fast Company, 19 Mar. https://www.fastcompany.com/91033146/cibus-most-innovative-companies-2024 ; Cibus Inc (2024). Cibus named to Fast Company’s annual list of the World’s Most Innovative Companies of 2024. ft.com, 19 Mar. https://markets.ft.com/data/announce/full?dockey=1330-9065646en-2L16IMADOQDFV9CTQUK6NGF1PS
5. Bonitas Research (2024). Cibus Inc. https://www.bonitasresearch.com/wp-content/uploads/dlm_uploads/2024/06/BonitasResearch-Short-Cibus-Nasdaq-CBUS-June-4-2024.pdf Note that on p1 of this report, Bonitas incorrectly describes Dr John Fagan as a “senior author for GMWatch”, when in fact Dr Fagan was only quoted by GMWatch and is not linked with GMWatch.
6. Block & Leviton LLP (2024). Shareholder alert: Cibus, Inc. Investigated for securities fraud; Block & Leviton encourages investors who have lost money to contact the firm. GlobeNewswire.com, 10 Jun. https://www.globenewswire.com/news-release/2024/06/10/2896188/0/en/SHAREHOLDER-ALERT-Cibus-Inc-Investigated-for-Securities-Fraud-Block-Leviton-Encourages-Investors-Who-Have-Lost-Money-to-Contact-the-Firm.html/
7. Fladung M (2016). Cibus' herbicide-resistant canola in European limbo. Nature Biotechnology 34: 473–474. https://www.nature.com/articles/nbt.3558
8. Gocal G (2014). Non-transgenic trait development in crop plants using oligo-directed mutagenesis: Cibus’ rapid trait development system.  https://core.ac.uk/download/pdf/83605867.pdf In: NABC (2015). NABC Report 26: New DNA-Editing Approaches: Methods, Applications and Policy for Agriculture. Cornell University eCommons. https://ecommons.cornell.edu/collections/50a92a84-f166-403c-a211-82f0ddc76e28
9. Robinson C (2020). Company claims first commercial gene-edited crop wasn't gene-edited after all. GMWatch, 21 Sept. https://www.gmwatch.org/en/106-news/latest-news/19535
10. Cibus (2024). Home page. https://www.cibus.com/ Accessed 25 Jun 2024.
11. Robinson C (2022). Has another gene-edited pioneer crop disappeared from the market? GMWatch, 16 Dec. https://www.gmwatch.org/en/106-news/latest-news/20142
12. Cibus (2014). Cibus and Rotam announce launch of their first non-transgenic commercial product: SU Canola™ herbicide tolerant system offers farmers an excellent canola alternative to use in crop rotations. 19 Nov. https://www.cibus.com/press/press111914.php
13. Issa B (2020). Calyxt to exit farming operations and focus on seed science. Seeking Alpha, 10 Dec. https://seekingalpha.com/article/4394048-calyxt-to-exit-farming-operations-and-focus-on-seed-science
14. English C (2022). Harvest Time: Why the UK should unleash the power of gene editing. IEA Discussion Paper No. 117. IEA. https://iea.org.uk/wp-content/uploads/2022/12/DP117_Harvest-Time.pdf
15. NFU (2024). What you need to know about gene editing in agriculture. 8 Jan. https://www.nfuonline.com/updates-and-information/what-you-need-to-know-about-gene-editing-in-agriculture/
16. This report was authored by Claire Robinson of GMWatch. See: Greens/EFA (2021). Gene editing myths and reality. Feb. https://www.greens-efa.eu/en/article/document/gene-editing-myths-and-reality
17. Bonitas Research (2024). Cibus Inc. https://www.bonitasresearch.com/wp-content/uploads/dlm_uploads/2024/06/BonitasResearch-Short-Cibus-Nasdaq-CBUS-June-4-2024.pdf
18. Cibus (2023). Cibus welcomes European Commission proposal on regulation of plants obtained from new genomic techniques. 5 Jul. https://investor.cibus.com/news-releases/news-release-details/cibus-welcomes-european-commission-proposal-regulation-plants


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https://gmwatch.org/en/106-news/latest-news/20434

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