Evogene reports fourth quarter and full year 2019 financial results
Mar. 5, 2020
Ofer Haviv, Evogene’s President and CEO, stated, “2019 has been a turning point year in the life of the company, with the completion of the organizational plan introduced at the beginning of 2018.
“The rationale behind this change was to capture the value of our diverse capabilities in computational biology. To this end, we established dedicated subsidiaries in specific markets, while at the heart of all activities is Evogene’s unique technology, the CPB (Computational Predictive Biology) platform serving as the subsidiaries’ core technological advantage.
“The transition to this structure was completed in 2019 with the establishment of Lavie Bio (ag-biologicals) and Canonic (medical cannabis), joining the companies Biomica (human microbiome based therapeutics) and AgPlenus (ag-chemicals), which were established in the last two years, and joining the more long-standing, Casterra (ag-solutions for castor oil production).
“Evogene will continue to focus on maintaining the technological edge of the CPB platform leveraging the revolutions in Big Data and Artificial Intelligence while incorporating a deep understanding of biology, and the subsidiaries will continue to utilize this platform to support their product development pipeline.
“The initial achievements reached by our subsidiaries during 2019, presented below, are confirmation that the undertaking of this strategic and organizational change was warranted and we look forward to the fruit of this new strategy in the coming years, as demonstrated by the following targeted milestones for 2020.”
- Investment in Lavie Bio by Corteva Agriscience, a major US agricultural chemical and seed company – Lavie Bio secured an external strategic equity investment from Corteva, which included $10 million dollars in cash and the transfer of Corteva’s holdings in its subsidiary, Taxon Biosciences, in exchange for approximately 28% of Lavie Bio’s shares.
- Advancement of Lavie Bio’s bio-stimulants for wheat program in line with plans – Lavie Bio advanced its leading product candidate LAV211 to ‘development stage 2’, while continuing the development of additional product candidates. LAV211 has shown consistent positive results in multiple trials, demonstrating up to 25% yield improvement in target locations.
- Advancements in bio-fungicide and bio-insecticide product programs including the successful completion with positive results of vineyard trials in Europe in its bio fungicide program for fruit and vegetables.
- Advancement of Biomica’s immuno-oncology program with completion of a first pre-clinical study with positive results.
- Initiation of pre-clinical trials in Biomica’s GI related disorders program.
- Collaboration between Biomica and Weizmann Institute of Science to develop a selective treatment against antibiotic resistant bacteria – in-licensing IP and knowhow generated by Prof. Ada E. Yonath, Nobel Prize laureate.
- Initiation of the development of Canonic’s cannabis varieties for medical cannabis products – received regulatory approvals for its activities, established dedicated facilities for cannabis breeding, successfully imported a diverse genetic collection for its product development program, and completed two cannabis growth cycles.
- Progress achieved in AgPlenus’ herbicide pipeline with ‘Hit-to-Lead’ optimization efforts, including promising greenhouse results of compounds confirming a new mode of action. New mode-of-action herbicides are expected to provide a solution to the problem of growing weed resistance to existing commercial solutions.
- Advancement of Casterra’s semi-commercial trials, which led to the decision to focus company efforts on the Brazilian market.
Targeted 2020 Milestones
Looking forward to 2020, the Company’s subsidiaries target to reach the following described milestones.
- File for regulatory approval for a wheat bio stimulant product and to advance to the pre-commercialization phase in preparation for its targeted 2022 commercialization.
- Initiation of additional trials in its bio fungicide program for fruit and vegetables in preparation for phase advancement.
- Extend pre-clinical studies in its immuno-oncology program.
- Initiate the scale-up process and first GMP production of drug candidates towards ‘first in man’ proof-of-concept clinical trials in 2021.
- Demonstrate yield improvement in its unique cannabis lines, in preparation for commercialization of a first product in early 2022.
- Conduct pre-clinical studies to support the development of Canonic’s medical cannabis products.
- Enter a later stage collaboration agreement based on its internal herbicide pipeline.
- Reach the phase of a “lead” chemical (an important milestone towards commercialization).
- Initial commercial castor seed sales in Brazil.
“An on-going effort for the Company and its subsidiaries is to identify and evaluate alternatives to address their financial needs to support and accelerate their continuing development efforts. We aim to do so in a manner that will provide both the required resources to support and accelerate the subsidiaries’ activities; while at the same time maintaining shareholder value for Evogene shareholders, as demonstrated by the Corteva investment in Lavie Bio. ” Mr. Haviv concluded
Consolidated financial results for the period ending December 31, 2019:
Cash position: As of December 31, 2019, Evogene had approximately $47 million in consolidated net cash, short-term bank deposits and marketable securities. The Company cash usage amounted to $17.6 million during the full year of 2019 and $5.2 million during the fourth quarter of 2019, in range with its cash usage estimate for 2019 of $16 to $18 million dollars.
$17.6 million of Evogene’s consolidated cash is appropriated to its subsidiary, Lavie Bio, including a $10 million investment received from Corteva during the third quarter of 2019.
For the full year of 2020, the Company estimates that its cash usage, excluding cash usage of Lavie Bio or payments from a significant collaboration, will be within the range of 14-16 million dollars. This cash use is mostly appropriated to Evogene’s subsidiaries, mainly Biomica, AgPlenus, Canonic and Evogene’s expenses as a public company such as D&O insurance and others.
Evogene does not have bank debt.
Revenues for the full year of 2019, were $0.8 million versus $1.8 million in 2018. Revenues for the fourth quarter of 2019, were $0.1 million versus $0.6 million in the same period the previous year. Revenues primarily consist of third-party research and development payments. These revenues represent R&D cost reimbursement and milestone payments under our various collaboration agreements. The majority of these agreements also provide for royalties or other forms of revenue sharing from successfully developed products.
Gross profit in 2019 was $419 thousand in comparison to $295 thousand in 2018. Gross profit for the fourth quarter of 2019 was $35 thousand in comparison to $8 thousand in the fourth quarter of 2018.
R&D expenses in 2019 were $15.8 million in comparison to $14.7 million in 2018. R&D expenses for the fourth quarter of 2019 were $5.2 million in comparison to $3.9 million in the fourth quarter of 2018. R&D expenses mostly represent product development activities of the Company and its subsidiaries, which include computational work, lab & greenhouse assays, field-trials and pre-clinical studies carried out by third parties.
The increase in R&D expenses during the quarter is attributed to payments made to third parties for (i) pre-clinical studies conducted for Biomica and (ii) field trials conducted in target locations for Lavie Bio, as well as (iii) the acquisition of a genomic-unique seed collection for Canonic.
Operating loss in 2019 was approximately $21 million in comparison to $20 million in 2018. Operating loss for the fourth quarter of 2019 was $6.9 million in comparison to $5.3 million in the fourth quarter of 2018.
Net financing income in 2019 was $2.1 million in comparison to net financing expense of $0.8 million in 2018. Net financing income for the fourth quarter of 2019 was $0.2 million in comparison to net financing expense of $0.6 million in the fourth quarter of 2018.
Loss for the full year of 2019 was approximately $19 million in comparison to a loss of approximately $21 million during 2018. Loss for the fourth quarter of 2019 was $6.7 million in comparison to a loss of $5.8 million during fourth quarter of 2018.
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