Evogene reports fourth quarter and full year 2017 financial results

Evogene Ltd., a leading biotechnology company developing novel products for life science markets through the use of a unique Computational Predictive Biology (CPB) platform, announced today its financial results for the fourth quarter and full year ending December 31, 2017.

Ofer Haviv, Evogene’s President and CEO, stated: “2017 was an important inflection point in our Company’s development as we began to see the initial fruits of our pioneering research and development efforts over the past few years. By year end, we had established robust product pipelines with strong industry alliances in each of our Agricultural divisions- Ag-Seeds, Ag-Biologicals and Ag-Chemicals. In addition, we initiated our first entry into human therapeutics with the establishment of our subsidiary Biomica, alongside our existing subsidiary – Evofuel.

“The next step in our corporate strategy and roadmap is to further develop each of these current market focused activities into “stand-alone” units, including their own R&D teams which have full access to utilize the CPB infrastructure for their market area. This led us to establish a new corporate structure being implemented earlier this year, with the result that each of our three agriculture divisions and our two subsidiaries is now operating under the direction of its own general manager and business development staff.

“We are already seeing the advantages of this new structure as we aggressively pursue both internal programs and collaborations in these separate and distinct market areas. In addition, this stand-alone presentation should also make the individual value of each division – and therefore Evogene as a whole – clearer as each has comparable tier companies focusing in that market area.

“In order to accelerate the progression into full stand-alone units, in 2018 I would like to see each general manager and his team continue to aggressively develop their product pipeline towards commercialization as well as form additional collaborations with industry leaders. We look forward to reporting our continuing progress during 2018.”

Key Evogene highlights for 2017 included:

Ag-Seeds Division:

• Yield and environmental stress Collaboration with Monsanto: Evogene has successfully completed the gene discovery phase, and the collaboration is now focused on progressing selected gene candidates through additional testing in Monsanto’s product development pipeline in corn and soy.
• Disease Resistance Collaboration with Monsanto: An important milestone was achieved in our Fusarium collaboration with Monsanto, with Evogene genes showing resistance to Fusarium in model plants. The top prioritized genes are advancing to tests in Monsanto’s corn pipeline.
• Collaboration with Rahan Meristem: The collaboration achieved positive results in 2nd year field trials for Black Sigatoka resistant bananas, which are now being leveraged through genome editing.

Ag-Biologicals Division:

• Bio-Stimulant collaboration with DuPont-Pioneer: Evogene entered a collaboration with DuPont-Pioneer to bring to market, in a broad acre approach, bio-stimulant coated corn seeds. This collaboration is based on the achievements of an internal product program for bio-stimulants. The next step in the collaboration will be field tests undertaken by DuPont-Pioneer.
• In January 2018, Evogene announced positive results in a second year field trial conducted by Evogene in 2017. The tested bio-stimulant seed treatments demonstrated up to 20% increases in corn yield under moderate drought conditions.

Ag-Chemicals Division:

• Novel herbicide collaboration with BASF: The collaboration is progressing according to plan.
• Internal novel Mode-of-Action herbicide program: Evogene continued to integrate product development criteria to optimize 10 validated chemical compounds, computationally predicted to inhibit 8 Evogene discovered herbicidal protein targets. In February 2018, Evogene announced an important step in the advancement of this program: positive results with multiple ‘families’ of Evogene predicted chemical compounds demonstrating improved herbicidal effectiveness in lab and greenhouse experiments.
• Initiation of internal novel insecticides product program focusing on key nerve & muscle targets.

Evofuel (wholly owned subsidiary) – focused on development and commercialization of castor seeds:

• Evofuel together with its partner achieved a breakthrough in terms of mechanical harvesting capabilities, which has been a major bottleneck in the commercialization of castor seeds.

Biomica (subsidiary) – focused on the discovery and development of human microbiome-based therapeutics:

• During 2017 Biomica was established by Evogene together with co-founder Prof. Yehuda Ringel, Biomica CSO, Chief Division of Gastroenterology and Hepatology at Meir Medical Center, Israel.
• In February 2018, Evogene announced the appointment of Dr. Elran Haber as CEO of Biomica.

Financial results for the period ending December 31, 2017

Cash Position: As of December 31, 2017, the Company had $71.8 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of $4.1 million for the fourth quarter and $16.4 million for full year ending December 31, 2017. The Company does not have bank debts.

Assuming the currently expected course of business and no new revenue sources from existing or new collaborations, in 2018 Evogene expects net cash usage of $14 to $16 million.

Revenues primarily consist of research and development payments, reflecting R&D cost reimbursement under certain of our collaboration agreements. The majority of these agreements also provide for development milestone payments and royalties or other forms of revenue sharing from successfully developed products.

Revenues for the full year of 2017 were $3.4 million, in comparison to $6.5 million in the full year of 2016. Revenues for the fourth quarter of 2017 were $0.7 million, in comparison to revenues of $1.2 million for the fourth quarter in 2016. The decline in revenues reflects the net decrease in research and development cost reimbursement, in accordance with the work plans under Evogene’s various collaboration agreements. This decline is mainly due to the advancement of our collaboration agreement with Monsanto, from gene discovery to pre-development efforts, resulting in reduction of activity scope. Looking forward, we expect this revenue trend to continue.

During the full year of 2017 we saw a negative impact on our expenses due to the depreciation of the USD in comparison to the Israeli Shekel. Our expenses, mostly salaries, are denominated in Israeli Shekels while our reporting currency is USD.

Cost of revenues mainly consist of collaboration related R&D expenses. Cost of revenues for the full year of 2017 were $2.8 million in comparison to $5.6 million in the full year of 2016. Cost of revenues for the fourth quarter of 2017 were $0.6 million, in comparison to $1.1 million in the fourth quarter of 2016. The decrease related primarily to the decrease in revenues from R&D cost reimbursement for such periods.

R&D expenses for the full year of 2017 were $17.0 million in comparison to $16.4 million in the full year of 2016. R&D expenses for the fourth quarter of 2017 remained stable at $4.7 million in comparison to in the fourth quarter in 2016.

Operating loss for the full year of 2017 was $21.9 million, in comparison to an operating loss of $21.1 million for the full year of 2016. Operating loss for the fourth quarter of 2017 was $6.0 million in comparison to $6.2 million in the fourth quarter in 2016. The increase in operating loss for the full year was mainly due to the decrease in revenues and an increase in R&D expenses.

The net financing income for the full year of 2017 was $1.1 million in comparison to $1.5 million in the corresponding period. This decrease is due to relatively high capital gains derived mainly from the company’s marketable securities in the first half of 2016.

Net loss for the full year of 2017 was $20.8 million in comparison to $19.6 million in the full year of 2016. The increase in the net loss was primarily due to the decrease in revenues, an increase in R&D expenses and the decrease in net financing income.

Net loss for the fourth quarter of 2017 was $6.2 million compared to the net loss of $6.6 million in the comparable quarter in 2016, the decrease in loss was due to a decrease in expenses and a decrease in net financing expenses.