Evogene reports second quarter 2018 financial results
Aug. 9, 2018
Ofer Haviv, Evogene's President and CEO, stated: “Since the initiation of our new corporate structure at the beginning of 2018, half a year has passed, and we are beginning to see the fruits of the new structure in each of our areas of activity. In each division we see product candidates advancing in the development pipeline alongside new product programs. Moreover, new collaborations have been formed, including those with key industry partners and we expect there is more to come. Last but not least, I am very happy to report that each division has assumed characteristics of a stand-alone entity, a process that we expect will accelerate in the second half of the year.
“Today I would like to give a few highlights of what has been achieved this past quarter:
“In our Ag-Seeds division, we recently announced together with IMAmt, the largest Brazilian cotton growers’ association, a collaboration in the field of insect resistance traits in cotton. Evogene will screen its insect control candidate genes and IMAmt will validate them in lab assays. Following successful validation, the parties intend to enter negotiations for a commercial license agreement.
“In our Ag-Biologicals division, we recently announced achieving positive yield results leading to phase advancement in our bio-stimulant for wheat program. This phase advancement, from discovery to early development, is based on meeting efficacy criteria in spring wheat field trials with significant yield improvement. As we have stated before, we believe we will be able to launch our first Ag-Biologicals product in 2021.
“Additionally, we are moving forward in our bio-pesticides programs focusing both on diseases such as Fusarium in corn and on insects such as Corn Rootworm. In our Fusarium program we are advancing greenhouse testing and aim to, depending on results, announce phase advancement in the upcoming months toward further validation in fields.
“As for our subsidiaries, Biomica announced its chosen business focus and I am pleased to update on the progress achieved in each area:
- Antibiotic resistant bacteria - Successful computational screen of tens of millions of small molecules for the identification of effective chemistry against one of the most common antibiotic resistant, hospital-acquired infections. The company will now enter biological in vitro assays for validation.
- Immuno-Oncology – After obtaining relevant data, Biomica aims to use its proprietary PRISM platform to identify and characterize microbes relevant for the enhancement of cancer immunotherapy. Initial results are expected till the end of this year.
- GI related disorders - Biomica recently integrated relevant Big-Data into its PRISM platform and have computationally identified a novel microbial consortia, predicted to carry out pivotal microbial functions that can potentially decrease inflammation in IBD patients.
“Finally, I would like to emphasize, once again, that the CPB platform is at the core of our activities. In the past, our use of the CPB platform was focused mainly on discovery activities, however given recent developments and progress in our pipeline, we are now applying these predictive tools which have benefited us in the discovery stage, to product development and optimization.
“We look forward to sharing with you the progress in our diverse product programs and expect 2018 to be a further demonstration of the CPB platform's capabilities.” - Concluded Mr. Haviv.
Financial results for the period ending June 30, 2018
Cash Position: As of June 30, 2018, the Company had $62.3 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of $9.5 million for the first half of 2018 and $3.6 for the second quarter of 2018. The cash usage during the first half of 2018 includes pre-paid expenses and non-recurring payments of approximately of $1.0 million, mainly in the first quarter of 2018. The Company does not have bank debts.
Assuming the currently expected course of business, Evogene expects net cash usage in 2018 of $14 to $16 million.
Revenues primarily consist of research and development payments, reflecting R&D cost reimbursement under our various 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 first half of 2018 were $0.7 million, in comparison to revenues of $1.9 million for the first half of 2017. Revenues for the second quarter of 2018 were $0.4 million, in comparison to revenues of $1.2 million for the second quarter in 2017. The decline in revenues and the related decline in cost of revenues reflects the net decrease in research and development cost reimbursement, under Evogene's various collaboration agreements, mainly due to the advancement of our multi-year collaboration with Monsanto from gene discovery and validation in model plants, which was largely preformed at Evogene, to pre-development efforts in target plants, conducted by Monsanto.
R&D expenses for the first half of 2018 were approximately $6.9 million in comparison to approximately $8.0 million in the first half of 2017. R&D expenses for the second quarter of 2018 were approximately $3.5 million in comparison to approximately $4.0 million in the second quarter of 2017. R&D expenses decreased following operating efficiencies achieved as a result of the new corporate structure initiated at the beginning of 2018.
Operating loss for the first half of 2018 was $9.6 million in comparison to $10.4 million in the first half of 2017. Operating loss for the second quarter of 2018 was $4.7 million in comparison to $5.2 million in the second quarter in 2017. The decrease in operating loss was mainly due to the decrease in R&D expenses as described above, which was partially offset by a net increase in business development expenses.
The net financing expenses for the first half of 2018 were $0.5 million in comparison to net financing income of $0.8 million in the corresponding period. The net financing expenses for the second quarter of 2018 were $0.1 million in comparison to net financing income of $0.4 million in the comparable quarter in 2017. This decrease in the first half of 2018 is mainly due to an increase in the USD/NIS exchange rate in the second quarter of 2018 which negatively affected the Company’s Shekel based portfolio and unrealized re-evaluation of marketable securities following the increase in the US treasury bonds interest rate.
Loss for the first half of 2018 was $10.2 million compared to a loss of $9.6 million in the first half of 2017. Loss in the second quarter of 2018 increased to $4.8 million compared to $4.7 million in the second quarter in 2017. Despite a decrease in operating loss following the new corporate structure, as described above, the increase in loss was due to an increase in the net financing expenses.
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