Evogene sales down 43% in 2018 Q1

Evogene Ltd., a leading biotechnology company developing novel products for life science markets, announced today its financial results for the first quarter ending March 31, 2018.

Ofer Haviv, Evogene's President and CEO, stated: “Evogene’s structure is built on three Ag-divisions and two subsidiaries, with the Computational Predictive Biology - CPB platform at its core. I am very pleased to report that our first quarter of 2018 was highlighted with key achievements in each of our areas of activity.

“In our Ag-Chemicals division, I am happy to highlight the achievement of a new collaboration with BASF focusing on the development of novel insecticides. I am very proud of this achievement, not just because it is a second collaboration with BASF in addition to our existing collaboration in the segment of herbicides, but because we also announced achieving the first milestone of identifying new sites-of-action for known protein targets which is another demonstration of the quality of our technology and capabilities.

“In our Ag-Seeds division, we recently announced together with Marrone Bio-Innovations advancement to Phase I in our joint collaboration. In this announcement, we shared the progress of the first toxin genes against Hemipteran insects to Phase I, leading our internal insect control seed trait product program to include toxin genes in Phase I in all major insect orders: Coleoptera, Lepidoptera and Hemiptera.

“In our Ag-Biologicals division, I am pleased with the progress of the joint work in our collaboration with Corteva (The Ag company established after the DowDuPont merger) for the development of novel corn bio-stimulants. In our wheat program, we will begin the harvest of our 2nd year field trial in the upcoming weeks. In the segment of bio-pesticides, based on promising greenhouse results in our bio-fungicides for fusarium in corn and bio-insecticides for western corn rootworm, we are moving forward with development efforts to further assess performance across additional pests and environmental conditions.

“As for our subsidiaries, in Biomica, which is focused on developing microbiome based therapeutics, I am very pleased with the progress of this recently established subsidiary, as can be seen in our recent press release, in which we announced that Biomica’s focus will be on the development of therapeutics for antibiotic resistant bacteria, Immuno-Oncology and GI related disorders. Regarding our second subsidiary Evofuel, focusing on the commercialization of castor seeds, we continue to see progress as planned mainly in solving the bottleneck of mechanical harvesting.

“Last but not least, I would like to emphasize, as mentioned, that the CPB platform is at the core of our activities. All the achievements described above have been made possible thanks to the competitive advantage of the CPB platform that allows us to decode the biological world, greatly accelerating product development in a variety of life-science fields. 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 March 31, 2018

Cash Position: As of March 31, 2018, the Company had $66.0 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of $5.8 million for the first quarter of 2018. The cash usage during the first quarter of 2018 includes pre-paid expenses and non-recurring payments of approximately of $1.6 million. In addition, we expect that in the following quarters the ongoing cash usage will decrease. 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 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 quarter of 2018 were $0.4 million, in comparison to revenues of $0.7 million for the first 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 quarter of 2018 were approximately $3.5 million in comparison to approximately $4.0 million in the first quarter of 2017. During the first quarter of 2018, we continued to support our existing internal product programs and expanded new activities such as Biomica. Despite these activities, R&D expenses decreased following the new corporate structure initiated at the beginning of 2018.

Operating loss for the first quarter of 2018 was $4.9 million in comparison to $5.3 million in the first 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 other expense categories.

The net financing expenses for the first quarter of 2018 were $0.4 million in comparison to a net financing income of $0.4 million in the comparable quarter in 2017. This decrease is mainly due to unrealized revaluation of marketable securities following the increase in the US treasury bonds interest rate in the first quarter of 2018.

Loss for the first quarter of 2018 was $5.4 million compared to a loss of $4.8 million in the comparable 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.