Evogene reports first quarter 2023 financial results

Evogene Ltd. (Nasdaq: EVGN, TASE: EVGN), a leading computational biology company aiming to revolutionize life-science-based product discovery and development utilizing cutting-edge computational biology technologies across multiple market segments, announced its financial results for the first quarter period ending March 31, 2023.

Mr. Ofer Haviv, Evogene’s President and Chief Executive Officer, stated, ″We have started 2023 strongly and are pleased with our business progress to date. We made significant improvements in recent months in the infrastructure and computational architecture underlying our AI tech-engines, as well as improvements in our algorithmic capabilities, providing for better automation, scalability and speed. These improvements were applied primarily to tech-engines MicroBoost AI, supporting the discovery and development of microbe-based products, and ChemPass AI, supporting small-molecule-based products. Additionally, our subsidiaries have consistently achieved their milestones and are progressing according to plan. We are very proud of their progress, which reflects their growing inherent value.″

Subsidiaries and Divisions overview – recent achievements and near-term targets

Lavie Bio develops and commercializes microbiome-based ag-biological products, utilizing Evogene’s MicroBoost AI tech-engine.

• In April, Mr. Amit Noam joined Lavie Bio as its new CEO. Mr. Noam brings expertise in team leadership and executing successful commercialization strategies in the ag-tech and healthcare sectors.

• ThrivusTM, Lavie Bio’s bio-inoculant for spring wheat: in April 2023 a sales campaign was initiated, which has seen high market demand. Lavie Bio has gained significant experience overcoming various production challenges with its manufacturing partner. Lavie Bio’s goal for next year is to expand sales into Canadian and European markets and plans to introduce the product to new crops like small grains and oil seeds.

• LAV311, a bio-fungicide designed to combat fruit rots and powdery mildews, has shown promising results in recent trials and reached a milestone in October 2022 by submitting its registration package to the United States EPA (Environmental Protection Agency). This marks the final step towards commercialization, with a targeted launch expected in 2024.

• LAV321, a bio-fungicide developed to tackle downy mildew, has shown promising results in recent trials. Further field trials are scheduled for 2023. This innovative solution addresses the growing challenge of restrictions on using traditional agricultural chemicals.

• In addition to the product programs described, Lavie Bio maintains close partnerships with its shareholders, leading ag-tech giants Corteva and ICL, to expand and enhance their ag-biological pipeline.

AgPlenus aims to develop and commercialize next-generation crop protection products, utilizing Evogene’s ChemPass AI tech-engine.

• APH1, a broad weed-control spectrum herbicide candidate, is the most advanced product candidate in AgPlenus’ pipeline. It has garnered market interest and may lead to strategic collaborations during 2023.

• AgPlenus and Corteva’s collaboration for developing novel herbicides was initiated in 2020, with AgPlenus focusing on discovery and optimization while Corteva handles testing and product development. AgPlenus aims to achieve its first milestone in-line with the collaboration workplan during the next 12 months.

• AgPlenus’ novel mode-of-action wheat blotch fungicide program: the main goals for 2023, are to nominate the target protein, design compounds which are predicted to bind to these nominated proteins and validate these compounds in greenhouse trials.

Canonic provides tailored medical cannabis products to optimize consumer well-being, utilizing Evogene’s GeneRator AI tech-engine.

• The High-bred series (2nd generation) with 23-24% THC and rich terpene profiles: in February 2023, Canonic completed the launch of the series’ six new products in Israel. These products are expected to be the engine for Canonic’s sales growth in 2023.

• Plantis licensing and royalty agreement: in May 2023, Canonic announced that leading Israeli cannabis grower Plantis licensed two of its elite varieties for sales in Israel. Canonic is expected to receive royalty payments from sales of those varieties by Plantis.

Casterra provides an integrated end-to-end solution for large-scale castor bean cultivation, utilizing Evogene’s GeneRator AI tech-engine.

• Casterra’s EVF series of castor seeds, suitable for various environmental and climatic conditions: in the last six months there has been an increase in interest in using castor oil as a plant-based source for biofuel. This led to a significant agreement with a major European-based global energy company, with Casterra supplying its elite castor varieties and growth-protocol know-how.

• Territorial expansion: Casterra intends to engage with strategic biofuel industry leaders in Africa to increase sales and sector footprint. In addition, Casterra intends to expand its activity within Latin America, targeting the bio-polymer industry’s interest in a broad, consistent, and high-quality castor oil supply.

Evogene’s Ag Seeds division develops improved seeds with high commercial value, utilizing Evogene’s GeneRator AI tech-engine.

• EU grant: in May 2023, following the reported period, the Ag Seeds division secured a €1.2 million EU grant from the EIC 2022 Horizon program to develop oil-seed crops with enhanced CO2 assimilation and drought tolerance. The Horizon program supports businesses addressing climate-focused and sustainable crop development. The potential commercial value of such products to the food, animal feed, and sustainable energy industries is significant, and is a unique proposition in today’s market.

Consolidated Financial Results Summary

Cash position: Evogene maintains a solid financial position for its activities with approximately $28.8 million in consolidated cash, cash equivalents, and marketable securities as of March 31, 2023. It is noted that this amount does not include the $10 million investment in Biomica by SHC that was received following the close of the first quarter and will be reflected in the results of upcoming quarters.

Approximately $8.2 million of Evogene’s consolidated cash, as of March 31, 2023, is appropriated to its subsidiary, Lavie Bio.

During the first quarter, the consolidated cash usage was approximately $6.6 million, or approximately $5.1 million, excluding Lavie Bio.

Revenues for the first quarter of 2023 were approximately $641 thousand compared to approximately $237 thousand in the same period the previous year. The revenue increase was primarily due to revenues recognized per the collaboration agreement of Evogene’s subsidiary AgPlenus with Corteva and from sales of Canonic’s medical cannabis products in Israel.

R&D expenses for the first quarter of 2023, which are reported net of non-refundable grants received, were approximately $4.8 million, compared to approximately $5.6 million in the same period in the previous year. The decrease is primarily due to decreased R&D expenses in Lavie Bio due to the commercialization of its inoculant product and a decrease in Canonic’s personnel expenses.

Sales and marketing expenses were approximately $800 thousand for the first quarter of 2023, compared to approximately $908 thousand in the same period the previous year. The main contributor to this expense decrease was a reduction in personnel expenses at Canonic.

General and administrative expenses were approximately $1.5 million in the first quarter of 2023, compared to approximately $1.6 million in the same period in the previous year.

Operating loss for the first quarter of 2023 was approximately $6.8 million compared to an operating loss of approximately $8.1 million in the same period in the previous year.

Net loss for the first quarter of 2023 was approximately $7.0 million compared to a net loss of approximately $9.1 million in the same period in the previous year.

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