Evogene reports third quarter 2024 financial results

Financial Highlights:

• In the first nine months of 2024, total revenues reached approximately $6.9 million, compared to approximately $5.1 million in the first nine months of 2023.

• In Q3 2024, total revenues reached approximately $1.8 million, compared to approximately $3.8 million in Q3 2023. The revenues in Q3 2024 are mainly based on Casterra's seed sales. The revenues in Q3 2023 included a license fee payment of $2.5 million received by Lavie Bio.

• For the full year 2024, Evogene anticipates continued revenue growth, compared to the previous year, mainly due to Casterra's supply of existing seed orders.

• G&A expenses in Q3 2024 included expenses of approximately $1.4 million resulting from Evogene's fundraising and an allowance for doubtful debt from one of Casterra's seed suppliers. The remaining G&A expenses in Q3 2024 amounted to approximately $1.5 million, unchanged compared to Q3 2023.

• In the first nine months of 2024, operating loss was approximately $17.6 million, which included the G&A expenses of approximately $1.5 million due to Evogene's fundraising and an allowance for doubtful debt mentioned above, and other expenses of approximately $0.5 million, compared to approximately $18.9 million in the first nine months of 2023.

• In the first nine months of 2024, financing expenses net, were approximately $0.38 million compared to financing income net of approximately $0.23 million in the first nine months of 2023. The financing expenses net in the first nine months of 2024, included approximately $0.88 million of expenses related to accounting treatment of warrants issued as part of Evogene's August 2024 fundraising.

• Projected cash usage for 2024, without Biomica and Lavie Bio, is approximately $8-$10 million compared to $12.5 million in 2023.

• In August 2024, Evogene completed a fundraising totaling $5.5 million in gross proceeds, including ordinary shares and two sets of warrants.

• The Company has taken measures to strengthen its cash position by reducing its expenses, including a reduction of 16% in its head count, and is exploring additional business opportunities to inject funds into the Company and its subsidiaries.

Evogene Ltd. (Nasdaq: EVGN) (TASE: EVGN) ("Evogene" or the "Company"), a leading computational biology company aiming to revolutionize the development of life-science-based products, announced its financial results for the third quarter period ended September 30, 2024.

Mr. Ofer Haviv, Evogene's President and Chief Executive Officer, stated: "Our vision is to position Evogene as a pioneering company in the development of groundbreaking life-science products, rooted in microbes, small molecules, and genomics.

This led to the development of our three proprietary AI tech-engines: MicroBoost AI, ChemPass AI and GeneRator AI. Our AI-driven tech-engines offer a strong value proposition by efficiently identifying and optimizing the most promising candidates, enhancing the likelihood of achieving breakthrough products within competitive timelines and in a cost-effective way.

To maintain the competitive advantage of our AI tech-engines, Evogene continuously invests in enhancements and the addition of new applications and capabilities. This commitment is exemplified by our recent collaboration with Google Cloud to develop an advanced generative AI foundation model for small molecule design.

Building on the successful integration of ChemPass AI into Google Cloud, this collaboration will now focus on expanding the value of our tech-engine specifically through the creation of a cutting-edge foundation model. This model will be designed to generate and optimize innovative small molecule structures with better specific, desired properties, by expanding the training set for the model from 6 million molecules to 40 billion molecules.

The primary objective of this initiative is to enhance and expedite the discovery and development of new small molecules for drug development, sustainable crop protection, and other innovative applications across various life-science sectors.

The significant expansion of the model training set is expected to lead to the following key benefits:

- Innovative molecules, more accurately addressing the specific product requirements

- Shortening development timelines

- Enhanced cost efficiency

I want to emphasize that the foundation model, which will be integrated into ChemPass AI, will remain the exclusive property of Evogene."

Mr. Ofer Haviv continued: "To effectively harness the value embedded in our technology, we implement a targeted business strategy designed to maximize potential while minimizing risk, by establishing a diverse network of collaborative partnerships for life-science product development. We partner with experts in complementary fields, forming licensing or collaboration agreements with companies that bring domain-specific knowledge. Through these strategic alliances, we aim to co-develop innovative products. The upside for Evogene stems from revenue sharing mechanisms of the end-product, or through equity holdings in the company developing the end-product.

In the passing quarter all our subsidiaries continued progressing in accordance with their work-plans, and we're very proud of their achievements.

With respect to activities in market segments not covered by our subsidiaries, I would like to share that, starting this past quarter, we have increased our efforts to establish partnerships with companies specializing in small-molecule drug development, leveraging the unique capabilities of ChemPass AI. To support this strategic focus, we have strengthened the business development team with a dedicated business development manager with the clear objective of generating new business opportunities for Evogene.

Additionally, we recently announced, alongside Watershed AC and Ben-Gurion University, the approval of a second-year grant to advance our joint project aimed at enhancing crustacean traits through gene-editing technology. In the second year, the collaboration will focus on scaling up CRISPR technology for the industrial production of giant freshwater prawns, with plans to extend these advancements to additional crustacean species."

Subsidiaries' Business Highlights:

Casterra Ag Ltd. – focuses on developing an integrated solution to enable large-scale commercial cultivation of castor to address the global demand for stable castor oil supply, mainly for the biodiesel industry. Casterra is utilizing Evogene's GeneRator AI tech-engine to direct and accelerate the development of its unique elite castor seed varieties.

• July 31 - Successfully completed castor seed growing and harvesting season in Brazil with shipments planned to be initiated starting Q3 2024.

• October 29 - Achieving key milestone in operational expansion in Africa, with completion of first shipment of over 100 tons of castor seeds grown and processed in Kenya.

• As a result of the extended rain season in Africa, the current harvest season in Africa is expected to be completed by Q1 2025, supporting current and future demands.

• Casterra is expected to supply a major portion of its existing seed orders by the end of 2024.

• Casterra and its business partners are currently discussing the supply schedule, quantity and seed varieties of the remainder of the orders and future orders in 2025.

Lavie Bio Ltd. – a leading ag-biologicals company that develops microbiome-based, computational-driven, novel bio-stimulant and bio-pesticide products, utilizing Evogene's MicroBoost AI tech-engine.

• July 2 - Commercial expansion of Yalos^® to winter wheat. Initial sales to growers started in Q3 2024.

• July 17 - ICL and Lavie Bio announced achieving a milestone in developing bio-stimulant solutions leveraging AI, by identifying over a dozen novel microbes within 12 months, for crops facing extreme weather conditions.

• September 30 - Grant received from the Israel Innovation Authority to advance the development of 'MicroFermentor', a unique technology that can change the economics of ag-biologicals.

• November 12 - Positive results for Yalos^® as seed-treatment for soybean. Initial sales to growers expected in spring 2025.

• November 19 - Advancement of LAV321, targeting downy mildew, to pre-commercialization, following successful 2024 field trial results.

AgPlenus Ltd. – specializes in developing novel and sustainable crop protection products, utilizing Evogene's ChemPass AI tech-engine.

• Collaborations: Bayer and Corteva collaborations advancing according to plan.

• Pipeline:

  - Septoria, novel fungicide program - 3 out of 3 predicted proteins have been verified to be essential in Septoria.

  - Ongoing testing of ~1,000 compounds against Septoria targets; currently at least one target is showing high rates of in vitro hits. 

Biomica Ltd. – a clinical-stage biopharmaceutical company developing innovative microbiome-based therapeutics, utilizing Evogene's MicroBoost AI tech-engine.

• BMC128 continued phase I clinical study, with prolonged positive response of 5 patients.

• Pre IND meeting with positive feedback from the FDA, and preparation for IND submission.

• Manufacturing of clinical batch of BMC128 as part of preparation for FDA approved phase II clinical study.

• 2 new programs initiated: obesity & longevity, following extensive evaluations of over 40 possible indications. Acquisition and partial analysis of relevant data for the new programs.

Financial Highlights:

Cash Position: As of September 30, 2024, Evogene held consolidated cash, cash equivalents, and short-term bank deposits of approximately $20.0 million. This amount does not include approximately $1.4 of payments due from customers regarding deliveries made in September 2024. The consolidated cash usage during the third quarter of 2024 was approximately $5.7 million. Excluding Lavie Bio and Biomica, Evogene and its other subsidiaries used approximately $3.1 million in cash during the third quarter of 2024. Projected cash usage for 2024, excluding Lavie Bio and Biomica, is expected to be approximately $8.0 - $10.0 million, marking a notable 20% - 36% decrease from approximately $12.5 million in 2023.

Revenue: Revenues for the first nine months of 2024 were approximately $6.9 million, an increase from approximately $5.1 million in the same period the previous year. This growth was primarily driven by revenues recognized from AgPlenus' new collaboration with Bayer and increased Casterra revenues for the supply of castor seeds during the period. Revenues for the third quarter of 2024 were approximately $1.8 million, compared to approximately $3.8 million in the same period the previous year. The decrease was mainly attributable to revenue of $2.5 million recognized in Lavie Bio in the third quarter of 2023 from the licensing agreement with Corteva, partially offset by increased revenues recognized in Casterra and AgPlenus during the third quarter of 2024.

Evogene anticipates continued revenue growth in the fourth quarter of 2024 compared to the previous year, mainly based on Casterra's forecast for seed-order supply.

R&D Expenses: Research and development expenses, net of non-refundable grants, for the first nine months of 2024 were approximately $13.2 million, a significant decrease from approximately $15.2 million in the first nine months of 2023. The decrease in expenses is mainly due to the cessation of Canonic's activities and a decrease in certain development expenses in Biomica as compared to the same period the previous year. Research and development expenses, net of non-refundable grants, for the third quarter of 2024 were approximately $4.4 million, and decreased as compared to approximately $5.1 million in the same period in the previous year. The decrease is mainly attributable to decreased expenses in Canonic and Biomica, as mentioned above.

Sales and Marketing Expenses: Sales and marketing expenses for the first nine months of 2024 were approximately $2.8 million, a slight increase from approximately $2.6 million in the same period in the previous year. The increase is mainly attributable to increased sales and marketing activities in Casterra during the first nine months of 2024 as compared to the same period in 2023. Sales and marketing expenses for the third quarter of 2024 were approximately $0.9 million and remained stable compared to approximately $0.9 million in the same period in the previous year.

General and Administrative Expenses: General and administrative expenses for the first nine months of 2024 increased to approximately $6.1 million from approximately $4.8 million in the same period of the previous year. General and administrative expenses for the third quarter of 2024 increased to approximately $2.9 million compared to approximately $1.5 million in the same period of the previous year. The increase during the first nine months period and the third quarter of 2024 were mainly attributable to expenses recorded in Casterra due to provision on doubtful debt of one seed supplier and transaction costs related to Evogene's fundraising that occurred in August 2024, totaling approximately $1.4 million. Total other G&A expenses in Q3 2024 amounted to approximately $1.5 million, unchanged compared to Q3 2023.

Other Expenses: The decision to cease Canonic's operations in the first half of 2024 resulted in other expenses of approximately $0.5 million for the nine-month period ended September 30, 2024, mainly due to impairment of fixed assets in the first quarter of 2024.

Operating Loss: The operating loss for the first nine months of 2024 was approximately $17.6 million, a decrease from approximately $18.9 million in the same period of the previous year, mainly due to increased revenues as mentioned above. The operating loss for the third quarter of 2024 was approximately $7.5 million, an increase from approximately $4.2 million in the same period of the previous year, mainly due to decreased revenues and increased general and administrative expenses as mentioned above.

Financing Income / Expenses: Financing expenses, net for the first nine months of 2024 were $378 thousand, compared to financing income, net of $234 thousand in the same period of the previous year. Financing expenses, net for the third quarter of 2024 were $757 thousand, compared to financing income, net of $320 thousand in the same period of the previous year. The increase in financial expenses, net during the first nine month period and the third quarter of 2024 as compared to the respective periods of 2023 was mainly associated with accounting treatment of pre-funded warrants and warrants issued in August 2024 fund raising. Pre-funded warrants and warrants were classified as a liability on the consolidated statements of financial position, were initially recorded at fair value and subsequently remeasured at each reporting period using the Black - Scholes option pricing model. As a result, during the third quarter of 2024 the Company recorded net financial expenses, related to warrants of approximately $882 thousand. 

Net Loss: The net loss for the first nine months of 2024 was approximately $18.0 million, compared to approximately $18.6 million in the same period of the previous year. The net loss for the third quarter of 2024 was approximately $8.2 million, compared to approximately $3.9 million in the same period of the previous year. The $4.3 million increase in net loss for the third quarter of 2024 as compared to the third quarter of 2023 was primarily due to decreased revenues, increased general and administrative expenses and increased financial expenses as mentioned above. This increase in net loss was impacted by an amount of approximately $1.5 million, due to transaction costs and the financial expenses related to warrants issued in that transaction.

For the financial tables click here.