Evogene sales down 30% in H1 2016

Date:08-12-2016

Evogene Ltd., a leading biotechnology company for the improvement of crop productivity and economics for the food, feed and fuel industries, announced today its financial results for the quarter and six months ended June 30, 2016.

Ofer Haviv, Evogene's President and CEO, stated: "Just three years ago Evogene’s research and development programs were almost entirely focused on one market segment of seed traits, and within this segment primarily at improving yield and a-biotic stress tolerance. Since then, we have grown to a company that has leveraged its unique technology platform to address multiple product opportunities in three different multi-billion-dollar markets - expanding our seed traits activities to include insect control, and entering the ag-chemicals and ag-biologicals market segments."

“We are extremely pleased with the advancements and the encouraging initial results we are seeing this year in key programs within each of these three market segments, particularly in our newer areas of activity. Some recent results and on-going activities include:

• Positive results for a set of Evogene discovered genes demonstrating the potential to achieve yield enhancement in corn and soybean as previously reported. Genes are progressing into further testing under our collaboration with Monsanto;
• Microbial genes identified as part of our collaboration with Marrone Bio Innovations have demonstrated toxic activity against target insects and are now progressing into further characterization tests and validation in plants;
• Following positive results received in soybean model system in our nematode program, promising genes are now undergoing stable soybean transformation at our facilities in St. Louis and are expected to begin validation tests next year;
• Genes showing positive results for black sigatoka resistance are currently undergoing larger scale field trials in Central America;
• Positive initial results in our promotor discovery activity where we were able to validate that our predicted promotors led to the specific gene expression pattern;
• The discovery and successful validation in plants of the first set of novel plant targets for herbicides which have now been incorporated into our BASF collaboration, and the on-going design of chemical libraries to inhibit these targets utilizing a unique computational based methodology;
• Successful demonstration in lab and greenhouse of herbicidal activity for several Evogene chemical compounds, including selected compounds displaying activity against a panel of weeds, which have now progressed into additional characterization within our product development pipeline;
• And finally, positive performance in initial model plant and corn greenhouse testing of tens of bacterial strain candidates predicted to have potential for development of ag-biologicals, a portion of which are now undergoing corn field trials."

Mr. Haviv concluded: "Most importantly, these impressive results, and the relatively short time frame in which they were achieved, are further testaments to the power and accuracy of the predictive capabilities provided by our science based technology platform established over the past decade and continuing to be expanded and enhanced. This platform has been designed to be broadly applicable, and its success in doing so is now being demonstrated as we address very diverse market segments, each with its own discovery pathways, but all of which nestle on the core of our capabilities – bringing plant science and computational power together."

Financial results for the period ended June 30, 2016:

Cash position: As of June 30, 2016, Evogene had approximately $97 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of $3.8 million for the six months ended June 30, 2016 and $1.9 million for the second quarter.

Revenues are largely 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, and therefore longer term, the Company anticipates that its future revenues and profitability will largely reflect the receipt of such payments from its existing and future collaborations.

Revenues for the six months ended June 30, 2016 were $3.8 million, compared to $5.4 million for the same period in 2015, declined 29.63%. Revenues for the second quarter of 2016 were $1.8 million,  compared to $2.7 million for the same period in 2015, declined 33.33%. This decline reflects the net decrease in such research and development payments in accordance with the work plans being pursued under the Company's various collaboration agreements. It includes changes in the scope and type of activities undertaken by the Company as part of its yield and stress collaboration with Monsanto, where by resource intensive activities such as novel gene discovery and validation evolved to increasingly focus on optimization activities supporting Monsanto’s ongoing development activities with respect to advancing Evogene discovered genes.

Cost of revenues includes research and development expenses related to the Company’s on-going activities in support of collaboration agreements. Cost of Revenues for the six months ended June 30, 2016 were $3.1 million, compared to $3.8 million, for the same period in 2015. Cost of revenues for the second quarter of 2016 were $1.6 million compared to$ 1.9 million for the same period in 2015. The net decrease primarily relates to the change in the scope and type of activities performed under the Company's collaboration with Monsanto, as noted above.

Research and development expenses for the six months ended June 30, 2016 were $7.8 million, compared to $7.2 million for the same period in 2015. Research and development expenses for the second quarter of 2016 were $4.0 million compared to $3.7 million for the same period in 2015. This increase largely relates to expansion of activities, primarily focused on the development of computational platforms as well as discovery and validation activities in our key growth engines – insect control, ag-chemicals and ag-biologicals.

Operating loss for the first half of 2016 was $9.8 million compared with $8.8 million for the same period in 2015, and $5.2 million for the second quarter of 2016 compared with $4.6 million for the second quarter of 2015. The increase in operating loss is mainly due to the decrease in revenues discussed above, which were partially offset by the net decline in other expense categories.

Net loss for the first half of 2016 was $7.8 million compared with a net loss of $8.4 million for the same period in 2015. Net loss for second quarter of 2016 was $4.5 million compared with a net loss of $5 million in the second quarter of 2015. The decline in net loss is attributed to the increase in financing income, reflecting the company's strong cash position.