Evogene reports Third Quarter 2016 financial results

Date:11-24-2016

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

Ofer Haviv, Evogene's President and CEO, stated: "We continue to be very pleased with the progress we are seeing in both our on-going collaborations with leading agriculture related companies world-wide, and our own internal programs. In this respect, we are particularly pleased to have recently announced positive results in our Ag-biologicals program, focused on bio-stimulants, for more than ten microbial strains that successfully completed the first year of testing and validation in corn for drought resistance. Further ahead, we will look to out-license advanced microbial strains to relevant partners for further development and commercialization, with the view to have a commercial product offering as early as five to six years from today."

"In our seed traits area, where we have active programs for the development of both crop enhancement traits and crop protection traits, we continue to build upon the positive results we announced in several of our most significant programs. These activities include supporting the advancement of our most promising candidate genes further in Monsanto's product development pipeline, and further validation of several successful candidate toxins we identified as part of our insect control program," continued Mr. Haviv.

"In addition, this past quarter we expanded our collaboration pipeline with the signing of an agreement with IMAmt, a leading Brazilian developer and marketer of cotton seeds, for the discovery and validation of novel genomic elements to support IMAmt's product development of insect-resistant cotton varieties."

"Finally, we continue to successfully advance our program for the discovery of novel chemical compounds for herbicides. This past quarter, chemical compounds identified by Evogene have demonstrated herbicidal activity in plant bio-essay tests and were advanced to the next stage of optimization," concluded Mr. Haviv.

Financial results for the period ended September 30, 2016:

Cash position: As of September 30, 2016, Evogene had $93.1 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of $3.9 million for the third quarter and $7.6 million for the nine months ended September 30, 2016. We expect our net annual cash usage for the current calendar year to be slightly below our previously disclosed range of $14 to $16 million.

Revenues primarily consist of 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 third quarter of 2016 were $1.5 million compared to $3.3 million for the same period in 2015. Revenues for the nine months ended September 30, 2016 were $5.4 million, compared to $8.7 million for the same period in 2015. This decline reflects the net decrease in such research and development payments in accordance with the work plans under Evogene'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, whereby resource intensive activities, such as novel gene discovery and validation, evolved to focus increasingly on optimization activities supporting Monsanto’s ongoing development with respect to advancing Evogene discovered genes.

Cost of revenues include research and development expenses related to the Company’s on-going activities in support of collaboration agreements. Cost of revenues for the third quarter of 2016 were $1.4 million compared to $2.5 million for the same period in 2015. Cost of revenues for the nine months ended September 30, 2016, were $4.5 million, compared to $6.2 million, for the same period in 2015. The net decrease primarily related to the change in the scope and type of activities performed under Evogene's collaboration with Monsanto, as noted above.

R&D expenses for the third quarter of 2016 were $3.9 million compared to $3.1 million for the same period in 2015. R&D expenses for the nine months ended September 30, 2016, were $11.7 million, compared to $10.3 million for the same period in 2015. This increase largely related to the 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 third quarter of 2016 was $5.2 million compared with $3.8 million for the third quarter of 2015. Operating loss for the nine months ended September 30, 2016, was $14.9 million compared with $12.6 million for the same period in 2015. The increase in operating loss was primarily due to the decrease in revenues discussed above, which were partially offset by the net decline in other expense categories.

Net loss for the third quarter of 2016 was $5.1 million compared with a net loss of $3.4 million in the third quarter of 2015. Net loss for the nine months ended September 30, 2016, was $12.9 million compared with a net loss of $11.7 million for the same period in 2015.