Evogene reports fourth quarter and full year 2016 financial results

Date:02-28-2017

Evogene Ltd., a leading company for the improvement of crop productivity, announced today its financial results for the fourth quarter and year ended December 31, 2016.

Ofer Haviv, Evogene's President and CEO, stated: “This past year was a period of rapid advancement across multiple fronts for Evogene. We believe that our development progress and the validation results we achieved have positioned the Company for a potentially transformative 2017.”

Some of Evogene's key highlights for 2016 included:

• In our yield and stress product program with Monsanto, a subset of the Company's discovered genes demonstrated positive results towards yield improvement in corn and soybean trials conducted by Monsanto;
• In our internal insect control product program, five novel microbial genes displayed insecticidal, toxic activity on target insects via potentially new modes of action;
• Our herbicide discovery collaboration with BASF is progressing and chemical compounds delivered by Evogene, having been predicted to inhibit the validated collaboration targets, will be tested in BASF’s herbicide pipeline;
• In our internal herbicide discovery program, ten chemical compounds that were computationally predicted to impact six Evogene discovered targets, were validated for herbicidal activity in plants;
• In our internal bio-stimulants program, ten microbial candidates exhibited positive performance for trait improvement in corn field validation.

“We are very proud of these impressive results achieved in 2016 in each of our target markets, which also provide additional proof of the predictive capability of our unique technology infrastructure. We are now evaluating the further enhancement of this discovery infrastructure with additional capabilities such as genome editing, and the extension of our program focus to additional market areas such as bio-pesticides and insecticides, and to new crops such as cannabis,” added Mr. Haviv

“We enthusiastically look forward to the remainder of this year as we continue to increase the commercial potential of our overall business. In addition to our leadership position in discovery, our progress is indicative of the fact that Evogene is moving downstream towards becoming a significant player in early-stage ag product development,” concluded Mr. Haviv.

Financial results for the fourth quarter and full year 2016:

Cash position: As of December 31, 2016, Evogene had $88.2 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of $12.5 million for the year. Assuming regular course of business and no new revenue sources, such as additional collaborations, the Company estimates that its net cash usage for full year 2017 will be in the range of $16 to $18 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 fourth quarter of 2016 were $1.2 million compared to $2.5 million for the same period in 2015. Revenues for the year ended December 31, 2016 were $6.5 million, compared to $11.1 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 and advancement efforts of 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 fourth quarter of 2016 was $1.1 million compared to $2.0 million for the same period in 2015. Cost of revenues for the year ended December 31, 2016 was $5.6 million, compared to $8.3 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 fourth quarter of 2016 were $4.7 million, compared to $4.1 million for the same period in 2015. R&D expenses for the year ended December 31, 2016 were $16.4 million, compared to $14.4 million for the same period in 2015. This increase is 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 segments - insect control, ag-chemicals and ag-biologicals.

Operating loss for the fourth quarter of 2016 was $6.2 million (including a non-cash expense of approximately $0.6 million for share-based compensation), compared with $5.4 million (including a non-cash expense of approximately $1.1 million for share-based compensation), for the same period in 2015. Operating loss for the year ended December 31, 2016, was $21.1 million (including a non-cash expense of approximately $2.9 million for share-based compensation), compared to $17.9 million (including a non-cash expense of approximately $4.4 million for share-based compensation), 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 fourth quarter of 2016 was $6.6 million compared with a net loss of $5.5 million for the same period in 2015. Net loss for the year ended December 31, 2016, was $19.6 million compared with a net loss of $17.2 million for the same period in 2015.