Evogene reports second quarter of 2019 financial results
Date:08-01-2019
Evogene Ltd. (NASDAQ, TASE: EVGN), a leading biotechnology company developing novel products for life science markets, announced today its financial results for the second quarter ending June 30, 2019.
Ofer Haviv, Evogene's President and CEO, stated: “During the first half of 2019 we completed the transition to our new corporate structure consisting of Evogene as a technology hub for multiple subsidiaries in different life-science markets. This corporate structure provides the subsidiaries with support from Evogene, to allow the subsidiaries to focus on building valuable assets and fast-tracking their product development towards commercialization. Evogene’s support to its subsidiaries can be attributed to three main areas:
- Access to the CPB platform– right to use the CPB platform by each subsidiary for its dedicated area of activity, to (i) advance subsidiaries’ current product pipelines, (ii) to expand the subsidiaries’ product pipeline.
- Corporate and infrastructure support – (i) the subsidiaries’ management works closely with Evogene's board, management, and advisors to benefit from their broad experience & access to industry network, (ii) Evogene provides access to its facilities and infrastructure including labs, greenhouses, and other.
- Funding – Evogene intends to leverage its strong financial position to financially support its subsidiaries until a point of maturity, wherein enough valuable assets have been created to warrant an attractive valuation at fundraising, or through the generation of revenues from sales or collaborations to cover expenses. Evogene aims to remain a major shareholder in its subsidiaries following external fundraising in order to maintain, for Evogene shareholders, a significant share of the subsidiaries’ future profits and/or market value.
Evogene and its subsidiaries are fully committed to achieving the milestones presented in Evogene’s updated corporate presentation filed today.” – Mr. Haviv concluded
Recent Developments:
- Lavie Bio announced positive 2nd year field results in its bio-stimulant program for wheat with product candidates showing repeated significant yield improvement in spring wheat field trials across multiple locations, varieties and conditions.
- Amendment of Evogene’s collaboration agreement with Bayer[1] to include genome editing targets following positive results in corn stalk rot fungal disease control. Evogene will use its CPB platform to identify the required edits to improve disease resistance in corn, focusing on altering gene expression or function. Any promising targets would be pursued by Bayer’s in-house team for validation.
- Evogene and certain subsidiary management have initiated a process to evaluate fundraising activities as the opportunities arise.
Consolidated financial results for the period ending June 30, 2019:
Cash position: As of June 30, 2019, Evogene had approximately $46 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of approximately $8.7 million during the first half of 2019 and $4.2 million during the second quarter of 2019.
Assuming that no external financial resources are secured, such as through new collaborations or external fund raising, the Company continues to estimate that its net cash usage in 2019 will be in the range of $16 to $18 million dollars.
Evogene’s consolidated cash use is mostly appropriated to its subsidiaries, mainly Lavie Bio, AgPlenus, and Biomica, with funds also used for the establishment of infrastructure and greenhouses for Canonic.
The Company does not have bank debts.
Revenues primarily consist of research and development payments. These revenues represent R&D cost reimbursement and milestone payments under our various collaboration agreements. The majority of these agreements also provide for royalties or other forms of revenue sharing from successfully developed products.
Gross profit for the first half of 2019 was approximately $0.4 million in comparison to approximately $0.2 million for the first half of 2018. Gross profit for the second quarter of 2019 remained stable at approximately $0.1 million in comparison to the second quarter of 2018.
R&D expenses for the first half of 2019 remained stable at approximately $7 million in comparison to the first half of 2018. R&D expenses for the second quarter of 2019 remained stable at approximately $3.5 million in comparison to the second quarter of 2018. R&D expenses mostly represent product development activities of the Company and its subsidiaries, which include field trials and pre-clinical studies provided by third parties. Evogene’s consolidated R&D expenses were mostly attributed to its subsidiaries, mainly Lavie Bio, AgPlenus, and Biomica, and to its seed division activity.
Operating loss for the first half of 2019 was approximately $9.4 million in comparison to approximately $9.6 million in the first half of 2018. Operating loss for the second quarter of 2019 remained stable at approximately $4.7 million in comparison to the second quarter of 2018.
Net financing income for the first half of 2019 was approximately $1.5 million in comparison to net financing expenses of approximately $0.5 million in the first half of 2018. Net financing income for the second quarter of 2019 was approximately $0.6 million in comparison to net financing expenses of approximately $0.1 million in the second quarter of 2018. This increase in the first half of 2019 is mainly due to translation of Israeli Shekel nominated cash and marketable securities to US Dollars, revaluation of the Company’s marketable securities and interest income on bank deposits.
Loss for the first half of 2019 decreased to approximately to $7.9 million in comparison to a loss of $10.1 million during first half of 2018. Loss for the second quarter of 2019 decreased to approximately to $4.1 million in comparison to a loss of $4.8 million during second quarter of 2018.
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