Evogene Reports Fourth Quarter and Year End 2010 Financial Results

Date:03-23-2011

Evogene Ltd. (TASE: EVGN) announced today its financial results for the fourth quarter and year ended December 31, 2010.

Ofer Haviv, Evogene's president and CEO, stated: "Although revenues for calendar year 2010 increased by more than 25% from 2009, clearly the key accomplishments from a strategic standpoint were those supporting our growing leadership position in the discovery and licensing of agbio traits to the industry. In this regard, during 2010 we were very proud to see greatly increased industry recognition, substantial enhancement and expansion of our discovery capabilities and further evidence of the quality of our results."

Highlights during the year included:

• The signing of a multiyear collaboration with Bayer CropScience AG, to improve wheat yield, drought tolerance and fertilizer use efficiency, utilizing a combination of advanced breeding and genetic modification methods. Evogene will receive approximately $20 million in the form of upfront fees and annual research payments over the term of the agreement and will additionally be entitled to milestone payments and royalties on product commercialization. In addition, Bayer CropScience made an equity investment of $12 million in Evogene equity. 

• Substantial enhancement of our discovery infrastructure and capacity, with the launch of ATHLETE 3.0 incorporating new computational capabilities as well as the introduction of two new computational discovery platforms, EvoBreed and RePack. These computational platforms will allow the introduction of novel products into the seed industry and open new commercial opportunities for Evogene.

• The advancement to the next stage of development of an Evogene yield and drought tolerance trait for corn as part of Evogene's collaboration agreement with Biogemma. This achievement follows a three year collaborative program and field trials.

• Successful completion of a second year of our multiyear collaboration with Monsanto, covering key traits for corn, soybean, cotton in canola.

• Continued progress in our Biofuel Program, including positive results in a pilot project conducted with NASA and UOP demonstrating that biojet produced from castor varieties under development by Evogene meets key international standards for alternative aviation fuels.

Mr. Haviv continued, "As we continue to partner on the basis of our core technology, we remain committed to our strategy of broadening its applicability to new areas in plant genomics. In this regard, we were pleased to see the introduction of our EvoBreed technology, applicable to advanced breeding, which will be utilized initially through our wheat collaboration with Bayer CropScience AG announced on December 2010. We enthusiastically look forward to the remainder of 2011 and the next few years as we continue to further build our unique offering to the Ag industry."

Revenues for 2010 were $12.6 million, compared to $10 million for the same period in 2009. Revenues for the fourth quarter of 2010 were $4.7 million, compared to $2.6 million for the same period in 2009. Revenues for all such periods consist of research and licensing revenues generated under the company's various collaboration agreements with seed companies.

Research & Development expenses for 2010 were $5.5 million, including non-cash financial expenses of $0.8 million for amortization of deferred compensation. This compares with $2.6 million for the same period in 2009, including such non-cash financial expenses of $0.2 million. Research & Development expenses for the fourth quarter of 2010 were $1.8 million, including non-cash financial expenses of $0.3 million for amortization of deferred compensation. This compares with $1 million for the same period in 2009, including such non-cash financial expenses of $0.1 million. These increases in Research & Development expenses relate to the development of new genomic technologies, the establishment of genomic and breeding infrastructure for wheat and to support our biofuel program. Research & Development expenses do not include expenses incurred in support of on-going collaborations, which are accounted for as Cost of Revenues.

Loss from ordinary operations for 2010 was $1.9 million, including non-cash financial expenses of $2.6 million for amortization of deferred compensation. This compares to a profit from ordinary operations of $0.3 million for the same period in 2009, including such non-cash financial expenses of $1 million. Profit from ordinary operations for the fourth quarter of 2010 was $0.2 million, including non-cash financial expenses of $0.8 million for amortization of deferred compensation. This compares to a loss from ordinary operations of $0.5 million for the same period in 2009, including such non-cash financial expenses of $0.4 million.

Financial expenses due to publicly traded warrants: As of December 31, 2010 Evogene had approximately 4.3 million publicly traded series 2 warrants outstanding which were issued in 2007 as part of its IPO on the Tel Aviv Stock Exchange. Such warrants will expire if not previously exercised on May 31, 2011. Although not impacting the actual financial status of the Company or its cash balances, as long as these warrants are outstanding, any change as of the end of a reporting period in the market price of the Company's ordinary shares will result in non-cash financial income (expense) due to revaluation of warrants on our statements of comprehensive income and a corresponding decrease or increase in the non-cash liability related to traded warrants on our balance sheets.

Comprehensive loss for 2010 was $7 million, which includes $5.4 million of non-cash financial expenses due to publicly traded warrants, as described above, compared to a total comprehensive loss of $3.4 million, including $4.8 million of such non-cash financial expenses for the same period in 2009. Total comprehensive loss for the fourth quarter of 2010 was $3 million, which includes $3.2 million of such non-cash financial expenses, compared to a comprehensive loss of $0.4 million, which includes $0.1 million of such non-cash financial revenues for the same period in 2009.

Cash Status: As of December 31, 2010, Evogene had $35.8 million in cash, cash equivalents, cash deposits and short-term marketable securities, compared to $38.2 million as of December 31, 2009, not including $12 million received in January 2011 pursuant to the Bayer CropScience agreement signed in late 2010.