Evogene reports third quarter 2023 financial results

Date:11-17-2023

Evogene Ltd. (Nasdaq: EVGN) (TASE: EVGN), a leading computational biology company aiming to revolutionize the development of life-science-based products utilizing cutting-edge computational biology technologies across multiple market segments, announced its financial results for the third quarter period ended September 30, 2023.

Mr. Ofer Haviv, Evogene's President and Chief Executive Officer, stated: "The events in Israel since October 7, 2023, have brought about significant changes to our nation; we find ourselves at a time of profound reflection. Our hearts go out to all those directly and indirectly impacted by these evil acts. I want to emphasize that these hardships only deepen our resolve to succeed and thrive. Despite these challenges, Evogene and our subsidiaries continue to operate, unwavering in our commitment to innovation and progress. Our strategic focus remains steady, and our dedicated team works tirelessly to achieve our objectives for 2023 and set the course for 2024.

In these uncertain times, it's crucial to underscore the financial stability of the Evogene Group. As of the end of the third quarter, the group had a consolidated cash position of approximately $37.2 million, with contributions from Lavie Bio - $7.1 million, Biomica - $14.6 million, and Evogene (together with Casterra, AgPlenus, and Canonic) - $15.5 million. It's important to note that this figure doesn't include any amount due to the purchase orders received by Casterra in the last few months and that Lavie Bio's cash balance is set to increase by an additional $2.5 million in January 2024 as part of a commercial agreement with Corteva.

Furthermore, we anticipate additional orders for Casterra's castor seeds and new collaborations to generate cash flow for the group, further enhancing our financial stability.

"Mr. Haviv continued: "As previously stated, this year we invested in establishing collaborations directly between Evogene and industry leaders, aiming to leverage our AI tech-engines for product development. We are very excited with the initial fruits of these efforts, as demonstrated by the recently reported collaboration with Colors Farm and Ben Gurion University - to pioneer crustacean gene editing technology aiming to enhance crustacean traits. The collaboration is powered by a grant from the Israel Innovation Authority and will utilize Evogene's GeneRator AI tech-engine."

Mr. Haviv added: "We are very proud of the achievements of our subsidiaries in the last few months. I want to emphasize that as part of their competitive advantage, all the subsidiaries use Evogene's AI tech-engines, under exclusive license, to direct and accelerate their product development."

Lavie Bio Ltd. - develops and commercializes microbiome-based ag-biological products, utilizing Evogene's MicroBoost AI tech-engine.

- In July, Lavie Bio announced a licensing agreement with Corteva. The agreement grants Corteva exclusive rights to develop further and commercialize two of Lavie Bio's lead bio-fungicide product candidates - LAV311 and LAV312 - targeting fruit-rots. Lavie Bio is entitled to an initial payment of approximately $5 million in 2 installments: the first payment of $2.5 million was received in September 2023, and the second payment is expected in the first quarter of 2024. It will also be eligible for additional future milestone payments and royalties from Corteva's sales of these future products.

- Last week, Lavie Bio announced a significant progress in its bio-fungicide program with LAV321, designed to combat downy mildew and late blight diseases. Field trials conducted in 2023 across Europe and the United States have yielded impressive results, establishing LAV321 as a potent solution against fungal diseases. Next year, LAV321 is expected to be tested in field trials by several multinational companies, for some of which it will be the second year of validation.

AgPlenus Ltd. - aims to develop and commercialize next-generation crop protection products, utilizing Evogene's ChemPass AI tech-engine.

- As previously disclosed, there is a growing interest in AgPlenus' lead target protein APTH1 and the small molecules that bind to this protein as candidates for a novel herbicide with a broad weed control spectrum. AgPlenus expects this interest to lead to a collaboration with a leading industry player.

Casterra Ag Ltd. - provides an integrated end-to-end solution for large-scale castor bean cultivation, utilizing Evogene's GeneRator AI tech-engine.

- In September, Casterra delivered its first shipment of high-yield, high-oil castor seeds from Brazil and Zambia to an African region, generating recognized revenue of approximately $0.9 million in this quarter.

- In recent months, Casterra made substantial steps in expanding its overseas seed production capabilities through subcontractors. As the complexity of this operation is high, it requires additional resources and extensive physical attendance of Casterra's professionals at the production sites overseas. Casterra is currently investing efforts in expanding its workforce to support this operation and, in parallel, looking for additional seed production subcontractors to manage risks.

Canonic Ltd. - provides tailored medical cannabis products to optimize consumer well-being, utilizing Evogene's GeneRator AI tech-engine.

- The Israeli medical cannabis market is characterized by a vast spectrum of products, either grown locall or imported. Capturing the patients' attention is challenging, leading to prices dropping even for premium products. To address this challenge, Canonic is focusing its marketing efforts on the frequent launching of new products in limited batches. During the third quarter, Canonic launched two new products, Tango and Two Aces, and this week, an additional product, SouthSide, was launched.

- During the last quarter, Canonic engaged with a new Israeli cultivator, EverGreen; four elite strains are currently being cultivated.

Mr. Haviv concluded: "All the subsidiaries are advancing their business targets, and as a shareholder, Evogene is very proud of this progress. Looking forward, when evaluating the needs of our wholly owned subsidiaries and their commercial potential, we intend to invest more efforts and resources in Casterra - since we see significant potential in the bio-diesel market, which castor oil can support, while reducing our investment in Canonic - due to the challenging market conditions of the medical cannabis sector."

Biomica Ltd. - develops microbiome-based therapeutics, leveraging Evogene's MicroBoost AI tech-engine.

- Biomica's leading product candidate, BMC128, for treating cancer patients, is now in a phase 1 clinical trial. The trial is conducted in Israel and started at the Rambam Health Care Campus. It aims to evaluate BMC128's safety and tolerability alongside Bristol Myers Squibb's Opdivo^® immunotherapy. In August, Biomica opened a second site at The Davidoff Cancer Center to allow the recruitment of additional potential patients. The trial is planned to include 10-12 patients; currently, 7 have enrolled.

- Biomica is advancing in preparing for a pre-IND meeting for BMC128, expected to occur in the first quarter of 2024.

Key Financial Highlights:

As of September 30, 2023, Evogene had consolidated cash, cash equivalents, and short-term bank deposits amounted to approximately $37.2 million. This included $14.6 million for Biomica, $7.1 million for Lavie Bio, and $15.5 million collectively for Evogene, Casterra, Canonic, and AgPlenus. The injection of funds from the last round of investment in July strengthens Evogene's financial position and provides it with the resources needed to execute future plans effectively.

The $15.5 million reflected in the cash balance of Evogene, together with Casterra, Canonic, and AgPlenus, does not include any amount due to the purchase orders received by Casterra in the last few months, which were partially supplied during the third quarter of 2023, and the $7.1 million reflected in the cash balance of Lavie Bio does not include the $2.5 million, which represents the second half of the upfront payment from the licensing agreement with Corteva, that is expected to be received at the beginning of 2024.

During the third quarter, the consolidated cash usage was approximately $4.8 million or approximately $3.2  million, excluding Lavie Bio, Biomica, and $1.2 million of advanced payments to Casterra's subcontractors for castor seed production.

Financial Performance:

Revenues for the third quarter of 2023 were approximately $3.8 million compared to approximately $0.5 million in the same period the previous year. The revenue increase was primarily due to revenues recognized by Lavie Bio per the licensing agreement with Corteva and due to revenues recognized by Casterra for the supply of castor seeds during the third quarter of 2023.

R&D expenses for the third quarter of 2023, which are reported net of non-refundable grants received, were approximately $5.1 million and remained stable compared to approximately $5.0 million in the same period in the previous year.

Sales and marketing expenses were approximately $850 thousand for the third quarter of 2023 and slightly decreased as compared to approximately $895 thousand in the same period the previous year. The main contributor to this expense decrease was a reduction in personnel expenses at Canonic.

General and administrative expenses were approximately $1.5 million in the third quarter of 2023 and remained stable compared to approximately $1.6 million in the same period in the previous year.

Operating loss for the third quarter of 2023 was approximately $4.2 million compared to an operating loss of approximately $7.1 million in the same period in the previous year. The decrease in operating loss is mainly due to the increased revenues mentioned above.

Financing income net for the third quarter of 2023 was approximately $320 thousand compared to the financing expenses net of approximately $61 thousand in the same period in the previous year. This difference was mainly due to an increase in interest income during the third quarter of 2023 compared to the same period in the previous year.

Net loss for the third quarter of 2023 was approximately $3.9 million compared to a net loss of approximately $7.2 million in the same period in the previous year. The decrease in the net loss is mainly due to the increased revenues recognized in the third quarter of 2023.

For the financial tables click here.

For an accessible file click here.