Rehovot, Israel
November 10, 2014
Evogene Ltd. (NYSE, TASE: EVGN), a leading company for the improvement of crop quality, productivity and economics for the food, feed and biofuel industries, announced today its financial results for the quarter and nine months ended September 30, 2014.
Ofer Haviv, Evogene's President and CEO, stated: “During the approximately one year period following our initial public offering in the U.S., we have been pleased to report accelerating progress in both enhancing our leadership position as a premier provider of seed traits to the agriculture industry, and in making significant progress across our other areas of focus.”
“Our ability to successfully pursue these multiple strategic objectives in parallel, is the result of our more than decade-long, and continuing, investment in building one of the best knowledge-based, discovery platforms available in the agriculture industry today. The value of this unique infrastructure can be demonstrated in part by the hundreds of candidate genes, mainly for improved yield and abiotic stress resistance, provided to date under multiple milestone and royalty bearing collaboration agreements with a majority of the world’s leading seed companies.”
“As our initial area of focus, seed traits represents our most mature area of operation, with our main goals currently being phase advancement and increasing the probability of success for achieving end-products. For this purpose, we continue to invest substantial efforts in building more robust and tailored computational and validation tools to further support the efficacy of Evogene genes currently undergoing field trial validation in our partners’ pipelines.”
“We also continue to expand our product portfolio and technology in this area by targeting new traits and new crops, mainly in the field of biotic stresses. Earlier this year we disclosed our entry into the field of insect resistance and control. I am extremely proud that with the advantage of our existing infrastructure, we were able to successfully initiate a robust product program in such a short period of time, and I am very excited about the prospects for future collaborations in this area, which we consider one of Evogene’s key growth engines.”
“A portion of the IPO proceeds was targeted towards the area of ag-chemicals, in particular to our ongoing activities in establishing a very innovative herbicide discovery program. This past year these activities included expanding our computational capabilities to support chemical discovery and building dedicated labs and plant validation systems in support of these growing activities. We are now evaluating the appropriate time to begin collaborative activities with one or more major companies in the field, and have been pleased with the interest shown during some initial discussions we have had.”
“The financial security provided by the capital raised in our IPO also allowed us to accelerate the product development and pre-commercialization progress of Evofuel’s castor bean varieties, and we are pleased that we are now on track for initial commercial seed sales to begin in 2016. This year, in our pre-commercial field testing, we harvested over 200 acres of our castor varieties. This is a fantastic achievement, one which I am very proud of and is not a trivial accomplishment. The success of Evofuel will mean the introduction of a completely new modern crop into world agriculture for both industrial uses and with the potential for addressing one of the world’s most significant challenges of fuel dependency,” concluded Mr. Haviv.
Financial results for the period ended September 30, 2014:
Total Revenues include (i) research and development payments, including up-front payments, and (ii) share purchase related revenues. Evogene anticipates that longer term, its primary sources of revenues and profits will be future royalties and other revenue sharing amounts, as well as castor seed sales by its wholly owned subsidiary Evofuel.
- (i) Revenues from research and development payments include periodic payments for research and development services generated under the Company's collaboration agreements with seed companies, as well as up-front payments received under the Company's agreements with collaborators, which are recognized as revenues over the duration of the relevant agreement. R&D revenues for the nine months ended September 30, 2014 were $10.6 million, compared to $10.8 million for the same period in 2013. Revenues for the third quarter of 2014 were $3.1 million, compared to $3.5 million for the same period in 2013. The decline in revenues in the third quarter of 2014 was primarily related to the amendment to the Company’s Bayer collaboration work plan, whereby $750 thousand of research payments due in 2014 were accounted for as deferred revenues and will be recognized as revenues in 2015 and onwards. This decline was offset in part by an increase in revenues associated with the expansion of activities in certain other collaborations, including the Company’s agreements with Monsanto and Syngenta, which were extended and expanded in late 2013.
- (ii) Share purchase related revenues result from the required accounting treatment for the past acquisitions of Evogene ordinary shares by Monsanto and Bayer, as well as the put option agreement that the Company entered into with Monsanto, all in conjunction with the research and development collaboration agreements signed with these partners. Share purchase related revenues for the nine months ended September 30, 2014 were $240 thousand, compared to $2.4 million for the same period in 2013. In the third quarter of 2014, the Company recorded $75 thousand of share purchase related revenues, compared with $767 thousand for the third quarter of 2013. The decline in share purchase related revenues reflects accounting treatment of certain past transactions involving Evogene ordinary shares with Monsanto and Bayer and does not reflect any current cash flow.
Cost of Revenues largely consists of research and development expenses related to the support of the Company’s ongoing activities under collaboration agreements with seed companies, all of which provide for future milestone and royalty revenues. Cost of Revenues for the nine months ended September 30, 2014 was $7.3 million, compared to $7.3 million for the same period in 2013. Cost of Revenues for the third quarter of 2014 was $2.3 million, compared to $2.6 million for the same period in 2013.
Research and Development Expenses for the nine months ended September 30, 2014 were $9.8 million, compared to $7.6 million for the same period in 2013. Research and development expenses for the third quarter of 2014 were $3.7 million, compared to $3.0 million for the same period in 2013. The increase in these expenses largely relates to expansion of self-funded activities, primarily focused on the development of new computational genomics and validation technologies in support of both existing and new activities, such as in the areas of fungi, insect and weed control. As stated above, research and development expenses do not include such expenses incurred in support of on-going collaborations, which are accounted for as Cost of Revenues.
Business Development Expenses for the nine months ended September 30, 2014 were $1.3 million, compared to $906 thousand for the same period in 2013. Business Development expenses for the third quarter of 2014 were $407 thousand, compared to $374 thousand for the same period in 2013. This increase reflects costs associated with the Company’s decision to establish dedicated Business Development capabilities within each of its four operating divisions, as well as costs associated with ongoing efforts to introduce the Company’s business proposition to prospective partners in new and existing areas.
General and Administrative Expenses for the nine months ended September 30, 2014 were $3.1 million (including a non-cash expense of $1.1 million for amortization of share-based compensation), compared to $2.0 million (including a non-cash expense of $503 thousand for amortization of share-based compensation) for the same period in 2013. General and Administrative expenses for the third quarter of 2014 were $984 thousand (including a non-cash expense of $294 thousand for amortization of share-based compensation), compared to $833 thousand (including a non-cash expense of $315 thousand for amortization of share-based compensation) for the same period in 2013. In addition to the non-cash share-based compensation, this increase relates to continued growth in the Company’s operations and costs associated with being a publicly traded entity in the US.
Operating Loss for the nine months ended September 30, 2014 was $10.7 million (including a non-cash expense of approximately $2.6 million for amortization of share-based compensation), compared to an operating loss of $4.7 million (including a non-cash expense of approximately $1.6 million for amortization of share-based compensation) for the same period in 2013. Operating loss for the third quarter of 2014 was $4.3 million (including a non-cash expense of $788 thousand for amortization of share-based compensation), compared to an operating loss of $2.5 million (including a non-cash expense of $1.0 million for amortization of share-based compensation) for the same period in 2013. This increase is mainly attributable to the increase in self-funded research and development expenses, among other operating expenses and non-cash share-based compensation expenses, as described above.
Cash Position: As of September 30, 2014, Evogene had $118.8 million in cash, short and long term bank deposits and marketable securities. Assuming regular course of business and no new revenue sources, such as additional collaborations, the Company reiterates its guidance that its cash burn for calendar 2014 will be in the range of the previously estimated $15 to $18 million.
Complete release and financial tables
Evogene (NYSE, TASE: EVGN) is a leading company for the improvement of crop productivity and economics for the food, feed and biofuel industries. The Company has strategic collaborations with world-leading agricultural companies to develop improved seed traits in relation to yield and a-biotic stress (such as tolerance to drought), and biotic stress (such as resistance to disease and nematodes), in key crops as corn, soybean, wheat and rice, and is also focused on the research and development of new products for crop protection (such as weed control). In addition, the Company has a wholly-owned subsidiary, Evofuel, developing seeds for second generation feedstock for biodiesel. For more information, please visit www.evogene.com and www.evo-fuel.com.
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