Rehovot, Israel
May 19, 2015
Evogene Ltd. (NYSE; TASE: EVGN), a leading company for the improvement of crop productivity and economics for the food, feed and biofuel industries, announced today its financial results for the quarter ended March 31, 2015.
Ofer Haviv, Evogene's President and CEO, stated: "This past quarter, we were very pleased with our continuing progress in each of our four market oriented divisions. We saw advances in development across our individual product programs and increased recognition by the industry of our broad discovery capabilities, as demonstrated by our recent announcements regarding the incorporation of our gene optimization program into our collaboration with Monsanto following the entry of over 1,000 Evogene candidate genes into their product development pipeline, and the signing of our first collaboration with a leading multinational food company."
Mr. Haviv continued, “Looking at the worldwide agriculture market, demand for key crops continues to increase steadily to new record levels. For example, corn consumption during the past five years increased by 25%, and is expected to reach record levels this year. In view of the combination of continuing world-wide population growth and changing food habits, these increases in demand are certain to continue. Furthermore, due to on-going changes such as increasing resistance of insects and weeds to current pesticides and herbicides, along with negative trends in arable land and environmental pressures, it is reasonable to project that without significant technological advances, just sustaining today's levels of production will be a major challenge, let alone meeting the continuing increases in demand.”
Mr. Haviv concluded, “We are confident that Evogene is uniquely qualified to address this critical need for technological advances in agriculture. For the past 10 years we have been establishing and enhancing a broadly applicable discovery platform that combines deeper understandings of plant biology with industry leading computational based 'big data' integration, analysis and prediction technologies. And this unique capability, now being applied by us to address the key needs in four major market segments, is being recognized by an increasing number of collaborations with leading seed and other ag-bio based companies world-wide."
Financial results for the quarter ended March 31, 2015:
Cash Position: As of March 31, 2015, Evogene had $113.2 million in cash, short term bank deposits and marketable securities, representing a net cash usage for the quarter of $3.1 million. 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 2015 will be in the range of $16 to $18 million.
Research Revenues include mainly periodic payments for research and development activities provided under certain of the Company's collaboration agreements with seed companies. Revenues from research and development payments for the first quarter of 2015 were $2.7 million, compared to $3.8 million for the first quarter of 2014. The decline was primarily related to the previously announced amendment to the Company’s Bayer collaboration work plan.
Evogene anticipates that longer term, its primary sources of revenues will be future royalties and other revenue sharing amounts, as well as castor seed sales by its wholly owned subsidiary Evofuel. In that regard, research revenues, which reflect R&D related cost reimbursement under certain of Evogene's collaboration agreements, were in the past a meaningful contributor to cash flow. Looking to the future, Evogene intends to consider, on a case by case basis, self-financing or jointly financing with potential partners, certain additional activities under future collaborations, particularly with respect to the Company's newer growth areas. Although possibly resulting in less short term R&D revenues than would otherwise be the case, the Company’s goal in negotiating the terms for future collaborations will be to maximize long term revenues, consistent with maintaining its financial strength.
Cost of Revenues largely includes research and development expenses related to the support of the Company’s on-going activities under collaboration agreements with seed companies, most of which provide for future milestone and royalty revenues. Cost of revenues for the first quarter of 2015 was $1.8 million, compared to $2.6 million, for the same period in 2014.
Research and Development Expenses for the first quarter of 2015 were $3.5 million, compared to $2.7 million for the same period in 2014. 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, mainly in our key growth engines – insect resistance, ag-chemicals and Evofuel. 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.
Operating Loss for the first quarter of 2015 was $4.1 million, compared to an operating loss of $2.6 million for the same period in 2014. This increase is mainly attributable to the decrease in revenues from research and development payments, as well as the increase in self-funded research and development expenses, and certain other operating expenses.
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