Rehovot, Israel
August 5, 2015
Evogene Ltd. (NYSE; TASE: EVGN), a leading company for the improvement of crop productivity and economics for the food and feed industries, announced today its financial results for the quarter and six months ended June 30, 2015.
Ofer Haviv, Evogene's President and CEO, stated: "These past few weeks have been extremely rewarding from the standpoint of Evogene’s on-going corporate growth and development. As we indicated at the time of our US IPO in late 2013, Evogene intended to allocate a large portion of the IPO proceeds towards new opportunities with substantial growth potential and a real need for innovation to drive the next generation of product development. This strategic undertaking, and the investment we made over the past year and a half in doing so, was well demonstrated by two milestone achievements that we recently disclosed."
“First, in our herbicide program, last month we announced the successful discovery and validation in plants of the first set of potential targets. These novel targets are a significant achievement for Evogene’s herbicide program, particularly since they are predicted to represent potential new 'mode of action', or manner, to kill weeds, and thus may provide the basis to the development of future weed-killing products."
“Second, we recently disclosed the successful completion of our first computational round of microbial genes in our insect control program, which was only initiated mid last year. This is a remarkable achievement considering that in a relatively short period of time we were able to leverage our knowhow and technology to tackle a new and commercially attractive market segment with significant barriers to innovation. This first set of promising genes provides us with strong confidence in the approach we are pursuing for the discovery of microbial genes, and more importantly in their likelihood to eventually yield a commercial product."
"In addition to the importance of these achievements for the programs themselves, they again demonstrate the power and broad applicability of our computational based predictive approach in the development of next-generation agriculture based products.”
Mr. Haviv concluded, “In summary, when looking across the various areas of the business, we are extremely excited with the initial progress we have made in advancing our newest areas of focus - insect control and novel herbicides - to the next stages of product development, and pleased with our continued efforts in narrowing the gap to successful product introduction in our more established market areas.”
Financial results for the period ended June 30, 2015:
Cash Position: As of June 30, 2015, Evogene had $110 million in cash, short term bank deposits and marketable securities, representing a net cash usage of $6.3 million for the six months ended June 30, 2015.
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 six months ended June 30, 2015 were $5.3 million, compared to $7.5 million for the same period in 2014. Revenues from research and development payments for the second quarter of 2015 were $2.6 million, compared to $3.8 million for the same period in 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. Today, in consideration of the Company's strong cash balances, research revenues do not constitute a significant or essential part of the Company's cash flow.
Looking forward, Evogene intends to consider, on a case by case basis, self-financing certain activities under future collaborations. 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, which provide for future milestone and/or royalty revenues. Cost of revenues for the six months ended June 30, 2015 was $3.8 million, compared to $5.0 million, for the same period in 2014. Cost of revenues for the second quarter of 2015 was $1.9 million, compared to $2.4 million, for the same period in 2014.
Research and Development Expenses for the six months ended June 30, 2015 were $7.2 million, compared to $6.0 million for the same period in 2014. This increase largely relates to expansion of self-funded activities, primarily focused on the development of new computational genomics platforms and validation technologies, mainly in our key growth engines – insect resistance and ag-chemicals. The increase also derives from an increase in non-cash share-based compensation expenses. Research and Development Expenses for the second quarter of 2015 were $3.7 million, compared to $3.4 million for the same period in 2014. This increase mainly relates to increase in non-cash share-based compensation expenses. 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 six months ended June 30, 2015 was $8.8 million (including a non-cash expense of approximately $2.2 million for amortization of share-based compensation), compared to an operating loss of $6.4 million (including a non-cash expense of approximately $1.7 million for amortization of share-based compensation) for the same period in 2014. Operating Loss for the second quarter of 2015 was $4.6 million (including a non-cash expense of approximately $1.4 million for amortization of share-based compensation), compared to an operating loss of $3.7 million (including a non-cash expense of approximately $0.9 million for amortization of share-based compensation) for the same period in 2014. This increase is mainly attributable to the increase in self-funded research and development expenses, the increase in non-cash share-based compensation expenses and the decrease in revenues from research and development payments as described above.
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