August 5, 2020
Evogene Ltd. (NASDAQ: EVGN, TASE: EVGN.TA), a leading computational biology company targeting to revolutionize life-science product development across several market segments, announced today its financial results for the second quarter ended June 30, 2020.
Ofer Haviv, Evogene’s President and CEO, stated: “During the second quarter the company announced its new branding, which marks the conclusion to the strategic change the company has been focused on over the past years. With this strategic change, we are aiming to apply our world leading computational biology capabilities to important new market areas in human health and in agriculture. I would like to encourage you to read the press release the company issued regarding the strategic change and rebranding, which can be found on Evogene’s revised website. The Evogene group (consisting of Evogene and its subsidiaries) is continuing to make substantial progress towards its 2020 targets.
“In parallel to the support Evogene provides its subsidiaries, we continue to develop our technological solutions in order to advance our capabilities and expand into new market segments. To that end, during this second quarter, Evogene announced its participation in the CRISPR-IL consortium to provide an end-to-end artificial intelligence system for genome-editing. The consortium is supported by the Israeli Innovation Authority as part of its Bio-Convergence Program and includes 21 industry and academic leaders in the artificial intelligence and genome editing space. Evogene’s Chief Scientific Officer, Dr. Eyal Emmanuel, serves as the chairman of the consortium. Genome editing is a tool that enables genetic changes in a method that may not be considered as GMO (genetically modified organism), and we believe that this revolutionary technology may be a breakthrough for the agricultural market in terms of consumer acceptance. Moreover, this technology has the potential to revolutionize a wide range of life-science based industries.” continued Mr. Haviv.
Milestones in the second half of 2020:
AgPlenus (wholly owned subsidiary focused on ag-chemicals)
Herbicide program – reach a ‘Lead’
Achieving a “Lead” phase indicates that a certain family of chemical compounds has shown efficacy in killing weeds in a series of different trials and finally also in commercial application rates in field trials. Reaching the development phase of a “Lead” is a significant and important stage in developing a Herbicide product. AgPlenus is now initiating field trials for its leading candidate in the herbicide program, with results expected by the end of 2020. The family of chemical compounds, expected to undergo these field trials, was discovered and optimized using Evogene’s ChemPass AI solution. In addition, this family of chemical compounds has been proven to work through a new mode-of-action that targets a protein that does not exist in humans, indicating, what we believe to be potential for a high safety profile. A safe, new mode-of-action herbicide is one of the most desired products in the ag-chemical industry, due growing weed resistance to existing commercial products.
Biomica (subsidiary focused on human-microbiome based therapeutics)
Immuno-oncology program – results in extended pre-clinical study
Immune checkpoint inhibitors immunotherapy is considered one of the most effective treatments today for various types of cancer. However, these types of therapies seem to be effective only in a fraction of patients. It has been observed in medical studies that fecal microbiota transplants (FMT), altering the patient’s gut microbiome, have the potential to improve the response rates to immunotherapy. Through the use of Evogene’s MicroBoost AI solution, Biomica is discovering and developing novel microbiome-based drug products to enhance the efficacy of immunotherapy with initial focus on lung cancer. In 2019, preliminary results in animal studies exhibited improved anti-tumor activity following treatment with Biomica’s leading microbial consortia BMC121 and BMC127 in combination with immune checkpoint inhibitors. This year, Biomica initiated extended pre-clinical studies and expects results from this study in the second half of 2020. Positive results will be a significant milestone supporting Biomica to move forward towards the anticipated first in man proof of concept clinical trials expected to be initiated in 2021.
Canonic (wholly owned subsidiary focused on medical cannabis)
MetaYield products – demonstrate yield improvement in cannabis lines
The first product line Canonic is focusing on is MetaYield, a product with stable and improved yield profile for medical cannabis products. An important milestone towards this product is to demonstrate significant yield improvement in a broad greenhouse assay. Canonic aims to reach this milestone by the end of 2020, through cultivation and by utilizing, Evogene’s GeneRator AI solution. Achieving this milestone is expected to provide the unique genomic composition of the MetaYield product line, targeted to be commercialized in 2022.
Engagement with commercial partners for cultivation and production
Canonic is focused on developing unique medical cannabis products, harnessing the power of plant genomics. While the company intends to internally conduct all the activity related to the development of the unique cannabis varieties, the cultivation and production are expected to be conducted through third parties. Canonic has already engaged in framework agreements with several cultivation and production partners in Israel and in Europe, creating the infrastructure for the company’s go-to-market plan. Canonic aims to sign a definitive agreement with such a partner during the second half of 2020, to support the commercialization of MetaYield products, expected in 2022.
Lavie Bio (subsidiary focused on ag-biologicals)
Spring wheat bio-stimulant program – phase advancement and file for registration
Spring wheat bio-stimulant LAV-211 is the most advanced product under development in Lavie Bio’s development pipeline. LAV-211 was discovered and optimized using Evogene’s MicroBoost AI solution, and has shown promising results over several years in diverse locations. LAV-211 is currently being tested in North America with advanced product formulations. Results from these field trials are expected during the second half of 2020. Positive results in these field trials are the milestone required for the company to file for registration for LAV-211, in order to allow the expected commercialization in 2022.
Bio-pesticide program – phase advancement
In its bio-pesticide pipeline, one of Lavie Bio’s leading products is a bio-fungicide for Botrytis and Downy Mildew, where the main commercial application is currently vineyards with the potential to expand to numerous other crops. Lavie Bio is currently testing its product candidate in vineyards in Europe and the United States and expects to share the results of these trials in the coming months. Increasing regulation pressure regarding the use of chemical pesticides, especially in Europe, creates a significant commercial opportunity for an effective bio-fungicide product, such as the bio-fungicide Lavie Bio is currently testing.
Mr. Haviv continued: “I would also like to update that in spite of the ongoing COVID-19 pandemic, the company has resumed full activity and that the company and its employees are working in compliance with the restrictions and guidelines provided by the Israeli health authorities and other applicable governmental authorities and will continue to do so.
“To summarize, we are extremely pleased by the accelerating rate of the Evogene group’s product oriented achievements – both with respect to the multiple individual product potentials, and with respect to this clear demonstration of the broad applicability and powerful competitive advantages of our technology. We are confident that as our subsidiaries continue to execute and their initial products move closer to commercialization, we will be able to further maximize shareholder value and demonstrate our true significance to the scientific and investment communities. Of course, we greatly appreciate the continuing support of our loyal shareholder base,” Mr. Haviv concluded.
Consolidated financial results for the quarter ending June 30, 2020:
Cash position: As of June 30, 2020, Evogene had approximately $38.1 million in consolidated net cash, cash related accounts and short-term bank deposits. Approximately $15.2 million of Evogene’s consolidated cash is attributed to its subsidiary, Lavie Bio.
During the first half of 2020, the company’s consolidated cash usage amounted to $8.8 million. Excluding the cash usage of Lavie Bio, the company’s cash usage amounted to $6.3 million during the first half of 2020. During the second quarter of 2020, the company’s consolidated cash usage amounted to $2.5 million. Excluding the cash usage of Lavie Bio, the company’s cash usage amounted to $1.7 million during the second quarter of 2020.
The company’s low burn rate during the second quarter of 2020 is attributed to the following:
- Certain measures the company took to mitigate the impact of the COVID-19 pandemic on the Company, including a temporary reduction in salary-based expenditure and a cut back in secondary activities,
- Funds received attributed to the collaboration agreement AgPlenus entered with Corteva during the first quarter of the year, and
- Grant received attributed to the ongoing Phenomics consortium.
For the full year of 2020, the company estimates that its cash usage, excluding cash usage of Lavie Bio, will be within the range of $13-15 million.
Evogene does not have bank debt.
Revenues for the second quarter of 2020 were approximately $0.3 million in comparison to approximately $0.2 million in the same period the previous year. Revenues primarily consist of third-party research and development payments. These revenues represent R&D cost reimbursement and milestone payments under our various collaboration agreements. The majority of these agreements also provide for royalties or other forms of revenue sharing from successfully developed products.
R&D expenses for the second quarter of 2020 were approximately $3.9 million (including a non-cash expense of $0.5 million for amortization of share-based compensation), in comparison to approximately $3.5 million (including a non-cash expense of $0.1 million for amortization of share-based compensation) in the second quarter of 2019. While the actual R&D expenses remained stable from quarter to quarter, R&D expenses attributed to Lavie Bio increased, due to an increase in downstream development activities, which were offset by a reduction in other secondary activities, as mentioned above.
Business Development (BD) expenses for the second quarter of 2020 were approximately $0.5 million, in comparison to $0.5 million in the second quarter of 2019.
G&A expenses for the second quarter of 2020 were approximately $1.1 million, in comparison to approximately $0.8 million in the second quarter of 2019. Despite a temporary reduction in salary-based expenditure during the second quarter of 2020, there was an increase in general and administrative expenses mostly attributed to an increase in the cost of the company’s D&O insurance.
Operating loss for the second quarter of 2020 was approximately $5.2 million (including a non-cash expense of $0.9 million for amortization of share-based compensation), in comparison to approximately $4.7 million (including a non-cash expense of $0.2 million for amortization of share-based compensation) in the second quarter of 2019.
Net financing income for the second quarter of 2020 was approximately $0.4 million in comparison to net financing income of approximately $0.6 million in the second quarter of 2019.
Loss for the second quarter of 2020 was approximately $4.8 million, in comparison to a loss of approximately $4.1 million during second quarter of 2019.