Evogene Ltd.
Q4 2021 Earnings Call Transcript
Published:
- Operator:
- Ladies and gentlemen, thank you for standing by. Welcome to Evogene's fourth quarter 2021 results conference call. As a reminder, this conference is being recorded March 10, 2022. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evogene's management will constitute forward-looking statements that relate to future events, risk, and uncertainties regarding business strategy, operations and future performance and results of Evogene. I encourage you to review Evogene's filings with the U.S. Securities and Exchange Commission and read the note regarding forward-looking statements in today's earnings release, which states that statements made in the earnings release and in a similar way on this earnings conference call that are not historical facts may be deemed forward-looking statements within the meaning of the private securities litigation reform act of 1995. For example, Evogene is using forward-looking statements in this call when it discusses its expected path to value creation, including potential fundraisings at the subsidiary level, its and its subsidiaries expected trials and their expected results, studies, product advancements, commercializations, launches, pipelines, milestones, potential collaborations, and other plans for 2021 and 2022, expected burn rate, the potential advantages of its technology, and its anticipated entry into new fields of activity. All forward-looking statements made herein speak only as of the date of the announcement of the results. Many of the factors that impact whether forward-looking statements will come true are beyond the control of Evogene and may cause actual results to differ materially from anticipated results. Evogene is under no obligation to update publicly or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. We expressly disclaim any obligation to do so. More detailed information about the risk factors potentially adversely impacting our performance can be found in our reports filed with the U.S. Securities and Exchange Commission. That said, I would now like to turn the call over to Ofer Haviv, Evogene's CEO. Ofer, please go ahead.
- Ofer Haviv:
- Thank you, and good day, everyone. We appreciate you joining us today for our fourth quarter 2021 conference call. Joining me today is Ms. Dorit Kreiner, our CFO. I will begin to call with sharing the company's plans for the coming years, what we aim to achieve and how our 3 tech engines are the driving force behind our activities and serve as the main competitive advantage of our subsidiaries. I will then go on to present the achievement in each of our subsidiaries and how Evogene's tech engines have supported those achievements. I will then hand the call over to Dorit who will summarize Evogene's financial results for the fourth quarter and whole year of 2021. We will then open the call for your question. As you know, Evogene aims to revolutionize the development of novel products for life science-based industries by utilizing cutting edge computational biology technologies. Why so important to instill this revolution? In general, life science product development is characterized by astronomic development cost requiring very long development periods, and the most frustrating part is the low possibility of actually reaching a successful commercial product. The reason for this reality is the challenge in finding the winning candidate which are the core of life science products, microbes, more microbes or genetic elements out of a vast number of possible prospects that need to address a complex merit of criteria to reach successful products. It is the ultimate case of finding a needle in haystack. We in Evogene see a unique opportunity in harnessing an advanced computational technology, including proprietary database and sophisticated algorithms together with the deep understanding of biology that have the potential to address the multiple development challenges toward the development of successful life science product. This increase the probability of success while reducing time and cost. So to achieve our mission, we established our unique Computational Predictive Biology, the CPB platform, which is the basis of our 3 tech engines, each focused on accelerating and directing the discovery and development of products based on one of the following core components
- Dorit Kreiner:
- Thank you, Ofer. I will begin by reviewing our cash balance. Evogene continues to maintain a strong financial position for its activities with approximately $54 million in consolidated cash, cash-related accounts, bank deposits and marketable securities as of December 31, 2021. Approximately $7.8 million of Evogene's consolidated cash is appropriated to its subsidiary, Lavie Bio. During 2021, the consolidated cash usage was approximately $25.8 million, lower than the estimated cash usage range of $26 million to $28 million provided by the company at the beginning of 2021. The consolidated cash usage excluding Lavie Bio was approximately $20.6 million in 2021. This sums in 2021 are before giving effect to approximately $29.6 million net raised through our at-the-market equity offering program and $1.8 million proceeds from nonrefundable funds and exercise of options. During the fourth quarter, Evogene did not raise additional funds through its ATM program. During the fourth quarter of 2021, the consolidated cash usage was approximately $8.4 million or approximately $7.0 million if excluding Lavie Bio. This is in comparison to the fourth quarter of 2020, during which the consolidated cash usage was $6.1 million or $5.1 million if excluding Lavie Bio. The burn rate during 2021 and in the fourth quarter was higher than the same period in 2020 for the following reasons. First, during the second and third quarter of 2020, the burn rate was relatively low due to certain measures the company initiated to mitigate the impacts of the COVID-19 pandemic. Second, during the second half of 2021, Evogene's subsidiary significantly expanded product development activities in Sweden. Biomica's ongoing cooperation including GMP's microbe production for the initiation of the first-in-human proof-of-concept study in the immuno-oncology program in the Rambam Health Care Campus. Lavie Bio's activities supporting the commercial launch in 2022 of its inoculant product branded as result. Canonic's product commercialization in Israel during the fourth quarter of 2021 and expenses related to accelerating and expanding Evogene's technological engines, as also mentioned, we estimate that our net cash usage for the full year of 2022 will be within the range of $26 million to $28 million. These guidelines include test usage of our subsidiary Lavie Bio which is expected to be approximately $8 million. The company does not have . Let's now turn to the statement of operations. Revenues for the fourth quarter of 2021 were $311,000 in comparison to $361,000 in the same period for the previous year. Revenues for the full year of 2021 was $0.9 million in comparison to $1.0 million in 2020. R&D expenses for the fourth quarter of 2021, which are reported was $6.0 million in comparison to $4.8 million in the fourth quarter of 2020. R&D expenses for the full year of 2021 were $21.1 million in comparison to $17.3 million in 2020. The increase in R&D expenses was mainly attributed to expansion in product development activities of the company and its subsidiaries as mention earlier. Business development expenses were approximately $720,000 for the fourth quarter of 2021 in comparison to $673,000 in the fourth quarter of 2020. Business development expenses remained stable in 2021 in comparison to 2020 and were approximately $2.7 million. General and administrative expenses for the fourth quarter of 2021 were $2.0 million in comparison to $1.7 million in the fourth quarter of 2020. General and administrative expenses for the full year of 2021 were $7.3 million in comparison to $5.3 million in 2020. The increase is attributed mainly to the increase of the cost of directors and officers insurance and an increase in salaries base expenses, as I will now describe, and an increase in other professional services. Overall operating expenses increased among other reasons due to an increase in salary-based expenses in comparison to 2020 following relatively low salary base expenses in 2020 due to measures taken by the company to mitigate the impact of the COVID-19 pandemic. And an increase in salaries in 2021 due to an increase in market demand for highly skilled workers. The loss for the fourth quarter of 2021 was $8.1 million in comparison to a loss of $8.8 million during the fourth quarter of 2020. The loss for 2021 was $30.4 million in comparison to a loss of $26.2 million during 2020. The increase in loss is attributed mainly to the increase in operating expenses, which was partially offset by net financing income for 2021 in comparison to net financing expenses for 2020. With that said, we would now like to open up the call for any questions you may have. Operator?
- Operator:
- . The first question is from Brian Wright of ROTH Capital Partners.
- Brian Wright:
- Congrats on the progress. I wanted to start out with -- could you give us a little granularity, and maybe I just missed it, on the revenue drivers in the quarter between kind of just historical revenues versus maybe some cannabis-related revenues?
- Ofer Haviv:
- This is Ofer. I can't disclose the exact number, but what I can say, that a significant portion from the revenue in the last quarter is based on revenue coming from economic activity 2 products during mid-October. And even though that it was really early launch, the market was very positive and that portion of the revenue is is based on this activity.
- Brian Wright:
- Great. I was hoping you said that. And then could you tell us -- give us maybe a little more granularity on the timing of the enrollment and maybe the observation period for the BMC human trials?
- Ofer Haviv:
- So we are now in the final stage of production, the microbe which are the basis for BMC128. I hope that the production which is -- took place in Europe in France will end in the next few days and they will ship the material to Israel. So assuming this will happen according to plan, so I would expect to initiate the clinical trial in the Rambam hospital at the beginning of next quarter.
- Brian Wright:
- Great. Great. And then last one, if I can squeeze one last one in there. Just wanted to kind of think about just what are some of the enhanced qualities or improvements for the second generation of the MetaYield products toΓ’β¬Β¦
- Ofer Haviv:
- So the second MetaYield product is mainly focusing on 2 parameters. The first one, this is the main between the 2, is increasing the concentration of THC because this is what the market is really looking at. Today, the maximum you can get to is, according to the regulation here is up to 24%. And our product was around 21%. So we are targeting to increase the THC concentration. And in addition, we are taking a lot of focus on the -- what is called the consumer trade, like the colors of the flower, the smell, the structure, the not the number of trichomes. But the main focus is increasing the THC concentration.
- Operator:
- The next question is from Kristen Kluska of Cantor Fitzgerald.
- Unidentified Analyst:
- This is Rick on for Kristen. As we're getting into the spring wheat season in the U.S. and consumers have been noticing increased costs due to inflation on different goods, including food, what could you say about how producers, including in the initial target region of North Dakota are looking at new technologies such as result in which you're looking at starting commercialization? And are you at all thinking about how macroeconomic factors could affect the launch?
- Ofer Haviv:
- Okay. So please remember that the first product that we are going to launch is increasing yield. And this is something that farmers are always looking for. And their eager to increase yield usually increase when the price of the yield of the crop, the profit and market price is going up. So we are now in the positive situation because the wheat -- the result is targeting to increase yield for wheat. And currently the price for wheat which because of the situation what's going on in Ukraine, the price of wheat are going up. So the interest of the farmers to increase yield is going up according to the price of the wheat. And when we are investing a lot in your in your crop, in crop protection and because of season everything, so if you can give the publicity that your yield will increase as well, it's something that you will always have been interested in. So bottom line, I think that the product that can increase yield for wheat week during this year and probably also next year, it's very positive. And this is why one of the things we are now evaluating is production capacity for next year because if we will see the same trend for wheat price due to what's going on in the world. So I think that we should try to increase our production capacity for the year 2023. I believe it will be -- it could lead to a nice demand. So further we can improve yield performance for a crop such as yield -- such as wheat, sorry.
- Unidentified Analyst:
- All right. And maybe just one more question. You mentioned AgPlenus looking at potential additional partnerships in addition to the ongoing Corteva partnership. So could you talk a little bit in general and perhaps give us a little bit of color on perhaps the different factors that Corteva could be weighing and looking for a potential partnership?
- Ofer Haviv:
- First, I would like to take advantage on this question and say once again that we are very excited to have Dr. Brian Amber, the new CEO of the company. I think that from the short time of working with him, I'm quite excited and looking forward to see how he's going to take the company to the next level. He already started to think about how to expand activity in addition to what we are doing in the area of herbicides. So I'm really looking forward to see how -- on the progress of the company under his guidance. With respect to your question, so in previous presentation of AgPlenus we shared our pipeline in the area of herbicides. And we listed a few targets in our -- few targets within that we look them as a target for developing of herbicides. And some of them are today part from our relationship with Corteva, and we can't disclose much what's going on in this pipeline, except that we are expanding according to plan. And we need of course to respect our partner's expectation not to share this type of information. In addition to the targets that are, apart from the relationship with Corteva, we have additional targets which we are managing in our external -- internal pipeline. And one of them is APTH 1 which we gather a lot of information around it. and gather information, and this is something actually that we learned, and this is something that again and we already started talking with new companies is that we are not looking just on a specific group of molecules that show the indication that they're guiding to the target. They are more looking to information around the target, and they are looking for different types of chemistry that's abiding to this protein. So this is the type of information that now we are gathering around our target protein. And this is the type of information which we are now sharing with different world-leading ag chemical company. And later on at time of request we're generating additional information and data on the specific target and the specific chemistry that we will validate for this target. And I believe that this could lead to a collaboration with one of these companies, assuming that the information that we generate will create enough interest to enter into this type of relationship. And I think that what is very interesting is what AgPlenus is doing. This is something that we emphasize again and again, is that we are focusing on new mode action, which to develop and to focus on in the area of herbicide. So this is why we believe that, again, it's biology, it's chemistry, if we'll have the result that we are looking for, it could lead to a collaboration around one of this -- around our leading protein. And the chemistry that we already discovered show a nice indication in different assays with their ability to act later on as a herbicide.
- Operator:
- The next question is from Nathan Weinstein of Aegis Capital.
- Nathan Weinstein:
- So maybe I can just start out on Biomica. Checkpoint inhibitors have shown efficacy in a broad range of solid tumor types. So I'm just curious of the inclusion criteria for the upcoming study of BMC128 which specify certain types of cancer or all-comers?
- Ofer Haviv:
- Your question is what type of cancer that we are going to validate the BMC128?
- Nathan Weinstein:
- Yes, exactly.
- Ofer Haviv:
- Yes. So I think that if I'm not wrong, in my script I mentioned that it's a lung, kidney and skin, melanoma.
- Nathan Weinstein:
- Okay. So I must have missed that in the prepared remarks, but thanks for reminding me. And then the second question, just shifting gears to Canonic, looking beyond revenue at the early stage of this launch, maybe what other metrics should we be considering to track the progress of the first products in Israel? And for example, could you speak to the consumer awareness trend so far in 2022?
- Ofer Haviv:
- Yes. I think that at least in 2022 we will so it will be -- mainly come from the Israeli market. And the Israeli market is really driving from a THC concentration and the quality and the look and the feel and smell of the product itself. And this is why we are looking not of our second product in the -- in MetaYield family. But my expectation is that the main growth for Canonic will come from Europe. I think that the second family, product family which we are focused on, which is the Precise, which we are expecting to launch in 2023. I think that this is the type of product that could be more relevant to European market where here we are talking about specific medical cannabis products with a clear indication, medical indication on the effect of the cannabis on specific pain or disease. And I think that this is where we will start to see the revenue going up very -- in a significant way. So yes, we probably should see a reasonable revenue from this activity in Israel. But what I think what I see Canonic's future really making in a big way is mainly when the Precise family will be ready for the market and when we will introduce those products not just to the Israeli market but also to Europe. Israeli market will mature. And the definition won't be just THC and CBD, and it will include additional parameters and then I think that we can be -- we can differentiate from the other companies and with our products. So to shorten my answer, year 2022 still we will focus on the Israeli market, with the MetaYield product. The second wave of product with higher THC is expected to capture their market share in Israel. But the main growth, I believe that it will come from Europe and from the Precise family.
- Operator:
- The next question comes from Stephen Goldman .
- Unidentified Analyst:
- Okay. So very briefly, I have some questions generally about your financial plans, a question about your CRISPR program, and then I have a couple of questions about each of your 4 main subsidiaries. So with respect to the financial aspect, we've heard that you have $54 million approximately as of December 31, and if there are plans to raise money. In the past, you've discussed unlocking shareholder value by doing one or more IPOs of your subsidiaries. I know the biotech market as a whole has not been in the positive mood lately. So do you still have plans to do that?
- Ofer Haviv:
- I think that at the current stage our main focus is on a private realm with strategic partner or with private investors, and it could be some existing financial capital or financial institution. And I believe should be the next step in the current margin conditions. And only then we will start when the market -- the capital market will stabilize. And then I think that we should start looking into the direction of a public offering. With this regard, of course, at this stage we prefer to look for potential investors, strategic investors that they see the value of the technology and partners of our subsidiaries institutions but if there will be relevant proposal of course we will consider it as well. I think that from my perspective, especially these days when the world is -- start to show more understanding to the importance of the issue of food supply stability, I think that the potential for companies like to advance and to increase the awareness to their activity is in positive trend. And I'm really looking forward to see how it will impact the progress of this company. And so this is I think that they are really . And when you're talking about the it's always when you have -- if you have some achievements and interesting results coming from the clinical trial, this could be also a very interesting point to evaluate the opportunity to take the company public. But still to -- I believe to reach this point when we start to begin to looking to the opportunity to take this company to the public market, we would like in between the 2, raise the money in the private funds and I described earlier.
- Unidentified Analyst:
- Now when you say that, are you talking about raising money at the subsidiary level?
- Ofer Haviv:
- Yes.
- Unidentified Analyst:
- Okay. All right. Because that would be presumably less dilutive. Is it your view that -- it's certainly my view that the value of each of the subsidiaries could actually be higher than the value of Evogene itself. Any comment on that?
- Ofer Haviv:
- I'm not sure that I can comment on something like this. You can imagine as the company's CEO I believe that each one of our subsidiary -- in our presentation that we published today, which I highly recommended that everybody in this call to review, there is one slide that we could, where it take -- do some comparison between our leading core subsidiary, the company in the same segment, and what is the current valuation if they are public or what was the valuation in the last time they raised money. And this could a message on what could be the valuation of our subsidiary. Of course we need to make sure that you compare between our subsidiary to the company that's like where our subsidiary are, but it still can give you an indication on what could be or maybe what should be the value of our subsidiary if you raise the money. No doubt that the current market cap of Evogene is not something that helps the subsidiaries to really to capture the real value, but it can give you an indication of what it could be if they will be completely independent and this is what we are focusing now on.
- Unidentified Analyst:
- Okay. Briefly on Evogene's role with the CRISPR. I know that you have press release, including the press release in November, your involvement in the CRISPR-IL consortium. And specifically I understand that Dr. Emmanuel, who is our VP of New Directions at Evogene is actually Chairman of that consortium. And there has been discussion by you in the past using CRISPR in the development of some new products. Can you shed any light on what is happening with that?
- Ofer Haviv:
- First, everything that you described now is correct. Evogene is involved and actually leading the biggest, the largest consortium of companies and academic institutions which are focusing on developing innovative and breakthrough technology in the area of genome editing, this consortium is called CRISPR-IL, and it's funded by the Israeli government. I think all the leading in Israel consortium. And we are developing in this consortium, mainly using AI machine, what is called guided RNA, which this is a very, very important piece from -- to ensure the accuracy and efficiency of genome editing in human or in plants or in animal. So it's a very important work that we are doing. And we at Evogene, we have the rights, not necessarily inclusive rights, but we have the right to own the technology that we are involved in developing in, and it's almost is doing. And it's really advancing nicely. And we're just looking in the last quarter of last -- of previous year. We also announced that Israel government approved the extension of the consortium by another 1.5 years. So this is what we are doing there. And all of this activity is passed from generator, our tech engine. What we -- how we are going to commercialize the value of this activity, this is something that we are now evaluating. I'm sure that we can use it in the ag world for developing unique products for the agriculture and the food industry. You can get it also to other industries, to different type of medical treatment. And one of the questions, if we ask ourself, if we would like to build a service provider or really to try to use the technology to develop products. But this is something that probably we will -- when we finalize the internal discussion we would be able to share more information. But the potential here is very, very big, the technology is very unique and show a very nice performance. Still, we are asking ourselves okay, what will be the next step? And this is something that is not clear to me because there is so many avenue, and we need also to make sure that we have enough financial resources to make it happen. So this is where we are today with this regard.
- Unidentified Analyst:
- Okay. I'll move on to Biomica. And I think a little bit has been touched on this. But we haven't yet seen the trial design for BMC128, although you have disclosed that you've entered into a supply agreement with Bristol Myers for their PD-1 checkpoint inhibitor Opdivo. But when do you expect to release the details of your trial design? And secondly, when do you expect to dose your first patient?
- Ofer Haviv:
- So this is the toughest question. Probably Elran, the CEO of Biomica is the right person to ask. I'm not sure that we are going to disclose all of this information. I don't know that we need to do. In high level, what we are planning to do is to recruit between 12 to 15 patient that didn't respond positively to the treatment by our checkpoint inhibitor. And they will enter to this trial while they're going to go to a second cycle of treatment. But this time it'll include the BMC128 together with Opdivo. And I think that what we also disclosed is that they will receive the BMC128 10 days or something like this before the joint treatment, and then they will receive the joint information. And honestly, I even think in a certain I don't know -- I don't have all the initial information maybe you can discuss this directly with Biomica's if you would like to do so. And I think this was your question or there was another part?
- Unidentified Analyst:
- Yes. When do you expect the dosing of the first patient?
- Ofer Haviv:
- I believe that it'll be in the first quarter, in the second quarter, the beginning, at the beginning of the second quarter. Yes.
- Unidentified Analyst:
- Okay. All right. That's great. And then recently, I guess a few months ago, you announced that Dr. Eran Segal has joined your scientific advisory committee. I had coincidentally been following Dr. Segal on Twitter because of his work. He's become a science star in Israel, but he's got a real specialty in microbiome therapeutics. And so my quite is will he be, or his lab be having a -- playing an active role in Biomica?
- Ofer Haviv:
- So first, yes, you're right, Professor Eran Segal which is a world leader in the field of competitional genomics and really mainly focusing on the microbial world, he joined to our scientific advisory board and very important evidence to the quality of what we are doing in Evogene. And yes, he's really interesting in what Biomica is doing. And I know that there is ongoing discussion between Biomica and his lab. And if there are area where we can work together, I think that what is unique and what Eran Segal's lab work is focusing on is mainly on the discovery phase while in Evogene, we are, yes, we are very strong in the discovery phase, but we are also focusing a lot of our effort on the optimization and the development phase. very nice synergy between his lab and Biomica activity. And I give green light for both sides to discuss and hopefully to find ways that we can work together. It will be amazing. I mean, to work with his lab, we are already working with Ada Yonath's lab together and Ada Yonath is a Nobel prize winner. So to also now with Eran Segal's lab, and it'll be another very nice accomplishment and compliment to Biomica quality and how serious this company in the way of the people
- Unidentified Analyst:
- That's great. He's quite an impressive gentleman. Let me move on to Lavie Bio, so the -- currently I understand you're looking for a new CEO, and I'm wondering how that search is going and when you expect to announce the appointment of a new CEO.
- Ofer Haviv:
- So one of the questions we are should we look ? So we decided to look in both places. And we are now working with headhunters and we are starting to conduct interviews. I believe that when we'll find the right person we will announce it. Currently, I'm acting as the -- my role is acting chairman, and we have the chief business officer, but you have also a temporary CEO. And I think that we are really, we are managing the company according to plan and to target, but no doubt we need to bring the right deal to the company and I believe that it's something that they should take in the next -- the upcoming, the next few months. So I really want to bring the right person that can take the company to the next phase. And it's one of -- one of the is going to be also to hopefully to the public market. So we are looking for somebody that has the right experience also for this type of task.
- Unidentified Analyst:
- Okay. That's what we look forward to during the results of the successful search. So you had mentioned, I guess, in your -- with your last speaker the price of wheat. And I understand because of the unfortunate Russian invasion of the Ukraine and Ukraine being such a major wheat exporter, that the price of wheat has actually skyrocketed. My understanding is that it's pretty much doubled in price since last year. So how -- is this affecting the way you're now marketing result, because I know last fall you were talking about results increasing in kind of net -- increasing net revenues per acre by about $20 per acre. Is that figure now double to $40? And how is this affecting you on the ground and in your marketing campaign?
- Ofer Haviv:
- So for this year, we start the marketing process in 2021. So to the event that took place in the last month, it won't have an effect on the pricing and the quantity that we produce and going to sell. This is usually something that you preparation at least 6 months before. So I think that if you are going to see an effect, it'll be more on the next season and we shouldn't underestimate this challenge because the production capacity, it's a significant issue because we are talking about a large microbe and we need to find the right third party that can produce for you the quantity, the microbe. And I think that this is one of the main task of Lavie Bio operational team, is to make sure that for the year 2023, during the wheat price will be where it is, we should increase the capacity, the production capacity, the sales force and then probably it could also have an effect on the price of our product because if -- the we can generate increase in parallel to the increase in the wheat grain price. So first, we need to make sure that we have the right capacity that can grain price will stay where it is now.
- Unidentified Analyst:
- Well, that makes sense. So with respect to the launch, I know 2022 you launched only in North Dakota or parts of North Dakota. And according to your presentation, it looks like you're expanding in the next year, for 2023 in Montana and the 3 Western Canadian provinces, Manitoba, Alberta and Saskatchewan. First of all, is that still your plan? And the next question is, are you planning to expand beyond those 2 states and 3 provinces in Canada? Like, for example, are you going to expand into Europe?
- Ofer Haviv:
- So the initial plan, the original plan is as you presented, which means we were planning to expand mainly in United States and also to Canada. But now we would like to accelerate the penetration, and we submit an application to start to market our product also to European markets. it might take a little bit longer because the regulatory process in Europe is different from the U.S. and Canada. But maybe it will change and there will be a way to accelerate the approval due to what's going on these days in the world, so let's see, let's see.
- Unidentified Analyst:
- Okay. And then with respect to LAV311, there you've indicated that you are doing regulatory filings in 2022 in anticipation of a 2024 commercial launch. But you've only mentioned the filings in the United States and California. But in your presentation you talk about your markets being North America and Europe. So will you be doing the regulatory filings in other states, provinces in Canada and in Europe? And if so, when do you expect to do those?
- Ofer Haviv:
- So we like to initiate the regulatory process in more than one place. But based on previous experience, the approval to market for such a product in U.S. is much shorter than the time needed in Europe. So we believe that launching the product in the commercial level, it probably -- we will initiate in the U.S. and probably in California or in other states in the West Coast in the U.S. But of course our target is also Europe. Actually, the -- all the field trial that we are conducting for this product is in Europe, we started in Europe and in Italy, and we expand to U.S. So yes, we would like to see this product in these 2 continents and other continents as well. But probably the first country that we will be able to start the marketing process, it will be U.S. mainly because of the regulatory process.
- Unidentified Analyst:
- Okay. So what's interesting about Lavie Bio compared to your other subsidiaries is that 28% of Lavie Bio was actually owned by Corteva, which is a multinational agricultural company, I guess the spin-off of DowDuPont. So how involved is Corteva in the operations of Lavie Bio and would they be willing to provide additional financing.
- Ofer Haviv:
- So Corteva has a representator in Lavie Bio Board. He is leading the ag biological activity in Corteva. So he's really having huge knowledge in the field. And I find -- I really enjoy working with him. And I see a lot of positive things having him as a board member. We have ongoing collaboration with Corteva in, I think, 3 different type of products. And it's really advancing nicely. And I think that there is a high implication from both teams, one to each other. I believe there will be product coming for this activity. And secondly, if you are working on corn and soybean, so there is only 2 companies in the world that you would probably would like to work with. One of them is Bayer and the second one is Corteva. And we are working with Corteva and we are very, very proud that we are working with them together. So so their involvement is in the Board level, which is really great, and also a commercial partner in the ROE level and which to will materialize to a product that will be marketed -- will be commercialized by Corteva.
- Unidentified Analyst:
- Okay. Let me move on to AgPlenus. In the past, but not today, you've referred to APTH 1 obtaining a lead status. And I think you announced that in November of 2020. And I had -- and your company has always talked about the next stage becoming -- of the molecule becoming an optimized lead. But I guess there's different language being used. So is APTH 1 becoming in -- is the plan still that it becomes an optimized lead sometime in 2022?
- Ofer Haviv:
- Okay. So thank you for this question, and I will elaborate a little bit about it. But even I think that probably I would like to let other people also to ask some questions if there are some more people still on the call, and we can definitely have later on an offline discussion, and I hope we'll be more happy to address all of your other question. So with respect to AgPlenus, so one of the things that we learned when you are talking with the big ag chemical companies is that their interest on a specific molecule is there, but they are much more interesting on a target. In other words, the package they are looking at is on a target, targeting a protein, with a single protient. But currently there is no protein -- a commercial product that is focusing on this specific protein. And they would like to see few that show evidence improve its blockage activity which leads to the death of the wheat. And not necessarily, it would like to be a specific molecule that has a nice performance, and this is the only information that you have. So think about the following, that we have to see a new mode of action a new protein, plus they will have to see few groups of chemistry to show that they have some efficacy with respect to this specific protein. So what we are doing this day is really trying to build this type of package in order to move to the next phase collaboration that we are interested in. So yes, we are still advancing APTH 1. This was the leading group of chemistry. But now -- these days we are also adjusting and focusing and spending our resources to chemistry to which to leap phase or to -- or even to phase. And they are all binding to the same protein. And why it's so important because from what we learned from the AgPlenus, the big company experience is that the previous success when you have such a package to reach at the end of the day a commercial product is much higher than you have only 1 or only 1 chemistry nice indication. So we changed our focus from -- on a single molecule to a protein and like cloud of chemistry that are binding to this protein because it was interesting what the industry is more interesting here. So this is why we changed the terminology and we are all focusing today on how to build a package around a protein rather than a specific chemistry.
- Operator:
- The next question is from Brett Reiss of Janney Montgomery Scott.
- Brett Reiss:
- The patients that start to use the G150 and G200 cannabis product, is that a kind of repeat prescription, once they start using it, they use it for quite some time? Or is it a kind of one-and-done prescription use?
- Ofer Haviv:
- So usually patients that are receiving prescriptions, they are renewing it every month again and again and again, literally it's a chronic pain, chronic disease. So they continue to buy cannabis products. And the good news is that what we saw especially with respect to G150 is that patients that brought our product for the first time, they continue to buy again and again. the prescription that they receive from the doctor is not for a specific product, it's for a product type, meaning they can go and buy one of the brands available that are in the category, which is called , so. And there is few -- there could be few products in each category. So the patient, yes, they will buy cannabis every month, but they can move from one brand to another brand and they're allowed to do so. So I hope that addressed your question. And as I said, a very positive news is that what we saw is that people especially G150 product once they continue to buy every month.
- Brett Reiss:
- Right. Right. Then with respect to spring wheat, I'm just interested in the feedback that you're getting from your distributor in North Dakota. I mean, I suppose they've shown it to a lot of farmers and not every farmer decides to use it. The farmers that do not use it, what is the typical sales resistant points? Is it price? Is it they just want to see that it works with maybe a fellow farmer's crop before they try it? Are they afraid it hurts their crop in any way? What's the typical sales resistance? And what is your counter, your sales people's counterargument to that?
- Ofer Haviv:
- So quantity, we still don't have this information. What I can tell you is that all the quantity that we were planning to produce this year, it wasn't huge. It wasn't -- because we wanted to make sure that we are going to have a full control on all the sales and the first year because we want to make sure that we are building the right reputation to our product, so I don't have the information if and what was the reason to -- not to use our product. I will tell you how do I see the situation. The first one, you need to educate the people to -- that such a product can make a difference. See, this is the main obstacle. It's not that they need to replace a product, they just need to buy and try it for the first time. And then usually what farmers are doing, they are buying a quantity that can give then enough information on the effects of this product and from the field. And if so, in this specific part of -- in the field it has a positive effect, so the year after they are going to buy for a much significant portion of the farm. And then they start to buy on a regular basis for all of the farms. So what I'm saying is that it's hard for me to see that people want to problem to sell our initial quantity. I think that what is very important is that we have a good impression on their validation -- in validation activity. And then you will see a significant growth the year after. This is how you usually introduce a new product to the market. And especially when you're talking about ag biological which is based on living microbe.
- Brett Reiss:
- Right. Okay. Ofer, is the window open for upper management and Board members to buy stock on the open market, should they decide to do that?
- Ofer Haviv:
- Well I checked it with our attorney. And currently we want we can do it now. We can .
- Brett Reiss:
- Not really a question, but some of the retail-type holders of the stock, their morale is bolstered up when they see insider purchases. I just lay that out there for you.
- Ofer Haviv:
- Okay.
- Operator:
- There are no further questions at this time. Before I ask Mr. Ofer Haviv to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin in 2 hours after the conference. In the U.S., please call 1-888-326-9310. In Israel, please call 03-92-55-901. Internationally, please call 972-3-92-55-901. Mr. Haviv, would you like to make your concluding statements?
- Ofer Haviv:
- Yes. Thank you. I would like to thank you everybody for participating in this analyst call. I'm really looking forward for Evogene's progress. And of course, we will be more than happy to continue to update you on our achievement, and thank you once again.
- Operator:
- Thank you. This concludes Evogene's Fourth Quarter 2021 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
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