Evogene Ltd.
Q1 2022 Earnings Call Transcript

Published: 27 May 2022

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to Evogene's First Quarter 2022 Results Conference Call. All participants are present in a listen-only mode. Following managements formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on May 26, 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, risks 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 expected path to value creation, including potential fundraising at the subsidiary level and untapping value in its subsidiaries, its and its' subsidiaries expected trials and their expected results, studies, product advancements, commercialization, launches, pipelines, milestones, potential collaborations, target markets and other plans for 2022 and beyond, expected cash 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 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 policy 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. I now hand over to Ofer Haviv, CEO of Evogene. Ofer?

[Ofer Haviv:]

Thank you, and good day, everyone. We appreciate you joining us today for the first quarter 2022 conference call. I will begin the call introducing some of the recent changes we have made to strengthen the management. Following that, I want to talk a little about Evogene's underlying computational predictive biology platform, our three AI technology engines and the business ecosystem built around each tech engine. I will then address the measure of funding mainly for our subsidiaries. And following that, I will provide an update on the subsidiaries activities and the recent milestones met. Elran Haber, the CEO of Biomica is joining us today and will give additional color on Biomica's activity as we have made a significant advancement there. Joining me today also is Mr. Yaron Eldad, Evogene's new CFO, and his appointment represents part of our recent changes to our management team. Yaron brings significant CFO experience to Evogene having filled various CFO position over the last 25 years in both public and private technology as well as biotechnology companies. I trust Yaron will prove to be a key asset to Evogene and its subsidiaries. Yaron will address to you in a few minutes and cover the Evogene financials. We also recently appointed Sassi Masliah as the Executive Vice President in charge of Corporate Development, and he will be responsible for Evogene's relationship management with its subsidiaries. Sassi has held various positions within Evogene since 2011, most recently as Evogene's Vice President for Legal Affairs and Corporate Secretary. I congratulate him on this promotion, and I know he will be excellent in his new role. Finally, joining Evogene's management team, we appointed Liat Foigel as Vice President Human Resources, having held various positions at Evogene since 2015, including most recently, Director of Human Resources. Liat has proven her capabilities over the years, and this is a key appointment, which will ensure we retain leading talent here at Evogene, especially at the time of a very tight labor market globally, including in Israel. I believe that for an interactive company at the crossroads of life science, the leading-edge technologies, it is critical that we attract and retain the best people. I congratulate Yaron, Sassi and Liat on their new positions and wish Evogene management the best success. And now to introduce some of the continued improvements, we have made to our technology and business processes. As I previously mentioned, we are uniquely positioned at the crossroad between big data, AI and life sciences, which is known as computational biology. Evogene's goal is to revolutionize the development process of new and novel life science-based products via our cutting-edge technologies. Our three tech engines relying on our computational predictive biology platform are the driving force behind our activities, and they serve as the underlying competitive advantage of each of our subsidiaries. With our MicroBoost AI, targeting to support the development of product based on microbes; ChemPass AI, targeting to support the development of product based on small molecules; and GeneRator AI, targeting to support the development of product based on genetic elements. Each engine addresses multiple development challenges and aims to solve the problem of finding the right product candidate out of multitude of potential, like finding a needle in the haystack. Our aim is to increase the probability of product success, while reducing development time, value risk and costs. Over the years, I have been asked, why don't you license out your technology? Our goal is to maximize the value we can capture from our technology through the end product developed by its use rather than became a simple technological service company. In other words, we feel that licensing out our solution without taking a share in the upside of the end product leaves significant value on the table. Based on this understanding, we have built around each of our tech engines and continue to build a business ecosystem. This is primarily in the form of independent subsidiaries, each of which empowers multiple product development or through strategic collaborations focused on the development of a specific product. Each ecosystem is both an interactive and also an iterative process work environment in which the more projects we embark on, the more enriched our databases and analysis capabilities that we can, contributing to better predictions down the road and improve the probability of success for each product on its own. We expect value to be generated through our equity stack in the subsidiaries or in the case of strategic partnerships through success-based payments and royalties generated from the end product. To support the expansion of our tech engines ecosystem, we have recently focused on automation of processes that previously required the intervention of a bioinformatics engineer to a fully autonomous implementation. This improved speed, reduced a road and most importantly, allows product developers to get more objective information in the product development process. Looking ahead, we aim to continue to invest in our tech engines, addressing more potential discovery and better solutions to development challenges. I would now like to address the matter of funding. As you know, global financial markets are facing the extreme at the moment, particularly in the U.S. for growth companies and even more so for companies in the biotech space. Last year, Evogene raised some capital at a much higher market valuation to support today's advancements at our subsidiaries. And thankfully, we continue to maintain a solid cash position, providing stable runway for the coming year. As of March 31, 2022, our consolidated cash, cash equivalents, bank deposits and marketable securities were approximately $44.6 million, which included $6.6 million held by Lavie Bio. As I updated last quarter, our 2022 net burn rate is expected to be similar to that of last year in the range of $26 million to $28 million, including Lavie Bio and $18 million to $20 million, excluding Lavie Bio, which manages its own cash position. While this gives us a long enough runway even in the current negative market environment, we continue to work to diversify funding sources at the subsidiary level. Our goal is to accelerate the subsidiary's growth and to strengthen their position as independent companies. As I will discuss in a few moments, we believe that we are at an inflection point stage, whereby we are meeting critical milestones and the inherent value of our subsidiaries is becoming increasingly obvious even if the market value of Evogene doesn't reflect it yet. Evogene's goal is to partner with value-adding companies and investors at the subsidiary level, who can correctly value and appreciate the potential from the product that our subsidiaries are developing. This will allow us to demonstrate, in a very public way, the subsidiaries very significant untapped value. We are currently in a number of discussions at various levels with potential strategic and financial investors towards potential fundraising and partnering and to the extent permissible under securities laws, we intend to provide updates. I will now move on to discuss our subsidiaries activities. We will start with Biomica, our subsidiary focused on the development of drug-based on the human microbiome. And as mentioned, I would like to introduce Elran Haber, CEO of Biomica, to the call. Elran, please?

[Elran Haber:]

Thank you, Ofer. We are very pleased with Biomica's living progress, which I want to briefly cover. In April, we announced an agreement with Sheba Medical Center, a global top 10 ranked hospital by Newsweek for joint microbiome clinical research. Together, we will conduct deep sequencing and high-resolution microbiome analysis of samples obtained from patients with inflammatory bowel disease, IBD. IBD represents an approximately $20 billion market opportunity. And over the past 20 years, multiple studies have shown the pivotal role of gut microbiome in the pathogenesis of IBD. The goal of this joint work will be to identify the potential profile of biomarkers and therapeutic entities in order to gain additional and deeper understanding of human microbiome in IBD patients. Our goal is to use those findings to expand our expertise in this field, bettering our ability to support development of new therapeutics. We expect this analysis will be highly complementary to our previous work on IBD. As we updated before, Biomica reported positive preclinical results in our IBD program following the evaluation of BMC twice weekly drug candidate in DSS-induced colitis model. We demonstrated that BMC's tolerability to significantly reduce intestinal tissue damage from inflammation. We hope to begin the scale-up development process of BMC to later this year in preparation for an initial clinical best production. Last week, we announced that the results from this work will be presented at the Digestive Disease Week, DDW, 2022 Conference by Biomica's CSO, Professor Yehuda Ringel. With regards to our drug candidate BMC128, a combination of four microbes for supporting immunotherapy, last year, we announced positive preclinical results. In a series of preclinical studies, BMC128, given in combination with immune checkpoint inhibitors immunotherapy, we were able to show significantly improved antitumor activity. Earlier this year, we received a clearance from the Israel Ministry of Health to proceed with the first-in-human Phase I study, which is set to be held at Rambam Health Care Campus, the largest health care center in northern part of Israel, and we are currently advancing towards the enrollment of the first patient. This Phase I study will evaluate the safety and tolerability of BMC128 in combination with BMS Opdivo in patients with non-small cell lung cancer, melanoma or RCC, renal cell carcinoma. BMC128 will be offered to oncology patients who have been found to be nonresponsive to immunotherapy treatments. So if BMC128 shows any clinical signal that would be a wonderful additional outcome. Earlier this week, we announced that we will be presenting at the 2022 ASCO Annual Meeting and that our work was also selected for the 2022 GRASP Advocate Choice Award. That ends my update. So back to you, Ofer.

[Ofer Haviv:]

Thank you, Elran. Moving on to the second company in the field of human health, Canonic, our subsidiary focused on the development of medical cannabis products. Focusing on the genetic of the cannabis plant was a good move from Evogene's perspective. The cannabis plant was an overlooked plant for which even relatively simple genetic step has made a huge impact, and it has the characteristics we were looking for. In October 2021, we moved ahead with full commercialization in Israel of our first two products from the MetaYield product line. Over these past few months, we have seen our brand awareness increase in Israel. I do note that while sales this year in Israel are still at an early stage and we remain modest, we've seen Israel as more of a test data market for us, and Europe is our main target market in the future. As part of our preparations for the planned 2023 European commercial launch, a first batch of unique cannabis variety was shipped in January of this year to a potential cultivation subcontractor in Portugal. Our current goal is to test our product under European growing conditions as well as finding and ultimately entering into commercial agreements with local growers and manufacturers in Europe. Canonic intends to introduce to the market additional products from the MetaYield product line in 2022. To this end, the Company employed Evogene's GeneRator AI to identify several genetic markers, including for increased THC levels. We recently showed a statistically significant increase of more than 20% in THC concentration in a target cannabis population using these genetic markers. In parallel, the Company is developing its Precise product line, targeting specific medical indications. Over the past two years, we conducted preclinical trials, which have identified cannabis varieties offering pain relief and anti-inflammatory operative. In January of this year, we announced positive results in Canonic preclinical studies that support the successful identification of specific cannabis varieties with anti-inflammatory and pain relief properties. We intend together additional clinical information over the course of 2022 to support the commercial launch of this product in 2023. I will now move to AgPlenus, one of our subsidiaries in the ag industry segment. The AgPlenus mission is a target-based design of novel and sustainable crop protection products based on small molecules. AgPlenus is currently working on expanding the data package regarding the Company's leading herbicide product candidate, APH1 as part of preparation for a potential future collaboration. In addition, together with Evogene's ChemPass team, AgPlenus is continuously working to expand computational and validation capabilities to enhance the discovery of novel certified compounds. Moving to Lavie Bio, our second subsidiary in the ag industry, which is aiming to improve agriculture productivity and sustainability through microbiome-based at biological products. During late 2021, Lavie Bio launched its crop inoculant named result for the 2022 spring wheat season. A few weeks ago, we announced that Lavie Bio successfully produced and fully sold its plant production quota to U.S. customers for result. I want to stress that this product result was launched to market at a very good time, and we believe that it can help contribute to secure global food supplies. Global wheat prices have recently increased significantly due to supply chain constraints and global shortages, which have been compounded by the world between Russia and Ukraine, the world's first and fifth largest wheat exporter, respectively. Current high wheat prices have made it highly economical for growers to explore ways to increase the wheat production by increasing yields. Our trials showed that result potentially contributes an additional three to four bushels per acre via yield improvements compared with industry benchmarks. Based on current wheat prices for farmers, this could provide growers an average of $30 to $40 in additional revenue per farmed acre, which is very significant. We expect that the demand for wheat yield improvement products will remain high for the foreseeable future. And this is the reason we are already working on expanding production for the 2023 growing season compared to our regional market penetration plan. Looking ahead, we are aiming to broaden result sales throughout North American markets, including Canada in the near term and later European markets. We are also working to expand our level to include additional crops such as small grains and oilseeds. With respect to Lavie Bio pipeline advancement, our bio-fungicide fruit rot program is continuing to progress. And during 2022, we expect to submit a regulatory dossier with the Federal U.S. EPA and California EPA for our leading candidate, LAV311. In summary, I hope I succeeded in demonstrating that as every quarter passes, our subsidiaries are all making continued advancement, reaching and surpassing their milestones. As you can imagine, we are very pleased with this achievement, which we view as a powerful demonstration to the quality and efficacy of our underlying tech engines, which support the discovery and development of this product. I hope to bring further advancements in the coming quarters, while working on demonstrating publicly the value in our equity, securing partners and ultimately, new financing options within our subsidiaries. With that, I would now like to turn the call over to our new CFO, Yaron Eldad. Yaron, please go ahead.

[Yaron Eldad:]

Thank you, Ofer. I would like to start by saying I am pleased to have joined Evogene. This is a company in which I see very significant potential. I'm very much looking forward to embarking on this journey with what I found to be a very strong and positive team. I will begin by reviewing our cash balance. Evogene continues to maintain a strong financial position for its activity with approximately $44.6 million in consolidated cash, cash-related accounts, bank deposits and marketable securities as of March 31, 2022. Approximately $6.6 million of Evogene's consolidated cash is appropriated to its subsidiary Lavie Bio. The Company does not have bank debt. During the first quarter of 2022, the consolidated cash usage was approximately $9.3 million or approximately $7.6 million, if excluding Lavie Bio. This cash usage this quarter included $1 million of foreign exchange expenses due to the dollar-shekel exchange rate differences and a decrease in marketable securities value and approximately $700,000 of nonrecurring expenses such as bonus payment to Evogene employees and establishing production capability to our subsidiary Lavie Bio. I remind that the estimated cash usage range for 2022 is expected to be $26 million to $28 million, of which approximately $7.6 million will be used by Lavie Bio. Let's now turn to our income statement. Revenues for the quarter were $237,000 in comparison to $333,000 in the same period for the previous year. Revenues were primarily due to the sales of Canonic products and a joint research project conducted by AgPlenus. R&D expenses for the quarter, which are reported net of nonrefundable grants received, were $5.6 million in comparison to $4.3 million in the same period the previous year. R&D expenses increased primarily due to

[Operator:]

[Operator Instructions] The first question is from Kristen Kluska of Cantor Fitzgerald. Please go ahead.

[Kristen Kluska:]

The first one I had was on Biomica. I was hoping to learn a little bit more about what we could expect at ASCO next week? And then also as it relates to the initial proof-of-concept data that's expected this year, could you touch on based on when you started the trial? What key questions do you believe you'll have some early insights into at this time?

[Yaron Eldad:]

Kristen, thank you for the question. So, yes, we are very excited to be presenting at ASCO next week. In ASCO, we'll be testing and showing the work with what has done and Biomica so far regarding the discovery and technical results. In addition, we've discussed and demonstrated the methods and design of our clinical study in which, obviously, the first and most important objective would be to monitor the safety and tolerability of BMC128 in combination with nivolumab. Since it's an open-label study, we are kind of hoping to be able to monitor and get early signals from additional clinical variables through the course of the study. The study is designed, as I mentioned on the call, to treat nonresponsive cancer patients with either non-small cell lung cancer, RCC or melanoma. And we already initiated the study and hopefully, very soon, we'll be enrolling patients. So once we enroll the first patient, we will announce it, obviously, to the investors in a press release.

[Kristen Kluska:]

And then for AgPlenus, could you talk a little bit more about the rationale for conducting more work ahead of a potential additional collaboration? So is this just based off of like feedback you've received in terms of more work that needs to be established? I guess I'm trying to understand what additional work you need to do in order to potentially gain more collaborations in light of what you've already reported here?

[Ofer Haviv:]

This is Ofer, and great talking with you. So, yes, I think that you described it correctly, we are in a discussion with different potential collaborators. And from this discussion, we learned that we should conduct additional work in order to address certain questions that will raise. As much as we gather more information, so our negotiation position is better and the interest is growing. So I think this is the main work that we are doing is just expanding the work to address additional questions, but not necessarily we were focusing on in the previous work.

[Kristen Kluska:]

And then for Lavie Bio, in light of the positive momentum we've seen in 2022, maybe can you talk about what work you need to do to really scale up in order to, one, expand the sites where this could be utilized, but then two, to expand to the label? And then maybe here, could you remind us the potential market opportunity for small grains and oilseeds?

[Ofer Haviv:]

So according to Lavie Bio business model, we are doing the production of the product itself through subcontractors, and we are working for this year, we work with one subcontractor. Next year, we are planning to work with more than -- we're talking to these two subcontractors. And maybe it's also worth to mention that you needed to decide on how much you want to produce a year before the actual selling season. So the quantity that we decided to produce for 2021, we made this decision in 2020, the quantity that we are planning to sell in 2022, the decision on how much we are going to produce took in 2021. And now we are going to take the decision on how much we are going to produce in 2023. And yes, there is enough subcontractors that can use their facility to grow. And so I think that's what we are more focusing now is on distribution channels to make sure that we can control and make sure that the product can reach to all the relevant customers. And we are now talking with different distributors in additional to United Agronomy that we are working with them already. And I believe that when there will be an agreement signed, we will announce it publicly. So with respect to production, and I think that we are in a good place. With respect to the marketing channel, we are working on it. Still, we are not going to jump like what is the quantity that we're going to produce for next year because we want to make sure that the quality of our product is according to our standards and the production will be exactly the way we want it. So it's going to be quite significant compared to this year, but I think that there will be a nice jump next year. But where we -- I think that we can move to full scale up, it's going to be 2024. And we intend to believe that the current market positive condition for Biomica for wheat will continue for the next few years. So it takes a while to close the shortage that we see today at the market with respect to retail production wheat grain and it's reflected in the wheat price as everybody is aware of. The potential is quite significant. Honestly, I don't have the numbers here in front of me. Maybe I can talk also with the Lavie marketing team, and we can send you separately more information on the size, such as product can reach you.

[Operator:]

The next question is from Nathan Weinstein of Aegis Capital. Please go ahead.

[Nathan Weinstein:]

Ofer, Yaron and Elran, so perhaps I'll just start with a couple on Canonic. First of all, I was just curious what maybe in Portugal, the interesting place maybe to begin cultivation. And then would you anticipate being able to service European demand solely from Portugal as your production base?

[Ofer Haviv:]

So in Portugal have to benefit for cannabis -- medical cannabis production in Europe. First, it's located in Europe and a part from the European Union. And second, they have the right climate most of the year to work cannabis with relevant cannabinoid concentration. So -- and this is why I think that in Portugal and actually also in Spain, you can find a nice number of cannabis grower that is willing to grow for a company like Canonic, their product. So this is the first -- the answer to your first question. The second is, yes, we will -- and our market is -- our end market in Germany. This is -- and market that we are focusing on. Our marketing team visited this country in a conference lately, and we are starting to build a relationship with local distributors and with local advisers to advise to build the right marketing efforts for this market. And yet, we believe that Portugal and if needed, also Spain, can grow for us enough cannabis for our future marketing plan.

[Nathan Weinstein:]

And then maybe just staying with the theme of Europe and potentially selling the cannabis into Germany. Like what are some of the features of that market, which make it attractive for you commercially? And then any challenges you foresee that you'd call out?

[Ofer Haviv:]

The reason the market is interesting for us is technically bright compared to other countries, it might rent in the regulatory process and the market is growing nicely. I think that the market there at least at this point of time, is more focusing on medical indication and it's a little bit different from what we see in Israel. In Germany, you need -- the doctor need to give a clear analysis on why he recommended for a patient to use cannabis and what product he is going to use. So, it's more close to the business model of drug versus food supplement. So I think that in Israel, it's less like -- it's not like a drug. So we need to prepare our -- we need to build our marketing approach more close as we are launching a drug, meaning you need to think about the doctors and the pharmacy and to be lot over there and less on the patients that are using the product. But in Israel, the audience that makes the decision, it's more the patient rather the doctors. So it's a different marketing approach. So -- and of course, when you interacted to comment on your specific product, you need to convince them with more data and more information. And this is why we are planning to launch our products only next year because we are now in the process of gathering the relevant medical data to support our products.

[Nathan Weinstein:]

Then switching gears for a question on Biomica. And I'm curious about the GMP production of the microbes. Do you have the infrastructure in place internally to produce enough quantities for your clinical plans? Do you work with outside production partners? Can you just sort of discuss the production side?

[Ofer Haviv:]

Sure. So the production of LBP, the live bacterial product is extremely complex, and we currently work with external vendor with the CDMO, the largest one, which is based in Europe. This facility is actually located in France and has the full experience and equipment in order to produce sufficient amount of those microbes in the strict conditions that they require. So, all of the production process has begun in Europe, in France, under GMP conditions as required for clinical production drugs.

[Nathan Weinstein:]

So I just had one final question. And this is one that we've talked about before, but -- and it may be a little early to bring it up, but in the case that a subsidiary becomes monetized in some fashion and moves out its own separate company, just hypothetically, are there more technologies and potential companies coming up on the Evogene platform that could take their place?

[Ofer Haviv:]

The answer is yes. The only reason that we are not expanding our activity into new areas is mainly because of focus and bad constraints. So when we -- hopefully, we will raise money to our subsidiaries, and they will be completely independent and will have their own financial resources. So then we will start to expand Evogene activity and the uses of our three tech engines into new area. We already in preparation, we are doing some early study, and we start to build some possible infrastructure for this expansion. But first, we need to make sure that the financial resources of our subsidiaries are stable. And then we can also shift our focus to a new adventure.

[Operator:]

The next question is from Brett Reiss of Janney Montgomery Scott. Please go ahead.

[Brett Reiss:]

First question, you said you sold all the new plant production on your spring wheat. Did you realize any revenues from that because I didn't see that included in the $237 million revenue number?

[Ofer Haviv:]

This revenue will be recorded only in the second quarter because we sold it only -- and we finished the production, and we ship the product during, I think, it was May, May or end of April. So, it will be in the second quarter.

[Brett Reiss:]

The $237 million revenues, which Canonic and -- forgive me, I don't have the release in front. Yes. Are you at liberty to give us a breakdown there? How much was contributed from Canonic?

[Ofer Haviv:]

Okay. So we didn't give this breakdown, but I can say that the majority of this number came from Canonic. We had some higher expectations from revenue from Canonic, but we have some limitation on production with the third party for us. We hope that we start to see the revenue increase from the Company activity in the second half of this year.

[Brett Reiss:]

Ofer, I just want to make sure I understood it. So the majority of the $237 million was from Canonic. Did I hear you correctly?

[Ofer Haviv:]

Yes.

[Brett Reiss:]

And yet there was headwinds that could have been even more?

[Ofer Haviv:]

Yes. But we worked with a few subcontractors that are supposed to grow for us the crop. And one of them, the quality of the crop wasn't according to our expectation. So it was a little bit lower than what we expected. But I think that in the second half of the year, there will be more supply and new type of products that we expected to improve the performance of Canonic for this year.

[Brett Reiss:]

Right. Now there's no seasonality to the Canonic sales. It should kind of off this baseline continuing to ramp up?

[Ofer Haviv:]

With respect to the demand, the demand is -- as we see it, is growing all the time. With respect to the seasonality, so the real season effect on the quality of the product, the best time to grow cannabis is starting in spring and during the summertime. So, there is some effect on the quality of the product due to the season. But the demand is there, and people all the time looking for high-quality products, which I think that our corn product is addressing this demand and the products we are planning to launch in the second half of this year will come from our grading program after we use our genomic market and expecting even to be with a better performance, which can have a better market penetration rate compared to our first two products.

[Brett Reiss:]

One last one. With conventional drugs that I'm more familiar with, if there are reimbursement protocols in place and additional studies, both those things in tandem tend to accelerate sales. Does that hold true for medical marijuana type products?

[Ofer Haviv:]

Yes, but probably not like as a drug. It has an effect, but not the same level of effect and it's really changing from one market to another market. In a market like in Germany that it's driven by the doctors that really decide what product the patient is going to use. So there, definitely, if you have stronger evidence, if we publish articles, so definitely, it will have a positive effect on the revenue. In Israel, I think that, yes, I mean, if you will publish results coming from the survey that you conduct between patients on your product or you have some preclinical data from experiment you conduct in the hospital, it's good, it's helping from marketing perspective. But I think that the market here is mainly driven from the concentration of the THC. And this is something that a significant portion of the market is -- this is the main criteria he's looking at. And then, of course, how the flower looks, smells, tests, so it's less medical indication.

[Operator:]

[Operator Instructions] The next question is from Brian Wright of ROTH. Please go ahead.

[Brian Wright:]

I have a couple of questions. Just wanted to start off with Lavie. There was initial production target that you were thinking about for 2023 for result? And is it kind of fair just without getting into numbers, but just like how do we think about the magnitude? Or are you now kind of thinking given the market conditions and the ability to sell it out real quickly here this year? Or are you thinking orders of magnitude 2x to 3x what you were originally kind of contemplating as far as production capacity or even something beyond that? Or am I getting too ahead of myself there?

[Ofer Haviv:]

So first, I would like to explain maybe this statement that we are expanding our production plans for 2023. It's all relied on our original plan, what we were planning before we saw the interest and the excitement in the market for product to increase for bio-stimulants improve yields. So, we had a certain amount we were planning to produce and we decided to increase it by -- in a significant quantity. And if I compare between 2022 to 2023, so a few fall, meaning more than 10x than what we were producing this year. So, it will be significant compared to what we did this year. This year, it was really to make sure that we can do the production correctly to make sure that we can do the feed coating, to distribute it. So it was the proof of concept. And please remember that when we make the decision on the production, it was in 2021 before the crisis in finance, eco finance. So -- and the original plan was in 2023, we are going to increase significantly the production. So as I said, we decided even to be more aggressive and it should be more than 10x than what we are told this year.

[Brian Wright:]

Okay. So, the original plan was 10x, and then now it's going to be more than that and yet to be determined on kind of the magnitude of more, is that a fair summary?

[Ofer Haviv:]

Yes.

[Brian Wright:]

Great. Can you give us a little more color on the BMC128, just kind of thinking on the timing for first enrollment? And then are you using genetic kind of markers as far as in the individuals you're kind of targeting to enroll? And is that part of the program?

[Ofer Haviv:]

Sure. So in regards to BMC128, as we previously announced, this is a combination of first-in-human, it's working close together in order to improve the antitumor activity for refractory cancer patients. I would say that in this study, we are hoping to be able to see, as I mentioned, the safety and tolerability first and to see some clinical signals. In regards to generic elements for including criteria, we are not looking for any generic criteria in order to include the patients. And hopefully, the first patient will be enrolled in the study any day. So that's kind of our expectation to have the first patient very soon.

[Brian Wright:]

Great. And then if you could just remind me, and I apologize, I shouldn't remember this, but off top my head, I don't -- can you remind me kind of what's the targeted size of the trial?

[Ofer Haviv:]

The targeted size, yes, sure. So altogether, we'll be enrolling 12 patients. Those patients would be either with non-small cell lung cancer, RCC or melanoma, of them have been previously responding on non-responding to all of the immunotherapies.

[Operator:]

There are no further questions at this time. Before I ask Mr. OferHaviv to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin two hours after the conference. In the U.S., please call 1-888-326-9310. In Israel, please call 03-925-5901. Internationally, please call 972-3-925-5901. Mr. Haviv, would you like to make your concluding statement?

[Ofer Haviv:]

Yes. Thank you. I would like to thank all of you for joining us, and thank you for your continued interest in Evogene. We look forward to speaking with you next quarter. Have a good day.

[Operator:]

Thank you. This concludes Evogene's First Quarter 2022 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.