Evogene Ltd.
Q1 2021 Earnings Call Transcript

Published: 26 May 2021

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to Evogene's First Quarter 2021 Results Conference Call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded, May 26, 2021. 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. 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 releases, which states that statements made in the earnings releases and in the 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 paths to value creation, its and its' subsidiaries expected trials, studies, product advancements, commercializations, launches, pipelines, milestones, potential collaborations and other plans for 2021 and 2022, the potential advantages of its technology and its anticipated entry into new fields of activity.

[Ofer Haviv:]

Thank you, and good day, everyone. We appreciate you joining us today for our first quarter 2021 conference call. Joining me today are, Mrs. Dorit Kreiner, our CFO; and Mr. Ido Dor, the CEO of our subsidiary Lavie Bio, which focused on ag-biologicals, the fastest growing segment in the ag-industry today. Following my initial remarks, Ido will provide an update about Lavie Bio and following Ido the weekly summaries Evogene financial results for the first quarter 2021. We will then open the call for your question. My remarks in today's call, we focus on our strategy for value creation to the Evogene subsidiary and its recognition by the capital markets. Before I reach this topic, I would like to recap the main topics I covered in the previous analyst call. Then, our broadly applicable Computational Predictive Biology platform, the CPB, and the three engines rely on this platform MicroBoost AI, ChemPass AI and GeneRator AI. If they didn't many times, we believe these capabilities provide a significant competitive advantage in the discovery and development of life-science based products in multiple industries. The CPB platform and the three engines aim to reduce time and cost of product development and most importantly to improve the provision for success to reach commercial product. Second, our proven ability to create subsidiaries in multiple life-science based fields by utilizing the CPB platform industry engine, which is subsidiary demonstrating its ability to rapidly discover and develop very promising product pipelines. We are pleased to see our subsidiaries receiving growing recognition for this pipeline by major companies in the field of focus. Lastly, I stated our intention to continue to initiate new activities in additional life-science based fields. In our last call, I mentioned by this new field, we are currently evaluating including using MicroBoost AI to identify microbes for the aquaculture industry and using ChemPass AI for drug optimization for human health.

[Ido Dor:]

Thank you, Ofer. I would like to begin by introducing myself. My name is Ido Dor and I serve as Lavie Bio's CEO, and I joined Evogene at the end of 2011 and held value of business and manager and related those, since 2015 I lead their biological division within Evogene, which we started off as Lavie Bio on February 2019. My background is in engineering and I held MBA and started my career in management consulting forward roughly six years followed by additional six years in leading sales and channel organization for SAP in Israel.

[Dorit Kreiner:]

Thank you, Ido. I will begin by reviewing our cash balance. Evogene maintain its strong financial position for its activities with approximately $70.1 million in consolidated cash, cash related accounts, bank deposits and marketable securities as of March 31, 2021. Approximately $11.8 million of Evogene's consolidated cash is appropriated to its subsidiary Lavie Bio. During the first quarter of 2021, our consolidated net cash usage excluding 27.1 million net raised to at the market offerings initiated January 2021 and concluded during February 2021, was approximately 5.2 million or 4 million, if excluding Lavie Bio. The low range case usage during the first quarter is mainly attributed to amount receipts for reimbursement of expenses for our collaborator. In March 2021, we announced a new ATM, and we had not sold any shares under this offering as of the end of the quarter. The Company does not have bank debt. Let's now turn to the statement of operations. R&D expenses, which are reported net of grants received were approximately 4.3 million for the first quarter of 2021, including a non-cash expenses of 0.3 million for amortization of share based compensation in comparison to 4.6 million, including a non-cash expenses of 0.9 million for amortization share-based compensation in the first quarter of 2020. In the first quarter of 2021, the actual R&D expenses slightly decreased, mainly due to the decrease in share based compensation. Business development expenses were approximately 0.6 million for the first quarter of 2021 including non-cash expenses of $0.1 million for amortization of share-based compensation in comparison to $1 million including a non-cash expenses of $0.7 million for amortization of share-based compensation in the first quarter of 2020. General and administrative expenses for the first quarter of 2021 were $1.5 million including a non-cash expense of $0.1 million for amortization of share based compensation in comparison to $1.3 million including a non-cash expense of $0.3 million for amortization of share based compensation in the first quarter of 2020. The increase is mainly attributed to the increase of the costs of directors' and officers' insurance, partially offset by a decrease in non-cash expenses of amortization of share-based compensation. Operating loss for the first quarter of 2021 was $6.3 million, in comparison to $6.9 million for the first quarter of 2020. The decrease in operating loss during the first quarter is attributed to the increase in revenues from collaboration agreements compared to the first quarter of 2020 and due to the decrease in aforementioned amortization of share-based compensation expenses. The loss for the first quarter of 2021 was $7.1 million in comparison to a loss of $7.2 million during the first quarter of 2020. The slight decrease in the loss for the first quarter is attributed to the reduction in operating loss, offset by an increase in financing expenses mainly attributed to exchange rate differences and revaluation of pre-funded warrants. With that said, we would now like to open up the call for any question you may have. Operator?

[Operator:]

Thank you. Ladies and gentlemen, at this time we begin the question-and-answer session. First question is from Kristen Kluska of Cantor Fitzgerald. Please go ahead.

[Kristen Kluska:]

Thank you. Thanks everybody for taking the questions. Have some for Lavie Bio. So with the recent announced hire of Mr. Putland as VP Commercial, how are you thinking long-term across your pipeline, which markets and geographies and products might be most appropriate for you to bring forward versus out of a partner? And then what are some of the key priorities he shared for the Company upon joining?

[Ido Dor:]

This is Ido. Well a rough person is joining to take a broad leadership of all the commercial activities. As we disclosed, the first target launch is targeted for North America, focusing on spring wheat and it's happening already in 2022. In parallel, we're working quite extensively on the second launch, which is planned there for the new generation product of bio-fungicide during 2024. Russ brings a lot of experience and knowhow from retail level from producer level and from our company levels, along more than 20 years of experience, mainly North America and then Canada and the U.S., but also in other parts of the world. Naturally, our products are targeting beyond North America and last we release also this part of the activity.

[Kristen Kluska:]

Thanks. And then for LAV312, on the back some of the data you recently reported here. Could you talk about what the latest has been on the formulation technology and the fermentation protocol? And in light of what you've already seen here, wondering if you've is that internally established a goal of what you might hope to see with some of these changes?

[Ido Dor:]

Yes, okay. So yes, we are working heavily on stabilizing the formulation extending the shelf life, reducing the cost of goods and also certain optimization approaches that targeting to increase the potential of the product for maybe additional crops and additional diseases. All of that is being validated in this season across multiple trials, multiple patients in Europe and U.S. and also plans for later this year, also in the Southern Hemisphere and the experiments we conducted in South Africa All of that should bring up to the situation where we finalize the formulation by the end of this year. So, we have few leading formulation both for LAV312 and both for LAV311. And once we finalized the leading formulations then we will choose the best of them, and these are the formulations that will be leading dossier that we are going to file in the first half of next year formulations.

[Operator:]

There are no further questions at this time. Therefore, I ask Mr. Ofer Haviv to go ahead with his closing statement.

[Ofer Havi:]

Hi, operator. We actually have some write-in questions we'd like to go through, if that's okay.

[Operator:]

Okay. Continue with the write-in questions.

[Unidentified Company Representative:]

Okay. So, this is Kenny Green from Edison Group. I'm part of the IR team at Evogene. So, we've had some write-in questions. I'd like to thank everybody who sent us questions for their continued interest. Our first question is about Biomica. When are we expecting to commence Biomica's first in human trials? How long would that trial be? And when do we expect those indication to results?

[Ofer Haviv:]

Hi. This is Ofer, and I will address this question. So, Biomica is really advancing nicely with its ongoing activity with respect to the immune oncology program. The expectation is that in the second half of this year, we will initiate the first first-in-man clinical trial in this program, and we already in quite advanced stage in discussion with a few medical institution here in Israel. And the expectation is that, this study will reach to conclusion during next year and we'll allow us to initiate the next phase.

[Unidentified Company Representative:]

Okay. Thank you. Second question about genomic. Do we intend for Canonic to receive exclusivity for their products and when can we expect Canonic's first sales?

[Ofer Haviv:]

So, Canonic is there again, advancing very, very nicely. Actually, we just now announced the agreement with respect to producing the product and distributing it. And this is message of our confidence on reaching to our target. The original plan is to launch the product during 2022, hopefully the first part of this year, and we are feeling comfortable with this expectation. Just to remind you the first product is going to be from the MetaYield family. And the idea is to distribute this product in a different marketing channels including pharmacy. We even started with some pharmacy, as preparation for this event. There is no expectations that there will be an exclusivity for specific pharmacy on marketing the product unless there will be fully committed to market the all quantity with the private we are looking for. But in this stage, we are not expecting for exclusivity at the first step. And as we mentioned in the past, this really market, this is just the first step. We start to look outside of Israel, as a next step forward Canonic product.

[Unidentified Company Representative:]

Okay, thanks. Third question, Ido, it's a Lavie Bio questions. When can we expect first sales from Lavie Bio?

[Ido Dor:]

Okay. So, the target is during the season of 2022. First product we target to sell is LAV211 and regarding specific timing along the year. So, we didn't disclosed what we are planning with respect to when we are planning to recognize the revenue. We are exploring few business models in parallel and the season is between April to November. So, somewhere on this, timeframe, I assume we will be able to disclose more, based on the model for revenue recognition that will need to apply.

[Unidentified Company Representative:]

Okay, final write-in question back to Ofer. If you are going to publicly list one of your subsidiaries overseas, will you only look at the U.S. exchanges or other countries?

[Ofer Haviv:]

So, when the time will come with respect to taking one of our subsidiaries public, and I'd say, it won't take too long. Probably, we will focus mainly on the American -- on the stock exchange in the state, NASDAQ probably, which this is probably the right place for a high tech and tech company like the one that we established here with the Evogene Group. But we can also think about maybe other markets that could be relevant for the specific type of company. Now Canada used to be or maybe still one of the leading capital markets for cannabis industry. So, this is probably something that we will evaluate it as well. But the main, the major markets that we consider as places that we would like to register our companies is the New York markets and mainly NASDAQ.

[Unidentified Company Representative:]

Okay, and that end the writing questions, and I'll hand back to the operator.

[Operator:]

There are no further questions at this time. Before I asked Mr. Ofer Haviv, the next question is from Brett Reiss of Janney Montgomery. Please go ahead.

[Brett Reiss:]

Thank you. The Lavie Bio commercial product that's going to be launched in 2022, are you going to have a North American distributor for that? And if so, who is it?

[Ofer Haviv:]

We are exploring and in discussion with few optional North American distributors and we hope that we will be able to share more in the next few months.

[Operator:]

There are no further questions at this time. Before I asked 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 two hours after the conference. In the U.S. please call 188-326-9310. In Israel, please call 03-9255-901. Internationally, please call 9723-9255-901. Mr. Haviv, would you like to make your concluding statement?

[Ofer Haviv:]

Yes, thank you. Thank you all for joining the call today. I look forward to updating you on our progress over the next few months. Thank you and good day everyone.

[Operator:]

Thank you. This concludes Evogene's first quarter 2021 results conference call. Thank you for your participation. You may go ahead and disconnect.