Evogene Ltd.
Q2 2020 Earnings Call Transcript

Published: 10 Aug 2020

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to Evogene’s Second Quarter 2020 Results Conference Call. All participants are present in a listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, August 5, 2020. 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 their earnings releases, which states that statements made in those earnings releases and in the similar way on this earnings conference call that are not historical facts maybe deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements made herein speak only as of the date of the announcement of 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 second quarter 2020 conference call. Joining me today is Ms. Dorit Kreiner, our CFO. I will begin my comments today by addressing the impact of the coronavirus pandemic on Evogene. I will then provide a brief review of Evogene’s and its subsidiaries’ primary expected value-enhancing activities in the near future. Following my comments, Dorit will summarize Evogene’s financial results for the second quarter of 2020. We will then open the call for your questions. With respect to the impacts of the COVID-19 pandemic on Evogene’s operations, I am pleased to say that to-date, the impact has been minimal. As of today, the company has resumed full activity. While we are fully operational, I want to assure our shareholders that the company and its employees are working in compliance with the restrictions and guidelines provided by the Israeli health authorities and other applicable governmental authorities and will continue to do so. Although Evogene group’s internal operations have not been severely impacted by the ongoing pandemic, our ability to meet freely with partners and investors has been hindered over the past few months. We have attempted to overcome this limitation by conducting meetings over virtual platforms. I would now like to begin by giving the quarterly update. In May, Evogene announced its new branding, which marks the conclusion to the strategic change the company has been focused on over the past years. The goal of this change was to apply our world leading computational biology capabilities to important new market areas, both within and outside agriculture. Our unique computational biology capabilities aim to revolutionize life-science product development in human health and agriculture to substantially increase the probability of success, while reducing the time and cost of life science product development. These unique capabilities were developed for over a decade and with an expenditure of tens of millions of dollars and validated through collaborations with industrial leaders. As a result, our Computational Predictive Biology, the CPB platform, today incorporates an increasing number of deep scientific understandings together with multiple big databases and advanced artificial intelligence technologies. Until 2014, Evogene’s initial market focus was on decoding important aspects of biology in order to improve seed traits based on genetic modification. These capabilities were the basis for a significant expansion of our technology platform, over the past few years, which now provide us with substantial competitive advantages for the discovery and development of life science based products inside and outside of agriculture. In this regard, it is important to note that a substantial percentage of life-science products are based on microbes, small molecules and genetic elements, as their core components. Therefore, we established three distinct solutions addressing the discovery and development of life-science products based on these core components

[Dorit Kreiner:]

Thank you, Ofer. I will begin by reviewing our cash balance, which includes approximately $38.1 million in consolidated cash, cash related accounts and bank deposits as of June 30, 2020. Approximately $15.2 million of Evogene’s consolidated cash is appropriately to its subsidiary, Lavie Bio. During the first half of 2020, the consolidated cash usage was approximately $8.8 million, or $6.3 million, if excluding Lavie Bio. During the second quarter the consolidated cash usage was approximately $2.5 million, or $1.7 million, if excluding Lavie Bio. The low burn rate during the second quarter of 2020 is attributed to the following. Certain measures the company took to mitigate the impact of the COVID-19 pandemic on the Company, including a temporary reduction in salary-based expenditure and a cut back in secondary activities. Funds received attributed to the collaboration agreement AgPlenus signed with Corteva during the first quarter of the year. Grant received attributed to the ongoing Phenomics consortium. For the full year of 2020, we continue to estimate that our cash usage, excluding cash usage of our subsidiary Lavie Bio, will be within the range of $13 million to $15 million. The Company does not have bank debt. Let’s now turn to the statement of operations. R&D expenses for the second quarter of 2020 were $3.9 million, including non-cash expenses of $0.5 million for amortization of share-based compensation, in comparison to $3.5 million, including non-cash expenses of $0.1 million for amortization of share-based compensation, in the second quarter of 2019. While the actual R&D expenses remain stable from quarter to quarter, R&D expenses attributed to Lavie Bio increased, due to an increase in downstream development activities, which were offset by a reduction in other secondary activities, as mentioned above. General and administrative expenses for the second quarter of 2020 were $1.1 million in comparison to $0.8 million in the second quarter of 2019. Although the company decreased its cash burn rate during the quarter, we experienced an increase in general and administrative expenses mostly attributed to an increase in the cost of the company’s D&O insurance. Operating loss for the second quarter of 2020 was $5.2 million, including a non-cash expense of $0.9 million for amortization of share-based compensation mainly attributed to options granted to Lavie Bio employees, in comparison to $4.7 million, including a non-cash expense of $0.2 million for amortization of share-based compensation, in the second quarter of 2019. The loss for the second quarter of 2020 was $4.8 million in comparison to a loss of $4.1 million during second quarter of 2019. With that said, we would now like to open up the call for any questions you may have. Operator?

[Ofer Haviv:]

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

[Operator:]

Thank you. This concludes Evogene’s second quarter 2020 results conference call. Thank you for your participation. You may go ahead and disconnect.