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Evogene Reports Third Quarter 2018 Financial Results

REHOVOT, Israel, Nov. 14, 2018 (GLOBE NEWSWIRE) -- Conference call and webcast, today at 9:00 am Eastern Time

Evogene Ltd. (NASDAQ, TASE: EVGN), a leading biotechnology company developing novel products for life science markets, announced today its financial results for the third quarter ending September 30, 2018.

As outlined in the 2018 CEO letter to the shareholders, Evogene is in the process of implementing its new business strategy and supporting corporate structure, which is based on stand-alone companies, each focused on a distinct field, with access to Evogene's unique CPB (Computational Predictive Biology) platform for their field. This standalone structure is expected to accelerate commercialization efforts, making product development more efficient and reduce time to market. Today, Evogene’s subsidiaries and dedicated divisions are focused in the following distinct fields:  (i) Agriculture – Ag Chemicals, Ag-Biologicals and Seed Traits; (ii) Human Health – microbiome based human therapeutics; (iii) Industrial Applications – castor oil.

Each of these subsidiaries, with its own management and R&D team, has three main objectives:

(i) advance its product pipeline; (ii) establish its go-to-market strategy based on collaborations and/or direct sales; (iii) enhance the creation of its internal value and secure its own financial resources.

Evogene is rapidly advancing in the execution of its new strategy, the implementation of its new corporate structure and the achievement of the subsidiaries’ and divisions’ defined objectives; as is illustrated in the following highlights from the last quarter:

Agriculture:

  • The incorporation of Evogene's broad Ag-Chemicals division's activities to a stand-alone company is expected to be completed by year end.
  • A significant milestone was achieved in the Ag-Chemicals division’s next generation herbicide pipeline. Biological proof was demonstrated in lab assays of the binding of predicted molecule families to two novel target proteins, representing a new Mode-of-Action. These next generation herbicide candidates have the potential to overcome growing weed resistance with a high standard of safety as they address target proteins not present in humans.

Human Health:

  • Biomica recently announced the addition of internationally renowned experts in the fields of Gastroenterology and the Human Microbiome to its Scientific Advisory Board. This addition to Biomica’s scientific expertise will support the company’s upcoming steps towards its clinical development and is an important step in the creation of the required infrastructure for Biomica’s success as a stand-alone company.

Industrial Applications:

  • Evofuel is currently in a rebranding and renaming process to better reflect its new strategy. Evofuel has realigned its strategy in light of changes in the biofuel industry and initiated a change in its targeted market from the biofuel industry to the castor oil market for industrial uses and a change in business model – from generating revenues from seed sales, to mainly focus on partnering with castor oil producers on a revenue-sharing basis from oil and other final product sales.
  • Evofuel recently announced together with Fantini, an agricultural equipment manufacturer, a breakthrough in mechanical harvesting for castor bean. Mechanical harvesting is a major bottleneck in the conversion of castor bean to a fully modernized commercial crop and the combination of Fantini’s harvester with Evofuel proprietary seeds has demonstrated significant improvement in yield loss in field trials.

Ofer Haviv, Evogene's President and CEO, stated: “I am very happy with the progress achieved to date in the implementation of our overall strategy and we are expecting to complete the new corporate structure in the first half of 2019. As you recall the CPB platform is at the core of our activities and their main competitive advantage. During the third quarter of 2018 we completed the development of the PRISM platform, exclusively dedicated to our activities in Human Health. With these abilities in place, they are expected to greatly accelerate Biomica’s product pipeline. 

“We look forward to sharing with you the progress in our diverse activities and expect the remainder of 2018 to be a further demonstration of the CPB platform's capabilities.” - Concluded Mr. Haviv.

Financial results for the period ending September 30, 2018:

Cash position:  As of September 30, 2018, the Company had approximately $58.2 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of approximately $13.5 million for the first nine months of 2018 and approximately $4.0 for the third quarter of 2018. The Company does not have bank debts.

Evogene expects its cash burn rate for 2018 to increase to the range of $16-$17 million, from $14 - $16 million, assuming the company continues to operate according to the current course of business and assuming no significant change in the Dollar/ILS exchange rate. This increase is mainly due to a significant reduction of approximately $1 million in the company's forecast for its financing income for the year. Additional details are provided below in the review of the net financing expenses. 

Revenues primarily consist of research and development payments, reflecting R&D cost reimbursement under our various collaboration agreements, as reflected in our cost of revenues. The majority of these agreements also provide for development milestone payments and royalties or other forms of revenue sharing from successfully developed products.

Gross profit for the first nine months of 2018 was approximately $0.3 million in comparison to approximately $0.4 million during the first nine months of 2017. Gross profit for the third quarter of 2018 was approximately $0.1 million in comparison to approximately $0.2 million reported for the third quarter of 2017.

R&D expenses for the first nine months of 2018 were approximately $10.8 million in comparison to approximately $12.3 million in the first nine months of 2017. R&D expenses for the third quarter of 2018 were approximately $3.9 million in comparison to approximately $4.3 million in the third quarter of 2017. R&D expenses decreased following operating efficiencies achieved as a result of the new corporate structure initiated at the beginning of 2018.

Operating loss for the first nine months of 2018 was approximately $14.7 million in comparison to approximately $15.9 million in the first nine months of 2017. Operating loss for the third quarter of 2018 was approximately $5.1 million in comparison to approximately $5.5 million in the third quarter in 2017. The decrease in operating loss was mainly due to the decrease in R&D expenses as described above and a decrease in G&A expenses, which was partially offset by an increase in the business development expenses.

The net financing expenses for the first nine months of 2018 were approximately $0.2 million in comparison to net financing income of approximately $1.3 million in the corresponding period in 2017. The net financing income for the third quarter of 2018 was approximately $0.3 million in comparison to net financing income of approximately $0.5 million in the comparable quarter in 2017. This decrease in the first nine months of 2018 is mainly due to re-evaluation of marketable securities following the increase in the US treasury bonds interest rate. 

Loss for the first nine months of 2018 was approximately $15.0 million compared to a loss of approximately $14.6 million in the first nine months of 2017. Loss in the third quarter of 2018 decreased to approximately $4.8 million compared to approximately $5.0 million in the third quarter in 2017.

Conference Call & Webcast Details:

Evogene’s management will host a conference call to discuss the results at 09:00 AM Eastern time, 16:00 Israel time. To access the conference call, please dial 1-888-668-9141 toll free from the United States, or +972-3-918-0609 internationally. Access to the call will also be available via live webcast through the Company’s website at www.evogene.com.

A replay of the conference call will be available approximately three hours following the completion of the call. To access the replay, please dial 1-888-326-9310 toll free from the United States, or +972-3-925-5901 internationally. The replay will be accessible through November 16, 2018, and an archive of the webcast will be available on the Company’s website through November 18, 2018. 

About Evogene Ltd.:

Evogene (NASDAQ, TASE: EVGN) is a leading biotechnology company developing novel products for major life science markets through the use of a unique computational predictive biology (CPB) platform incorporating deep scientific understandings and advanced computational technologies.

Today, this platform is utilized by the Company to discover and develop innovative products in the following areas (via subsidiaries or divisions): ag-chemicals, ag-biologicals, seed traits, integrated castor oil ag-solutions and human microbiome based therapeutics. Each subsidiary or division establishes its product pipeline and go-to-market, as demonstrated in its collaborations with world-leading companies such as BASF, Corteva, Bayer and ICL. For more information, please visit www.evogene.com

Forward Looking Statements
This press release contains "forward-looking statements" relating to future events. These statements may be identified by words such as "may", "could", “expects”, "intends", “anticipates”, “plans”, “believes”, “scheduled”, “estimates” or words of similar meaning. Such statements are based on current expectations, estimates, projections and assumptions, describe opinions about future events, involve certain risks and uncertainties which are difficult to predict and are not guarantees of future performance. Therefore, actual future results, performance or achievements of Evogene may differ materially from what is expressed or implied by such forward-looking statements due to a variety of factors, many of which beyond Evogene's control, including, without limitation, those risk factors contained in Evogene’s reports filed with the appropriate securities authority. Evogene disclaims any obligation or commitment to update these forward-looking statements to reflect future events or developments or changes in expectations, estimates, projections and assumptions.

Evogene Investor Contact
Nir Zalik
IR Director
IR@evogene.com
972-8-931-1900

US Investor Relations:
Vivian Cervantes
PCG Investor Relations
vivian@pcgadvisory.com
646-863-6274

 
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands (except share and per share data)
 
  As of
September 30,
 As of
December 31,
   2018   2017 
  Unaudited Audited
CURRENT ASSETS:    
Cash and cash equivalents $  5,710   $  3,435  
Marketable securities  40,001   59,940 
Short-term bank deposits  12,500   8,380 
Trade receivables  236   132 
Other receivables and prepaid expenses  1,566   904 
     
   60,013   72,791 
LONG-TERM ASSETS:    
Long-term deposits  21   19 
Property, plant and equipment, net  3,632   4,792 
     
   3,653   4,811 
     
  $  63,666   $  77,602  
     
CURRENT LIABILITIES:    
Trade payables $  784   $  1,110 
Other payables  2,652   2,934 
Liabilities in respect of government grants  1,028   104 
Deferred revenues and other advances  598   516 
     
   5,062   4,664 
     
LONG-TERM LIABILITIES:    
Liabilities in respect of government grants  2,761   3,438 
Deferred revenues and other advances  36   89 
Severance pay liability, net  32   33 
     
   2,829   3,560 
SHAREHOLDERS' EQUITY:    
Ordinary shares of NIS 0.02 par value:
Authorized - 150,000,000 ordinary shares; Issued and outstanding – 25,754,297 and 25,750,547 shares at September 30, 2018 and December 31, 2017, respectively
  142   142 
Share premium and other capital reserve  187,349   186,268 
Accumulated deficit  (131,989)  (117,032)
     
Equity attributable to equity holders of the Company  55,502   69,378 
     
  Non-Controlling interests  273   - 
     
Total equity  55,775   69,378 
     
  $  63,666   $  77,602  
         


 
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
U.S. dollars in thousands (except share and per share data)
 
  Nine months ended
September 30,
 Three months ended
September 30,
 Year ended
December 31,
   2018   2017   2018   2017   2017 
  Unaudited Audited
           
Revenues $  1,112   $  2,647   $  367   $  748   $  3,381  
Cost of revenues  825   2,211   276   546   2,845 
           
Gross profit  287   436   91   202   536 
           
Operating expenses:          
           
Research and development, net  10,828   12,319   3,883   4,301   16,987 
Business development  1,610   1,264   526   443   1,686 
General and administrative  2,571   2,781   785   960   3,810 
           
Total operating expenses  15,009   16,364   5,194   5,704   22,483 
           
Operating loss  (14,722)  (15,928)  (5,103)  (5,502)  (21,947)
           
Financing income  1,196   1,769   328   563   2,125 
Financing expenses  (1,423)  (444)  (35)  (85)   (1,005)
           
Loss before taxes on income  (14,949)  (14,603)  (4,810)    (5,024 )   (20,827 )
Taxes on income  34   11   18   -   11 
           
Loss $  (14,983 ) $  (14,614 ) $  (4,828 ) $  (5,024 ) $  (20,838 )
           
Attributable to:          
Equity holders of the Company  (14,957)  (14,614)  (4,802)  (5,024)  (20,838)
Non-controlling interests  (26)  -   (26)  -   - 
           
  $  (14,983 ) $  (14,614 ) $  (4,828 ) $  (5,024 ) $  (20,838 )
           
Basic and diluted loss per share, attributable to equity holders of the parent $  (0.58 ) $  (0.57 ) $  (0.19 ) $  (0.20 ) $  (0.81 )
           
Weighted average number of shares used in computing basic and diluted loss per share  25,753,111   25,647,266   25,754,297   25,745,887   25,673,276 
                     


 
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
   Nine months ended
September 30,
 Three months ended
September 30,
 Year ended
December 31,
   2018   2017   2018   2017   2017 
  Unaudited Audited
Cash flows from operating activities          
           
Loss $  (14,983 ) $  (14,614 ) $  (4,828 ) $  (5,024 ) $  (20,838 )
           
Adjustments to reconcile loss to net cash used in operating activities:          
           
  Adjustments to the profit or loss items:          
           
Depreciation  1,507   1,624   506   533   2,145 
Share-based compensation  1,371   1,648   650   682   2,244 
Net financing expense (income)  150   (1,579)  (347)  (490)  (1,454)
Taxes on income  34   11   18   -   11 
           
   3,062   1,704   827   725   2,946 
 

Changes in asset and liability items:
          
           
Decrease (increase) in trade receivables  (104)  (799)  (107)  95   37 
Decrease (increase) in other receivables  (621)  177   131   127   221 
Increase in long-term deposits  (2)  (2)  -   (1)  (6)
Decrease in trade payables  (417)  (381)  (313)  (62)  (86)
Increase (decrease) in other payables  (294)  (122)  211   177   138 
Increase (decrease) in deferred revenues and other advances  29   5   (227)  (1)  (500)
           
   (1,409)  (1,121)  (305)  335   (196)
           
Cash received (paid) during the period for:          
           
Interest received  1,139   1,682   318   561   2,173 
Taxes paid  (23)  (14)  (6)  (3)  (14)
           
Net cash used in operating activities  (12,214)  (12,363)  (3,994)  (3,406)  (15,929)
                     


 
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
  Nine months ended
September 30,
 Three months ended
September 30,
 Year ended
December 31,
   2018   2017   2018   2017   2017 
  Unaudited Audited
Cash flows from investing activities          
           
Purchase of property, plant and equipment $  (256 ) $  (442 ) $  (103 ) $  (157 ) $  (590)
Proceeds from sale of marketable securities  33,434   13,812   12,337   2,697   22,737 
Purchase of marketable securities  (14,401)  (6,208)  (11,246)  (881)  (11,659)
Proceeds from (investment in) bank deposits, net  (4,120)  3,620   (6,000)  (1,500)  4,757 
           
Net cash provided by (used in) investing activities  14,657   10,782   (5,012)  159   15,245 
           
Cash flows from financing activities          
           
Proceeds from exercise of options  9   682   -   12   683 
Proceeds from government grants  221   266   68   -   339 
Repayment of government grants  (65)  (208)  (21)  (64)  (208)
           
Net cash provided by (used in) financing activities  165   740   47   (52)  814 
           
Exchange rate differences - cash and cash equivalent balances  (333)  62   (62)  (2)  69 
           
Increase (decrease) in cash and cash equivalents  2,275   (779)  (9,021)  (3,301)  199 
           
Cash and cash equivalents, beginning of the period  3,435   3,236   14,731   5,758   3,236 
           
Cash and cash equivalents, end of the period $  5,710   $  2,457   $  5,710   $  2,457   $  3,435 
           
Wednesday, November 14, 2018 - 07:00