On May 26, 2020 Evogene Ltd. (NASDAQ: EVGN, TASE: EVGN.TA), a leading computational biology company targeting to revolutionize life-science product development across several market segments, reported its financial results for the first quarter, ended March 31, 2020 (Press release, Evogene, MAY 26, 2020, View Source [SID1234558441]).
Ofer Haviv, Evogene’s President and CEO, stated: "I would like to update that during the COVID-19 pandemic, the company and its employees have been working in compliance with the guidelines provided by the Israeli health authorities to ensure the health and safety of our employees. I would like to thank our employees for their great efforts and commitment during this period of time. I am pleased to share that Evogene’s operations were not significantly impacted and that, as of today, we have almost resumed full activity, in line with the official guidelines. The company has taken certain steps to strengthen its ability to withstand the impact of COVID-19 and I am pleased to share that, as of today, we have not found it necessary to change any of our main targets and goals for 2020 and we have even succeeded in decreasing our cash burn rate forecast for the year.
"Last week, we unveiled Evogene’s new branding, which we believe reflects the company’s expanded vision and new business model and will facilitate clearer communications with potential partners and investors. This re-branding is the outcome of an evolution the company underwent in recent years that led Evogene to broaden its vision beyond plant genomics and focus on new target markets outside of agriculture.
"Established as a spin-off from Compugen in 2002, Evogene was initially focused on applying its capabilities in computational biology in agriculture and more specifically, on improving seed traits via genomic modification. This focus shifted following changes in this market and in consumer tastes that led Evogene to broaden its vision and focus on several new target markets.
"In the past years, management took a series of steps that paved the path to its new value proposition. Two key decisions underlay this development; the first was expanding Evogene’s technological capabilities in computational biology to include the development of products based on microbes and small molecules, in addition to genomics, and the second was to expand Evogene’s focus in and beyond agriculture, to human health.
"These decisions led to the creation of the two main pillars of our new offering – our computational biology technology, the CPB platform, and our rapidly growing subsidiaries.
"With respect to the CPB platform, a deep understanding of biology, combined with disruptive computational technologies, including artificial intelligence and big data, have led to the birth of this powerful platform. The platform provides tailor-made solutions for the discovery and development of products based on microbes, small molecules and genetic elements for life-science based industries, including: human health, agriculture and industrial applications. With these new capabilities, we are ready to engage with world leading companies across diverse market segments focusing on different product types.
"Before elaborating on our subsidiaries, I would like to note that in parallel to the establishment of our powerful technology, we utilized the CPB platform in certain market segments to internally build product pipelines. The subsidiaries established over the past few years were built on these internal product pipelines to advance existing and future product candidates towards commercialization in a defined market segment, using the CPB platform through an exclusive license for its field. Each subsidiary may decide to develop and commercialize its products independently or through strategic collaborations.
"It is important for me to note, that each subsidiary has several upcoming milestones, which mark their development roadmap and these can be viewed in the presentation filed last week. I am happy to share that during the first quarter of 2020 AgPlenus reached one of these milestones with the announcement of their collaboration with Corteva for the co-development of new Mode-of-Action herbicides, based on herbicidal candidates discovered by AgPlenus. We see this collaboration to hold great promise." – Continued Mr. Haviv.
Additional announcements made by subsidiaries during the first quarter of 2020:
Biomica entered an agreement with Biose Industrie for scale-up and GMP production of drug candidates BMC121 & BMC127 for its immuno-oncology program, which is intended to support the preparation towards anticipated first-in-man proof-of-concept clinical trials.
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Canonic entered into an agreement with Hadassah Medical Center for pre-clinical studies to support the development of Canonic’s medical cannabis products, focusing on inflammatory indications at Prof. Reuven Or’s laboratory.
"I am very pleased with the progress we’ve made so far as a company and am confident that we have a solid strategy that will prove fruitful over the next few years. We will continue to develop the CPB platform and each subsidiary will be accountable to their milestones, while at the same time we will support them in any way possible. We are ready to continue to harness our technology, forging new strategic partnerships, and to benefit as a shareholder from our subsidiaries as their value is unlocked and becomes increasingly apparent." – Mr. Haviv concluded.
Evogene’s new investor presentation can be viewed at: www.evogene.com
Consolidated financial results for the period ending March 31, 2020:
Cash usage: For the full year of 2020, the company has provided an update on its estimated cash usage, excluding cash usage of Lavie Bio, from the range of $14-$16 million to $13-$15 million. The expected decrease in cash usage is due to adjustments in the company’s expenditures to better accommodate the impact of COVID-19, including a temporary reduction in salary-based expenditures and a cut-back in secondary activities that are not directly connected to the company’s near-term milestones, as well as an expected increase in revenues for the remainder of 2020, following the collaboration agreement AgPlenus signed with Corteva in March 2020. Reduced cash usage is expected to begin to take effect in the results of the second quarter of 2020.
Cash position: As of March 31, 2020, Evogene had approximately $40.6 million in consolidated net cash, short-term bank deposits and marketable securities. Approximately $16 million of Evogene’s consolidated cash is attributed to its subsidiary, Lavie Bio. The company’s consolidated cash usage amounted to $6.3 million during the first quarter of 2020. Excluding the cash usage of Lavie Bio, the company’s cash usage amounted to $4.6 million during the first quarter of 2020. Cash usage during the first quarter of 2020 included pre-paid expenses and non-recurring payments of approximately $0.8 million.
Evogene does not have bank debt.
Revenues for the first quarter of 2020, were $0.1 million versus $0.3 million in the same period the previous year. Revenues primarily consist of third-party research and development payments. These revenues represent R&D cost reimbursement and milestone payments under our various collaboration agreements. The majority of these agreements also provide for royalties or other forms of revenue sharing from successfully developed products.
Gross profit for the first quarter of 2020 was $36 thousand in comparison to $277 thousand in the first quarter of 2019.
R&D expenses for the first quarter of 2020 were $4.6 million (including a non-cash expense of $0.9 million for amortization of share-based compensation), in comparison to $3.5 million (including a non-cash expense of $0.1 million for amortization of share-based compensation) in the first quarter of 2019. R&D expenses in this quarter were attributed to product development activities of the Company and its subsidiaries, including fermentation, lab work and pre-clinical studies carried out by third parties as well as expenses relating to computational work.
Business Development (BD) expenses for the first quarter of 2020 were $1 million (including a non-cash expense of $0.7 million for amortization of share-based compensation), in comparison to $0.5 million (including a non-cash expense of $0.1 million for amortization of share-based compensation) in the first quarter of 2019.
G&A expenses for the first quarter of 2020 were $1.3 million (including a non-cash expense of $0.3 million for amortization of share-based compensation), in comparison to $0.9 million (including a non-cash expense of $31 thousand for amortization of share-based compensation) in the first quarter of 2019.
Operating loss for the first quarter of 2020 was $ 6.9 million (including a non-cash expense of $1.9 million for amortization of share-based compensation), in comparison to $ 4.7 million (including a non-cash expense of $0.2 million for amortization of share-based compensation) in the first quarter of 2019. This is mainly due to an increase of $1.7 million in non-cash expenses related to the amortization of share-based compensation, mainly attributed to options granted to Lavie Bio employees.
Net financing expenses for the first quarter of 2020 were $0.4 million in comparison to net financing income of $0.9 million in the first quarter of 2019. The increase in the net financing expenses during the quarter is due to the translation of Israeli Shekel denominated cash and marketable securities to U.S. Dollars.
Loss for the first quarter of 2020 was $7.2 million in comparison to a loss of $3.8 million during first quarter of 2019. The increase in loss is attributed to an increase of $1.7 million in non-cash expenses related to the amortization of share-based compensation, as described above, and to net financing expenses in comparison to net financing income in the first quarter of 2019.