On March 3, 2021 Evogene Ltd. (NASDAQ: EVGN) (TASE: EVGN.TA), a leading computational biology company targeting to revolutionize life-science product discovery and development across several market segments, reported its financial results for the fourth quarter and full year ended December 31, 2020 (Press release, Evogene, MAR 3, 2021, View Source [SID1234576012]).
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Mr. Ofer Haviv, Evogene’s President and CEO, stated, "2020 was a year of significant accomplishment for Evogene as we successfully realigned our organizational structure and core capabilities to dramatically accelerate the company’s progress and value creation. Our excitement at Evogene today is primarily due to two substantial value creators that have resulted from our long-term commitment to computational predictive biology (CPB) for the development of life science-based products. The first value creator is our growing group of highly focused subsidiaries in multiple key markets, each with what we believe are very attractive products under development and a unique capability to advance them relatively rapidly towards commercialization. The second value creator is Evogene’s powerful technology hub, our CPB platform and three dedicated engines: MicroBoost AI, ChemPass AI, and GeneRator AI, for products based on three core components: microbes, small molecules and genetic elements, respectively. This hub is allowing us, in addition to supporting our subsidiaries, to establish product pipelines in new fields of activity.
I would like to provide key information on our subsidiaries’ main achievements in 2020 and lead on to their intended future plans for 2021-2022."
2020 main achievements
Biomica
Immuno-oncology program – positive results in pre-clinical study were achieved.
Immuno-oncology program – initial scale-up and first GMP production of drug candidates, as preparation for first-in-man clinical trial, expected to be initiated in 2021.
Canonic
MetaYield product family – identification of leading lines to be further developed into commercial varieties, towards expected commercial launch in Israel in 2022.
Go-to-market strategy – signed an agreement with a commercial partner for cultivation and production of proprietary cannabis varieties, as part of the strategic goal to build an end-to-end value chain – from seed to product sale.
AgPlenus
Herbicide program – entry into a strategic collaboration with Corteva Agriscience (NYSE: CTVA), to develop a novel herbicide, based on pre-lead candidates.
Herbicide program – reaching a lead phase for lead candidate APH1, following the completion of field tests that demonstrated APH1’s effective control over a broad panel of weeds, including ones known to have resistance to existing herbicides. These results were confirmed in independent field tests, conducted by SynTech Research.
Lavie Bio
Bio-pesticide program – LAV312 showed positive results in protecting grapes from Botritis, in a trial that took place in an Italian vineyard. Product is expected to reach the market in 2024.
Bio-stimulant program – LAV211 was successfully combined with harvesting spring wheat in North Dakota. Based on results gained during the last three years, product launch is expected in 2022.
Future expected milestones
Biomica
2021
Inflammatory Bowel Disease (IBD) program – extend pre-clinical study.
Immuno-oncology program – initiate proof of concept, first-in-man study.
2022
IBD program – initiate first GMP production of drug candidates for IBD.
Immuno-oncology program – readout from proof of concept, first-in-man study.
Canonic
2021
MetaYield product family – reach first commercial variety; sign distribution agreements in anticipation for commercialization in 2022.
Precise product family – identify specific lines that exhibit distinct effect in model systems for reducing pain or inflammation.
2022
MetaYield product family- commercial launch and initial sales of first product in Israel.
Precise product family – reach first commercial variety for reducing pain or inflammation as preparation for commercial launch in 2023.
AgPlenus
2021
Herbicide program – reach a herbicide tolerance trait proof of concept for APH1.
Herbicide program / insecticide program – sign a licensing agreement for a leading candidate.
2022
Herbicide program – reach an ‘Optimized Lead’ phase for APH1.
Herbicide program – sign a strategic agreement for the development of an ‘Optimized Lead’ compound.
Lavie Bio
2021
Bio-pesticide program – complete LAV311/312 development towards regulation.
Bio-stimulant program – conduct pre-commercial trials for LAV211 in spring wheat.
2022
Bio-stimulant program – initial product sales of LAV211 for spring wheat.
Bio-pesticide program – file for regulatory approval for leading product candidate LAV311 / LAV312.
Mr. Haviv continued: "I hope you are as excited as I am about Evogene’s subsidiaries’ expected future milestones. But these are not all the highlights I wish to update you about today. Evogene is currently evaluating entry into various new fields of activity in which our technology could provide significant competitive advantages, such as:
Developing products based on microbes to address various market needs in the aqua-culture industry, using MicroBoost AI;
Drug optimization in human health, using ChemPass AI; and
Developing high quality plant-based food based on genome editing, using GeneRator AI.
2020 was Evogene’s coming of age and it is only the beginning. We enthusiastically look forward to continuing our progress, achieving our defined targets, and expanding the use of our technology into new fields of activity," Mr. Haviv concluded.
Consolidated financial results for the fourth quarter and full year ended December 31, 2020:
Cash position: As of December 31, 2020, the company’s consolidated cash, cash related accounts and bank deposits amounted to approximately $48.2 million. Approximately $13.0 million of Evogene’s consolidated cash is appropriated to its subsidiary, Lavie Bio.
The $48.2 million does not include $28.0 million received after year end from the company’s "At the Market Offering" (ATM) initiated in January 2021 and concluded during February 2021. The weighted average selling price under the ATM offering was $7.36 per share. As a result of such offering, Evogene exhausted the remaining amount under the shelf prospectus filed in July 2020.
During the fourth quarter of 2020, the company’s consolidated net cash usage was approximately $6.1 million, or $5.1 million, if excluding Lavie Bio. During the full year 2020, consolidated net cash usage was approximately $19.3 million, or $14.7 million, if excluding Lavie Bio, which is in the range estimated for the full year 2020.
For the year ending December 31, 2021, Evogene expects to see an increase in the cash usage as its subsidiaries enter advanced stages of product development and commercialization: Biomica is expecting to conduct its first in-man clinical trial, AgPlenus is expecting to conduct a broad field trial in its herbicide program towards an ‘Optimized Lead’, and both Canonic and LavieBio are preparing for their respective first product launches during 2022.
For the year ending December 31, 2021, we estimate that net cash usage will be within the range of $26.0 – $28.0 million. Excluding cash usage by Evogene’s subsidiary Lavie Bio, the company estimates net cash usage will be within the range of $20.0 – $22.0 million.
We do not currently have any bank debt.
Pre-funded warrants: A new line item on the balance sheet this quarter relates to pre-funded warrants that were issued in conjunction with the $12.0 million registered direct offering that was completed in November 2020. In accordance with the International Financial Reporting Standards, these warrants were recorded as a liability as of December 31, 2020. These warrants were exercised for ordinary shares of Evogene at the beginning of January 2021, and therefore will not appear on our balance sheet next quarter.
Research and Development ("R&D") expenses: R&D expenses, which are reported net of grants received, were approximately $4.8 million for the fourth quarter of 2020, in comparison to $5.2 million in the fourth quarter of 2019. This decrease in R&D expenses during the fourth quarter was mainly due to grants received from the Israeli Innovation Authority. For the full year 2020, R&D expenses were approximately $17.3 million, compared to $15.8 million in 2019. The increase in R&D expenses for 2020 was mainly attributed to payments made to third parties in connection with pre-clinical studies conducted for Biomica, field trials conducted in target locations for Lavie Bio, and an increase in non-cash expenses of $1.4 million for amortization of share-based compensation.
General and Administrative ("G&A") expenses: G&A expenses were approximately $1.7 million for the fourth quarter of 2020, in comparison to $1.1 million in the fourth quarter of 2019. The increase during the fourth quarter of 2020 was partly attributed to the impact of an industry-wide increase in the cost of directors’ and officers’ insurance. For the full year 2020, G&A expenses were approximately $5.3 million, compared with $3.8 million in 2019. For the full year 2020, the increase was also primarily attributed to the impact of the cost of directors’ and officers’ insurance as well as due to an increase in non-cash expenses of amortization of share-based compensation.
Operating loss: Operating loss for the fourth quarter of 2020 was $7.2 million, in comparison to $6.9 million for the fourth quarter of 2019. For the full year 2020, the operating loss was $24.8 million, compared with $21.2 million in 2019. The increase in operating loss during the fourth quarter and for the full year of 2020 is primarily attributed to the increase in the aforementioned operating expenses.
Loss: For the fourth quarter of 2020, the company’s loss was $8.8 million, in comparison to $6.7 million during the fourth quarter of 2019. For the full year 2020, the loss was $26.2 million, compared with $19.1 million in 2019. The increase in the loss during the fourth quarter and for the full year 2020 is primarily attributed to the increase in operating expenses and an increase in financing expenses mainly attributed to $1.9 million of non-cash expenses related to the revaluation of pre-funded warrants mentioned above.
Replay Information: A replay of the conference call will be available approximately two hours following the completion of the call.
To access the replay, please dial 1-888-326-9310 toll free from the United States, or +972-3-925-5904 internationally. The replay will be accessible through March 5, 2021, and an archive of the webcast will be available on the Company’s website.