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Evogene Reports Second Quarter 2018 Financial Results

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REHOVOT, Israel, Aug. 08, 2018 (GLOBE NEWSWIRE) -- Evogene Ltd. (NASDAQ, TASE: EVGN), a leading biotechnology company developing novel products for life science markets, announced today its financial results for the second quarter ending June 30, 2018.

Ofer Haviv, Evogene's President and CEO, stated: "Since the initiation of our new corporate structure at the beginning of 2018, half a year has passed, and we are beginning to see the fruits of the new structure in each of our areas of activity. In each division we see product candidates advancing in the development pipeline alongside new product programs. Moreover, new collaborations have been formed, including those with key industry partners and we expect there is more to come. Last but not least, I am very happy to report that each division has assumed characteristics of a stand-alone entity, a process that we expect will accelerate in the second half of the year.

"Today I would like to give a few highlights of what has been achieved this past quarter:  

"In our Ag-Seeds division, we recently announced together with IMAmt, the largest Brazilian cotton growers' association, a collaboration in the field of insect resistance traits in cotton. Evogene will screen its insect control candidate genes and IMAmt will validate them in lab assays.  Following successful validation, the parties intend to enter negotiations for a commercial license agreement.

"In our Ag-Biologicals division, we recently announced achieving positive yield results leading to phase advancement in our bio-stimulant for wheat program. This phase advancement, from discovery to early development, is based on meeting efficacy criteria in spring wheat field trials with significant yield improvement. As we have stated before, we believe we will be able to launch our first Ag-Biologicals product in 2021.

"Additionally, we are moving forward in our bio-pesticides programs focusing both on diseases such as Fusarium in corn and on insects such as Corn Rootworm. In our Fusarium program we are advancing greenhouse testing and aim to, depending on results, announce phase advancement in the upcoming months toward further validation in fields.

"As for our subsidiaries, Biomica announced its chosen business focus and I am pleased to update on the progress achieved in each area:

  • Antibiotic resistant bacteria - Successful computational screen of tens of millions of small molecules for the identification of effective chemistry against one of the most common antibiotic resistant, hospital-acquired infections. The company will now enter biological in vitro assays for validation.

  • Immuno-Oncology – After obtaining relevant data, Biomica aims to use its proprietary PRISM platform to identify and characterize microbes relevant for the enhancement of cancer immunotherapy. Initial results are expected till the end of this year.

  • GI related disorders - Biomica recently integrated relevant Big-Data into its PRISM platform and have computationally identified a novel microbial consortia, predicted to carry out pivotal microbial functions that can potentially decrease inflammation in IBD patients.

"Finally, I would like to emphasize, once again, that the CPB platform is at the core of our activities. In the past, our use of the CPB platform was focused mainly on discovery activities, however given recent developments and progress in our pipeline, we are now applying these predictive tools which have benefited us in the discovery stage, to product development and optimization.

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

Financial results for the period ending June 30, 2018

Cash Position:  As of June 30, 2018, the Company had $62.3 million in cash, short-term bank deposits and marketable securities, representing a net cash usage of $9.5 million for the first half of 2018 and $3.6 for the second quarter of 2018. The cash usage during the first half of 2018 includes pre-paid expenses and non-recurring payments of approximately of $1.0 million, mainly in the first quarter of 2018. The Company does not have bank debts.

Assuming the currently expected course of business, Evogene expects net cash usage in 2018 of $14 to $16 million.

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

Revenues for the first half of 2018 were $0.7 million, in comparison to revenues of $1.9 million for the first half of 2017. Revenues for the second quarter of 2018 were $0.4 million, in comparison to revenues of $1.2 million for the second quarter in 2017. The decline in revenues and the related decline in cost of revenues reflects the net decrease in research and development cost reimbursement, under Evogene's various collaboration agreements, mainly due to the advancement of our multi-year collaboration with Monsanto from gene discovery and validation in model plants, which was largely preformed at Evogene, to pre-development efforts in target plants, conducted by Monsanto.

R&D expenses for the first half of 2018 were approximately $6.9 million in comparison to approximately $8.0 million in the first half of 2017. R&D expenses for the second quarter of 2018 were approximately $3.5 million in comparison to approximately $4.0 million in the second 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 half of 2018 was $9.6 million in comparison to $10.4 million in the first half of 2017. Operating loss for the second quarter of 2018 was $4.7 million in comparison to $5.2 million in the second quarter in 2017. The decrease in operating loss was mainly due to the decrease in R&D expenses as described above, which was partially offset by a net increase in business development expenses.

The net financing expenses for the first half of 2018 were $0.5 million in comparison to net financing income of $0.8 million in the corresponding period. The net financing expenses for the second quarter of 2018 were $0.1 million in comparison to net financing income of $0.4 million in the comparable quarter in 2017. This decrease in the first half of 2018 is mainly due to an increase in the USD/NIS exchange rate in the second quarter of 2018 which negatively affected the Company's Shekel based portfolio and unrealized re-evaluation of marketable securities following the increase in the US treasury bonds interest rate.

Loss for the first half of 2018 was $10.2 million compared to a loss of $9.6 million in the first half of 2017. Loss in the second quarter of 2018 increased to $4.8 million compared to $4.7 million in the second quarter in 2017. Despite a decrease in operating loss following the new corporate structure, as described above, the increase in loss was due to an increase in the net financing expenses.

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 August 8, 2018, and an archive of the webcast will be available on the Company's website through August 17, 2018. 

About Evogene: 

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. This platform is utilized by the Company to discover and develop innovative ag-chemical, ag-biological and ag-seed products (GM and non-GM), and by two subsidiaries; Evofuel, focused on castor seeds, and Biomica, focused on human microbiome therapeutics. Through its collaborations with world-leading agricultural companies such as BASF, Corteva, Monsanto and ICL, Evogene has licensed genes, small molecules and microbes to partners under milestone and royalty bearing agreements. 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 June 30,   As of
December 31,
      2018       2017       2017  
    Unaudited   Audited
CURRENT ASSETS:            
Cash and cash equivalents   $ 14,731     $ 5,758     $ 3,435  
Marketable securities     41,040       65,878       59,940  
Short-term bank deposits     6,500       8,017       8,380  
Trade receivables     129       1,063       132  
Other receivables and prepaid expenses     1,683       1,105       904  
             
      64,083       81,821       72,791  
LONG-TERM ASSETS:            
Long-term deposits     21       14       19  
Property, plant and equipment, net     3,986       5,611       4,792  
             
      4,007       5,625       4,811  
             
    $ 68,090     $ 87,446     $ 77,602  
             
CURRENT LIABILITIES:            
Trade payables   $ 1,048     $ 947     $ 1,110  
Other payables     2,429       2,502       2,934  
Liabilities in respect of government grants     676       103       104  
Deferred revenues and other advances     793       1,081       516  
             
      4,946       4,633       4,664  
             
LONG-TERM LIABILITIES:            
Liabilities in respect of government grants     3,091       3,416       3,438  
Deferred revenues and other advances     68       30       89  
Severance pay liability, net     32       32       33  
             
      3,191       3,478       3,560  
SHAREHOLDERS' EQUITY:            
Ordinary shares of NIS 0.02 par value:                        
Authorized - 150,000,000 ordinary shares; Issued and outstanding – 25,754,297, 25,745,371 and 25,750,547 shares at June 30, 2018 and 2017 and December 31, 2017, respectively     142       142       142  
Share premium and other capital reserve     186,998       184,977       186,268  
Accumulated deficit     (127,187 )     (105,784 )     (117,032 )
             
      59,953       79,335       69,378  
             
    $ 68,090     $ 87,446     $ 77,602  

                                                                                                  

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
U.S. dollars in thousands (except share and per share data)
 
    Six months ended
June 30,
  Three months ended
June 30,
  Year ended
December 31,
      2018       2017       2018       2017       2017  
    Unaudited   Audited
                     
Revenues   $ 745     $ 1,899     $ 379     $ 1,178     $ 3,381  
Cost of revenues     549       1,665       265       1,018       2,845  
                     
Gross profit     196       234       114       160       536  
                     
Operating expenses:                    
                     
Research and development, net     6,945       8,018       3,460       4,014       16,987  
Business development     1,084       821       486       370       1,686  
General and administrative     1,786       1,821       841       943       3,810  
                     
Total operating expenses     9,815       10,660       4,787       5,327       22,483  
                     
Operating loss     (9,619 )     (10,426 )     (4,673 )     (5,167 )     (21,947 )
                     
Financing income     868       1,206       335       484       2,125  
Financing expenses     (1,388 )     (359 )     (418 )     (57 )     (1,005 )
                     
Loss before taxes on income     (10,139 )     (9,579 )     (4,756 )     (4,740 )     (20,827 )
Taxes on income     16       11       13       3       11  
                     
Loss   $ (10,155 )   $ (9,590 )   $ (4,769 )   $ (4,743 )   $ (20,838 )
                     
Basic and diluted loss per share   $ (0.39 )   $ (0.37 )   $ (0.19 )   $ (0.18 )   $ (0.81 )
                     
Weighted average number of shares used in computing basic and diluted loss per share     25,752,505       25,596,863       25,754,297       25,691,852       25,673,276  


CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
     Six months ended
June 30,
  Three months ended
June 30,
  Year ended
December 31,
      2018       2017       2018       2017       2017  
    Unaudited   Audited
  Cash flows from operating activities                    
                     
Loss   $ (10,155 )   $ (9,590 )   $ (4,769 )   $ (4,743 )   $ (20,838 )
                     
Adjustments to reconcile loss to net cash used in operating activities:                    
                     
Adjustments to the profit or loss items:                    
                     
Depreciation     1,001       1,091       505       546       2,145  
Share-based compensation     721       966       375       450       2,244  
Net financing expense (income)     497       (1,089 )     86       (524 )     (1,454 )
Taxes on income     16       11       13       3       11  
                     
      2,235       979       979       475       2,946  
Changes in asset and liability items:                    
                     
Decrease (increase) in trade receivables     3       (894 )     60       (438 )     37  
Decrease (increase) in other receivables     (752 )     50       (130 )     770       221  
Increase in long-term deposits     (2 )     (1 )     (2 )     (10 )     (6 )
Increase (decrease) in trade payables     (104 )     (319 )     126       110       (86 )
Increase (decrease) in other payables     (505 )     (298 )     84       (656 )     138  
Increase (decrease) in deferred revenues and other advances     (10 )     6       (180 )     (50 )     (500 )
                     
      (1,370 )     (1,456 )     (42 )     (274 )     (196 )
                     
Cash received (paid) during the period for:                    
                     
Interest received     821       1,121       288       450       2,173  
Taxes paid     (17 )     (11 )     (10 )     -       (14 )
                     
Net cash used in operating activities     (8,486 )     (8,957 )     (3,554 )     (4,092 )     (15,929 )


CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
    Six months ended
June 30,
  Three months ended
June 30,
  Year ended
December 31,
      2018       2017       2018       2017       2017  
    Unaudited   Audited
Cash flows from investing activities:                    
                     
Purchase of property, plant and equipment   $ (153 )   $ (285 )   $ (105 )   $ (87 )   $ (590 )
Proceeds from sale of marketable securities     21,097       11,115       13,875       4,829       22,737  
Purchase of marketable securities     (3,155 )     (5,327 )     (951 )     (2,623 )     (11,659 )
Proceeds from bank deposits, net     1,880       5,120       -       4,000       4,757  
Proceeds from government grants     266       -       266       -       -  
                     
Net cash provided by investing activities     19,935       10,623       13,085       6,119       15,245  
                     
Cash flows from financing activities:                    
                     
Proceeds from exercise of options     9       670       -       322       683  
Proceeds from government grants     153       266       96       165       339  
Repayment of government grants     (44 )     (144 )     -       (50 )     (208 )
                     
Net cash provided by financing activities     118       792       96       437       814  
                     
Exchange rate differences - cash and cash equivalent balances     (271 )     64       (249 )     4       69  
                     
Increase in cash and cash equivalents     11,296       2,522       9,378       2,468       199  
                     
Cash and cash equivalents, beginning of the period     3,435       3,236       5,353       3,290       3,236  
                     
Cash and cash equivalents, end of the period   $ 14,731     $ 5,758     $ 14,731     $ 5,758     $ 3,435  
                     

 

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