Evogene Reports Second Quarter 2015 Financial Results

REHOVOT, Israel--()--Evogene Ltd. (NYSE; TASE: EVGN), a leading company for the improvement of crop productivity and economics for the food and feed industries, announced today its financial results for the quarter and six months ended June 30, 2015.

Ofer Haviv, Evogene's President and CEO, stated: "These past few weeks have been extremely rewarding from the standpoint of Evogene’s on-going corporate growth and development. As we indicated at the time of our US IPO in late 2013, Evogene intended to allocate a large portion of the IPO proceeds towards new opportunities with substantial growth potential and a real need for innovation to drive the next generation of product development. This strategic undertaking, and the investment we made over the past year and a half in doing so, was well demonstrated by two milestone achievements that we recently disclosed.

“First, in our herbicide program, last month we announced the successful discovery and validation in plants of the first set of potential targets. These novel targets are a significant achievement for Evogene’s herbicide program, particularly since they are predicted to represent potential new 'mode of action', or manner, to kill weeds, and thus may provide the basis to the development of future weed-killing products."

“Second, we recently disclosed the successful completion of our first computational round of microbial genes in our insect control program, which was only initiated mid last year. This is a remarkable achievement considering that in a relatively short period of time we were able to leverage our knowhow and technology to tackle a new and commercially attractive market segment with significant barriers to innovation. This first set of promising genes provides us with strong confidence in the approach we are pursuing for the discovery of microbial genes, and more importantly in their likelihood to eventually yield a commercial product."

"In addition to the importance of these achievements for the programs themselves, they again demonstrate the power and broad applicability of our computational based predictive approach in the development of next-generation agriculture based products.”

Mr. Haviv concluded, “In summary, when looking across the various areas of the business, we are extremely excited with the initial progress we have made in advancing our newest areas of focus - insect control and novel herbicides - to the next stages of product development, and with our continued efforts in narrowing the gap to successful product introduction in our more established market areas.”

Financial results for the period ended June 30, 2015:

Cash Position: As of June 30, 2015, Evogene had $110 million in cash, short term bank deposits and marketable securities, representing a net cash usage of $6.3 million for the six months ended June 30, 2015.

Research Revenues include mainly periodic payments for research and development activities provided under certain of the Company's collaboration agreements with seed companies. Revenues from research and development payments for the six months ended June 30, 2015 were $5.3 million, compared to $7.5 million for the same period in 2014. Revenues from research and development payments for the second quarter of 2015 were $2.6 million, compared to $3.8 million for the same period in 2014. The decline was primarily related to the previously announced amendment to the Company’s Bayer collaboration work plan.

Evogene anticipates that longer term, its primary sources of revenues will be future royalties and other revenue sharing amounts, as well as castor seed sales by its wholly owned subsidiary Evofuel. In that regard, research revenues, which reflect R&D related cost reimbursement under certain of Evogene's collaboration agreements, were in the past a meaningful contributor to cash flow. Today, in consideration of the Company's strong cash balances, research revenues do not constitute a significant or essential part of the Company's cash flow.

Looking forward, Evogene intends to consider, on a case by case basis, self-financing certain activities under future collaborations. Although possibly resulting in less short term R&D revenues than would otherwise be the case, the Company’s goal in negotiating the terms for future collaborations will be to maximize long term revenues, consistent with maintaining its financial strength.

Cost of Revenues largely includes research and development expenses related to the support of the Company’s on-going activities under collaboration agreements with seed companies, which provide for future milestone and/or royalty revenues. Cost of revenues for the six months ended June 30, 2015 was $3.8 million, compared to $5.0 million, for the same period in 2014. Cost of revenues for the second quarter of 2015 was $1.9 million, compared to $2.4 million, for the same period in 2014.

Research and Development Expenses for the six months ended June 30, 2015 were $7.2 million, compared to $6.0 million for the same period in 2014. This increase largely relates to expansion of self-funded activities, primarily focused on the development of new computational genomics platforms and validation technologies, mainly in our key growth engines – insect resistance and ag-chemicals. The increase also derives from an increase in non-cash share-based compensation expenses. Research and Development Expenses for the second quarter of 2015 were $3.7 million, compared to $3.4 million for the same period in 2014. This increase mainly relates to increase in non-cash share-based compensation expenses. As stated above, research and development expenses do not include such expenses incurred in support of on-going collaborations, which are accounted for as Cost of Revenues.

Operating Loss for the six months ended June 30, 2015 was $8.8 million (including a non-cash expense of approximately $2.2 million for amortization of share-based compensation), compared to an operating loss of $6.4 million (including a non-cash expense of approximately $1.7 million for amortization of share-based compensation) for the same period in 2014. Operating Loss for the second quarter of 2015 was $4.6 million (including a non-cash expense of approximately $1.4 million for amortization of share-based compensation), compared to an operating loss of $3.7 million (including a non-cash expense of approximately $0.9 million for amortization of share-based compensation) for the same period in 2014. This increase is mainly attributable to the increase in self-funded research and development expenses, the increase in non-cash share-based compensation expenses and the decrease in revenues from research and development payments as described above.

Conference call and webcast details:

Evogene management will host a conference call today at 09:00 am Eastern time, 16:00 Israel time to discuss the results. US-based participants are invited to access the call by dialing 1-888-668-9141, and participants from Israel and other countries are invited to access the call at 972-3-918-0609. A replay of the conference call will be available beginning at approximately 13:00 Eastern time, 20:00 Israel time today, and will be accessible through August 7, 2015. US-based participants are invited to access the replay by dialing 1-888-782-4291, and participants from Israel and other countries are invited to access the replay at 972-3-925-5904. A replay of the call may also be accessed as a webcast via Evogene’s website at www.evogene.com and will be available for a period of ten days.

About Evogene Ltd.:

Evogene (NYSE, TASE: EVGN) is a leading company for the improvement of crop productivity and economics for the food and feed industries. The Company has strategic collaborations with world-leading agricultural companies to develop improved seed traits in relation to yield and a-biotic stress (such as tolerance to drought), and biotic stress (such as resistance to disease and nematodes), in key crops as corn, soybean, wheat and rice, and is also focused on the research and development of new products for crop protection (such as weed control). In addition, the Company has a wholly-owned subsidiary, Evofuel, developing seeds for second generation feedstock for biodiesel. For more information, please visit www.evogene.com.

This press release contains "forward-looking statements" relating to future events. These statements may be identified by words such as "may", “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.

 

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

 
  As of June 30,  

As of
December 31,

2015   2014 2014
Unaudited Audited
CURRENT ASSETS:
Cash and cash equivalents $ 7,949 $ 8,716 $ 5,213
Restricted cash - - 1,000
Marketable securities 78,812 78,549 80,040
Short-term bank deposits 23,228 24,000 30,046
Trade receivables 750 1,864 1,183
Other receivables   1,084   1,026   889
 
  111,823   114,155   118,371
LONG-TERM ASSETS:
Long-term bank deposits - 10,000 -
Long-term deposits 24 20 21
Plant, property and equipment, net 8,016 7,188 8,812
Long-term investment - 471 382
Intangible assets, net   -   22   -
 

 

  8,040   17,701   9,215
 
$ 119,863 $ 131,856 $ 127,586
 
CURRENT LIABILITIES:
Trade payables $ 1,205 $ 1,488 $ 1,984
Other payables 2,485 2,840 3,854
Liabilities in respect of grants from the Chief Scientist 553 603 570
Deferred revenues and other advances   1,248   1,572   1,511
 
  5,491   6,503   7,919
 
LONG-TERM LIABILITIES:
Liabilities in respect of grants from the Chief Scientist 3,145 2,939 3,103
Deferred revenues and other advances 845 567 453
Severance pay liability, net   28   19   29
 
  4,018   3,525   3,585
SHAREHOLDERS' EQUITY:

Ordinary shares of NIS 0.02 par value:

     Authorized - 150,000,000 ordinary shares; Issued
and outstanding – 25,388,938, 25,010,394 and
25,350,954 shares at June 30, 2015 and 2014 and December 31, 2014, respectively

140 138 140
Share premium and other capital reserve 177,962 172,077 175,553
Accumulated other comprehensive loss - - (222)
Accumulated deficit   (67,748)   (50,387)   (59,389)
 
  110,354   121,828   116,082
 
$ 119,863 $ 131,856 $ 127,586
 
 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE 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,

2015   2014 2015   2014 2014
Unaudited Audited
Revenues:

Research and development payments, including up-front payments

$ 5,276 $ 7,542 $ 2,616 $ 3,767 $ 14,198
Share purchase related revenues   81   165   40   83   313

Total Revenues

  5,357   7,707   2,656   3,850   14,511
 
 
Cost of revenues   3,762   4,988   1,932   2,425   9,709
 
Gross profit   1,595   2,719   724   1,425   4,802
 
Operating expenses:
 
Research and development, net 7,229 6,012 3,690 3,355 14,022
Business development 999 936 502 562 1,851
General and administrative   2,137   2,124   1,174   1,236   4,185
 
Total operating expenses   10,365   9,072   5,366   5,153   20,058
 
Operating loss   (8,770)   (6,353)   (4,642)   (3,728)   (15,256)
 
Financing income 1,277 1,353 331 703 2,242
Financing expenses   (866)   (528)   (639)   (166)   (1,516)
 
Net loss $ (8,359) $ (5,528) $ (4,950) $ (3,191) $ (14,530)
 
Other comprehensive loss:
Gain (loss) from cash flow hedges $ (45) $ - $ 19 $ - $ (222)
Amounts transferred to the statement of profit or loss for cash flow hedges 267 - 72 - -
         
Total comprehensive loss $ (8,137) $ (5,528) $ (4,859) $ (3,191) $ (14,752)
 
Basic and diluted loss per share $ (0.33) $ (0.22) $ (0.20) $ (0.13) $ (0.58)
 
 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

U.S. dollars in thousands

 
 

Share

capital

 

Share
Premium and
other capital
reserve

 

Accumulated
other
comprehensive
loss

 

Accumulated
Deficit

 

Total

Unaudited
       
Balance as of January 1, 2015 (audited) $ 140 $ 175,553 $ (222) $ (59,389) $ 116,082
 
Net loss - - -

(8,359)

(8,359)
Other comprehensive income - - 222 - 222
Exercise of options * ) 208 - - 208
Share-based compensation   -   2,201   -   -   2,201
 
Balance as of June 30, 2015 $ 140 $ 177,962 $ - $ (67,748) $ 110,354

*) Represent amount lower than $1 thousand

         

Share

capital

 

Share
Premium
and other
capital
reserve

   

Accumulated
Deficit

  Total
Unaudited
 
Balance as of January 1, 2014 (audited) $ 137 $ 169,469 $ (44,859) $ 124,747
 
Total comprehensive loss - - (5,528) (5,528)
Exercise of options 1 859 - 860
Share-based compensation   -   1,749   -   1,749
 
Balance as of June 30, 2014 $ 138 $ 172,077 $ (50,387) $ 121,828
 
         
Share

capital

 

Share
Premium
and other
capital
reserve

 

Accumulated
other
comprehensive
loss

 

Accumulated
Deficit

  Total

Unaudited

 
Balance as of April 1, 2015 $ 140 $ 176,437 $ (91) $ (62,798) $ 113,688
 
Net loss - - - (4,950) (4,950)
Other comprehensive income - - 91 - 91
Exercise of options * ) 134 - - 134
Share-based compensation   -   1,391   -   -   1,391
 
Balance as of June 30, 2015 $ 140 $ 177,962 $ - $ (67,748) $ 110,354

*) Represent amount lower than $1 thousand

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

U.S. dollars in thousands

 
  Share

capital

 

Share
Premium
and other
capital
reserve

 

Accumulated
Deficit

  Total
Unaudited
     
Balance as of April 1, 2014 $ 138 $ 170,986 $ (47,196) $ 123,928
 
Total comprehensive loss - - (3,191) (3,191)
Exercise of options * ) 168 - 168
Share-based compensation   -   923   -   923
 
Balance as of June 30, 2014 $ 138 $ 172,077 $ (50,387) $ 121,828

*) Represent amount lower than $1 thousand

  Share

capital

 

Share
Premium
and other
capital
reserve

 

Accumulated
other
comprehensive
loss

 

Accumulated
Deficit

  Total
Audited
       
Balance as of January 1, 2014 $ 137 $ 169,469 $ - $ (44,859) $ 124,747
 
Net loss - - - (14,530) (14,530)
Other comprehensive loss - - (222) - (222)
Exercise of options 3 2,854 - - 2,857
Share-based compensation   -   3,230   -   -   3,230
 
Balance as of December 31, 2014 $ 140 $ 175,553 $ (222) $ (59,389) $ 116,082
 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 
 

Six months ended

June 30,

  Three months ended

June 30,

 

Year ended
December
31,

2015   2014 2015   2014 2014
Unaudited Audited

Cash flows from operating activities

 
Net loss $ (8,359) $ (5,528) $ (4,950) $ (3,191) $ (14,530)
 
Adjustments to reconcile net loss to net cash used in operating activities:
 
Adjustments to the profit or loss items:
 
Depreciation and amortization 1,266 1,055 612 536 2,249
Share-based compensation 2,201 1,749 1,391 923 3,230
Net financing expenses (income)   (451)   (12)   240   (103)   (926)
 
  3,016   2,792   2,243   1,356   4,553

Changes in asset and liability items:

 
Decrease in trade receivables 433 49 66 12 730
Decrease (increase) in other receivables (312) (293) (308) 5 58
Decrease (increase) in long term deposits (3) 8 (4) 6 7
Increase (decrease) in trade payables (400) (606) (6) 14 (267)
Increase (decrease) in other payables (1,246) (1,523) 9 (565) (895)
Increase (decrease) in severance pay liability, net (1) - 1 - 10
Increase (decrease) in deferred revenues   129   (396)   (401)   172   (571)
 
  (1,400)   (2,761)   (643)   (356)   (928)
 
Cash received during the period for:
 
Interest received   1,372   226   551   143   2,010
 
 
Net cash used in operating activities   (5,371)   (5,271)   (2,799)   (2,048)   (8,895)
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 
  Six months ended

June 30,

  Three months ended

June 30,

 

Year ended
December
31,

2015   2014 2015   2014 2014
Unaudited Audited

Cash flows from investing activities

 
Purchase of property, plant and equipment $ (849) $ (925) $ (296) $ (622) $ (3,564)
Proceeds from sale of marketable securities 14,854 8,096 7,016 3,759 31,195
Purchase of marketable securities (13,905) (55,359) (7,424) (7,513) (80,615)
Proceeds from (investment in) bank deposits 6,818 (34,000) (42) - (30,046)
Decrease (increase) in restricted cash   1,000   -   1,000   -   (1,000)
 
Net cash provided by (used in) investing activities   7,918   (82,188)   254   (4,376)   (84,030)
 

 

Cash Flows from Financing Activities

 
Proceeds from exercise of options 208 860 134 168 2,857
Proceeds from the Chief Scientist grants 188 126 188 126 339
Repayment of the Chief Scientist grants   (233)   (272)   -   -   (530)
 
Net cash provided by financing activities   163   714   322   294   2,666
 
Exchange rate differences - cash and cash equivalent balances   26   7   106  

(12)

  18
 
Increase (decrease) in cash and cash equivalents 2,736 (86,738) (2,117) (6,142) (90,241)
 
Cash and cash equivalents, beginning of the period   5,213   95,454   10,066   14,858   95,454
 
Cash and cash equivalents, end of the period $ 7,949 $ 8,716 $ 7,949 $ 8,716 $ 5,213
 

Significant non-cash transactions

Acquisition of property, plant and equipment $ 157 $ 379 $ 157 $ 379 $ 536
 

Contacts

Evogene
Karen Mazor, +972-54-2288 039
Director, Public and Investor Relations
karen.mazor@evogene.com

Contacts

Evogene
Karen Mazor, +972-54-2288 039
Director, Public and Investor Relations
karen.mazor@evogene.com