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Evogene Reports Second Quarter 2017 Financial Results

Conference call and webcast, today at 9:00 am Eastern Time

REHOVOT, Israel, Aug. 10, 2017 (GLOBE NEWSWIRE) -- Evogene Ltd. (NASDAQ:EVGN) (TASE:EVGN), a leading company for the improvement of crop productivity and economics, announced today its financial results for the second quarter ended June 30, 2017.

Ofer Haviv, Evogene's President and CEO, stated: “2017 is proving to be a significant year in the development of Evogene and we look forward with high expectations to what the year has yet to bring. We were pleased to see progress and achievements in our collaborations and internal programs, across all areas of activities. In our on-going Fusarium collaboration with Monsanto, we reached an important milestone, and our newly initiated collaboration with DuPont-Pioneer1, is a testament to the important achievements reached in our internal bio-stimulant product program. This collaboration is an example of the comprehensive abilities of our computational biology platform, which is constantly evolving to now also include ‘artificial intelligence’, allowing us to enter new areas of activity. Evogene continues to lead innovation and, as we announced in the past, we are actively seeking applications for our exciting technology, both within and outside the agriculture world.

For the first time, in addition to our robust internal programs, we now have collaborations with at least one world leading company in each of our areas of activity: DuPont-Pioneer in Ag-Biologicals, Monsanto in Seed Traits and BASF in Ag-Chemicals.  We believe this trend will continue and are looking to strengthen our position as a world leading ag-biotech company with additional collaborations.

Looking deeper into each area of activity, I would like to emphasize the following:

In Ag-Biologicals, our most important achievement in recent months is our strategic collaboration with DuPont-Pioneer, a leader in the corn seeds market, for the development of bio-stimulant seed coating products. This collaboration is based on the achievements of an internal product program in which positive results were achieved in corn field trials under drought conditions. Additionally, we also have an internal bio-stimulant program in wheat in which we reached positive results on 1st year field trials on select microbial strains that will be re-validated in field trials next year.  Bio-stimulant products present an exciting opportunity, as product development is considered short, with time to market, according to industry estimates, as short as 5 years, depending on regulation.

We are also happy to announce the addition of a product program for the development of microbial-based bio-pesticides that address various insect and fungi control. This market is expected to reach $8B in 20202.

In Seed Traits, we had three important achievements during the past quarter:

(i) Gene advancement in our disease resistance Fusarium collaboration with Monsanto - we reached an important milestone with Evogene discovered genes showing resistance to Fusarium in model plants, with the top prioritized genes advancing to testing in Monsanto’s corn pipeline.
(ii) Completion of discovery in our yield and abiotic stress collaboration with Monsanto - we successfully completed of the gene discovery phase, with the discovery of ~4,000 genes and more than 1,000 genes nominated to Monsanto’s product development pipeline, as disclosed in the past.
(iii) Advancement to phase I in our internal insect control program - in our Coleopteran control product program we have advanced a gene to phase I, having met all of phase advancement criteria, including efficacy and lower risk of toxicity to other organisms such as bees, animals and humans.

In Ag-Chemicals, we continue to show good progress in our internal herbicide program as well as in our collaboration with BASF. Additionally, I am very excited to disclose that we recently initiated an insecticide product program. The global insecticide market is currently estimated at $14B, and is expected to reach $16B by 20203.

In conclusion, we are making important progress in all three of our core activity areas: Ag-Biologicals, Seed Traits and Ag-Chemicals.  We look forward to the second half of 2017, and we expect progress in our internal programs, as well as our collaborations with world leading partners, and hope to forge new partnerships in the future.”

Financial results for the period ending June 30, 2017
Cash Position:  As of June 30, 2017, the Company had $79.7 million in cash, short-term bank deposits and marketable securities, as compared to $83.4 million at March 31, 2017. Evogene continues to expect that its net cash usage for full-year 2017 will be in the range of $16 to $18 million.

Revenues primarily consist of research and development payments, reflecting R&D cost reimbursement under certain of our 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 2017 reached $1.9 million in comparison to $3.8 million, in the comparable period in 2016. Total revenues for the second quarter of 2017 were $1.2 million, compared to $1.8 million for the second quarter in 2016. The decline in revenues reflects the net decrease in research and development cost reimbursement, in accordance with the work plans under Evogene's various collaboration agreements. This decline is mainly due to the advancement of our collaboration agreement with Monsanto, from gene discovery to pre-development efforts, resulting in reduction of activity scope. As we look forward, we expect this revenue trend to continue.

During the first half of 2017 we saw a negative impact on our expenses due to the depreciation of the USD in comparison to the Israeli Shekel. Our expenses, mostly salaries, are denominated in Israeli Shekels while our reporting currency is USD.

Cost of revenues consist of collaboration related R&D expenses. Cost of revenues during the first half of 2017 reached $1.7 million in comparison to $3.1 million in first half of 2016. During the second quarter of 2017 the cost of revenues reached $1.0 million, in comparison to $1.6 million for the same period in 2016. The decrease related primarily to the decrease in revenues for such periods.

R&D expenses for the first half of 2017 reached $8.0 million in comparison to $7.8 million in the first half of 2016. During the second quarter of 2017, R&D expenses remained stable at $4.0 million, in comparison to the second quarter of 2016. R&D expenses were impacted by exchange rate fluctuations, as mentioned above.

Operating loss during the first half of 2017 reached $10.4 million, in comparison to a loss of $9.8 million during the first half of 2016, due to the decrease in revenues which was partially offset by a decrease in other expense categories. Operating loss for the second quarter of 2017 remained stable at $5.2 million in comparison to the comparable quarter in 2016.

The net financing income for the first half of 2017 reached $0.8 million in comparison to $1.9 million in the corresponding period. The net financing income for the second quarter of 2017 reached $0.4 million in comparison to $0.7 million in the comparable quarter in 2016. This decrease is due to relatively high capital gains derived from the company's marketable securities in the first and second quarter of 2016.

Net Loss
for the first half of 2017 reached $9.6 million in comparison to $7.8 million in the first half of 2016. Net loss for the second quarter of 2017 was $4.7 million compared to the net loss of $4.5 million in the comparable quarter in 2016. The increase in the net loss was primarily due to the decrease in revenues and the decrease in net financing income, which was partially offset by a net decline in other expense categories.

Conference Call & Webcast Details:

Evogene 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 +972-3-918-0644 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 1-888-254-7270 toll free from the United States, or +972-3-925-5940 internationally. The replay will be accessible through August 12, 2017, and an archive of the webcast will be available on the Company’s website through August 20, 2017.

About Evogene Ltd.:
Evogene (NASDAQ:EVGN) (TASE:EVGN) is a leading biotechnology company for the improvement of crop productivity for the food, feed and fuel industries. The Company operates in three key target markets: improved seed traits (addressing yield increase, tolerance to environmental stresses and resistance to insects and diseases); innovative ag-chemicals (developing novel herbicide solutions for weed control); and ag-biologicals. Evogene has collaborations with world-leading seed and ag-chemical companies. For more information, please visit www.evogene.com or contact the Company at info@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.

____________________________________

Please see Evogene DuPont-Pioneer collaboration presentation, filed together with this press release
http://www.evogene.com/wp-content/uploads/2017/07/evogene-dupont-presentation-final.pdf

2 Dunham Trimmer (2015)

3 Phillips McDougall (2015)

 
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands (except share and per share data)
         
    As of June 30,   As of
December 31,
      2017       2016       2016  
    Unaudited   Audited
CURRENT ASSETS:            
Cash and cash equivalents   $ 5,758     $ 5,533     $ 3,236  
Restricted cash     47       47       47  
Marketable securities     65,878       74,801       71,738  
Short-term bank deposits     8,017       16,561       13,137  
Trade receivables     1,063       80       169  
Other receivables     1,058       1,542       1,163  
             
      81,821       98,564       89,490  
LONG-TERM ASSETS:            
Long-term deposits     14       16       13  
Property, plant and equipment, net     5,611       7,354       6,483  
             
      5,625       7,370       6,496  
             
    $ 87,446     $ 105,934     $ 95,986  
             
CURRENT LIABILITIES:            
Trade payables   $ 947     $ 1,364     $ 1,330  
Other payables     2,502       2,495       2,803  
Liabilities in respect of government grants     103       766       125  
Deferred revenues and other advances     1,081       820       967  
             
      4,633       5,445       5,225  
             
LONG-TERM LIABILITIES:            
Liabilities in respect of government grants     3,416       2,614       3,303  
Deferred revenues and other advances     30       157       138  
Severance pay liability, net     32       30       31  
             
      3,478       2,801       3,472  
SHAREHOLDERS' EQUITY:            
Ordinary shares of NIS 0.02 par value:                        
Authorized - 150,000,000 ordinary shares; Issued and outstanding – 25,745,371, 25,447,024 and 25,480,809 shares at June 30, 2017 and 2016 and December 31, 2016, respectively     142       140       141  
Share premium and other capital reserve     184,977       181,985       183,342  
Accumulated deficit     (105,784 )     (84,437 )     (96,194 )
             
      79,335       97,688       87,289  
             
    $ 87,446     $ 105,934     $ 95,986  

                                                                                                  

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,
      2017       2016       2017       2016       2016  
    Unaudited   Audited
                     
Revenues   $ 1,899     $ 3,824     $ 1,178     $ 1,808     $ 6,540  
Cost of revenues     1,665       3,090       1,018       1,575       5,639  
                     
Gross profit     234       734       160       233       901  
                     
Operating expenses:                    
                     
Research and development, net     8,018       7,765       4,014       4,040       16,405  
Business development     821       790       370       428       1,696  
General and administrative     1,821       1,944       943       946       3,889  
                     
Total operating expenses     10,660       10,499       5,327       5,414       21,990  
                     
Operating loss     (10,426 )     (9,765 )     (5,167 )     (5,181 )     (21,089 )
                     
Financing income     1,206       2,095       484       761       2,424  
Financing expenses     (359 )     (165 )     (57 )     (43 )     (891 )
                     
Loss before taxes on income     (9,579 )     (7,835 )     (4,740 )     (4,463 )     (19,556 )
Taxes on income     11       -       3       -       36  
                     
Net loss   $ (9,590 )   $ (7,835 )   $ (4,743 )   $ (4,463 )   $ (19,592 )
                     
Basic and diluted net loss per share   $ (0.37 )   $ (0.31 )   $ (0.18 )   $ (0.18 )   $ (0.77 )

/EIN News/ --

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
 
    Share
capital
  Share premium
and other capital
reserve
  Accumulated
deficit
  Total
        Unaudited    
Balance as of January 1, 2017 (audited)   $ 141   $ 183,342   $ (96,194 )   $ 87,289  
Net loss     -     -   (9,590 )   (9,590 )
Exercise of options     1     669   -     670  
Share-based compensation     -     966   -     966  
             
Balance as of June 30, 2017   $ 142   $ 184,977 $ (105,784 ) $ 79,335  


    Share
capital
  Share premium
and other capital
reserve
  Accumulated
deficit
  Total
        Unaudited    
Balance as of January 1, 2016 (audited)   $ 140   $ 180,214   $ (76,602 )   $ 103,752  
Net loss     -     -   (7,835 )   (7,835 )
Exercise of options   *) -     114   -     114  
Share-based compensation     -     1,657   -     1,657  
             
Balance as of June 30, 2016   $ 140   $ 181,985 $ (84,437 ) $ 97,688  

*) Represents an amount lower than $1

    Share
capital
  Share premium
and other capital
reserve
  Accumulated
deficit
  Total
        Unaudited    
Balance as of April 1, 2017   $ 141   $ 184,206   $ (101,041 )   $ 83,306  
Net loss     -     -   (4,743 )   (4,743 )
Exercise of options     1     321   -     322  
Share-based compensation     -     450   -     450  
             
Balance as of June 30, 2017   $ 142   $ 184,977 $ (105,784 ) $ 79,335  


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, 2016   $ 140   $ 181,170   $ (79,974 )   $ 101,336  
Net loss     -     -   (4,463 )   (4,463 )
Exercise of options   *) -     29   -     29  
Share-based compensation     -     786   -     786  
             
Balance as of June 30, 2016   $ 140   $ 181,985 $ (84,437 ) $ 97,688  

*) Represents an amount lower than $1

    Share
capital
  Share premium
and other capital
reserve
  Accumulated
deficit
  Total
        Audited    
Balance as of January 1, 2016   $ 140   $ 180,214   $ (76,602 )   $ 103,752  
Net loss     -     -     (19,592 )     (19,592 )
Exercise of options     1     185     -       186  
Share-based compensation     -     2,943     -       2,943  
                 
Balance as of December 31, 2016   $ 141   $ 183,342   $ (96,194 )   $ 87,289  


CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
    Six months ended
June 30,
  Three months ended
June 30,
  Year ended
December 31,
      2017       2016       2017       2016       2016  
    Unaudited   Audited
Cash flows from operating activities                    
                     
Net loss   $ (9,590 )   $ (7,835 )   $ (4,743 )   $ (4,463 )   $ (19,592 )
                     
Adjustments to reconcile net loss to net cash used in operating activities:                    
                     
Adjustments to the profit or loss items:                    
                     
Depreciation     1,091       1,176       546       585       2,279  
Share-based compensation     966       1,657       450       786       2,943  
Net financing income     (1,089 )     (2,017 )     (524 )     (723 )     (1,688 )
Loss from sale of property, plant and equipment     -       17       -       17       39  
Taxes on income     11       -       3       -       36  
                     
      979       833       475       665       3,609  
Changes in asset and liability items:                    
                     
Decrease (increase) in trade receivables     (894 )     2,595       (438 )     545       2,506  
Decrease (increase) in other receivables     50       (477 )     770       291       (100 )
Decrease (increase) in long-term deposits     (1 )     6       (10 )     -       9  
Increase (decrease) in trade payables     (319 )     (241 )     110       54       (215 )
Increase (decrease) in other payables     (299 )     (596 )     (656 )     160       (303 )
Increase in severance pay liability, net     1       4       -       4       5  
Increase (decrease) in deferred revenues and other advances     6       119       (50 )     -       (81 )
Increase in liabilities in respect of government grants     -       115       -       -       115  
                     
      (1,456 )     1,525       (274 )     1,054       1,936  
                     
Cash received (paid) during the period for:                    
                     
Interest received     1,121       1,154       450       475       2,360  
Taxes paid     (11 )     -       -       -       (6 )
                     
Net cash used in operating activities     (8,957 )     (4,323 )     (4,092 )     (2,269 )     (11,693 )


CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
    Six months ended
June 30,
  Three months ended
June 30,
  Year ended
December 31,
      2017       2016       2017       2016       2016  
    Unaudited   Audited
Cash flows from investing activities:                    
                     
Purchase of property, plant and equipment   $ (285 )   $ (474 )   $ (87 )   $ (91 )   $ (808 )
Proceeds from sale of marketable securities     11,115       11,624       4,829       8,134       23,926  
Purchase of marketable securities     (5,327 )     (13,750 )     (2,623 )     (8,465 )     (24,561 )
Proceeds from bank deposits, net     5,120       2,042       4,000       4,042       5,466  
Proceeds from sale of property, plant and equipment     -       -       -       -       5  
                     
Net cash provided by (used in) investing activities     10,623       (558 )     6,119       3,620       4,028  
                     
Cash flows from financing activities:                    
                     
Proceeds from exercise of options     670       114       322       29       186  
Proceeds from government grants     266       258       165       150       802  
Repayment of government grants     (144 )     (199 )     (50 )     -       (333 )
                     
Net cash provided by financing activities     792       173       437       179       655  
                     
Exchange rate differences - cash and cash equivalent balances     64       20       4       18       25  
                     
Increase (decrease) in cash and cash equivalents     2,522       (4,688 )     2,468       1,548       (6,985 )
                     
Cash and cash equivalents, beginning of the period     3,236       10,221       3,290       3,985       10,221  
                     
Cash and cash equivalents, end of the period   $ 5,758     $ 5,533     $ 5,758     $ 5,533     $ 3,236  
                     
Significant non-cash transactions                    
                     
Acquisition of property, plant and equipment   $ 109     $ 225     $ 53     $ 225     $ 150  
                     

  

Contact:
Nir Zalik 
IR/PR Manager
E: IR@evogene.com
T: (+972)-8-931-1963

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