Q3 2022 Evogene Ltd Earnings Call
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Ladies and gentlemen, thank you for standing by the conference will begin shortly.
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Ladies and gentlemen, thank you for standing by welcome to Epogen third quarter 2022 results Conference call. All participants are at present in listen only mode.
Management's formal presentation instructions will be given for the question and answer session.
For operator assistance during the conference. Please press Star Zero as a reminder, this conference is being recorded November 17, 2022, before we begin I would like to caution that certain statements made during this earnings conference call by evidence management will constitute forward looking statements that relate to future events.
Risks and uncertainties regarding the business strategy operations and future performance and results of that vote. Yet I encourage you to review evidence filings with the U S Securities and Exchange Commission and read the note regarding forward looking statements in today's earnings release, which state that statements made in the earnings release and then.
Similar way on this earnings conference call that are not historical facts may be deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 for example that Virginia is using forward looking statement.
This call when it discusses its expected path to value creation, including potential fundraisings at the subsidiary level its and its subsidiaries expected trials and their expected results studies product advancements commercialization launches pipelines milestones potential collaborations and other plans for 2022 and 2012.
<unk> three expected burn rate the potential advantages of its technology and its anticipated entry into new fields of activity. All forward looking statements made herein speak only as of the date of the announcement of results. Many of the factors that impact whether forward looking statements will come true are beyond the control of the F O jet and.
May cause actual results to differ materially from anticipated results.
<unk> is under no obligation to update publicly or alter our forward looking statements, whether as a result of new information future events or otherwise, except as otherwise required by law, we expressly disclaim any obligation to do so more detailed information about the risk factors potentially adversely impacting our performance can be found in our.
<unk> reports filed with the U S Securities and Exchange Commission that said I would now like to turn over the call to overhaul our Virgin CEO Ofer. Please go ahead.
Thank you for joining our conference call.
Nothing in providing an update on our activities in the third quarter of 2022.
My follow through today's review will be on two topics.
The first one.
Current financial status and our plans to strengthen it.
And the second one I think on the latest achievements of our subsidiaries.
What else might reveal Yolanda Dunn, our CFO will provide the financial summary.
After that we will open the Q&A session.
As you all know financial markets are going to be very volatile.
And company valuation, especially in the best executor and fallen very significantly over the past year and half or so.
I want to highlight that Amgen had.
And we continue to successfully navigate this difficult time.
There are many challenges.
Beyond that.
The activities of our subsidiaries are advancing nicely and.
And strengthened our belief that each generate significant value for the emergency room.
So as most of our cash position.
At the end of the third quarter, we have consolidated $38 million on IMO jennison balance sheet.
We expect that based on our business plan it will be enough and take a tour that late 2024.
The strategic steps, we continue to pursue many fund raising for our subsidiaries and collaboration with non dilutive payments. We believe will ultimately extend this runway out further.
We expect to fund raising for the subsidiaries, we are working hard to identify and bring value, adding partners and investors.
This was achieved Sandra Bullock at the same time.
Any investment and the subsidiary level brings a new source of capital to the subsidiary and lowered the demand on Apple agenda balance sheet, enabling us to extend our cash resources.
Green and value, adding partner to the subsidiary, which has a strong share in the ultimate success and uptake of this subsidiary.
And from even just specifically.
<unk> reached the investments you've made allow us to identify shareholders about you by demonstrating its inherent financial value and emo Genesis Harding <unk>.
In parallel we are pursuing collaborations for both Amgen and <unk> subsidiaries.
Of which our vitek engine for emergent and the product under development from the subsidiaries.
That's what aberrations when included in our revenue stream of non dilutive payments.
Extend the emergence potential market and established market access for the product of our subsidiaries.
I would like to now continue with an update on our subsidiaries.
Starting with <unk>.
Our subsidiary focusing on developing a biologic drug utilizing epigenesis, Michael boost AI engine.
The key event during the third quarter was the investment into <unk> by ICL and.
Leaving $11 billion.
Global many of our company.
ICL provides <unk> with a $10 million investment.
New capital from each development activities.
For the <unk> ICL is much more than just an investor.
The investment is part of the collaboration that we.
Strongly broaden its product pipeline.
I would like to repeat the statement made by ICL in the recent conference call with regard to general investment in the deep value.
<unk> unique approach leverage big data and advanced artificial intelligence.
And our collaboration with them focused on developing novel past few minutes draw that to enrich fertilizer efficiency.
Combining <unk> and biologics experience and cutting edge technology with ICL advanced knowledge of fertilizer use and farmers need will help facilitate the development of new and innovative product for the agricultural industry.
<unk> shares our vision, despite combining levine and biological expertise ampligen macro boost AI technology with ICL calculator experience there.
Our collaboration is to create a new type of bio stimulant product to enrich fertilizer efficiency and product, which will be highly synergistic with ICL existing product portfolio.
This is the second leading global player to which the fee is now partnered with.
The other being Cordova and Europe listed.
46 billion dollar major architectural company.
These partners for Teva and now ICM.
Fully aligned with us and all have a strong interest in the <unk> long term success and growth.
The I 10 investment combined with the fact that <unk> is now at the commercialization stage.
As its first product drivers.
Enables us to reduce Apple Jim's financial resources focused on <unk>.
At the same time it ensures that <unk> is moving ahead at full speed and has the resources to meet its full potential in line with our long term strategy.
You look so bear <unk> submitted.
Distraction package to the United States EPA.
The environmental Protection agency.
<unk> 311.
Nobody.
Syed product.
Which is the final step prior to commercialization.
Last 311 is the biopharma side targeting <unk> and <unk>.
Foundry many Jews.
Based on novel bacteria, Mitch already presented in nature.
Which was selected utilizing epogen micro most AI.
The startup timeline registration.
To take 18 months and we hoped to soft launch for the 2024 growing Susan pending regulatory approval.
All in all.
Especially in times before the Sittercity.
Increasing prices and macroeconomic uncertainty.
<unk> brings a strong solution to enhance global food quality.
Sure, it's just an ability and increased productivity.
We believe that <unk> is in the right place at the right time.
And can attract strong value adding investment.
Even during this challenging times.
Moving on to BELBUCA, our subsidiary focusing on developing drugs based on human microbiome.
Leveraging our micro most AI engine.
Back in July the first patient was dosed in biomarker phase one clinical trial.
<unk> seen 128.
Oh, My God Microbiome based immuno oncology drug candidate, it's run by a health care campus in Haifa Israel.
In recent weeks, we have now progressed to the certification out of Twitter.
The trial is designed primarily to evaluate the safety and Tolerability.
Because BMC 128.
Consortium of microbes selected utilizing epigenetic micro most AI engine in.
In combination with an immune checkpoint inhibitor in cancer patients.
If the trial is open label.
Expect we'll eliminate our ebitdas and data readout in spring 2023.
The first few patients concluded their treatment programs.
We are targeting to complete the trial in the later part of 2023.
We are greatly encouraged with the positive progress we are seeing in the brought in humans microbiome drug basically industry.
Given the recent announcements made by service and ferry with regard to the advancement in the regulatory process of the candidates.
The FDA.
Moving on to <unk>, our subsidiary focusing on developing medical cannabis products, leveraging generates or AI engine.
In September the company announced the launch of its second generation products with a higher level of <unk>.
And unique <unk> profile.
These new and improved products were developed using genetic markers.
Which our generator IDEXX engine identified.
In October the sales of this product was initiated in days really market with two new brands synergy and comparable.
With 24% THC.
While the maximum percentage of the TC allowed in Israel is 24, 4%.
The market feedback in Israel, So far has been excellent.
<unk> is the primary sites of active ingredients in cannabis.
Europeans are planned compounds known to provide relief for many many kind of symptoms, including pain relief.
The inflammation.
Anti <unk> anti.
And the duration and more.
They also influence the roadmap and the sense of cannot be Easter or rent since.
In addition in September we announced a licensing agreement with a Portuguese cannabis cultivation company Davita for the commercialization in Europe .
Our new connect line.
Under the agreement.
<unk> will cultivate market and sell products based on those varieties and we faced economic royalties.
The beta has been our partner for cultivation and testing of our cannabis varieties in the EU throughout 2022.
Their interest in broadening our relationships to a new stage is a testament to the quality of economics varieties and.
And two provision belief in the commercial potential of our strength in European market.
Europe is a key target market for <unk> with total medical cannabis market sales estimated at approximately 400 million euro while it's still early.
Early stage in its growth cycle.
Finally last week, we announced a change in leadership economics.
Dr. Hemant CEO of economic we'll leave it to C O position at the end of the year he.
He will continue to serve canonicus and member of the board of directors.
He's been with economics since the beginning and was instrumental in developing our incredible market leading products and we are thankful. He will continue to play a role from the board level.
I don't think has appointed a young woman, who also serve Epogen Cohen executive Vice President business development Economics, GNU C. O effective January 1st 2023 in parallel to Israel in Epogen.
Economic advance instead in Israel and globally I believe the.
Strongest business development background and broad experience will enable economics to move onto the next stage in its growth in sales and development.
To conclude my review on the subsidiaries.
To highlight Costello, our customers switch technology to develop there and focus on the latest announcement, we released just a few days ago.
Cost of oil and its derivatives.
Wide range of users to date.
<unk>, one 2 billion dollar market worldwide.
Applications include Boeing for lubricants industrial human has such as cosmetics and plastic polymers, given its high durability and elasticity and as a source for biofuels.
Global demand for biofuel is increasing.
As we look to replace fossil fuel with biofuels such as those derived from customer means we will see an increase in the demand forecast of oil.
Cancel beans has high oil and energy content, and giving extensive environmentally friendly cultivation practice. It can serve as an effective source for the biofuel industry.
Because there was the latest announcements informed it has signed a long term exclusive production and distribution agreement with two time capsule form.
Zambian cultivator and distributor of types of oil.
This agreement is a first in new and important step in leveraging <unk> technology into the African continent.
He said, we provide cassandra royalties on certain of its cost of oil products, which are expected through.
Out of Zambia, and surrounding South Eastern Africa region, starting in 2023.
In summary.
Ethnic group.
We have met several important milestones in the past few months.
And the inherent value of our subsidiaries.
Seniors to increase.
It shows that our hard work in busy investing in and strengthening our subsidiaries.
Of which are leveraging our underlying computational predictive biology Tech engine is the right strategy and is creating value.
At the same time, our cash position is strong and we believe is more than adequate.
The current capital market volatility.
Our midterm target is that each subsidiary will have its own financial resources to support these activities.
Typically success, while it's evil Gin. In addition to be a major shareholder will continue to play a major role in maintaining and building the competitive advantages through our tech engine.
In travel in and just as importantly, we are targeting and exploring the potential to establish new partnership and activities that can benefit from our technology.
We hope to highlight more successes in the coming quarters.
That ends my summary, and now over to your own for the financial review your own.
Thank you Ofer.
I will now provide the financial summary.
Epogen continues to maintain a solid financial position for its activities with them.
Approximately $38 million in consolidated cash cash equivalents and marketable securities as of September 32022.
Approximately $12 million of emergence consolidated cash is appropriate it to a subsidiary we buy them.
We do not have any bank debts.
During the third quarter of 2022, the consolidated cash usage was approximately $7 $3 million or approximately $4 $7 million, excluding coffee by them.
To date in the first nine months of the year, our consolidated cash burn was $25 9 million Donuts, which included $3 $3 million from the impact from foreign exchange and the decrease in market value of marketable securities on <unk> balance sheet.
For the full year of 2022, excluding the impacts from foreign exchange differences and the change in market value for marketable securities.
We expect our consolidated cash burn rate to be in the range of $27 million to $28 million.
We are aiming to reduce the cash burn in 2023 and are currently building our budget.
We hope to provide you with more color next conference call in February .
2023.
I would like now to highlight some specific items on the P&L.
Revenues for the third quarter were $466000.
In comparison to $151000.
Same period the previous year.
And were primarily due to revenues recognized.
Collaboration agreement of one of our subsidiaries.
R&D expenses for the quarter, which are reported net of nonrefundable grants received were $5 million in comparison to $5 $8 million in the same period the previous year.
The main contributors to R&D expenses whenever he buyers activity supporting the production and commercialization of it.
In Nokia lens product and Miami cause ongoing phase one trial.
Business development expenses were approximately.
Zero point $9 million for the first quarter of 'twenty to 2022 in comparison to zero point $8 million in the same period the previous year.
G&A expenses were $1 $6 million in the third quarter of 2022 in comparison to $2 million in the same period in the previous year.
Operating loss for the third quarter of 2022 was $7 $1 million in comparison to an operating loss of $8 $6 million in the same period in the previous year.
The net loss for the third quarter of 2022 was seven.
$2 million in comparison to a net loss of $8 $3 million in the same period in the previous year.
And the aforementioned our business plan is to pursue strategies to strengthen evidence consolidated cash position.
During our subsidiaries are well capitalized.
Was that both of them and I would now like to open the call for any questions you might have.
Alright there.
Thank you ladies and gentlemen at this time, we will begin the question and answer session. If you have a question. Please press star one if you wish to cancel your request. Please press star two if you are using speaker equipment kind of lift the handset before pressing the numbers.
No questions will be pulled in the order they are received.
These standby, while we poll for your questions.
The first question is from Christopher <unk> of Cantor Fitzgerald. Please go ahead.
Hi, Good morning, good afternoon, everybody. Thanks for taking my question. So the first one I had is if you could please elaborate more on your business plan, what specifically are you changing or keep prioritizing in order to extend your cash balance now for two years.
And could you speak to which subsidiaries in particular or you think there could be some near term opportunities for non dilutive fundraisings, whether that's your partnership or other items.
Hi, Chris This is ofer.
I will start by addressing the second part of your question. So I think that in the short term for what he wanted the company to do more.
Better position for fund raising.
The biomarker, but I believe that.
Next year.
<unk>.
There is another two company.
Would it be on the road.
On fund raising I think that the amount of money, we make <unk> probably.
It's nice when we raise the $10 million of updates we should target for a higher.
Uh-huh amount and I think Thats also a <unk> or <unk> should dig the started the process of fed fund raising as well so for the short term.
And with more emphasis.
On <unk>, but do you mean midterm.
In order to company.
<unk> initiated the process of Fed fund raising this is with respect to fund raising with respect to non dilutive for our restaurants.
Actually here.
The company such as Atlanta.
<unk> and <unk>.
He also colonial can do in a good position to move forward with it and also cost era as I mentioned lately.
<unk>.
Hum.
This field of console became again very interesting.
And Youtube.
Increased demand in the area of biofuel.
The first question was related can you remind me what was it.
Well, what's the activity we are planning to reduce so I.
I think that the.
With respect to <unk>.
The activity that we are going to reduce your debt.
If you if you remember and as you probably remember according to our business plan.
We are all the time looking for a new activity and new initiatives that can benefit from our technology.
So this is probably something that we will reduce significantly the level of bid.
Activity, meaning the business development and you know it may be developing technology, which could be relevant for newfield activity. So this is probably we are going to put on hold and we will focusing mainly on our existing activity and push them further.
As an example in the past we have been in activity and are focusing on producing.
Producing protein and plant to replace the algae protein.
This is the and.
A small part of activity that we conduct an evident.
But they probably know this is an example, where we will put it on hold.
Until we will have additional financial resources to expand our activity. So when you were talking about.
The company such as <unk> and also X men so.
We're not going to increase the budget, but we are not going to review the strategic Andy I'm not going to reduce it to <unk>. As an example, probably we are going to focus more on <unk>.
Initial activity. The main reason is that the what we succeed to build until now it's quite amazing.
In the research level and we have some very very promising.
I mean for me seeing game variety some of the early launch and.
I can update that we're quite happy with the launch of this product and I hope that we would be able to see.
And some of the effect on the revenue for next quarter.
But to <unk>.
So there will be a shift from focusing on R&D activity and.
Trying to develop a variety.
<unk>.
And for Mark to the medical aspect of.
Cannabis product and more focusing on what you already developed which there is a clear current demand in the market for high THC product and we already have a nice variety that collection of products already available. So.
This is what we're going to do focusing more on the commercial aspects and listen the R&D aspect I hope that addresses your question.
Yes. It does thank you Ofer and then can you give us some context to what we could expect to see in the spring 2023 update for biomarker is this primarily going to focus on safety or do you think we'll get some clues into early efficacy signals at this time and then are you targeting to present at a medical.
Conference right.
So.
Actually the reason that Iran is not participate in the call. As an example is because we participate in your conference in Boston in a very important panel.
And.
And received very positive feedback from these events.
And yes, we will.
And particularly in different conferences, and we are going to publish it and we're going to present the results.
With respect to what I'm expecting you know in spring 2023.
The clinical strategies focusing on safety. So of course, we are going to disclose information about safety, but the things that you can already see some indication that we are really good shape, otherwise, we wont be able to move to the third patient and hopefully after we will and received positive feedback from the from.
The second and the third we can automatically to recruit.
The additional nine patient so I think that again you know you can never know until you have all the results.
Safety.
This is definitely what we're going to focus on and I think that we can do now we are in good shape with respect to <unk>.
So of course, if we are going to see some indication.
Of the four efficacy we're going to disclose this information. Please remember that the patient that we are recruiting for this experiment.
All right.
In suffering.
Suffering from cancer. They all received already one treatment of the Opdivo.
Hope Diebold.
Keytruda that it didn't help them and now that we're entering into another cycle of treatment with <unk>.
Opdivo, but this time with our microbes. So if we're going to see some positive effect. It's got its really going to have a block of meaning and make us very very excited. So we are not targeting for this because the number of patients is relatively very small it's only 12, but if we are going to see some indication like this.
We will share this information.
With the public.
Okay. Thanks, and last question for me is if you could talk a little bit more about the work that youre doing to understand the financial research requirements moving forward for each of the subsidiaries.
So we have.
Each of our CEO .
Establishing a clear.
Target for 'twenty, three and 'twenty four each one of our <unk>.
Subsidiary is building the required budget and we are building out.
In financial plan, according to the needs and I think that.
Based on.
Financial plan that you've already established I think that we are in.
Good shape.
As I said I can't disclose much about it I believe that at least some of our subsidiary will be able to raise money in the short term or maybe the midterms and this is definitely will support their activity.
And.
And I can't disclose more than this but we.
We all are aware to the challenging environment.
And the fact that we currently keeping all of the activity moving forward I think it should send a message that we are confident on our ability also to fund this activity of <unk> next year.
I hope that if our plan will mature.
Materialize.
We will be all with a big Smile and also for 2024.
Great. Thanks again.
If there are any additional questions.
I repeat if you have a question please press star one.
There are no further questions at this time before I ask Mr. Ofer hobbies to go ahead with his closing statement I would like to remind participants that a replay of this call is scheduled to begin two hours.
After the conference in the U S. Please call 18883 to 693, one in Israel. Please call 039 to 5591901.
Internationally. Please call nine seven to three nine to 55901, Mr. Bobby would you like to make your concluding statement.
Yes. Thank you.
As you all for joining the call today I look forward to.
Updating you on our progress in our next call. Thank you once again.
Thank you.
This concludes <unk> third quarter 2022 results conference call. Thank you for your participation you May go ahead and disconnect.
Okay.
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