Q2 2023 Evogene Ltd Earnings Call
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Ladies and gentlemen, thank you for standing by. Welcome to Evident's second quarter, 2023 Resolved Conference Call. All participants are present in Listen Only Mode, following 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 on August 17th, 2023. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evident's management will constitute forward-looking statements that relate to future events, risks, and uncertainties regarding business strategy, operations, and future performance and results of Evident. I encourage you to review Evident's filings with the U.S. Securities and Exchange Commission and read the note regarding forward-looking statements in today's earnings release.
which states that statements made in the earnings release and in a similar way on this earnings conference call that are not historical facts may be deemed forward-looking statements within the meaning of the private security litigation Reform Act of 1995. For example, Evagen is using forward-looking statement in this call when it discusses the establishment of collaboration agreements with leading companies in new domains of activity, target selector ability to identify novel target proteins for innovative products, the BMC 426 and BMC 427 for IBS treatment effectiveness in reducing visceral pain and related studies and trials. Future milestone payments.
and royalties from Corteva sales of La Vie Bios products, the resources needed to execute the company's plans effectively and in a timely fashion, return on investment for farmers who use thrivis, and the enhancement of Agplanis' ability to identify new pesticide mechanisms due to the use of Evigen's target selector applications.
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 Evagen and may cause actual results to differ materially from anticipated results.
Evagen 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 reports filed with the U.S. Securities and Exchange Commission.
Starting the call today is the President and CEO of Evogen, Ofer Javiv, joined by Evogen CFO Yaron El-Dad, CEO of Kastera Eyal Ronen, CEO of LaVie Bio, Amit Noam. That said, I would now like to turn the call over to Ofer Javiv, President and CEO of Evogen. Mr. Javiv, please go ahead.
Thank you and good day everyone. Today I will review EvoGen activities and recent achievements and provide you with an update on EvoGen's potential catalysts expected in the near future.
I will also discuss some of our subsidiaries' recent accomplishments.
which leverage EvoGen's AI-driven tech engines as their main competitive advantage and demonstrate the power of our technology underlying their product development process.
I will end my part reviewing Abogen's recent fundraising and how it improves our financial stability. I will end my part reviewing Abogen's recent fundraising and how it improves our financial
I would like to state that the second quarter of 2023 has been a remarkable one. We made significant achievements on all fronts and I hope that you will share this view at the end of our talk.
As we have many new listeners on today's call.
I would like to briefly review EvoGen's core technology. EvoGen has been using its computational predictive biology platform, the CPP.
to direct and accelerate the development of lifestyle-based products.
The CP bin is the foundation of our three tech engines.
Microboost AI.
supports the discovery and development of micro-based products.
Generally, aye.
So, of course, products based on genetic elements.
and Campus AI supports more molecules-based products. Our AI-driven tech engines aim to tackle the main challenges in life science product development, identifying winning candidates from a vast number of prospects.
and meeting complex criteria of successful commercial products. Our AI-Driven Tech Engine efficiently finds the needle in a high stick.
Therefore, increasing the probability of force accept within a competitive timeframe and at a cost efficient manner.
On July , we unveiled the latest enhancement of our campus AI tech engine.
Target Selector, a groundbreaking application designed to streamline target protein discovery using predictive machine learning algorithms and genomic data.
With this new technology, researchers across various industries
can efficiently identify novel target proteins for innovative products, while significantly reducing research and development time and resources and increasing the likelihood of success. Proteins are crucial for developing therapeutics and that times solutions.
agriculture, and environmental applications. As mentioned, Campus AI Tech Engine is a cutting edge platform for the identification of small molecules.
The addition of the target selector applications now enable a broader scope of finding the optimal target protein for those molecules.
Our subsidiary ag plans, which focus on developing alchemicals, is the first to benefit from this new improvement, applying it to identify novel mechanism of action for pesticides.
We consider this significant advancement in Evergen Campus AI Tech Engine.
to strongly position us to forge strategic partnership with industry leaders, expediting product development and delivering novel solutions to pressing global needs such as developing sustainable new pesticides and therapeutics. Epogen's business model is to establish a product development ecosystem.
around each tech engine through two main business structures.
Independent subsidiaries focusing on specific life science market segments with the license used Evergen step engine for product development or
A joint development with leading companies for defined products.
utilizing ApogenTech engines. Typically, partners lead the latest stage of development and product commercialization. In recent years, our focus has been on the establishment of various subsidiaries that nowadays show impressive results, which I will soon discuss.
I would like to emphasize that this year, EvoGen increased its efforts to establish collaborations with leading companies in new areas of activities not covered by our subsidiaries for further development, leveraging our tech engines.
DAW just recently initiated the response we received to our unique offering is positive and we hope some of those discussions will materialize into collaborations agreements in the near future.
With respect to our subsidiaries, they have accomplished multiple achievements and have several upcoming milestones of significant potential value creation.
I would like to start my review with Biomekta, a subsidiary of Evogen that is developing microbio-best therapeutics for human health.
Biomeka leverages Evergen's MicroBoost AI Tech Engine to identify and characterize microbes with therapeutic potential.
In April 2023, Biomeca completed a $20 million financing round led by a $10 million investment from Shanghai as their capital.
The transaction was done at a postman evaluation of $50 million.
This external and independent endorsement of Biomica validates our belief in Biomica's long-term potential.
Baromica's leading product candidate, BMC 128.
is for the treatment of immuno-emphatic patients, now in phase one clinical trial.
The trial conducted in Israel at the Ramban Healthcare Campus.
aim to evaluate BMC 12860 and tolerability alongside BMS of the Evo.
immunotherapy for respiratory patients
The trial is planned to include 10 to 12 patients and until now, sex has enrolled.
In August , Biomeka opened a second site in Israel, a Davidoff Cancer Center.
to open the trial to additional potential patients. In addition, this quarter, BioMica reported positive and trim results for its IBS program to correct clinical studies. The studies were performed in collaboration with the lab of Professor Kara Gross-Margolis at NYU and demonstrated the efficiency of BioMica's live bacterial consortia, BMC-426.
and BMC 427 in reducing visceral pain and major IBS symptoms.
giving the limited options for IBS treatment and the significant unmet need. These findings could be used to any level related to during their testing or80s as well as after treating,
Present promising new treatment possibilities.
Biomeca intends to further assess BMC-426 and BMC-427 efficiency in additional preclinical studies in the near future in preparation for its clinical trial for IBS.
The second subsidiary, which is also using Evogen Microboost AI Tech Engine, is Labib Bio, developing next generation biological products.
In addition to Ebergen's majority ownership, we are happy to emphasize that Labibbio has two additional major shareholders, Corteva, a public multinational architect giant, and ICL, a public global, mineral, and an architect company.
which last year made a $10 million investment into Labibio under a SAFE agreement. In addition to equity investment, Corteva and ICL are also collaborating with Labibio on the development of novel add biologicals.
In July , LaViv Bio announced that it entered into another licensing agreement with Corteva.
The agreement grants Corteva exclusive rights to further develop and commercialize two of LaVie Bios lead biophonicide product candidate Lab 311 and Lab 312 targeting fruit growth.
The agreement follows two years of independent field validation trials conducted by both companies.
into installment and will also be eligible for additional future milestone payments and royalty from Corteva's sale of those future products. Stay tuned to hear directly from L'Vivb Biod, CEO Amit Noam, as he shares in-depth insights into this remarkable achievement and other ongoing activities. Now, I would like to review Act Lens, our subsidiary leveraging the Campus AI Tech Engine.
Major ag chemical companies such as BSS, Bayer, Corteva, and Syngenta dominant today's crop protection industry. Still, they look to smaller ag tech companies like Agplanus to discover new target proteins and small molecules that inhibit such target proteins serving as the active ingredient in commercial crop protection products. Agplanus is exactly the company that addresses this need and it explores partnership with these major industry players.
Herbicide resistance weeds today are flourishing and there has not been a new commercial herbicide with a novel mode of action for over 30 years. Act-Lance looks to change that. There is a growing interest in Act-Lance's product pipeline, especially in our lead target protein, APTH1, and the small molecules that bind to this protein as candidates for a novel herbicide with a broad weed control spectrum.
We hope to update in the future on strategic collaboration based on APTH1. As I mentioned earlier, the new application target selector that is now part of our Campus AI Tech Engine, which serves as the infrastructure of ACQ Planus technology platform.
We allow the company to accelerate and improve the identification of novel mechanism of action for pesticides.
I expect that this significant advancement
We better position as planners.
to forge strategic partnerships with industry leaders.
Lastly, I would like to congratulate Dr. Edwin Percy on joining the AgPlemus board of directors. Dr. Percy is a highly accomplished agricultural scientist with over 20 years of experience in the industry.
Before I move on, I would like to encourage you to review ACK Planos' new presentation available on ACK Planos and EvoGen's website. I will now review the activities of Castera and Canonix, our subsidiaries that utilize EvoGen's generator AI tech engine as their main technological advantage. Starting with Castera, which reached a major milestone in the last quarter, Castera focused on developing an integrated solution.
to enable large-scale commercial cultivation of cutlery beans through its unique elite seed varieties.
The goal of Castella is to address the global demand for stable castor oil supply, mainly for the biodiesel industry. The past few months were pivotal to Castella.
Our vision of becoming a major player in the biodiesel industry progresses.
We see the orders from a world leading energy and gas company.
totaling $11.2 million.
for castle cultivation in Africa to support the growing demand for biodiesel. This is just the beginning.
are to grow its cannabis cells in Israel
benefiting from its elite unique strengths, while significantly reducing canonical expenses.
ECC-Canonic's go-to-market strategy includes out-licensing to third parties the commercial growth of the cannabis stream toward the final product.
it is crucial to select subcontractors that have the right skills and expertise to maximize the genetic value of canonical strains meeting the premium market criteria
To this end, during the past month the company has been evaluating and negotiating with various subcontractors including growers outside Israel.
and indoor growth facilities.
We hope to update on this matter in the coming months.
I would now like to address the successful completion of Evergen's latest capital raise.
On July 17th we raised $8.5 million to register the direct offering from institutional investors including Silver Ark Capital Management, Arteum Capital Management, LP and CDI Investments. And within the whole EvoGen group.
we do have a substantial amount of funds. A significant portion is assigned to the subsidiaries. The additional funds raised for Evogen itself will now allow more financial flexibility, strengthen our position, and will ensure continued growth at the end. For more details on Evogen Financial, please visit www.evogenfinancial.com.
We will later hear from EvoGen CFO , Yaron Eldad. To wrap up, the second quarter of 2023 has been an exceptional period of achievement in the EvoGen group. And in my view, it is pivotal point in the transformation EvoGen is going through. We started with the creation of our three AI tech engines. Announcing purchase order in the accumulated amount of $11.2 million for Castor C. Licensing agreement between LaVie Bayo and Corteva, which include an upfront payment of $5 million, milestone in royalties. Closing a financial round for Biomica on the amount of $20 million. And last but not least, receiving the trust.
of high quality investors demonstrated by purchasing 8.5 million ordinary EvoGen shares in our research financing round, all happening in a relatively short time, signals a clear message that EvoGen is on the right path of success. I will now hand over to Amit Noam LaVie.
who will elaborate on the latest Evergen fundraising and our financial results for the second quarter.
elaborate on the latest epigenetics, fundraising, and our financial results for the second quarter. Amit.
Hello everyone. I'm delighted to be joining Evergen's earnings calls for the first time. It has been an incredible journey over the past four months since I joined LaViv Bio as the company's CEO . I've had the pleasure of meeting a remarkable group of people and talents and I'm confident that together we will drive LaViv Bio to new heights.
in our business endeavors. I want to express my gratitude to Evogen CEO Ofer, his management team, and the entire Laviv Bio board of directors for their warm welcome and unwavering professionalism. Thank you all for your support. I would like to update you on three of Laviv Bio's main achievements in the last...
agreement with Corteva for two of our leading biofungicide candidates and the third the advancement in our product pipeline. Back in May the company updated that it had received regulatory approval.
from the Canadian Food Inspection Agency for its bioinoculant treatment, TRIVIS. This approval triples the product sales territory, expanding its global reach.
Trivus, which increases hard red spring wheat production by enhancing soil nutrient availability and efficiency while mitigating environmental stresses, has already demonstrated its efficacy in the U.S. with an average of 3 to 4 bushels per acre yield increase.
providing a four-week return on investments for farmers. LaVe Bio plans to extend Trivus application to other crops in the near future. The product developed using LaVe Bio's BDB platform, powered by EvoGen's micro-boost AI tech engine, exemplifies the company's commitment to sustainable agriculture and enhancing...
This significant agreement grants Corteva exclusive rights subject to reaching certain commercial milestones to further develop and commercialize LAV-311 and LAV-312, our promising lead by a fungicide candidate which targets fruit drops.
These candidates were originally discovered and developed by Lavie Bio, showcasing our commitment to innovative solutions in the ag. biological industry. As also mentioned, in the same of this collaboration, Lavie Bio is set to receive an initial payment of approximately $5 million.
In addition, we are eligible for additional milestone payments in the future based on achieving student patent rights and regulatory approvals. Most importantly, this mutually beneficial agreement also allows us to receive royalties from Corteva's sales of these future products. We are thrilled about this strategic partnership and confident that Corteva's
to towards commercial success. This agreement aligns perfectly with La Vie Bios vision to provide farmers with environmentally friendly and sustainable tools that effectively combat fruit troughs, a highly destructive disease causing substantial annual losses in the agriculture sector.
We also refined the company's strategy of being a leading ag-biological product development company with the goal of consistently and repeatedly bringing high quality, commercially viable ag-biological products to the market that are competitive in performance to the synthetic chemical solutions, but superior in their sustainability benefits. This product program will support our two goals of improving the quality of our products.
Corteva. I'm excited about the future of La Vie BIO and our commitment to supporting farmers worldwide with cutting-edge solutions.
Thank you for your continued support and I look forward to updating you on our progress in the future.
Thank you all and now Yael Romain, Kastara's CEO and Evergen's EVP Business Development, will provide his update.
Hello everyone, thank you Omid. I'm delighted to join the call today and provide a brief overview of Castella's recent activities and our plans for the future.
Our mission is clear, to transform the customer oil industry by providing an integrated, holistic solution for industrialized cultivation, ensuring a consistent supply of high quality grains for the industry's daily chain.
Through our profound knowledge of genetics and innovative agro and technical solutions, we are committed to creating a continuous single season industrial solution for the best coastal crop performance.
Let's review last quarter's activities.
In the second quarter of 2023, Castella achieved significant milestones with purchase orders totaling to 11.3 million dollars for the supply of our high-yield, high-oil proprietary castor seeds for the cultivation of castor plants to produce oil for sustainable biofuels.
I would like to elaborate on this achievement. In June , we announced a signing of a framework agreement with a prominent oil and gas company securing emissions per chase order worth $9.1 million for the supply of our castor seeds to be cultivated in specific African territories. Additionally, in July , we unveiled one more per chase order of value that two million
to Kastera. The biodiesel market, the president's research site, was valued at 92 billion dollars in 2021 which is nine percent of the global diesel market and is expected to reach 190 billions by 2030. Biodiesel currently consists of 93 to 95 percent fossil oil and five to seven percent non-fossil oil.
in non-fossil components. Castor is a standout non-fossil oil candidate with carbon natural properties thriving in marginal lands without competing with edible crops.
Spare-heading this development is Castella, using advanced computational biology technologies to develop high-yield custom varieties.
I would like to note that we are free to receive these significant purchase orders which confirm our value proposition for the sustainable biodiesel industry. As we eagerly hope to secure more orders in the future, these accomplishments reinforce our ongoing commitment to delivering exceptional eco-friendly solutions to meet the ever-growing global demand for renewable energy.
Castero plans to increase its global spend and embrace more companies in the oil and gas space. Additionally, in its R&D, it targets to expand its activity to sustainable aviation fuel, SAF, markets and develop virtually three recent varieties for animal feed. After more than a decade of hard work and investment of millions of dollars in developing our unique...
that I may have. And now I want to pass the mic to my colleague Yaron Eldad, Evergen CFO . Yaron?
Thank you Eyal. As previously mentioned by Ofer, in July we successfully concluded a fundraising round securing total gross proceeds of $8.5 million.
I must emphasize that the securities issued in this round were common stock only and did not include any world coverage.
As of June 30, 2023, Evergen has consolidated cash, cash equivalents and short-term bank deposits of approximately $33.9 million.
Of this sum, Bionica accounted for $16.8 million and La Vie bio holds $7.1 million.
?
together with Cristero, Canonic and Art Blenus, possessed an aggregate of $10 million in cash.
The injection of funds from this last round in July strengthens evident financial positions and provides us with the resources needed to execute our future plans effectively and in a timely fashion. Courvard feintly
An example of such financial need is a significant increase in the required working capital of our only owned subsidiary, Castera, in order to produce the custom seeds needed to fulfill the purchase orders received in the last month totalling $11.3 million.
It is important to note that the $10 million reflected in the cash balance of Evergen together with Castera, Canonic and iPlanets do not include funds raised by Evergen in July and any amount due to the purchase orders received by Castera in the last few months.
which are expected to be supplied during the second half of the year and at the beginning of next year.
Further note that the $7.1 million reflected in the cash balance of La Vie Bayou does not include the $5 million expected to be received at the upfront payment from the licensing agreement with Culteva. It was announced in July .
During the second quarter the consolidated cash usage was approximately $5.6 million or approximately $2.8 million excluding LaVie Bio and Bionica.
I will now review the P&L main items.
Revenues for the second quarter of 2023 were approximately $654,000 compared to approximately $312,000 in the same period the previous year.
The revenue increase was primarily due to revenues recognized by the collaboration agreement of evidence subsidiary AgPlanners with Copesa and from sales of LaVie BioTribus.
R&D expenses for the second quarter of 2023, which are reported net of non-refundable grants received, were approximately $5.4 million and remain stable as compared to approximately $5.4 million in the same period in the previous year. Sales and marketing expenses were approximately $928,000 for the second quarter of 2023 and slightly decreased as compared to approximately $962,000 in the same period in the previous year.
The main contributor to this decrease in expense was a reduction in personal expenses at Canonic. General and administrative expenses were approximately $1.8 million in the second quarter of 2023 compared to approximately $1.7 million in the second quarter of 2023.
in the same period in the previous year. The increase is mainly due to expenses related to share based compensation.
Updating loss for the second quarter of 2023 was approximately $7.9 million compared to an operating loss of approximately $8 million in the same period in the previous year.
Financing income for the second quarter of 2023 was $0.1 million in comparison to financing expenses of $1.7 million in the same period in the previous year.
This difference was mainly due to the US dollar and shekel exchange rate differences between periods, a decrease in marketable securities value in the second quarter of 2022 and an increase in interest income during the second quarter of 2023.
Net loss for the second quarter of 2023 was approximately $7.8 million compared to a net loss of approximately $9.8 million in the same period in the previous year.
mainly due to the financing expenses, differences and mentions above.
With that, Ofer and I would like to open the call for any questions.
Operator. Thank you. Ladies and gentlemen, at this time we will begin the question and answer session.
If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by while we poll for your questions.
The first question is from Ben Cleave of Lake Street Capital Market. Please go ahead. All right. Thanks for taking my questions here. I have a few. I'd like to start with a couple on Castera. For this initial $11 million order...
hand versus contract production that is out now to satisfy that order.
Hi Ben, this is Ofer. I will ask Eyal to address this question. Hi Ben, basically the amounts that we have received in the order are substantial amounts, so we are producing and continue producing the extra capacity which is required to...
to supply the common demand that exists in the markets.
The additional orders requiring us to add more in our production, this is exactly what we are doing now and we'll continue in the coming months to accomplish all the quantities required for that deal.
Okay, great, thanks. And so this is, I think, clearly in that sense of what I certainly was expecting would be possible here in year one, which is fantastic to see. I'm wondering if you can help us understand...
kind of your outlook for next year. And specifically.
Do you know what kind of the limiting factor will be for Castera revenue next year? Is it going to be, you know, capacity for your biofueled whole partner? Is it going to be access to farmers to actually plant the seed? Is it going to be available inventory? I mean, what do you think the limiting factor is going to be for Castera in its second year?
Leal, can you continue? Yes, based on the estimation that we received from the clients and based on the preparations required in terms of land, I do not see at the moment any limitations that will be restricting us from producing the substantial amounts that are required. The main challenge I believe in...
having those capacities shifted to the client is a logistic one. So we are improving and preparing all kinds of adjustments over there to attend the supply itself. From production perspective we don't see any limitations. Land is quite available whether you produce this amount or another amount the additions that are required are not something which is beyond our reach.
I see it mainly as a challenge in the logistics that we need to shift substantial amounts from one place to another. Production wise we are settled down and whether they will be increasing dramatically we are able to supply the quantities.
I would prefer to believe it's more conservative and I would say that that on what we know could be the orders for next year, so we believe that we are in a good position to support it still. We need to strengthen our infrastructure as an example.
Probably we need to have additional de-hulling machine, additional servicer, and we need to prepare more land. But I think that this is the thing that we can handle. Of course, if it would be a dramatic increase in the demand, which is something that we currently are seeing. Similargov has a built-in
I'm not expecting something that's 10 times more. I think then probably it will be more difficult to address it. But at least to what we know now, yes, we expect to see increasing demand. And we believe that we would be able to address this increase.
And we are working very, very hard, in some cases even day and night, in order to be able to address this challenge.
Great, great, thank you. One last one on Castera and then I have a quick one on lobby. So for Castera, Eyal, I heard your comment about ambitions in the world of sustainable aviation fuel. I'm curious if your unnamed partner in this space is…
is going to be your expected partner in this end market, or if you're looking to strike additional collaborations with other energy players in the world with sustainable aviation fuel.
So maybe I will take this question. It's very interesting because I think maybe 10 years ago, Acostavela had an ongoing relationship with NASA.
from the US and with an aviation company where we evaluate the probability of converting biofuel into, converting castor oil into jet fuel and we succeed to demonstrate that it's truly working.
This product didn't move forward because again there was the decline in the oil price during 2014 and on. So it's a little bit reduced the motivation of the bigger companies to move in this direction.
So we already have collaboration with one of the big airplane manufacturing and NASA and we demonstrate that it can really work. Now we are talking with new companies, new partners. We can't disclose the names but I think hopefully next year...
We will advance, maybe even before, but we will advance a little bit faster and maybe this is something that we can disclose. But we already have a nice experience in this field in the way we are now continuing what we did in the past and what we stopped and now I think we are really in good position to see nice results.
shaking out, and kind of what you are doing to really accelerate Thrivis revenues in 2024. David Lamont Wilson Thank you for this question. I will ask Amit, the CEO of Labibario, to address this question. Amit Bhandari Yes, so Thrivis sales in 2023 again, we are just in the beginning of entering the market. But we saw this year two main things. One is we continued the growth compared to last year. But we have encountered some production challenges that limited the amount of product that we were able to produce this year.
from Jenny Montgomery Scott. Please go ahead. Good morning gentlemen. Thanks for the opportunity to ask a question or two. First question, I just wanna understand the flow of, the cash management on the castor seed, a part of the business. If you get continued large orders, you have to lay out capital to the entities producing the seeds. And then once the seeds are delivered to the customer.
we get paid and reimbursed. What is the timing on all of that? Eyal, can you take this question?
Yes, basically there are many pathways to conduct those businesses or those deals. We normally take the responsibility to produce the seeds and bring them to the port and from that port, whether it is in Latin America or in Africa, the client is responsible for dispatching.
taking the goods on his behalf. In terms of the recognition of the revenue and the income, some of it is obviously paid in advance in order to support the production, especially if we talk about substantial production. And later on, once the goods are arriving, the growth of the client, we are receiving the...
the final and completion of the payment. So that's in terms of the support of the capital to provide the cultivation of the cost.
Maybe I will add a little bit more. We have three different sites where we are producing the seed, which this is the product that Castera is selling to its partner. One is the smallest one in Israel. Then we have one in Africa and the other one is in South America.
When we collect the purchase order from our partners, then we instruct our subcontractors how much we would like them to grow and produce for us, to support the purchase orders.
In some cases, yes, we have already seen it in the inventory, but especially when there is such a significant increase in demand like that we have been exposed this year, so of course we can't support such a quantity based on existing inventory.
So we ask our subcontractors in all of these locations to start to grow the seeds that we are going to distribute to our partners. And of course, they are using our genomics, they are using our protocols, and we are supporting our subcontractors during the growing season.
And after four months, we have the seeds and then, you know, our top contractors are doing the harvesting, the de-hulling, coating the seeds, packaging them, and then they're ready to be shipped to our partners. And when the seeds are on the way, so then of course we...
So there is a gap between the amount of money that we pay to our subcontractors to produce the seed, and then we get our rewards with all the margin from our partners after we supply the seed.
So this is how it depends. And the purchase order that we receive, it's not something that our partners can cancel. So in a way, it's like there is a guarantee that we are going to receive the money based on the supply of the seeds in a certain period of time.
So this is why we feel comfortable to invest in growing the seed and sometimes we even support our subcontractors to strengthen infrastructure in order to support high quality seed to our partners.
And then, in a way, we have like a guarantee that we receive the money from our partners when they will receive the state.
That was helpful.
But in the future, I mean, we're all looking and hopeful that seed orders are really going to...
to explode. Do you have enough existing working capital, you know, since there's a lag between the time you get the order and you get paid to support this robust...
sales growth that we're all hopeful is going to come? So for this year, one of the reasons that we raised money, it was also to support this growing demand in working capital. According to our estimation, after we will go through this round with the 11 million
we'll need additional capital and maybe if we do so, based on a purchase order that we might even, if needed, we can take a loan from the banks, credit, or in order to support the field production. I think that this year we felt that maybe the right thing to raise money in order to do so.
In the future, I intend to believe that all that we will have enough from our internal resources or that if we need to receive some credit from the bank, I believe that this is another option in order to fund the working capital needed.
Great, thank you for that answer. Great question.
The collaborations you're working on with companies in areas not covered by your subsidiaries.
Do you have, could you share with us, do you have a kind of template of what the structure of these potential deals and collaborations will look like?
Yes, I can give you two examples. One ongoing discussion that we have, which is advancing nicely, is actually in the area of food tech. And here we are talking about producing a protein implant, a protein that today we all consume.
through eating meat. So we would like to produce, there is specific investors and companies that are interested in this field of a protein production plant to replace a mammalian protein that we are consuming.
campus AI in order to identify the genes, the genomic mechanism that you would like to improve in order to produce those proteins. Another example, it's related to microboost. such as the cheek end and maybe
others they also suffer from different type of problems that you can treat them using a microbe and We might enter to some relationship in the field that we are using
our microbiome AI tech engine in order to identify microbes that can improve animal health. So this is another example. But there are many other opportunities. You know this is just
Few that currently are under discussion, but there is much more that we are now pushing forward.
Great. Thank you very much Shira for the opportunity to ask questions and carry on, sir. Thank you very much. I appreciate it.
If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by while we poll for more questions.
There are no further questions at this time. Before I ask Mr. Ofer Javiv 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 US call 1-888- Expansion helmet, suggest that youcontent Schumacher is somebody who is Councillor off to the line ofWilliam & Mary.
In Israel, please call 03-925-901. Internationally, please call 9723-925-901. Mr. Habib, would you like to make your concluding statement? Yes, thank you.