Evogene Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 18, 2023

There are 8 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Evogene's First Quarter 2023 Results Conference Call. All participants are present in listen only mode. Following management's formal presentation, instructions will be given to the question and answer session. As a reminder, this conference is being recorded May 18, 2023.

Operator

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 Evogene. I encourage you to review Evogene'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 Securities Litigation Reform Act of 1995. For example, Evogene is using forward looking statements in this call when it discusses the results of Vionica's Phase 1 clinical trial for immuno oncology microbiome drug candidate, BMC-three thirty three's progress to Phase 1 clinical trial, BMC-four twenty six's advance in its preclinical trials, LaVie Bio's expansion of sales into Canadian and European markets and introduction of new crops like small grains and oilseeds, registration of LaVie Bio's bio fungicides for fruit rot and powdery mildews with the U.

Operator

S. EPA and LAV 321 further field trials, potential collaboration of AgPlannus with respect to its APH1 candidate, achievement of 1st milestone in AgPlannus' collaboration with Corteva, the nomination of new protein targets and achievement of greenhouse readout in its wheat blotch fungicide program, Canonic's goal to expand 2nd generation product sales and receipt of loyalty payments from Variety Licensing, Cordera's territorial expansion and increased sales, the potential commercial value of the product of the Ag Seed Division's grant program. 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 Evogene and may cause actual results to differ materially from anticipated results. Evogene 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.

Operator

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 report filed with the U. S. Securities and Exchange Commission. That said, I would now like to turn over the call to Rachel Pomeran, Evogene's Head of Investor Relations.

Operator

Rachel, please go ahead. Welcome to Evogene's earnings call in

Speaker 1

the Q1 of 2023 and thank you all for joining us. My name is Rachel and I'm the new Investor Relations Director at Evogene. I'm excited to join this innovative team and help drive growth through solid investor relationships and effective communication. Starting the call today is the President and CEO of Evogene, Ofer Haviv, who will provide insights into our business model and the significance of our technological engines and the life science industry. He will also provide updates on Evogene subsidiaries.

Speaker 1

Also joining offer on today's call are Doctor. Nir Rabel, Evogene's Chief Product Officer, who will be discussing some of the recent improvements we have made to Evogene's AI tech engines Doctor. Elan Haber, the CEO of Biomica, Evogene's subsidiary focusing on developing drugs based on the human microbiome will follow Ofer's review and elaborate on Biomica's activity and achievements. Our CFO, Yaron Eldad will later provide a financial summary and update. But first, it is my pleasure to introduce our main speaker, the President and CEO of Evogene, Ofer Haviv.

Speaker 2

Thank you, Rachel, and good day, everyone. Today, I will review Evogene's activities and recent accomplishments and provide you with an update on potential catalysts expected in the near future. I will also discuss some of our subsidiaries' recent accomplishments, leveraging our technology and demonstrating the power of the value of our AI driven tech engine underlying the product development process. As you know, Evogene has been using its computational predictive biology platform, the CPB, to direct and accelerate the discovery and development of lifetime based products. The CPB is the foundation of our 3 tech engines.

Speaker 2

Microboost AI supports the discovery and development of microbe based products Campus AI supports small molecule based products and generator AI supports products based on genetic elements. Our AI driven tech engine help address the main challenge in lifestyle based product development. Finding the winning candidate or candidates out of best number of possible prospects that addresses a complex myriad of criteria to reach successful commercial products. Many potential candidates exist when identifying a specific microbe, gene or small molecule. Our AI tech engines help to find that needle in a haystack in a way and within a timeframe and cost that our competitors or partners may not be able to accomplish and most importantly increase the probability of success.

Speaker 2

Around each of our 3Tech engines, Evogene has established a business ecosystem, including independent subsidiaries or strategic collaboration. This focus on developing products for a specific life science market segment, benefiting from the tech engine as their main competitive advantage. I am pleased to introduce Doctor. Nir Arbel, Evogene's Chief Product Officer, who is leading the development of our AI tech engine to share with you more information and the latest AI tech engine development accomplishment. Nir?

Speaker 3

Thank you, Ofer. As Ofer mentioned, our AI driven tech engines are designed to serve as a powerful platform for directing and accelerating the discovery and development of life science based products. During the past year, we invested significant efforts in creating a user friendly dashboard as the tech engine's primary interface, facilitating seamless navigation across multiple applications within the discovery and development process and the tech that the tech engine supports. These apps are sophisticated software applications internally developed to serve 2 purposes. 1st, they enable predictive outcomes by leveraging advanced outdoor systems, supporting the desired product definition to narrow an extensive range of options to a practical number of high potential candidates.

Speaker 3

2nd, they integrate diverse data sources, both internal and from the public domain to facilitate informed decision making in the R and D processes. We have recently invested in improving our AI tech engines infrastructures, enhancing their efficiency and appeal to prospective partners and I'll now go into more detail. I will start by describing the improvements made in Micro Boost AI Tech Engine, which enables the discovery and development of micro based products for various industries such as healthcare and active. We have expanded the engine's usability and statistical capabilities, mainly targeting to improve our ability to translate the microbial gene to its functions. For example, by revamping one of our apps named Corbac, Lavie Bio quickly identified several new genes related to bacterial shelf life, enabling better prediction for commercial attributes early in the discovery process.

Speaker 3

Moving on to Kempass AI Tech Engine, which facilitates the discovery and development of small molecule oriented products, notable enhancements have been implemented. Kempass AI has undergone a substantial upgrade predominantly focusing on augmenting its automation, scalability and speed. These improvements allow us to amplify the volume of projects undertaken annually, thereby enabling more efficient collaboration with potential partners. This aspect holds particular significance in the light of anticipated upsurge in Agclinys' project portfolio as well as Evogene's intention to expand the use of Kempass AI into the pharma market segment. In conclusion, I look forward to updating you on our ongoing journey of continuous improvements, focusing on enhancing the robustness and attractiveness of our tech engines to cater the need of potential partners seeking to address a wide range of life science discoveries.

Speaker 3

Our dedicated efforts aim to refine and expand our capabilities ensuring that we remain at the forefront of technological advancements and providing exceptional solutions for partners in the life science industry. Back to you, Ofer. Thank you, Neil. Before I review the impressive recent achievements of our subsidiaries, I

Speaker 2

want to update on potential catalysts we see at the Evogene Group in the near future. Evogene aims to enter into business relationships in new areas of activity not covered through our subsidiaries for product development leveraging our tech engines technological improvements in our AI tech engines, strengthening our offering to potential partners and to our subsidiaries Meeting the defined milestones by our subsidiaries as listed in the new Evogene presentation published today, thus demonstrating the impact of our AI tech engines and the value of the subsidiaries themselves and raising external funds at the subsidiary level to fund the subsidiaries' activity and demonstrate their inherent value as well. With respect to our 5 subsidiaries, they have accomplished multiple achievements from the beginning of this year and we have several upcoming milestones, which we believe are significant value creators. I want to start with Biomica, which focuses on developing microbiome based therapeutics for human health, leveraging Micro Boost AI. I'm delighted to announce that the $20,000,000 financing round led by the $10,000,000 investment from Shanghai Healthcare Capital has closed.

Speaker 2

The deal was done at the post money valuation of $15,000,000 This external and independent endorsement of Biomica validates our belief in Biomica's long term potential. For more details on this investment and Biomikal's activity and achievement, we will later hear Doctor. Elran Heber, Biomikal's CEO. Let's now move to Labii Bio. Labii Bio leverages Evogene's Microboost AI tech engine to develop next generation biological products.

Speaker 2

In addition to Evogene's majority ownership, we are happy to emphasize that Labipayo has 2 additional major shareholders: Korceva, a New York listed multinational agtech giant and ICL, a New York listed global minerals and Actech Company, which last year made a $10,000,000 investment into Labibayo under a safe agreement. In addition to equity investment by these 2 giants, iCE and Corteva, they also conduct a collaboration with Labii Bio toward novel ag biological product development. I'm delighted to announce that last month, Mr. Amit Nuan joined Labipayo as its new CEO. He's highly accomplished professional with expertise in leading teams and executing successful commercialization strategies in the agtech and health care sectors.

Speaker 2

I look forward with excitement to working together with Amit toward Labibayo's success. With respect to Labibayo's achievement this quarter, I would like to start with its first product on the market, Trivos. Trivos is a microbiome best seeded treatment that enhance yield in North America's 10,000,000 acres spring wheat market, offering 3 to 4 additional bushels per acre and significant ROI for farmers. Trivos has the potential to expand to additional crops in the future. We are currently seeing high demand far exceeding our supply.

Speaker 2

With our manufacturing partner, we have gained significant experience this season overcoming various production challenges as we increase capacity. The experience has set us up well for the future and will enable us to ramp production better for the expected jump in sales for next year's season. Looking ahead, we aim to broaden sales into Canadian and European markets and add further crops such as small grains and oilseeds. Labii Bio's bio pesticides program continues to advance. In October 2022, we submitted the registration package to the United States EPA for LAB 311, our novel bio fungicide targeting fruit rot and powdery medias, a final step before commercialization targeted for 2024.

Speaker 2

The initial target market is for the treatment of RIPS, a $200,000,000 market. Labibio's 2nd bio fungicide product in the pipeline is LAB321 against DownyMedius, solving a significant challenge as traditional agricultural chemicals are increasingly banned. The results from recent trials are promising. And in 2023, we plan further field trials. The initial target market is for the treatment of BRIFS, a $500,000,000 market.

Speaker 2

Labibio's significant achievement demonstrate the power of Evogene's technology and its micro boost AI tech engine. Let's now move on to AgPlenys. AgPlenys aims to discover and commercialize next generation mode of action crop protection products, including herbicides, insecticides and fungicides, leveraging the Campus AI tech engine. Major alchemical companies such as BASF, Bayer, Proteva and Syngenta dominant today's crop protection industry. Still, they look to smaller agtech companies like AgPlenus to develop new minor molecule candidates and AgPlenus is exploring partnership with these major industry players.

Speaker 2

Herbicide resistant weeds today are flourishing. There has not been a new commercial herbicide with a novel mode of action for over 30 years and AgPlenus looks to change that. AgPlenus is seeing interest in its product pipeline, especially our most advanced candidate, APH1, a novel herbicide with a broad weed control spectrum and commercial dosage rates. We hope to update in the future on a strategic collaboration based on APH1. Since 2020, AgPlenus has worked closely with Corteva to develop new herbicides.

Speaker 2

Aglanus discovers and optimize the candidates, while Corteva conducts testing and product development. We hope to update on progress in this collaboration in the future as well. Our next subsidiary, Canonic, is focused on developing best in class medical cannabis products, leveraging Evogene's generator AI tech engine. Currently, Canonic is advancing 2 business models, using its unique capabilities to rapidly develop elite medical cannabis varieties, addressing the changing demand of the medical cannabis market. The first, a direct sales model, in which Canonic is responsible end to end for all expenses related to the product development, cultivation and sales, with the end product to be introduced under the Canonic brand.

Speaker 2

In this case, the company will generate revenue from the sales of the end product to pharmacies. The second is the royalties model in which Canonic license its elite variety to partner, while all other expenses related to the cultivation, production, marketing and sales are covered by the partner and the end product will be introduced under the partner's brand. In this case, the company will generate income from royalties to be paid by the partner from its own revenue. In line with its direct sales model, Canonic recently launched 6 new 2nd generation products in Israel as part of its hybrid series. In line with our royalties model, last week, we announced that leading Israeli cannabis grower plant is licensed 2 of our varieties for Israeli sales.

Speaker 2

Canonic's main goal for the near term is to grow our 2nd generation cannabis sales in Israel, launch our 3rd generation product series and increased license sales, while significantly reducing company expenses. Let's now move to our last subsidiary, Castera, offering an integrated solution to enable large scale commercial cultivation of castor bins, utilizing Evogene Generator AI Tech Engine. This integrated solution includes proprietary castor feed varieties, supported by agrotechnical know how and novel mechanical harvesting and dehulling machines to address global demand for stable castor oil supply. Acera's castor seed varieties are designed to maximize water efficiency and provide drought resistance, allowing for cultivation on marginal non herbal land with minimal irrigation. Castera's advanced castor varieties are developed using our generator AI tech engine.

Speaker 2

Castera's current commercial activity is mainly in Latin America and Africa with strong business partners. In the last 6 months, we have seen an increase in interest in using castor oil as a veggie source for biofuels. This led to a significant agreement signed at the beginning of this year with a major European Best Global Energy Company with Castera supplying its elite castor varieties and growth protocol know how. The castor market, particularly castor for biofuel, is rapidly growing and gaining attention and Castera is well positioned to be a key player in that market. In the past few years, we have not emphasized Castera's activity when describing the Evogene Group.

Speaker 2

But now with the growing demand for castor oil, we expect that Castera will become a valuable contributor to Evogene's continued success and shareholders' value. Last but not least, as disclosed last week, our Agci division secured a €1,200,000 EU grant to develop oilseed crops with an enhanced CO2 assimilation and drought tolerance. The program known as the EIC 2022 Horizon Program supports business addressing climate focused and sustainable crop development. The overall budget under the program is €2,500,000 shared between the program partners. This followed a successful 2021 proof of concept we took part in with the EU Futura Agriculture Consortium.

Speaker 2

The program aimed to create canola and rapeseed seed that observe more atmospheric CO2, acquire 20% less water and use less fertilizer, mitigating climate change and conserving water resources. The potential commercial value of such products for the food, animal feed and sustainable energy industries is significant and is a unique proposition in today's market. In summary, the activity of Evogene and its subsidiaries are progressing well. From financial perspective, we closely monitor the current difficulties in the financial market. We are consistently advancing our strategy and ensure we remain self sufficient financially for the foreseeable future.

Speaker 2

On Evogene's balance sheet, we have consolidated $29,000,000 for March 2023. This amount does not include the $10,000,000 Biomica received from the SHC investment in April 2023. I note that Labii Bio and Biomica, which recently have raised funds from strategic and financial investors, are now self funding and do not require additional financial support from Evogene. Our return target is that each subsidiary will have its own financial resources to support its activity until its success. At the same time, at Evogene, as a major shareholder, we will continue to play a significant role in maintaining and building our tech engine, providing the subsidiaries competitive advantage.

Speaker 2

Our long term plan is to realize value by spinning out or IPO ing 1 or more of our subsidiaries depending on the market and other conditions and subject to SEC and other rules regarding any such transaction. The recent external investments in Labipio and Biomica each with valuation well in excess of Evogene's current market cap validate the significant inherent value within our subsidiaries and testify to the value initially created by Evogene's AI tech engine. We hope to announce additional success in the future. I now invite Doctor. Elran Hebel, Biomica's CEO to join the call and elaborate on Biomica's achievements.

Speaker 2

Elran? Thank you, Ofer. I'm thrilled

Speaker 4

to update you that Biomica made significant progress last quarter with the closing of substantial financing ground led by Shanghai Hesburgh Capital. SHC's investment is a forward of confidence in Biomica's capabilities and the microbiome based therapeutic space. With Evogene, dollars 20,000,000 was invested in Biomica in this round, valuing us at $50,000,000 Doctor. Jing Bao, a partner at Shanghai Hekker Capital that received her PhD from the Weitman Institute of Science in Israel joined Biomica's Board of Directors. The financing round was signed in December and in April it was officially closed after all regulatory approvals were obtained.

Speaker 4

This investment serves as an external and independent endorsement of Biomica and it marks a significant milestone for us and strategically positions us for growth in the years ahead. Last week, we had the privilege of integrating our new lab and office space. Establishing these facilities is essential to our company's growth and development. We're excited about their possibilities, enabling us to enhance our capabilities further and to support our research and development. Before moving forward, I want to update you on our recent programs and provide insights into our plans for the future.

Speaker 4

As you may know, Biomica is currently focused on 3 proprietary therapeutic programs. The most advanced program is in the immuno oncology, BMC 128. BMC 128 is a rationally designed lab therapeutic consortium product. Last June, we'll begin our Phase 1 POC clinical trial in Israel for BMT-one hundred and twenty eight to treat 3 types of poly tumors in humans. The Phase 1 trial is designed to evaluate safety and tolerability of BMTs of PMC128 in combination with an anti PD-one checkpoint inhibitor Opdivo in refractory cancer patients.

Speaker 4

We have enrolled several patients in the study and aim to complete the trial later this year. We plan to file an IND with the FDA late 2023 or early 2024 and intending to begin our Phase IbIIa trial for BM-two twenty eight in the U. S. In the first half of twenty twenty four. Our 2nd microbiome therapeutic program focuses on glomerular disease or IPD where the lead candidate is BMC III, a rationally designed optimized consortium of 4 live bacterial strains.

Speaker 4

In several preclinical animal studies, BMC could have produced significantly reduced inflammation and tissue damage. We aim to start the scale up development process and GMP production of this product as part of the preparation for our expected clinical trial in the U. S. In 2024. It is important for me to emphasize Micro Boost AI Tech Engine has been instrumental in supporting the discovery process for our LBP program and we eagerly anticipate future improvements.

Speaker 4

A 3rd program focused on IBS in which we completed the discovery phase for BMC 4 26, which is now beginning being evaluated in preclinical studies. The preclinical results are encouraging and we will update you as we advance. That ends my summary and Yaron Nedath will now provide the financial update. Yaron?

Speaker 5

I will now give the financial overview. Evogene maintains a solid financial position with approximately $28,800,000 in consolidated cash, cash equivalents and marketable securities as of March 31, 2023. This amount does not include the $10,000,000 investment in Biomica by SHC that was received during April this year. Approximately $8,200,000 of Evogene's consolidated cash as of March 31, 2023 is appropriated to its subsidiary La Vibayo. We do not have any bank debt.

Speaker 5

During the Q1 of 2023, the consolidated net cash usage was approximately $6,600,000 or approximately $5,100,000 excluding LaVie Bio. Looking ahead to 2023, excluding any impact from foreign exchange differences and the change in market value from marketable securities, we expect our consolidated cash burn rate to be between $27,000,000 to $29,000,000 Excluding the use of cash by Biomica Olavi Bio, we expect our consolidated cash burn usage during 2023 to be between $12,000,000 to $14,000,000 I want to highlight some specific items on the P and L. Revenues for the Q1 were $641,000 compared to $237,000 in the same period the previous year. The revenue increase was primarily due to revenues recognized with the collaboration agreement of Evogene's subsidiary AgPlanners with Corteva and from sales of Cononics Medical Cannabis products in Israel. R and D expenses for the Q1 of 2023, which are reported net of non refundable grants received, were $4,800,000 compared to $5,600,000 in the same period in the previous year.

Speaker 5

The decrease is primarily due to decreased R and D expenses in LaVie Bio due to the commercialization of its inoculant product and a decrease in Canonic's personnel expenses. Sales and marketing expenses were approximately $800,000 for the Q1 of 2023 compared to $908,000 in the same period last year. The main contributor to this decrease in expenses was a reduction in personnel expenses at Canonic. General and administrative expenses were $1,500,000 in the Q1 of 2023 compared to $1,600,000 in the same period in the previous year. Operating loss for the Q1 of 2023 was $6,800,000 compared to an operating loss of $8,100,000 in the same period in the previous year.

Speaker 5

The decrease in the operating loss was due to the above mentioned. Net loss for the Q1 of 2023 was $7,000,000 compared to a net loss of $9,100,000 in the same period in the previous year. With that, Ofra and I would like to open the call for any questions you may have. Operator?

Operator

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. The first question is from Brian Wright of ROTH. Please go ahead.

Speaker 4

Thanks. Good morning or good afternoon, I should say, both of you all. A couple of questions. I wanted to start off with just you mentioned on Biomica that there were a couple of patients enrolled in BMG128. Just wanted to get a little more does that mean like 2 way through?

Speaker 4

Or just a little more clarity on that?

Speaker 2

Eduardo, can you take this question?

Speaker 6

Yes, sure. So thanks

Speaker 4

for the question. Yes, as I mentioned, we involved a few patients already. Keep in mind that the entire Phase I study is estimated to be around 12 patients. So we have enrolled, I would say, approximately a handful of patients so far. As you may remember from previous reports, our main objective is to enroll patients that are progressing on pre types of solid tumors, either non small cell lung cancer, RCC patients or melanoma, both of them previously failed with immunotherapy and just after failing through the treatment they can be enrolled in PROS studies.

Speaker 4

Okay, great. So I hand hold that. Okay. Sounds like you're really kind of on track there. One quick question on the drivers given the supply demand dynamics, is that something you considered maybe increasing the price of?

Speaker 4

Or is it just a matter of it's just move to market where the price is the price and even running for next year?

Speaker 2

The stand wasn't very good and I'm not sure that we understand the question. But with respect to Travis, we are producing the product for the sales campaign a few months before the sales even started. And in a way, we are captured with the quantity we can sell according to the quantity that we produce. And what I can share is that, as we mentioned, we go through some challenges and struggles with the production process this year, but still it's a much higher quantity compared to previous year. And the good news is that what we see is that there is a more demand to compared to what we supply.

Speaker 2

And I think that next year with all the experience we gain, this year we are going to produce a significant higher quantity compared to what we are going to sell this year. It will be a quite significant amount compared to previous year, But I think that's the big jump is going to be introduced next year. And we are planning not just to sell in the U. S. Like this year.

Speaker 2

Next year, we hope also to start to sell in Canada. We are waiting for the Canadian approval to start to sell this product, which we are hope to receive it in the near future. Assuming that we receive it, of course, we will announce it as well. And the cells are progressing better than what we expected this year and there is high expectation for next year.

Speaker 4

Great. Thanks. And just wondering if you're in economics, I wanted with the recent announcements with the licensing agreement, how should we think about that as far as the split? Like is more of your revenue now going to come from licensing based sales or from your direct sales?

Speaker 2

What is nice about Canonic, which is very different from many other companies in this field in Israel is that we have the engine that produce varieties. And what we are doing is that, usually, we are conducting a variety test in potential cultivators because we don't have the facility to cultivate to grow the product itself. We are only greenhouses for research activity. So when we conduct a variety test, so we choose the most promising one and we decided that this is going to be our product. But in doing so, we are the company that then cultivates for us the variety or conduct for us the test, they are exposed to the quality of our variety.

Speaker 2

And then in some cases, there is a situation where they ask to have a license to some of our the varieties that we decided not to commercialize because still they believe that this is a high quality compared to what exists in the market. So we feel very positive on the situation that more and more variety that maybe we decided that we are not going to take all the way to commercialization, if we can still benefit from this variety through other companies that will grow the crop and we will be responsible on the marketing and we will get royalty and we don't see direct competition between the sales products. So, I think that this could be a very interesting additional business model for colonic activity. And of course, the revenue we are going to generate will be lower, but there is no risk and there is no cost of goods sold. So, every dollar that we are going to get from this avenue, it will be in addition to the net profit.

Speaker 2

And because as I said, it's not variety that we developed for a partner, it's variety that we developed already and we decided not to commercialize it, but they believe that there is still a significant commercial value and they would have to take it all the way to the market. So I think that through the years, as we have more and more this type of opportunity and there will be a company that they have space that they can grow cannabis, but they don't have high quality variety. So, if they will approach us, we will be more than happy to capture this opportunity and generate more revenue for Canonic.

Speaker 4

The

Operator

next question is from Ben Klieve of Lake Street Capital. Please go

Speaker 6

ahead. I'd like to start with Kistara. Ofer, I appreciate that your comment on emphasizing this subsidiary and have a couple of questions on this specifically. So my first question is in your updated presentation, you refer to having to expecting a few 100 tons a year out of 2024 production. Can you provide a bit of context to this?

Speaker 6

Is the few 100 tons a year in 2024 expected, is that seed inventory? Or is that grain production that your end customers will be producing for their customers?

Speaker 2

So we are talking about seeds that we are planning to sell to our partners. We are building the inventory. We have one group that grow for us seeds in Brazil and we have another group that can grow for us seeds in Africa. And numbers, if I'm we're referring to the same figure, so we're talking about a few tens of tons that we are generating as the feed or for sale.

Speaker 6

Okay. So that's so that few 100 tons a year in 2024 is a few 100 tons of seed for sale? Yes. Okay. That's great.

Speaker 6

Thank you. And then you also mentioned the benefit of Caster from a perspective of marginal land and negligible irrigation requirements. In the context of the EU's recent deforestation legislation, are you expecting that your products will be broadly applied on land that is considered deforestation free? And if so, are you going to be able to really validate that the degree that the EU regulators would like? Is that something that you're going to be able to prove to those regulators?

Speaker 6

Or is that something you're still working through?

Speaker 2

On what product you are talking about, Tobey? On the pharma?

Speaker 6

Yeah. For Cevan. Okay. So at

Speaker 2

least from my understanding, in the area where we are growing our crop, there is no any limitation. It's really the power decision what we want to grow. All of our variety are registered and we can start the selling process. I don't think that we need to my understanding, I mean, I can check it once again, but I don't think that we need any regulatory permission to sell the product in South America or in Africa. Actually, we are also we started doing so last we are doing it already for a few years in a small quantity.

Speaker 2

And now we are expecting to see a significant growth, especially in Africa. And I think as we publish, we engage with a very big energy company that we sold them grains, which we sold them soy seeds, which we start to shift those quantity only this year. And we are expecting to start to recognize revenue from this activity in next quarter.

Speaker 6

Great. In the second quarter. Got it. Got it. Okay.

Speaker 6

Very helpful. Thank you. One more for me on LOVIC bio and then I'll pass it on. You also have noted and it's reiterated in your presentation, additional biopesticides programs that are coming online. You know that this is the large multinational company expected in 2024.

Speaker 6

I know you can't name names, but can you clarify if this is with one of the existing collaborators that you have? Or is this what potentially a new multinational partner?

Speaker 2

With respect to Labibio in we're talking about bio pesticides. So there is more than one program that we are managing in this at this cycle. I'm more than happy to share that there is more than one program that we are having ongoing discussion with potential partners. And I can assure you that we are not talking just with our current shareholders. There is an interest coming from other companies as well.

Speaker 2

And we are free. There is some limitation on what we can do, but here we have enough freedom to work with other companies. And I really hope and believe that there will be some positive announcement in this direction in 2024 and hopefully maybe even in 2023.

Speaker 6

Very good. Very good. Well, best of luck on that. All right. I will appreciate you taking my questions.

Speaker 6

Good luck here in the coming quarter and I'll get back in line. Thank

Operator

There are no further questions at this time. Before I ask Mr. Ofer Khabib to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin 2 hours after the conference. In the U. S, please call 1-eight eighty eight-three twenty six-nine thousand three hundred and ten.

Operator

In Israel, please call 9,003-nine thousand two hundred and fifty five-nine thousand and one. Internationally, please call 9,723-nine thousand two hundred and fifty five 901. Mr. Habich, would you like to make your concluding statement? We actually have I think we have one other person who wanted to ask a question as far as I can see.

Operator

The next question is from Brett Reiss of Janet Montgomery Scott. Please go ahead.

Speaker 7

Hi, Ofer. My question is probably for Rachel. The company has been doing a lot of the right things. And yet the stock price is, it's a penny stock below $1 which limits institutions that can buy even my own firm frowns on buying this type of stock. I'm just wondering if there's an opportunity Rachel, to reach out to the key opinion leaders in the Reddit, meme stock crowd.

Speaker 7

And yes, I'm aware of the pejorative reputation that some of these folks have, but they are enthusiastic. They possess creative thinking and you see they have a lot of power. And the problem is they sometimes marry themselves to economically challenged entities. With Evergene, you have a company with sexy products on the right side of history, no debt, cash and a limited float. I'm just wondering if that's something that could be considered?

Speaker 1

Thank you for your question. If that's all right with you, I will let Ofer answer it. Thank you.

Speaker 2

So I think that since Rachel just joined the company, I will prefer that she will address this type of question and she will do so starting from the next quarter. So, I think the fact that we decided to recruit an internal IR manager, I think it sent a clear message that we believe that we need to invest much more in IR activity, also in public relationship activity. I think that maybe we didn't spend enough resources and attention in this direction. Probably it was my mistake. And my expectation is that together with Rachel, we are going to change it.

Speaker 2

We start to see in the news more and more articles about Evogene. There is more actually because even a nice article in Forbes, and I hope and believe there will be more this type of articles. And yes, I'm planning to start to meet with investors. And now when I have all of this amazing great news, as you described, and thank you for this, and there is more to come. And I think that I really hope that in the next few quarters, we'll start to see also the P and L start to reflect those good news through a milestone payment, sales, upfront payment from collaborations our subsidiary are going to conduct.

Speaker 2

I think this is assuming that all of this will happen, I think that then with meeting with investors and with the right publication and additional IR and PR work, I hope that it will start to have also the understanding of the market of what AirPOCENTE is doing and what our subsidiaries are doing will start to have also will diffuse into the capital market and we'll start to see the changing momentum and direction in our share. So yes, we are aware to this. Yes, we start to put now more resources and attention. And yes, and probably the most important thing, we start to see, I guess, stronger news from our own activity and our subsidiary activity. And I hope to say, we will be able to communicate all of this good stuff to the capital market.

Speaker 2

So, let's see next quarter and the quarter after. And I hope that first Rachel will be able to address this question and she will do it with a big smile.

Speaker 7

All right. Thank you for answering the question and welcome aboard Rachel.

Speaker 1

Thank you. Thank you so much.

Operator

Mr. Habib, would you like to make your concluding statement?

Speaker 2

Thank you all for joining the call today. I look forward to updating you on our progress in our next call and I believe that there will be much to tell about. Thank you very much.

Operator

Thank you. This concludes Evogene's Q1 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.

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Earnings Conference Call
Evogene Q1 2023
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