Textron Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 7, 2024

There are 5 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Evogene's 4th Quarter and Full Year 2023 Results Conference Call. All participants are at present in listen only mode. As a reminder, this conference is being recorded March 7, 2024. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evogene's management will constitute forward looking statements that relate to future events.

Operator

This investor call contains forward looking statements relating future events. These statements may be identified by words such as may, could, expect, hopes, intends, anticipates, plans, believes, schedules, estimates or words of similar meaning. For example, Evogene is using forward looking statements in its investor call when it discusses the further partnerships with industry leaders, increased sales of subsidiary products like Castera's Elite Castor Varieties and Lavivio's Bioinoculantialo, expansion beyond its current sectors continued revenue growth for the Evogene Group in 2024 potential transfer of Canonic's operations to a third party increased production of KASTERRA commercialization of AgPlannus and Laviv Bio's products and the timing and results of the clinical trials and preclinical trials of Viamaco's products. Such statements are based on current expectations, estimates, projections and assumptions, describe opinions about future events, involve certain risks and uncertainties, which are difficult to predict and are not guarantees of future performance. Therefore, actual future results, performance or achievements of Evogene and its subsidiaries may differ materially from what is expressed or implied by such forward looking statements due to a variety of factors, many of which are beyond the control of Evogene and its subsidiaries, including without limitation, the current war between Israel and Hamas and any worsening of the situation in Israel, such as further mobilizations or escalation in the northern border of Israel and those risk factors contained in Evogene's reports filed with the applicable securities authority.

Operator

In addition, Evogene and its subsidiaries rely and expect to continue to rely on third parties to conduct certain activities such as their field trials and preclinical studies. And if these 3rd parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, Evogene and its subsidiaries may experience significant delays in the conduct of their activities. Evogene and its subsidiaries disclaim any obligation or commitment to update these forward looking statements to reflect future events or developments or changes in expectations, estimates, projections and assumptions. More detailed information about the risk factors potentially adversely impacting our performance can be found in our reports filed with the U. S.

Operator

Securities and Exchange Commission. Today's call will feature Ofer Hadeep, President and CEO of Evogene alongside Yaron El Ghad, CFO of Evogene and Yoast Zohar, CEO of Katera. Additionally, a representative from each subsidiary will be present at the Q and A session. That said, I would now like to turn over the call to Ofer Khabib, President and CEO of Evogene. Mr.

Operator

Khabib, please go ahead.

Speaker 1

Hi, and good day, everyone. In today's conference call, I would like to start with a review of the Evogene Group achievements during 2023 until today and provide you with an update on our activities as well as potential catalyst during the next 12 months. Following my review, Castera's new CEO, Iyash Grohara, will introduce himself, provide an update on Castera's activity and outline the company's goals for the coming years. Evogene's CFO, Yaron Elvad, will then provide a financial summary and update. After that, we will open the Q and A session.

Speaker 1

What a year it's been for the Iberd Group since our last earning call summarizing 2022. Despite the challenges we are facing collectively here in Israel, this year marks a significant shift in how the industry views our technology and products, translating into growing collaborations with world leading companies. The number and caliber of partnerships Evogene and our subsidiaries have formed speaks volumes: La Vibayo partnering with Cortera, ICL and Syngenta XLEMOS partnering with Bayer and Corteva Casera partnered with global oil and gas company Bionica securing investment from Shanghai Healthcare Capital and Evogene collaborating with Verbio Optics and Colors all highlight our growing presence and impact in the life science industry. This expanding collaboration momentum validates the value of Evogene's AI tech engines, micro boost AI, campus AI and generator AI relying on our CPB platform, which we have been developing for over a decade.

Speaker 2

Looking ahead, we anticipate further

Speaker 1

collaboration with industry leaders directly or through our subsidiaries, an increase in the volume of sales of products by our subsidiaries such as Caffera's Elite Custom Variety, Endavid Bios BioNichol and Tiallos and expanding Evogene's reach beyond its current sectors of activity. These efforts not only validate our contribution, but also strengthen our financial position through non dilutive funding and revenue streams from upfront payments, R and D fees, milestones and direct product sales. That's reflected in the revenue the company reports today, totaling approximately $5,600,000 compared to approximately $1,700,000 in 2022. We expect to see continued growth in the Evogene Group revenue in 2024. As we have new listeners on today's call, I would like to briefly review Evogene's core technology and our value proposition.

Speaker 1

Evogene has been using its computational predictive biology platform, the CTB, to direct and accelerate the development of life science based products. The CTB is at the foundation of our 3 AI tech engines. Microboost AI supports the development of micro based products. Campus AI supports small molecules based products. And generator AI supports products based on genetic elements.

Speaker 1

Our AI driven tech engines aim to tackle the main challenges in life science product development, candidate discovery and optimization, identifying winning candidates from a vast number of prospects and meeting complex criteria for successful commercial products. The value proposition of our AI driven tech engines stems from the efficient finding of the middle in the high spec, therefore, increasing the probability of the success within competitive time frame and in cost efficient manner. After reviewing our technology, also our business model. Our business model revolves around 2 main strategies for leveraging our AI technology. Licensing.

Speaker 1

Evogene offers highly limited license to third parties such as our subsidiaries or related entities, allowing them to use our tech engine for product development within a specific commercial domain. This model typically generates revenue through license fee, R and D reimbursement, but more importantly, dividends to Evogene as a shareholder or a significant one time payment upon an exit event, particularly if Evogene is a major shareholder. Collaboration. Evogene collaborates with industry leaders to jointly drive product development. In these ventures, our partners often take the lead in later stage development and commercialization, while we contribute our unique tech engine to identify and optimize product candidates.

Speaker 1

Revenue from this model usually came from app on payments, R and D fees and royalty from sales of future end products. And now we are commercializing microboost AI through licensing agreements with Labid Bio for Ad Biological and with Biotica for human microbiome development. And Evogene is also collaborating with Verb Biotech to develop probiotic products. Campus AI is commercialized through a license agreement with our subsidiary, XLANUT,

Speaker 2

for

Speaker 1

A chemical product development. Generator AI is commercialized through license agreement with Castella for castor seed varieties and Canonic for medical cannabis products. Evogene is also collaborating with ColorPharm Ltd on prostate gene editing technology through genera. AI. I would like now to review in more detail the collaboration that Evogene is engaged in with third parties and then briefly review the main achievements of our subsidiaries.

Speaker 1

At the beginning of February 2024, we proudly announced a partnership between Evogene and Verbiotics, an innovative probiotics company. Our collaboration with Verbiotics allowed us to tap into the growing probiotics market using Evogene's Micro Boost AI tech engines. Together, we are working on identifying and designing probiotic bacteria that produce highly sustainable quantities of microbial metabolites known to improve human health and vitality. With the probiotics market projected

Operator

to double to around $114,000,000,000

Speaker 1

by 2,031, we are seizing the opportunity to revolutionize this industry and provide cutting edge solutions for consumer worldwide. Earlier this year, we reported collaboration with Color Farm and Ben Go Won University to pioneer kerstesting gene editing technology aiming to enhance kerstetian traits. The collaboration is powered by a grant from the Adrian Innovation Authority and utilized Evogene's generator AI tech engine. Another milestone worth mentioning is that our Ag Seeds division secured a €1,200,000 grant to develop oilseed crops with enhanced CO2 accumulation and drought tolerance. The program known as the EIC 2022 Horizon program supports business addressing climate focus and sustainable crop development.

Speaker 1

In this program, we utilize Evogene Generator AI Tech Engine capabilities as well. These partnerships exemplify our business approach and demonstrate how we use our tech engines to bring innovative products to market in sectors not covered by our subsidiaries. It's important for me to emphasize that all of these collaborations are all generating revenue to Evogene. Now let's review our subsidiaries' achievements. I would like to start with Costera, Evogene's fully owned subsidiary, which focuses on developing an integrated solution to enable large scale commercial cultivation of castor bins, benefiting from its unique, holistic varieties, utilizing generator AI tech engines.

Speaker 1

Casera's solutions aim to address the global demand for a stable cut through oil supply, mainly for the biodiesel industry. The past year was pivotal for Castera. Its vision of becoming a significant player in the biobizza industry progresses with seed order from award leading oil and gas company totaling $11,300,000 for Castel cultivation in Africa. In September, Castelo successfully delivered its 1st shipment of high yield, high oil castro seeds from Brazil and Zambia to an African region, generating revenue of approximately $1,000,000 Established earlier this week, the company recently signed agreements with existing and new feed producers in Brazil and Africa to increase its production capabilities of Castor Seeds in 2024, which are expected to add approximately 400 pounds. This new agreement will enable the company to support the existing seed orders.

Speaker 1

Looking forward to 2024, Cattera is committed to expanding its castor seed production capacity through securing agreements with additional subcontractors in Brazil and Africa on which we expect to update. Finally, on January 2024, we welcomed Joash Zohar as Casera's new CEO, who will later present himself. Joash brings a wealth of experience in global art projects, and I'm confident in his ability to propel the company forward. I wish him and the rest of Kosteva's team good luck. Now I would like to review our wholly owned subsidiary, AgPlenus, aiming to discover next generation innovative crop protection products, including herbicides, insecticides and fungicides and commercialize them through collaboration with worldbuilding partners.

Speaker 1

AgPlanet utilized Evogene's Tempa AI Tech engine to accelerate and direct its product development. Major agrochemical companies dominate today crop protection industry. Still, they look to smaller agtech companies to discover new target proteins and small molecules that inhibit such target proteins, serving as the active ingredient in commercial crop protection products. AgPlenus is the company that addresses this need. As I stated in the previous call, there is a growing interest in AgPlenus product pipeline.

Speaker 1

And recently, we were fortunate to see that interest materialize. In February 2024, AgPlanet announced the signing of a licensing and a collaboration agreement with Bayer's Prop Science division. Under the agreement, Aclamp will use its AI driven computational modeling technology to design and optimize the molecules identified for their broad spectrum herbicidal activity, targeting the APTH1 protein, a new mode of action identified by AgPlans. While we have the exclusive license for developing and commercializing products developed within the collaboration, a plan which will be entitled to receive an upfront payment, ongoing research funding, milestone payments and royalty based on future product sales. Another impressive and important announcement was the milestone achievement in the ongoing collaboration with Corteva for the development of novel herbicides.

Speaker 1

The milestone marks the potential identification of a new family of molecules exhibiting herbicidal effect through a novel mode of action, APCO-twelve, discovered by AgPlans. In the next phase, the collaboration will optimize the identified molecule towards commercial level products, utilizing AgPlen's cutting edge computational technology powered by Evogene's campus AI tech engine. These two collaborations strengthen Axleme's financial position and overall perceptions in the agriculture market. Last but not least, we introduced Doctor. Dan Jacob Gelvin as AgPlenus' new CEO.

Speaker 1

Dan's extensive experience and proven track record well positioned him to guide Ag Planet through its next phase of growth and innovation. Ag Planet's former CEO, Doctor. Brian Amber, has transitioned to Chief Business Officer. I would like to thank Brian for his contribution and leadership to Axlerenus, and I look forward to continuing our work together in his new role. X Menus is looking towards an exciting year, with new management in place, the collaborative agreement signed with Bayer in February and the milestone reach in the Corseva collaboration in March.

Speaker 1

2024 is looking bright for the company. Alongside those, X Menace will continue to advance its pipeline based on the campus AI tech engine and seek additional collaboration with existing and new partners. I would like now to continue with the 2 subsidiaries using Micro Boost AI to accelerate and direct their product development, BIOMICA and Labii Bio. BIOMICA specializing in developing microbiome based therapeutics for human health, utilizing Evogene's micro boost AI tech engine to discover and optimize microbes with therapeutic potential. In April 2023, Biomica completed a $20,000,000 financing round with an high healthcare capital investment of 10,000,000 dollars This investment made at a post money valuation of $15,000,000 serve as an external validation of VIONICA's long term potential.

Speaker 1

VIONICA's flagship product candidate, BMC 128, targeting immune oncology patients, is currently undergoing Phase 1 clinical trial. The trial initiated at the Rambam Health Care Campus in Israel aimed to assess BNP-one hundred and twenty eight safety and stability in combination with Bristol Myers Squibb Opdivo Immune Therapy. In August 2023, Viorica expanded its operations by opening a second site at the Davido Cancer Center in Israel to facilitate additional patient recruitment for the clinical trial. In January 2024, VIONICA reached a significant milestone by completing Phase I trial enrollment for a clinical biomethane immunology drug with preliminary results showing promising outcomes. Initial data point readout is anticipated during 2024.

Speaker 1

In July 2023, Vionica reported positive interim results from preclinical studies on its IBS program conducted in collaboration with Professor Kiara Gross Magoli's lab at New York University. These results demonstrate the efficacy of BiomTaz Live Bacterial Concertia, DMC426 and DMC 427, a legating visceral pain, a major symptom of IBS, presenting promising new treatment avenues. BIOMICA intend to conduct further preclinical studies on DMC426 and DMC 427 to prepare for clinical trials. Looking ahead, Biomica remains committed to advancing its efforts and aims to submit an IND application for BMC-one hundred and twenty eight targeting in urolinology patients during the Q3 of 2024, a pivotal step in preparing for Phase II clinical trials in the U. S.

Speaker 1

In addition, the company will continue to advance its candidates in the IBS and IBD program towards Phase I clinical trials. Now to Lavibayo, who leverages Evogene's microgrid AI tech engine to develop next generation ad biological products. In addition to Evogene's majority ownership, Labibio has 2 additional major shareholders: Corteva, a New York listed multinational agtech giant and ICL, a New York listed global minerals and an agtech company. In July 2023, Labibio entered a licensing agreement with Corteva, conferring exclusive rights to Corteva for advancing and commercializing Labid Bio's lead biopharmicides, LAB-three eleven and LAB-three twelve, targeting footwork. This agreement follows 2 years of independent field validation trials conducted by both companies.

Speaker 1

Under the agreement, La Vibayo received an initial payment of $5,000,000 and will also be eligible for additional future milestone payments and royalties from Corteva's future sales of the product. Another major step for La Vibayo was the recent announcement in February 2024 of the agreement with Syngenta for the discovery and development of new biological insecticidal solutions. The collaboration will leverage Lafid Bio's unique technology platform to rapidly identify and optimize bioinsecticide candidates. These 2 collaborations strengthen Lafid Bio's financial position and overall perception in the agriculture market. Now let's move from collaboration to product sales.

Speaker 1

Labii Bio's 1st bioiniquelence product, YALOS, achieved several impressive milestones. In May 2023, Yaltz obtained regulatory approval from the Canadian Food Inspection Agency, expanding its territory significantly and tripling its reach. In November 2023, Gallos expanded its scope to include durum and barley varieties across the U. S. And Canada.

Speaker 1

This expansion followed successful field trials in 2023, demonstrating an average of approximately 7% of yield increase in Durham and Bali. In December 2023, Levivion secured an exclusive distribution agreement with Winfield United Canada for Yalo, aiming to drive sales growth in key Canadian agriculture regions, including Saskatchewan, Alberta and Manitoba. The focus of the distribution agreement is on spring wheat, durham and barley crops. Overall, Yalos made significant strides in regulatory approval, product expansion and distribution partnership, positioning it as a valuable tool for enhancing crop productions and addressing environmental challenges in the agriculture industry. Looking forward to 2024, La Vipayo will continue to focus on 3 main pillars.

Speaker 1

The first will be to grow the sales and distribution of the company's bioequivalent product, Yalot, in the U. S. And Canada. The second is to continue driving the company's pipeline of innovative product toward commercialization, including special focus on the company's strategic partnership with Forteva, ICL and the recent one with ZYNJELTA. The last pillar will be to continue advancing the company's unique technology platform, the BDD, powered by Evogene Micro Boost AI tech engine with new tools and capabilities.

Speaker 1

Finalizing my view of our subsidiaries, I would like to update Ancononic, which provides tailored medical cannabis products. Following the previous update in Q3 2023, in which we noted that we have decided to reduce our investments in Canonic due to the challenging market conditions of the medical cannabis sector, we have recently engaged in advanced discussions relating to the potential transfer to a 3rd party of Canonic's operations. There is no assurance that such transfer will be completed or on what terms. We will continue to update you on this matter. No doubt 2023 was an exciting year for the Evogene Group, filled with achievements.

Speaker 1

Looking forward to 2024, we expected to see continued growth and additional collaborations benefiting from Evogene 3 AI test engine. We ended 2023 with a solid cash balance of approximately $31,100,000 and are expecting additional cash injections from collaborations and product sales. This concludes my review of the IboGen Group activities. Now Joach Zohar, Castera's new CEO, will take the lead.

Speaker 3

Thank you, Ofer, and good day, everyone. I would like to start by thanking the exceptional team at Castera for quite a while during this pivotal moment for the company and expressing my sincere gratitude to the emerging management for their support. As we face the challenges ahead, I'm filled with optimism driven by the great potential I see in Costera. Ensuring a reliable and stable supply of customer seeds is crucially meeting our customers' demands while contributing positively to local economies. Our recently signed agreements with seed producers in Africa and Brazil strengthened our supply chain and marked a strategic change towards diversifying our production sources.

Speaker 3

I believe leveraging innovative array technology will play a crucial role in shaping the future of customer seats, solidifying Castero's position as a world leader in the field. Together, I'm confident that we will leverage this technology to maintain Castero's competitive edge and achieve unparalleled success

Speaker 2

in the global market. Thank you, Raj. As of December 31, 2023, Evogene had consolidated cash, cash equivalents and short term bank deposits of approximately $31,100,000 Evogene, together with Castera Economic and Ag Planning, possessed an aggregate of $12,400,000 in cash, Bayomita $12,700,000 and La Viva $6,000,000 In July 2023, the company entered into securities purchase agreement with institutional investors in a registered direct offering of shares only. The gross proceeds from the offering were approximately $8,500,000 Looking ahead to 2024, we expect an approximate cash usage of $8,000,000 excluding the rebuyo and Bionica, which is significant decline compared to $12,500,000 in 2023. This decline is mainly attributable to an expected increase in revenue in 2024 and a decrease in expenses due to the decline in Terminix activity.

Speaker 2

The total consolidated burn rate is expected to decline in 2023 as well to $21,000,000 compared to $23,100,000 in 2023. We do not have any benefits. I would like now to highlight some specific items under P and L. Revenue for 2023 were approximately $5,600,000 in comparison to approximately $1,700,000 in 20.22. The increase in revenue was primarily due to $2,500,000 generated by Avi Bayer as a licensing fee in the frame of its collaboration with Corteva as well as the revenue recognized from Castera sale of customer fees.

Speaker 2

R and D expenses for the Q4 of 2023, which are reported net of R900 dollars per fee were approximately $5,500,000 in comparison to approximately $4,800,000

Speaker 1

in

Speaker 2

the same period in the previous year. R and D expenses for the full year 2023 were approximately $20,800,000 and remained stable compared to 20.22. The main contributor to R and D expenses during 2023 were a re buyout activity and Bionicle development efforts. Sales and marketing expenses for the Q4 of 2023 were approximately $1,000,000 reflecting a slight decrease compared to approximately $1,200,000 in the same period the previous year. For the full year 2023, sales and marketing expenses were approximately $3,600,000 in comparison to approximately $3,900,000 in 20 22.

Speaker 2

General and administrative expenses for the Q4 of 2023 were approximately $1,200,000 in comparison to approximately $1,700,000 in the same period in the previous year. For the full year 2023, general and administrative expenses were approximately $6,100,000 in comparison to approximately $6,500,000 in 20.22. The decrease was mainly attributed to the decrease in the cost of directed and officers' insurance. Other income in the Q4 of 2022, the company received $3,500,000 from Bayer under the Joint Food Trade Collaboration Agreement as part of restructuring and release of the patent filing, prosecution and maintenance obligation under the collaboration. Operating loss for the Q4 of 20.43 was approximately $7,600,000 in comparison to an operating loss of approximately $3,800,000 in the same period in the previous year.

Speaker 2

The increase in operating loss was mainly due to the other income recorded in the Q4 of 2022 as mentioned above. Operating loss for the full year of 2023 was approximately $26,500,000 in comparison to $26,900,000 in 20.22, mainly due to the significant increase of revenues in 2023, offset by the other income recorded in 2023. Financing income net for the Q4 of 2023 was approximately $297,000 compared to approximately $6,000 in the same period in the previous year. Financing income net for the full year 2023 was approximately $521,000 compared to financing expenses of approximately $2,800,000 in the same period in the previous year. The difference between periods was mainly due to the U.

Speaker 2

S. Dollar and the new shekel exchange rate, a change in the value of marketable securities and an interest income compared to the same period in the previous year. Net loss for the Q4 of 2023 was approximately $7,300,000 in comparison to a net loss of approximately $3,800,000 in the same period in the previous year. The increase in net loss during the Q4 of 2023 is mainly due to other income received in 2023 as mentioned above. Net loss for the full year of 2023 was approximately $46,000,000 and comparing them to a net loss of approximately $29,800,000 for 20.22.

Speaker 2

With that, both Ofer and I would now like to open the call for any questions you may have.

Operator

Thank

Speaker 1

you.

Operator

The first question is from Ben Klee of Lake Street Capital.

Speaker 4

A few questions. The first couple regarding Castera. You talked about the increased access to farmers supplying new castor seed. I'm wondering if you can characterize, if you feel confident that you have enough inventory to fill the entirety of the initial $11,300,000 order in 2024. Do you guys feel comfortable with the inventory that you're going to have to do that?

Speaker 4

Do you think there's any variability there?

Speaker 1

Hi, Ben. This is Roper. And Joach is also online, Joach, the CEO of Pasera. We believe that we would be able to supply the orders we receive in 2023 during 2024. A fraction will come from the 6 production that was initiated during 2023 and now it's on its way.

Speaker 1

The rest will come from production that we are going to conduct during this year, which is part of what we announced during the last quarter. So the answer to your question is yes.

Speaker 4

Great. That's great.

Speaker 2

And so I think

Operator

that so a follow-up question to

Speaker 4

this thing is regarding a follow on order from this unnamed energy partner. Can you characterize what is needed in order for a follow on order to be received? So do

Operator

you guys need to deliver fully before you think they will commit to

Speaker 4

a follow on order? Is there ongoing discussions about a follow on order currently? What

Speaker 3

can

Speaker 4

you help us understand about expectations and timing around that?

Speaker 1

So we have already started to talk with our partners with respect to orders for year 2025. I believe that the main challenge is still to be able to produce the needed quantity for year 2025. So in a way our plans for the year 2024 is to produce the cattle feed not just in order to supply the existing purchase order we receive in 20 20 3. Our target is also to end the year with inventory and feed production in the field that will support the demand for 2025. So bottom line, as far from our progressing in supplying the feed for this year, we are expecting also to receive orders from next year and we will start the production during 2024 as the version for 2025.

Speaker 4

Great, great. That's very helpful. Thank you, Ofer. The pivoting over to Canonic. Coming quarters?

Speaker 1

So I think that our final target is that starting from this year, Canonic activity won't be material in our P and L. And the way that we are planning to achieve it is by integrate economic activity to other third party that we are talking with. And still it's under discussion. But that is that we will stay a minority shareholder in a company, but we won't continue to invest in this activity the way that we did in the previous years. So bottom line, we might say with some rights to equity or to other mechanism in this field, but we will stop to invest in the cannabis industry.

Speaker 4

Great, great. Thank you. And then one last one for

Speaker 1

me and then I'll get

Speaker 4

back in queue as it pertains to lobby bio. I mean, I had to hop in and off of the call here when you were talking about this. So if I'm making you repeat yourself, I apologize. But can you talk about the supply chain of lobby bio and that I know had some challenges last year? I believe you have that supply chain really secured to really enable a more material commercial launch in yellow here in 2024.

Speaker 4

But can you just confirm that really the inventory build in support of the commercial launch is in place? Are there any supply chain challenges that you're still working through?

Speaker 1

So I think that in this case, I have a good news. So I'm really nice to see that you remember that we had some challenges in producing Yalos in 2023 in 2020 too. But I'm very happy to report that we successfully produced the quantity that we were targeting and even a little bit more than what we were targeting for the sales season of the 2024. So we are in good shape. We changed the phone manufacturer, and we are very happy with this performance and the quality of the product.

Speaker 4

Great. Great, very good. Well, I appreciate you taking my questions. Plenty more to talk about. That's a good place to leave it.

Speaker 4

I'll get back in queue.

Speaker 1

Thank you.

Operator

The next question is from Ben Haynor of Alliance Global Partners. Please go ahead.

Speaker 4

Good day, gentlemen. Thanks for taking the questions. I wonder to focus on egg slabs and the agreement that you have there with there in Protemra on APC-twelve and APC-one. What will we expect China from a development time line there? And when and how large do they simply even discuss might some of these upfront milestone payments worth, etcetera, of the as far as these agreements here?

Speaker 1

And thank you, Ben, for this question. First, I would ask you to use this question and to share with a particular team's call, how proud we are that we are in a position that Labibay, our subsidiary in the world of ag biological, is collaborating and working with 3rd monsters in the ag industry, ICL, Corteva and Syngenta. And we also have AgPlan, which is working with Corteva and also with Bayer. It's really incredible that today within the Evogene Group, we are working with almost all the 1st year type of companies. I think that only BSS is the only company we cannot walk in yet and probably this is the only question of time.

Speaker 1

So I think that this is something that works to note. Well, with respect to your question, I think that both ongoing collaboration with Corteva and with Bayer, they are an important part from funding of ex lenders activity for the next few years. That is the reason why we report on the buyer collaboration agreement in a fixed case format. I can't disclose of course the numbers, but as we mentioned, this agreement includes upfront payment, R and D fee and then of course milestone payment and royalty. I think what is important in these two announcements is that the first that another 1st year company choosing AgPlenus to optimize to develop one of the most important products in our chemical industry, herbicides.

Speaker 1

And the second announcement, if you think about it, this is the first time that we have confirmation from a third party that our tech engine can pass and X Planus to achieve a milestone. So I think this is very important to you. Now as I said, we expect that the significant portion from X Planus expenses, but it will be covered by these 2 collaborations. And I hope and believe that there will be more in the future. And I think that what we should expect in the near future is achieving additional milestones that will present the progress of this collaboration.

Speaker 1

With respect to royalty, it still will take some time. But like in the archaeological arena, what is important is advancing in the pipeline because the value creation scheme is rapidly increased when you are moving from heat to lead, to optimize lead, etcetera, etcetera, etcetera. So this is a great for AgPlan that we achieved 1st milestone in the collaboration with Corteva, and we are looking at to the next challenges and milestones, which we believe will achieve them.

Speaker 4

Okay. And maybe just a follow-up on the near term math, are E and O expenses to hit this year?

Speaker 1

Can you repeat what you said just now?

Speaker 4

Sure. On the I think you said that near term milestones milestone payments, is there or

Speaker 1

upcoming milestone payments, are any

Speaker 4

of those expected to be recognized this year?

Speaker 1

So there are some milestones that we are trying to reach during this year, not necessarily in Act Plano. There is other agreements in the group that we are targeting for. But milestones also depends on research activity. So yes, we are looking forward to see the progress. In some cases, we've often believe that we will be able to achieve them.

Speaker 1

Some, there is always a challenge with respect to R and D activity, it might take a little bit longer. But we are excited to see the current progress in all fronts with respect to our activities in our subsidiaries.

Speaker 4

Okay. Fair enough. And then I apologize if I missed this earlier. On the 400 tons we get to Steve, is that sufficient? I thought I got the end of response to one of the earlier questions.

Speaker 4

Is that enough to meet the current order and the beginning of supply for 2025? Or can you clarify it on what that 400 tons of production capacity gives you?

Speaker 1

Okay. So our target is that in order to support the demand from the purchase order we see in 2023 is coming from 3 avenues. The first one is from production took place last year and now we are harvesting the field, packaging the feed and shipping them to our partners. Additional revenue is from the seed production agreement that we announced this quarter. And there is additional ongoing discussion that we are now planning to close the agreement, not just to supply the existing demand, but also to start to build in the inventory for 2025.

Speaker 1

So as I respond earlier, according to our plan, we believe and expect it to be able to deliver not just the quantity we obligate last year, but we are also planning to build an inventory for expected for the future purchase order for 2025.

Speaker 4

Okay. That's helpful. And thank you for raising that. I'll leave it there. Thanks for taking the questions, gentlemen, and congrats on all the validation you've seen in third party services.

Speaker 1

Thank you.

Operator

The next question is from Brett Reiss of Janney Montgomery Scott.

Speaker 3

First

Operator

question, based on the crop location cycle, when will we definitively know that the new group of Berwind and Kenling Farmers have been able to successfully grow and deliver the seeds so we can consummate sales?

Speaker 1

So first, one of the reasons that we are growing in different regions is to be able to capture more than one season to grow a customer. In addition, in all the areas that we are now engaged, there is a irrigation system in order to address the issue of water for the customer. I think that we are planning to probably we'll have better understanding during the Q2 or close to the end of the second quarter with respect to this question. And in any event, we are our plan, we are going to engage with much more than what we need for this year to supply. So as I said, approximately it will be for the inventory for next year.

Speaker 1

But I think that during the second half the second quarter this year, we have a better clarity. But at least from what we are doing now, I think that we'll be able to achieve these targets.

Operator

Okay. Thank you for that. Somebody one of the prior callers asked about the 400 tonnes of production. I'm going to ask it a different way. If you're able to generate 400 tonnes of production, what capacity of dollar revenues would can result if you're able to successfully come in with 400 tons of production?

Speaker 1

I can't disclose this information because then our competitors will know what is the price that we are selling our product. So I prefer to keep this commercial information confidential. And this is we were hedging what information we can disclose. I think it was important for us to send a message that we are taking care on the production issue. So this is why we came with this virtually.

Speaker 1

We prefer not to share more information because it's not for the benefit of the company.

Operator

Okay. And last one. Since so much depends on selecting the right farmers in Brazil and Kenya and monitor them monitoring them. Have you marinated yourself and your team? Have they marinated themselves in Brazilian and Kenyan business culture so that we're sure we're selecting the right farmers and they deliver what they're contracted to do?

Speaker 1

This is a very good question and we are trying to tackle this challenge in different ways. The first one is that we are if in the past we worked only with 2 seed producer, currently we are working with more than 5 and the numbers will continue to grow. And it's in different regions. In addition, we spent significantly the number of Castera employees, all of them are agronomists that have experience in growing capital and a significant portion from the time they are export our seed grower in Africa and in Brazil. As an example, Yuas is currently in the call, but he's located now in Kenya, where he is conducting set of meetings with our existing speaker users and additional fleet producers that we are planning to engage with them for growing for us additional customer deals.

Speaker 1

And we have 1 Brazilian employee that is located in Brazil and we are planning to open a subsidiary in Kenya that there will be local people that will work for Casera and they will be on the ground through the years all the time. So in addition, I think that today when we are choosing a feed producer, we are visiting his farm, we are checking the facility. He has and we are doing a lot of work before we engage with them. But maybe the most important thing is that we are not choosing 1 fit per user and give him all the and build all of our expectation on him like maybe we did in the past. Today, we are prepared to work with many fit per user in order to make sure that even if one of them won't achieve his target, still we will get the overall performance will cover our expectation.

Operator

Great. Thank you for taking my questions. There are no further questions at this time. Before I ask Mr. Ofer Habis 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.

Operator

In the U. S, please call 1-eight eighty eight-three twenty six-nine thousand three hundred and ten. In Israel, please call 3,9,250,591. Internationally, please call 9,7,239,250,901. Mr.

Operator

Khabib, would you like to make your concluding statement?

Speaker 1

Yes. Thank you once again for your ongoing support. Together, we will continue to drive our company forward and create long term value for all stakeholders. Thank you and goodbye.

Operator

Thank you. This concludes Epelgens 4th quarter and full year 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.

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Earnings Conference Call
Textron Q4 2023
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