Evogene Ltd. (NYSE, TASE:EVGN), a leading plant genomics company specializing in enhancing crop productivity for the food, feed and biofuel industries, announced today its financial results for the quarter ended March 31, 2014.
Commenting on the results, Ofer Haviv, Evogene's President and CEO, stated: "The uniqueness of our company rests on the broadly applicable proprietary discovery and validation infrastructure that has provided - and continues to provide - the basis for each of our four product divisions. This integrated infrastructure was specifically designed to be both scalable and flexible in order to allow continuing integration of additional types of data and new computational capabilities as they are developed or become available. We believe that both our short and long term success will in large part be determined by our ability to utilize these powerful proprietary capabilities to meet key unmet needs in the food, feed, and fuel industries."
Mr. Haviv continued, "This flexibility is being demonstrated as we now generate innovative solutions to an increasingly broad range of crops, traits and different end-products. More specifically, our announcement last week disclosing our entry into the field of insect resistance provides an excellent example of how our past investment in building this carefully designed discovery infrastructure is allowing us to advance rapidly and at relatively low costs, not only in our current areas of interest, but in new areas as well."
Mr. Haviv added, "Also of note this past quarter is the agreement signed between our subsidiary Evofuel and SLC Agricola, our long term partner and one of Brazil's largest agriculture businesses. The agreement sets the stage for the expected commercial introduction of our proprietary castor seed varieties in Brazil in 2016."
Financial results for the quarter ended March 31, 2014:
Total Revenues include (i) research and development payments, including up-front payments, and (ii) share purchase related revenues.
(i) Revenues from research and development payments for the first quarter of 2014 were $3.8 million, compared to the same amount for the first quarter of 2013. These revenues include periodic payments for research and development services generated under the Company's various collaboration agreements with seed companies, as well as up-front payments made under the Company's agreements with collaborators, which are recognized as revenues over the duration of the relevant agreement.
(ii) The first quarter of 2013 and full year 2013 include $811 thousand and $2.6 million respectively of share purchase related revenues, compared with $82 thousand for the first quarter of 2014. This decline is a result of the required accounting treatment of share purchase agreements entered into with Monsanto and Bayer, as well as the put option agreement entered with Monsanto, in conjunction with the research and development collaboration agreements signed with these partners.
Cost of Revenues largely includes research and development expenses related to the support of the Company's on-going activities under collaboration agreements with seed companies, all of which provide for future milestone and royalty revenues. Cost of revenues for the first quarter of 2014 was $2.6 million (including a non-cash expense of $181 thousand for amortization of share-based compensation), compared to $2.2 million (including a non-cash expense of $93 thousand for amortization of share-based compensation), for the same period in 2013.
Research and Development Expenses for the first quarter of 2014 were $2.7 million (including a non-cash expense of $196 thousand for amortization of share-based compensation), representing an increase of approximately 22% compared to $2.2 million (including a non-cash expense of $92 thousand for amortization of share-based compensation), for the same period in 2013. These expenses largely relate to self-funded activities primarily focused on the development of new computational genomics and validation technologies in support of both existing and new activities, such as the areas of Biotic Stress and Ag-chemicals. As stated above, research and development expenses do not include such expenses incurred in support of on-going collaborations which are accounted for as Cost of Revenues.
Business Development Expenses for the first quarter of 2014 were $374 thousand (including a non-cash expense of $100 thousand for amortization of share-based compensation) compared to $227 thousand (including a non-cash expense of $40 thousand for amortization of share-based compensation), for the same period in 2013. This increase reflects costs associated with the Company's decision to establish dedicated Business Development capabilities within each of its four operating divisions.
General and Administrative Expenses for the first quarter of 2014 were $888 thousand (including a non-cash expense of $349 thousand for amortization of share-based compensation), compared to $555 thousand (including a non-cash expense of $99 thousand for amortization of share-based compensation), for the same period in 2013. In addition to the non-cash share-based compensation, this increase relates to continued growth in the Company's operations and costs associated with being a publicly traded entity in the US.
Operating Loss for the first quarter of 2014 was $2.6 million, compared to an operating loss of $0.6 million for the same period in 2013. This increase is mainly attributable to the increase in self-funded research and development expenses, as described above.
Cash Position: As of March 31, 2014, Evogene had $123.6 million in cash, cash equivalents, short and long term bank deposits and marketable securities. Assuming regular course of business and no new revenue sources, such as additional collaborations, the Company estimates that its cash burn for calendar 2014 will be in the range of $15 to $18 million.
Conference call and webcast details:
Evogene management will host a conference call today at 09:30 am Eastern time, 16:30 Israel time to discuss the results. US-based participants are invited to access the call by dialing 1-888-668-9141, and participants from Israel and other countries are invited to access the call at 972-3-918-0609. A replay of the conference call will be available beginning at approximately 13:00 Eastern time, 20:00 Israel time today, and will be accessible through May 9, 2014. US-based participants are invited to access the replay by dialing 1-888-782-4291, and participants from Israel and other countries are invited to access the replay at 972-3-925-5904. A replay of the call may also be accessed as a webcast via Evogene's website at www.evogene.com and will be available for a period of ten days.
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