Earnings Call Transcript - EVGN Q4 2025

Operator, Operator

Welcome to Evogene's Fourth Quarter 2025 Results Conference Call. This conference is being recorded on March 5, 2026. Before we begin, I want to emphasize that some statements made during this call by Evogene's management may include forward-looking statements related to future events. This presentation contains forward-looking statements regarding Evogene Ltd., and the company may occasionally make other statements about our outlook or expectations for future financial or operating results, as well as other matters that are also considered forward-looking statements. Statements not based on historical facts may be regarded as forward-looking. These statements may use words like believe, expect, anticipate, should, plan, estimate, intend, and potential or similar terms. We will use forward-looking statements when discussing our value drivers, commercialization efforts and timing, product development and launches, market size estimates and milestones, and our capabilities and technology. These statements rely on current expectations, estimates, projections, and assumptions and involve risks and uncertainties that are hard to predict and do not guarantee future performance. Important factors may influence the company's actual results and could cause actual results to differ significantly from any forward-looking statements made in this presentation. Therefore, actual future results, performance, or achievements may vary greatly from what is expressed or implied due to various factors, many of which are beyond our control, including the aftermath of the recent conflict between Israel and various terrorist groups, and any resulting instability in Israel, neighboring territories, or the Middle East region. More details are available in Evogene's annual report on Form 20-F and in other filings with the Israel Securities Authority and the U.S. Securities and Exchange Commission, especially under the heading Risk Factors. Unless required by applicable securities laws, we have no obligation to update any information in this presentation or publicly release any results of revisions to any statements to reflect future events or changes in expectations, estimates, projections, and assumptions. The information here does not act as a prospectus or offering document, nor does it form part of any invitation or offer to sell or solicit any invitation or offer to purchase or subscribe for any Evogene securities, and should not be relied upon in connection with any related actions or commitments. The trademarks mentioned are the property of their respective owners and are used for reference purposes only. This use should not imply endorsement of our products or services. Joining us today are Ofer Haviv, President and CEO of Evogene, and Yaron Eldad, CFO of Evogene. Now I will hand the call over to Ofer Haviv. Mr. Haviv, please proceed.

Ofer Haviv, President and CEO

Thank you for joining Evogene's Fourth Quarter and Annual 2025 Analyst Call. In today's call, I would like to focus on the significant progress Evogene has made over the past year and to outline the strategic transformation we initiated to position the company for long-term value creation. Following my remarks, our CFO, Yaron Eldad, will present the financial results, and we will then open the call for questions. During 2025, following a comprehensive review of our technology, markets and capital allocation, we made a deliberate choice to sharpen our focus and execution. This transformation was guided by a strong objective to direct Evogene resources where we believe we can create the greatest sustainable value. Today, our mission is clear and focused: to design novel, highly potent small molecules optimized across multiple parameters for drug development and agricultural chemicals by utilizing ChemPass AI, our computational generative AI engine. For this purpose, we implemented two core strategic decisions. First, we focused our technology development on a single computational engine, ChemPass AI. Second, we streamlined our business activities to concentrate exclusively on two high-impact markets where ChemPass AI offers strong differentiation: human health, centered on small molecule drugs, and agriculture, focused on novel agricultural chemicals. These decisions have led to determined actions across the company. We dedicated our computational capabilities to ChemPass AI, discontinued non-core activities, divested misaligned assets, resized the organization, and established a business development team aligned with our refined strategy. I would like to elaborate on ChemPass AI and emphasize its competitive advantage for small molecules generation. ChemPass AI is designed to generate novel, highly active molecules while meeting the complex parameters required to meaningfully increase the probability of downstream development success. ChemPass AI's competitive advantage lies in the powerful combination of the following two capabilities: first, generating novel molecules based on vast chemical territories, and second, ensuring they meet demanding multi-parameter requirements from day one. Our platform goes far beyond the chemical space the industry traditionally explores. Based on a universe of 38 billion molecules, ChemPass AI's foundation model navigates vast diverse chemical domains that others simply cannot access. This enables us to design truly original molecular structures with strong biological potential and highly defensible intellectual property, opening the door to breakthrough products and new IP landscapes. At the same time, precision is built into every molecule we create. Our AI engine simultaneously optimizes a wide range of critical chemical, biological, and physical parameters, tailoring each compound to the exact constraints and success criteria of the specific target product. The result is not just innovations but synthesizable active molecules engineered from the outset to meet real development requirements, dramatically increasing the probability of real-world commercial success. This differentiation is supported by proprietary technological advancements developed by our internal team, guided by world-class scientific advisers and reinforced through multiple collaborations with leading technology companies, including Google Cloud, with whom we are currently engaged in our second collaboration. Our first announced collaboration with Google Cloud was successfully completed in mid-2025 with a first-in-class foundation model for the generation of novel molecular product candidates optimized for multiple parameters by processing a database of 38 billion structures. We tripled our benchmarks for accuracy, delivering 90% design precision. Building on this, we were pleased to announce our second collaboration with Google Cloud initiated this February. We are now integrating advanced AI agents into ChemPass AI using Google Cloud's Vertex AI to decrease manual errors and automate complex scientific workflows, aiming to improve our novel small molecule candidate probability of development success. This move towards autonomous discovery is key to advancing and scaling our capabilities for the support of future partnerships across the pharma and agriculture industries. To summarize the uniqueness of Evogene's offering, our product candidates combine three powerful capabilities: novel molecules generated based on vast and diverse chemical space, simultaneous optimizations for multiparameter requirements from the outset, and highly potent molecules optimized through targeted experimental validation. We don't just design novel chemistry; we generate novel chemistry that performs. ChemPass AI is built on a fully integrated partnership-driven workflow, forming our business model expressed in collaboration and in-house development towards proprietary product candidates. Our partners are engaged at every stage, from joint strategic review through rigorous experimental validation and collaborative evaluation. Each project is custom designed to align precisely with each specific scientific and strategic objective. I view this collaborative structure as a key strategic advantage for us, both in enhancing the likelihood of advancing proprietary candidate molecules with the highest potential to become successful products and in positioning Evogene as a true development partner, enabling participation in the product's future revenue stream. That brings me to this slide, demonstrating the implementation of our business model, summarizing Evogene's current achievements, of which I'm very proud. In human health, we are advancing multiple partnered drug discovery programs with biotechnology companies and academic institutions. In this partnership, ChemPass AI is driving discovery and optimization of candidates that are progressing into testing with our partners. To date, we have publicly disclosed four such collaborations, and we expect such activity to scale with additional collaborations. These achievements were made within a very short time frame of several months, and we aim to present similar advancements during the remainder of 2026 and beyond. You are invited to visit Evogene's website and review our company's presentation for additional details on each of these collaborations. In agriculture, our subsidiary, AgPlenus, continues to apply ChemPass AI to the development of novel herbicides and fungicides. The maturity and robustness of the platform are reflected through our strategic collaborations with Bayer and Corteva alongside a differentiated internal pipeline. We expect continued growth through the expansion of those collaborations and the formation of new partnerships. In our future quarterly analyst call, I expect to go deeper into these business engagements and update on new ones. To complete my part in today's call, I would like to send a clear message: the generation of proprietary small molecule product candidates is our mission. With ChemPass AI, our well-differentiated generative AI engine, disciplined capital allocation focused on high potential markets, and strong strategic partnerships, we believe Evogene is now positioned on a defined, more focused path towards sustainable value creation. Our business aim for the short and midterm is to become the partner of choice for small molecule discovery and optimization with pharma and big biotech companies for drug development, and with multinational agriculture companies for ag chemical development. For the long term, Evogene aims to develop its own product pipeline, benefiting from the competitive edge of our proprietary technology. This is Evogene, combining cutting-edge AI with deep scientific expertise to generate real-world innovation. Thank you for your time and attention. With this, I conclude my part and will now hand the call to our CFO, Yaron Eldad, to present the financial results.

Yaron Eldad, CFO

As part of the company's updated strategic plan, management implemented an organizational realignment and cost reduction initiatives. The effects of these measures are reflected in the significant decrease in operating expenses net, which declined to approximately $13.8 million for the year ended 2025 compared to approximately $22 million in 2024. The impact is also evident in the fourth quarter results with total operating expenses net of approximately $3.2 million compared to approximately $4.3 million in the corresponding period of 2024. The company expects this reduced expense level to be sustained in future periods. In 2025, Lavie Bio Ltd, a subsidiary of Evogene Ltd focused on agricultural biologicals, completed the sale of the majority of its operations to ICL. As a result of this transaction, Lavie Bio no longer maintains employees and its operation expense level has decreased significantly. Lavie Bio anticipates distributing the majority of its remaining cash to its shareholders, including Evogene during 2026. During 2025, as part of the company's updated strategic plan, we scaled down Biomica's operations and research and development activities and reduced its personnel to a minimal level. In early 2026, Biomica entered into a license agreement with Lishan Pharmaceuticals for its lead oncology candidate, BMC128. Following this transaction, Biomica does not expect to conduct further material operational activities and anticipates distributing the majority of its remaining cash to its shareholders, including Evogene. With respect to AgPlenus, we integrated AgPlenus, our ag chemical subsidiary, into the core operations of Evogene with the objective of maximizing the value of our ChemPass AI platform for the development of novel ag chemical products. In alignment with the company's updated organizational structure, AgPlenus was resized and streamlined to reflect the revised operating model. During 2025, due to a significant decline in demand for castor seeds, Casterra AG ceased its operations in Kenya, reduced its headcount and overall expense level, and is currently focusing its activities on the Brazilian market. As a result of these developments, Casterra recorded an impairment of approximately $2.2 million related to its seed inventory. This impairment is presented within the cost of sales in the consolidated financial statements in a separate line item. In February 2026, Evogene entered into a warrant inducement agreement with an existing investor, providing the immediate exercise in full of its August 2024 Series A and Series B warrants, resulting in gross proceeds to the company of approximately $3.4 million before deducting placement agent fees and other offering expenses. In consideration for such exercise, the investor will receive in a private placement, new unregistered Series A1 and Series B1 warrants to purchase up to an aggregate of 5,076,924 ordinary shares. The new warrants are exercisable immediately at an exercise price of $1.25 per ordinary share. Cash position: As of December 31, 2025, Evogene held consolidated cash, cash equivalents, and short-term bank deposits of approximately $13 million. The consolidated cash usage during the fourth quarter of 2025 was approximately $3 million. Excluding Lavie Bio and Biomica, Evogene and its other subsidiaries used approximately $2.4 million in cash during the fourth quarter of 2025. Revenues for 2025 totaled approximately $3.9 million compared to approximately $5.6 million in the same period the previous year, reflecting a decrease of approximately $1.7 million. The decrease was primarily driven by lower revenue recognized from AgPlenus' activity, which included a one-time payment during the first quarter of 2024 and revenues recognized from the collaboration agreement with Corteva that was completed during 2024. Revenues for the fourth quarter of 2025 were approximately $0.3 million, a decrease compared to approximately $1.5 million in the same period last year. The decrease was mainly due to reduced seed sales generated by Casterra during the fourth quarter of 2025. Cost of revenues for the year ending 2025 was approximately $4.1 million compared to approximately $2.4 million in the previous year. The increase was primarily attributable to an inventory impairment of approximately $2.2 million recorded by Casterra during the fourth quarter of 2025, mainly due to its decision to cease its operations in Kenya as noted above. Cost of revenues for the fourth quarter of 2025 was $2.3 million compared to $0.7 million in the fourth quarter of the previous year. The increase in quarterly cost of revenues was mainly driven by the same inventory impairment of Casterra. R&D expenses net of non-refundable grants for the year 2025 were approximately $8 million, a decrease of approximately $4.5 million compared to $12.5 million in the year 2024. The decrease was primarily due to reduced R&D expenses in Biomica, Casterra, and AgPlenus. In the fourth quarter of 2025, R&D expenses were approximately $1.8 million, down from approximately $2.7 million in the same period of 2024. This decrease is mainly attributed to decreased expenses in Biomica. Sales and marketing expenses for the year 2025 were approximately $1.5 million, a decrease of approximately $0.5 million compared to approximately $2 million in the same period last year. The decrease was mainly due to reductions in Evogene and Biomica's personnel costs. Sales and marketing expenses for the fourth quarter of 2025 and 2024 were approximately $0.3 million and $0.4 million, respectively. General and administrative expenses for the year 2025 decreased to approximately $4.3 million from approximately $7 million in the same period last year. This decrease is mainly attributable to expenses recorded during the year 2024 related to a provision for doubtful debt for one of Casterra's seed suppliers as well as transaction costs associated with Evogene's fundraising in August 2024. Additional decrease is attributable to a reduction in Biomica's activity and personnel costs during 2025. General and administrative expenses for the fourth quarter of 2025 decreased to approximately $0.9 million compared to approximately $1.3 million in the same period of the previous year, primarily due to decreased expenses in Evogene and Biomica, as mentioned above. Operating loss for 2025 was approximately $14 million, a significant decrease from approximately $18.8 million in the same period of the previous year, mainly due to decreased operating expenses, partially offset by the decreased revenues, as mentioned above, and the higher cost of revenues, mainly due to an inventory impairment of approximately $2.2 million recorded by Casterra in the fourth quarter of 2025. The operating loss for the fourth quarter of 2025 was approximately $5.2 million, an increase from approximately $3.5 million in the same period of the previous year primarily due to the decreased revenues and increased cost of revenues, mentioned above, partially offset by decreased operating expenses. Financing income net for the year 2025 was approximately $0.6 million compared to approximately $4 million in the previous year. The decrease in financing income net was mainly associated with the accounting treatment of prefunded warrants and warrants issued in August 2024 fundraising. As a result, during the 12 months of 2025, the company recorded financial income net related to prefunded warrants and warrants of approximately $458,000 as compared to a financial income of approximately $3.4 million in the same period of 2024. Financing expenses net for the fourth quarter of 2025 were approximately $0.2 million compared to financing income net of approximately $4.5 million in the same period of the previous year. The decrease in financing income is mainly associated with the accounting treatment of prefunded warrants and warrants issued in the August 2024 fundraising as mentioned above. Income from discontinued operations net for the 12 months of 2025 was approximately $5.7 million compared to a loss of approximately $3.2 million in the same period of 2024. For the fourth quarter of 2025, the loss from discontinued operations net was approximately $16,000 compared to a loss of approximately $1 million in the fourth quarter of the previous year. These amounts primarily reflect the financial results of Lavie Bio's operations as well as expenses related to the development and maintenance of MicroBoost AI for Ag, which are presented as a single line item in the consolidated statements of profit and loss. Following the sale of the majority of Lavie Bio's assets as well as Evogene's MicroBoost AI for Ag to ICL, the company recognized a gain on sale of approximately $6.4 million which is also included in the income from discontinued operations net for the year 2025. All prior period amounts have been reclassified to confirm to this presentation. Net loss for the 12 months of 2025 was approximately $7.8 million compared to approximately $18.1 million in the same period last year. The $10.3 million decrease in net loss was primarily due to decreased operating expenses and an income derived from discontinued operations due to the asset sale to ICL net, partially offset by reduced revenues, higher cost of revenues, and decreased financing income net. The net loss for the fourth quarter of 2025 was approximately $5.4 million compared to a net loss of approximately $5,000 in the same period last year. This increase in net loss was primarily due to decreased financial income, decreased revenues, and increased cost of revenues, partially offset by decreased operating expenses, as mentioned above.

Operator, Operator

There is a siren in Israel. We will be back in a few minutes. Thank you for your patience. The first question is about the terms of the BMC128 license agreement with Lishan Pharmaceuticals.

Ofer Haviv, President and CEO

This is Ofer. Sorry for asking you to wait. It's not a regular time here in Israel; everybody that participated in the call is in the same place at Evogene's office. With respect to this question, what I can disclose is that the agreement with Lishan includes a milestone payment, which is expected based on advancing the BMC128 in the pipeline or if there will be any commercial transaction that will generate value for Lishan, so we will participate in this amount. And of course, revenue sharing from the revenue the end product will generate. So this is what we can disclose. And in pharma, the numbers will be quite significant. So when this event occurs, it could be significant for Evogene. It could be quite significant for Biomica, and Evogene, as a major shareholder in Biomica, is expected to benefit from it. We can move to the next question.

Operator, Operator

Can you speak to the magnitude of cash potentially coming in from Lavie Bio and Biomica? To summarize, can you highlight investor catalysts over the coming 12 months?

Ofer Haviv, President and CEO

So with respect to the cash expected from Biomica and Lavie Bio, we disclosed the financial terms of the acquisition of the majority of Lavie Bio and MicroBoost to ICL. What we expect is that the cash that Evogene will have after this dividend distribution will satisfy our needs for at least mid next year, maybe even more. But the current operation's expectation is that even without additional financial transactions, we have sufficient cash for a little bit more than 1.5 years. With respect to the catalysts that might take place, I think that I described it in my part. You can envision three types of catalysts. The first one is additional technology collaborations with companies such as Google. What I can share is that we are talking with some other companies of a similar size to Google, seeking different opportunities to work together and leverage their assets and knowledge to enhance where we operate. Each time that such a collaboration occurs, it pushes the boundaries we are addressing with our technology further and further. This is quite important and has the potential to attract attention from potential partners due to increased evidence that what we offer is something very unique, especially if these mega companies are working with us. This is one type of catalyst. The second type of catalyst is additional collaboration agreements with pharma companies or biotech companies, where we are going to use ChemPass AI to identify small molecules which bind to the protein of interest addressing multiple actor criteria, novel chemical structure, and with high potency. The first set of collaborations engaged with small biotech companies and institutions. Now we are targeting more significant biotech companies. We also expect that at least some of these transactions will inject cash into Evogene even in the early stages to cover our expenses. The third type of catalyst also involves collaboration agreements but this time with other chemical companies. We are talking with some companies in this field. The industry in the last few years didn't have a positive performance in the market, negatively affecting their willingness and appetite to enter into a collaboration. However, things are starting to change now, and the understanding that there is a clear need for innovation is increasing. I believe the performance that AgPlenus achieved in the last year will also help us engage in some collaboration agreements with potential partners in this industry. To summarize, we expect three types of catalysts: technology collaborations with companies like Google and others, collaboration with mid-sized biotech and pharma companies, and collaboration with other chemical companies. These are the main catalysts I expect to share coming from the core business of Evogene as we see today. We also have some other activities such as Casterra and other legacy activities, but I prefer not to refer to them today because it's crucial for me to ensure it's clear what strategic avenue Evogene has decided to pursue, and we truly believe this represents the highest potential for our shareholders over the next few years.

Operator, Operator

There are no further questions at this time. Mr. Haviv, would you like to make a concluding statement?

Ofer Haviv, President and CEO

Yes. I would like to thank everybody for participating in today's conference call. We at Evogene are committed to achieving our targets. I can assure you that all of Evogene employees are working from home or even coming to our offices. I look forward to continuing to update you and share with you additional great announcements like in the last quarter. Thank you.

Operator, Operator

Thank you. This concludes Evogene's Fourth Quarter 2025 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.