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spk04: Ladies and gentlemen, thank you for standing by. Welcome to Evagen's first quarter 2022 results conference call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded on May 26, 2022. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evigen'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 Evigen. I encourage you to review Evigen'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, Evagen is using forward-looking statements in this call when it discusses expected tasks to value creation, including potential fundraisings at the subsidiary level and untapping value and its subsidiaries' expected trials and their expected results Studies, products, advancements, commercializations, launches, pipelines, milestones, potential collaborations, target markets, and other plans for 2022 and beyond. Expected cash burn rate, the potential advantages of its technology, and its anticipated entry into new fields of activity. All forward-looking statements made herein speak only of the date of the announcements of the results. Many of the factors that impact whether forward-looking statements will come true are beyond the control of Evogen and may cause actual results to differ materially from anticipated results. Evogen is under no obligation to update policy or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as otherwise required by law. We expressly disclaim any obligation to do so. More detailed information about the risk factors potentially adversely impacting our performance can be found in our reports filed with the U.S. Securities and Exchange Commission. I now hand over to Ofer Chaviz, CEO of Evogen. Ofer?
spk02: Thank you, and good day, everyone. We appreciate you joining us today for the first quarter 2022 conference call. I will begin the call introducing some of the recent changes we have made to strengthen management. Following that, I want to talk a little about Evogen's underlying computational predictive biology platform, our three AI technology engines, and the business ecosystems built around each tech engine. I will then address the matter of funding mainly for our subsidiaries, and following that, I will provide an update on the subsidiaries' activities and recent milestones met. Elran Hafer, the CEO of Biomica, is joining us today and will give additional color on Biomica's activity, as we have made a significant advancement there. Joining me today also is Mr. Yaron Eldad, Evogen's new CFO, and this appointment represents part of our recent changes to our management team. Yaron brings significant CFO experience to Evogen, having filled various CFO positions over the last 25 years in both public and private technology, as well as biotechnology companies. I trust Yaron will prove to be a key asset to Evogen and its subsidiaries. Yaron will address you in a few minutes and cover the Evogen financials. We also recently appointed Sassi Matsliach as the Executive Vice President in charge of corporate development, and he will be responsible for Evogen's relationship management with its subsidiaries. Sassi has held various positions within Evogen since 2011. most recently as Evogen's Vice President for Legal Affairs and Corporate Secretary. I congratulate him on this promotion, and I know he will be excellent in his new role. Finally, joining Evogen's management team, we appointed Liat Feugel as Vice President Human Resource, having held various positions at Evogen since 2015, including most recently Director of Human Resource. Liat has proven her capabilities over the years, and this is a key appointment which will ensure we retain leading talent here at Evogen, especially at a time of a very tight labor market globally, including in Israel. I believe that for a disruptive company at the crossroads of life science and leading-edge technologies, it is critical that we attract and retain the best people. I congratulate Jeroen, Sasi, and Liat on their new positions and wish Avogen Management the best success. And now, to introduce some of the continued improvements we have made to our technology and business processes. As I previously mentioned, we are uniquely positioned at the crossroads between big data, AI, and life sciences, which is known as computational biology. Evogen's goal is to revolutionize the development process of new and novel life science-based products via our cutting-edge technologies. Our three tech engines relying on our computational predictive biology platform are the driving force behind our activities, and they serve as the underlying competitive advantage of each of our subsidiaries. These are MicroBoost AI targeting to support the development of product based on microbes, Campus AI targeting to support the development of product based on small molecules, and Generator AI targeting to support the development of product based on genetic elements. Each engine addresses multiple development challenges and aims to solve the problem of finding the right product candidate out of a multitude of potentials, like finding a needle in a high-tech. Our aim is to increase the probability of product success while reducing development time, failure risk, and cost. Over the years, I have been asked, why don't you license out your technology? Our goal is to maximize the value we can capture from our technology through the end product developed by its use, rather than become a simple technological service company. In other words, we feel that licensing out our solution without taking a share in the upside of the end product leaves significant value on the table. Based on this understanding, we have built around each of our tech engines and continue to build a business ecosystem. This is primarily in the form of independent subsidiaries, each of which empowers multiple product development or through strategic collaborations focused on the development of a specific product. Each ecosystem is both an interactive and also an iterative process work environment in which the more projects we embark on, the more enriched our databases and analysis capabilities became, contributing to better predictions down the road and improved probability of success for each product on its own. We expect value to be generated through our equity stack in the subsidiaries, or in the case of strategic partnerships, through success-based payments and royalties generated from the end product. To support the expansion of our tech engines ecosystems, we have recently focused on automations of processes that previously required the intervention of a bioinformatics engineer to fully autonomous implementation. This improves speed, reduce errors, and most importantly, allows product developers to get more objective information in the product development process. Looking ahead, we aim to continue to invest in our tech engines, addressing more potential discovery and better solutions to developmental challenges. I would now like to address the matter of funding. As you know, global financial markets are changing in the extreme at the moment, particularly in the U.S., for growth companies, and even more so for companies in the biotech space. Last year, Evogen raised some capital at a much higher market valuation to support today's advancements at our subsidiaries, and thankfully, we continue to maintain a solid cash position, providing stable runway for the coming year. As of March 31, 2022, our consolidated cash Keshek Viva Lens, bank deposit, and marketable security were approximately $44.6 million, which includes $6.6 million held by LaviBio. As I updated last quarter, our 2022 net burn rate is expected to be similar to that of last year, in the range of $26 to $28 million, including LaviBio, and $18 to $20 million, excluding LaviBio, which manages its own cash position. While this gives us a long enough runway, even in the current negative market environment, we continue to work to diversify funding sources at the subsidiary level. Our goal is to accelerate the subsidiary's growth and to strengthen their position as independent companies, As I will discuss in a few moments, we believe that we are at an inflection point stage whereby we are meeting critical milestones and the inherent value of our subsidiaries is becoming increasingly obvious, even if the market value of Evogen doesn't reflect it yet. Evogen's goal is to partner with value-adding companies and investors at the subsidiary level who can correctly value and appreciate the potential from the products that our subsidiaries are developing. This will allow us to demonstrate in a very public way the subsidiaries' very significant untapped value. We are currently in a number of discussions at various levels with potential strategic and financial investors towards potential fundraising and partnering, and to the extent Permissible under securities laws, we intend to provide updates. I will now move on to discuss our subsidiary activities. We will start with Biomica, our subsidiary focused on the development of drug-based on the human microbiome. And as mentioned, I would like to introduce Elran Hever, CEO of Biomica, to the call. Elran, please.
spk03: Thank you, Ofer. We are very pleased with Biomica's recent progress, which I want to briefly cover. In April, we announced an agreement with Chiba Medical Center, a global top 10 ranked hospital by Newsweek, for joint microbiome clinical research. Together, we will conduct deep sequencing and high-resolution microbiome analysis of samples obtained from patients with inflammatory bowel disease, IBD. IBD represents an approximately $20 billion market opportunity. And over the past 20 years, multiple studies have shown the pivotal role of gas microbiome in the pathogenesis of IBD. The goal of this joint work will be to identify the potential profiles, biomarkers, and therapeutic entities in order to gain additional and deeper understanding of the human microbiome in IBD patients. Our goal is to use those findings to expand our expertise in this field furthering our ability to support development of new therapeutics. We expect this analysis will be highly complementary to our previous work on IBD. As we updated before, Biomica reported positive preclinical results in our IBD program following the evaluation of BMC333 RAC candidate in DSS-induced colitis model. We demonstrated that BMC-333 ability to significantly reduce intestinal tissue damage from inflammation. We hope to begin the scale-up development process of BMC-333 later this year in preparation for an initial clinical batch production. Last week, we announced that the results from this work will be presented at the Digestive Disease Week DDW 2022 conference by Biomica's CSO, Professor Yehuda Ringel. With regard to our drug candidate, BMC-128, a combination of four microbes for supporting immunotherapy, last year we announced positive preclinical results. In a series of preclinical studies, BMC-128, given in combination with immune checkpoint inhibitors immunotherapy, we were able to show significantly improved anti-tumor activity. Earlier this year, we received a clearance from the Israeli Ministry of Health to proceed with the first in-human phase one study, which is set to be held at Rambam Healthcare Campus, the largest healthcare center in northern part of Israel, and we are currently advancing towards the enrollment of the first patient. This phase one study will evaluate the safety and tolerability of BMC-128 in combination with BMS Opdivo in patients with non-small cell lung cancer, melanoma, or RTC, renal cell carcinoma. BMC-128 will be offered to oncology patients who have been found to be non-responsive to immunotherapy treatments. So if BMC-128 shows any clinical signals, that would be a wonderful additional outcome. Earlier this week, we announced that we will be presenting at the 2022 ASCO Annual Meeting, and that our work was also selected for the 2022 GIRA Advocate Choice Awards. That ends my update, so back to you, Ofer.
spk02: Thank you, Erwan. Moving on to the second company in the field of human health, Canonic, our subsidiary focused on the development of medical cannabis products. Focusing on the genetic of the cannabis plant was a good move from Evogen's perspective. The cannabis plant was an overlooked plant for which even relatively simple genetic steps have made a huge impact, and it has the characteristic we were looking for. In October 2021, we moved ahead with full commercialization in Israel of our first two products from the MetaGuild product line. Over these past few months, we have seen our brand awareness increase in Israel. I do note that while sales this year in Israel are still at an early stage and we remain modest, we see Israel as more of a test bed market for us and Europe is our main target market in the future. As part of our preparations for the planned 2023 European commercial launch, a first batch of unique cannabis varieties will shift in January of this year to a potential cultivation subcontractor in Portugal. Our current goal is to test our product under European growing conditions as well as finding and ultimately entering into commercial agreements with local growers and manufacturers in Europe. Canonic intends to introduce to the market additional products from the MetaYield product line in 2022. To this end, the company employed Avogen's generator AI to identify several genetic markers, including for increased THC levels. We recently showed a statistically significant increase of more than 20% in THC concentration in a target cannabis population using these genetic markers. In parallel, the company is developing its precise product line targeting specific medical indications. Over the past two years, we conducted preclinical trials which have identified cannabis varieties offering pain relief and anti-inflammatory properties. In January of this year, we announced positive results in canonic preclinical studies that support the successful identification of specific cannabis varieties with anti-inflammatory and pain relief properties. We intend to gather additional clinical information over the course of 2022 to support the commercial launch of this product in 2023. I will now move to AgPlanus, one of our subsidiaries in the ag industry segment. The AgPlanus mission is a target-based design of novel and sustainable crop protection products based on small molecules. AgPlanus is currently working on expanding the data package regarding the company's leading herbicide product candidate, APH1, as part of preparation for a potential future collaboration. In addition, together with Avogen's campus team, AgPlanus is continuously working to expand computational and validation capabilities to enhance the discovery of novel pesticide compounds. Moving to La Vie Bio, our second subsidiary in the ag industry, which is aiming to improve agriculture productivity and sustainability through microbiome-based ag biological products. During late 2021, La Vie Bio launched its crop inoculant named Result for the 2022 spring wheat season. A few weeks ago, we announced that La Vie Bio successfully produced and fully sold its plant production quota to U.S. customers for result. I want to stress that this product result was launched to market at a very good time, and we believe that it can help contribute to securing global food supplies. Global wheat prices have recently increased significantly due to supply chain constraints and global shortages which have been compounded by the war between Russia and Ukraine, the world's first and fifth largest wheat exporter, respectively. Current high wheat prices have made it highly economical for growers to explore ways to increase wheat production by increasing yields. Our trials showed that result potentially contributes an additional three to four bushels per acre via yield improvements compared with industry benchmarks. Based on current wheat prices for farmers, this could provide growers an average of $30 to $40 in additional revenue per farmed acre, which is very significant. We expect that the demand for wheat yield improvement products will remain high for the foreseeable future, and this is the reason we are already working on expanding production for the 2023 growing season compared to our original market penetration plan. Looking ahead, we are aiming to broaden results throughout North American markets, including Canada in the near term, and later European markets. We are also working to expand our label to include additional crops, such as small grains and oilseed. With respect to L'aviv Bio pipeline advancement, Our biofungicide fruit rot program is continuing to progress, and during 2022, we expect to submit a regulatory dossier with the federal US EPA and California EPA for our leading candidate, Lab 311. In summary, I hope I succeeded in demonstrating that as every quarter passes, our subsidiaries are all making continued advancement reaching and surpassing their milestones. As you can imagine, we are very pleased with this achievement, which we view as a powerful demonstration to the quality and efficacy of our underlying tech engines, which support the discovery and development of these products. I hope to bring further advancement in the coming quarters while working on demonstrating publicly the value in our equity securing partners, and ultimately new financing options within our subsidiaries. With that, I would now like to turn the call over to our new CFO, Yaron Eldad. Yaron, please go ahead.
spk01: Thank you, Ofer. I would like to start by saying I am pleased to have joined Evogen. This is a company in which I see very significant potential. I'm very much looking forward to embarking on this journey with what I have found to be a very strong and positive team. I will begin by reviewing our cash balance. Evergen continues to maintain a strong financial position for its activities with approximately $44.6 million in consolidated cash, cash-related accounts, bank deposits, and marketable securities as of March 31, 2022. Approximately $6.6 million of Evergen's consolidated cash is appropriated to its subsidiary, Levy Bio. The company does not have bank debt. During the first quarter of 2022, the consolidated cash usage was approximately $9.3 million, for approximately $7.6 million, if excluding LaviBio. This cash usage, this quarter, included $1 million of foreign exchange expenses due to the dollar-shekel exchange rate differences and a decrease in marketable securities value and approximately $700,000 of non-recurring expenses such as bonus payment to Evergen employees and establishing production capability to our subsidiary, La Vie Bio. I remind that the estimated cash usage range for 2022 is expected to be $26 to $28 million, of which approximately $7.6 million will be used by La Vie Bio. Let's now turn to our income statement. Revenues for the quarter were $237,000 in comparison to $333,000 in the same period for the previous year. Revenues were primarily due to the sales of canonic products and a joint research project conducted by ag planners. R&D expenses for the quarter, which are reported net of non-refundable grants received, were $5.6 million in comparison to $4.3 million in the same period the previous year. R&D expenses increased primarily due to, one, Biomica's ongoing preparations, including GMP microproduction, for initiation of its first inhuman proof-of-concept study in the immuno-oncology program. LaviBio's activities supporting the production and commercial launch of its inoculant product, branded as a result. And three, to Canonix products commercialization efforts in Israel. Business and development expenses were approximately $908,000 for the first quarter of 2022, in comparison to $570,000 in the same period the previous year. The increase in the business development expenses was primarily due to the recruitment of business development personnel supporting the commercialization activities of our subsidiaries. General and administrative expenses remained steady and for the first quarter of 2022 were $1.6 million in comparison to $1.5 million in the first quarter of 2021. Operating expenses were $8.1 million overall in the quarter versus $6.3 million in Q1 last year. Overall operating expenses increased, among other reasons, due to an increase in the activities described earlier this call, as well as headcount and salaries increase due to a growth in market demand for highly skilled workers. The net loss for the quarter was $9.1 million in comparison to $7.1 million last year. The increase in loss is attributed mainly to a $1 million loss due to foreign exchange differences that I mentioned earlier, a decrease in marketable securities value, and to the increase in operating expenses. With that said, both Ofer and I would now like to open the call for any questions you may have.
spk04: Thank you. Ladies and gentlemen, at this time, we'll begin the question and answer session. As you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by while we pull for your questions. The first question is from Kristen Kliska of Cancer Fitzgerald. Please go ahead.
spk00: Hi, everybody. Good morning. Good afternoon. Thank you for taking my questions. The first one I had was on Biomeka. I was hoping to learn a little bit more about what we can expect at ASCO next week and then also to relate to the initial proof of concept data that's expected this year. Could you touch on, based on when you started the trial, what key questions you believe you'll have some early insights into at this time? Thank you.
spk03: Hi, Kristen. Thank you for the question. So, yes, we are very excited to be presenting at ASCO next week. In ASCO, we'll be discussing and showing the work that was done in Biomica so far regarding the discovery and practical results. In addition, we've discussed and demonstrated the methods and design of our clinical study, in which, obviously, the first and most important objective would be to monitor the safety and tolerability of BMC-128 in combination with Nivelumax. Since it's an open-label study, we are kind of hoping to be able to monitor and get early signals from additional clinical variables through the course of the study. The study is designed, as I mentioned, on the call to treat non-responsive cancer patients with either non-small cell lung cancer, RTC, or melanoma. And we already initiated the study, and hopefully very soon we'll be enrolling patients. So once we enroll the first patient, we will announce it, obviously, to the investors for a press release.
spk00: Thank you. Appreciate that. And then for AgPlanet, could you talk a little bit more about the rationale for conducting more work ahead of a potential additional collaboration. So is this just based off of feedback you've received in terms of more work that needs to be established? I guess I'm trying to understand what additional work you need to do in order to potentially gain more collaborations in light of what you've already reported here.
spk02: This is Ofer. Great talking with you. So, yes, I think that you described it correctly. We are in a discussion with different potential collaborators. And from this discussion, we learned that we should conduct additional work in order to address certain questions that were raised. As much as we gather more information, so our negotiation position is better. and the interest is growing. So I think this is the main work that we are doing, is just expanding the work to address additional questions that not necessarily we were focusing on in previous work.
spk00: Okay, thanks. And then for LabVIEW Bio, in light of, you know, the positive momentum you've seen in 2022, maybe can you talk about what work you need to do to really scale up in order to, one, expand the sites where this could be utilized, but then, two, to expand the label? And then maybe here, could you remind us the potential market opportunity for small grains and oilseeds? Thank you.
spk02: So, According to La Vie Bio business model, we are doing the production of the product itself through subcontractors. And we are working for this year, we work with one subcontractor. Next year, we are planning to work with more than – we are planning to work with two subcontractors. So – and maybe it's also worth to mention that – you need to decide on how much you want to produce a year before the actual selling season. So the quantity that we decided to produce for 2021, we make this decision in 2020, the quantity that we are planning to sell in 2022, the decision on how much we are going to produce it took in 2021. And now we are going to take the decision on how much we are going to produce in 2023. And yes, there is enough subcontractors that can use their facility to grow. And so I think that what we are more focusing now is on distribution channels to make sure that we can control and make sure that the product can reach to all the relevant customers. And we are now talking with different distributors in addition to United Agronomies that we are working with them already. And I believe that when there will be an agreement signed, we will announce it publicly. So with respect to production, and I think that we are in a good place. With respect to a marketing channel, we are working on it. Still, you know, we are not going to jump like crazy with the quantity that we are going to produce for next year because we want to make sure that the quality of our product is according to our standard and the production will be exactly the way we want it. So it's going to be quite significant compared to this year, but I think that there will be a nice jump next year. But where I think that we can move to full scale-up, it's going to be 2024. And we intend to believe that the current market positive condition for bio-nucleant for wheat will continue for the next few years, because it will take a while to close the shortage that we see today at the market with respect to wheat production, wheat grain. And it's reflected in which price everybody is aware of. The potential is quite significant. Honestly, I don't have the numbers here in front of me. Maybe, you know, I can talk also with the Lavi marketing team and we can send you, you know, separately more information on the size that such a product can reach you.
spk00: Great. Thank you for taking my questions.
spk04: The next question is from Nathan Weinstein of Aegis Capital. Please go ahead.
spk06: Good morning, Ofer Yaron and Elron. Thanks for taking my questions. So perhaps I'll just start with a couple on Canonic. First of all, I just was curious what is making Portugal the interesting place maybe to begin cultivation And then, would you anticipate being able to service European demand solely from Portugal as your production base?
spk02: So, Portugal has two benefits for medical cannabis production in Europe. First, it's located in Europe and they're part of the European Union. And second, they have the right climate most of the year. to grow cannabis with a relevant cannabinoid concentration. And this is why I think that in Portugal and actually also in Spain, you can find a nice number of cannabis growers that are willing to grow for a company like Canonic, their product. So this is the answer to your first question. The second is, yes, our end market is Germany. This is the market that we are focusing on. Our marketing team has visited this country in a conference lately, and we are starting to build a relationship with local distributors and with local advisors to assist us to build the right marketing approach for this market. And, yes, we believe that Portugal, and if needed, also Spain, can grow for us enough cannabis for our future marketing plan.
spk06: Thanks, Ofer. Okay, and then maybe just staying with the theme of Europe and potentially selling the cannabis into Germany, what are some of the features of that market which make it attractive for you commercially, and then any challenges you foresee that you'd call out?
spk02: The reason the market is interesting from our perspective, because it's quite, compared to other countries, it's much advanced in the regulatory process, and the market is growing nicely. I think that the market there, at least at this point of time, is more focusing on medical indication, and it's a little bit different from what we see here in Israel. In Germany, you need, the doctor needs to give a clear analysis on why he recommended for a patient to use specific cannabis and what product he's going to use. So it's more close to the business model of drug versus food supplements. So I think that in Israel, it's less like, it's not like a drug. So we need to prepare our, we need to build our marketing approach more enclosed as we are launching a drug, meaning you need to think about the doctors and the pharmacy and to do a lot of work over there and less on the patients that are using the product. While in Israel, the audience that makes the decision, it's more the patient rather than the doctors. So it's a different marketing approach. And of course, when you need to convince doctors to recommend On your specific product, you need to convince them with more data and more information. And this is why we are planning to launch our product only next year, because we are now in the process of gathering the relevant medical data to support our product.
spk06: Okay, fantastic. And thank you for the color there. Then switching gears for a question on biomica. And I'm curious about the GMP production of the microbes. Do you have the infrastructure in place internally to produce enough quantities for your clinical plans? Do you work with outside production partners? Can you just sort of discuss the production side?
spk03: Sure. So the production of LBPs, of live biotherapeutics products, is extremely complex, and we currently work with an external vendor, with the CDMO, the largest one that is based in Europe. facility is actually located in France and has the full experience and equipment in order to produce sufficient amounts of those microbes in the strict conditions that they require. So all of the production process is being done in Europe and France under GMP conditions as required for clinical production drugs.
spk06: Okay, thanks. So I just had one final question, and this is one that we've talked about before, and it may be a little early to bring it up, but in the case that a subsidiary becomes monetized in some fashion and moves as its own separate company just hypothetically, are there more technologies and potential companies coming up on the eBudget platform that could take their place?
spk02: The answer is yes. The only reason that we are not expanding our activity into new areas is mainly because of focus and budget constraints. So when we hopefully we will raise money to our subsidiaries and they will be completely independent and they will have their own financial resources. So then we will start to expand Evergen activity and the uses of our three tech engine into new area. We already, you know, as preparation, we are doing some early study and we start to build some possible infrastructure for this expansion. But first, we need to make sure that the financial resources of our subsidiaries are stable, and then we can also shift our focus to a new adventure.
spk06: Okay, great. Thanks again for taking my questions.
spk04: The next question is from Brett Rice of Jenny Montgomery Scott. Please go ahead. Good morning, gentlemen.
spk07: First question, you said you sold all the plant production on your spring wheat. Did you realize any revenues from that? Because I didn't see that included in the 237 revenue number.
spk02: This revenue will be recorded only in the second quarter because we sold it only and we finished the production and we shipped the product during, I think it was May or end of April. So it will be in the second quarter. Great.
spk07: The 237 revenues, which was canonic and... And forgive me, I don't have the release in front of me. Yes, yes. Are you at liberty to give us a breakdown there? How much was contributed from Canonic?
spk02: Okay, so we didn't give this breakdown, but I can say that the majority of this number came from Canonic. We had some higher expectation from revenue from Canonic, but we had some... a limitation on production with the third party that worked for us. We hope that we start to see the revenue increase from the company activity in the second half of this year.
spk07: Ofra, I just want to make sure I understood it. So the majority of the 237 was from Canonic? Did I hear you correctly?
spk02: Yes.
spk07: And yet there was headwinds. It could have been even more?
spk02: Yes, but we work with a few subcontractors that are supposed to grow for us the crop, and one of them, the quality of the crop wasn't according to our expectation, so it was a little bit lower than what we expected. But I think that in the second half of the year, more... there will be more supply and new type of product that is expected to improve the performance of Canonic for this year.
spk07: Right, right. Now, there's no seasonality to the Canonic sales. You know, it should kind of off this baseline, you know, continue to ramp up.
spk02: With respect to the demand, the demand is, as we see it, is growing all the time. With respect to the supply, so there is some season effect on the quality of the product. The best time to grow cannabis is starting in spring and during the summertime. So there is some effect on the quality of the product due to the season. But the demand is there, and people are all the time looking for high-quality products, which I think that our corn product is addressing this demand. And the products we are planning to launch in the second half of this year will come from our breeding program after we use our genomic markers and expecting even to be with a better performance, which can have a better market penetration rate compared to our first two products.
spk07: One last one. With conventional drugs that I'm more familiar with, if there are reimbursement protocols in place and additional studies, both those things in tandem tend to accelerate sales. Does that hold true for you know, medical marijuana-type products?
spk02: Yes, but probably not like for drug. It's having an effect, but not the same level of effect, and it's really changing from one market to another market. In a market like in Germany, it's driven by the doctor that really decides what product the patient is going to use. So there, definitely, if you have stronger evidence, if you publish articles, so definitely it will have a positive effect on the revenue. In Israel, I think that, yes, I mean, if you will publish results, coming from a survey that you conduct between patients on your product or you have some preclinical data from experiments you conduct in the hospital, it's good. It helps you from a marketing perspective. But I think that the market here is mainly driven from the concentration of THC. And this is something that the significant portion from the market is – this is the main – the main criteria he's looking at. And then, of course, have the flower look, smell, test. So it's less medical indication.
spk07: Great. Thank you for taking my questions.
spk02: Thank you.
spk04: If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by while we poll for more questions. The next question is from Ryan White of Ross. Please go ahead.
spk05: Thanks. Good afternoon. I had a couple of questions. You know, just wanted to start off with Lavi. There was initial production target that you were thinking about for 2023 for result. And is it kind of fair just without getting into numbers, but just like how do we think about the magnitude? Are you now kind of thinking, given the market conditions and the ability to sell it out real quickly here this year, are you thinking orders of magnitude two to three times what you were originally kind of contemplating as far as production capacity or even something beyond that, or am I getting too ahead of myself there?
spk02: So first, I would like to explain maybe this statement that we are expanding our production plan for 2023. It all relies on our original plan, you know, what we were planning before we saw the interest and the excitement in the market for product to increase, for bio-nuclein to improve yield. So we had a certain amount we were planning to produce, and we decided to increase it in a significant quantity. And if I compare between 2022 to 2023, so a few fold, meaning more than 10 times than what we were producing this year. So it will be significant compared to what we thought this year. This year it was really to make sure that we can do the production correctly, to make sure that we can do the seed coating, to distribute it. So it was proof of concept. And please remember that when we make the decision on the production, it was in 2021 before this crisis in Ukraine. So, and the original plan was that in 2023, we are going to increase significantly the production. So, as I said, we decided even to be more aggressive, and it would be more than 10 times than what we sold this year.
spk05: Okay, so the original plan was 10 times, and then now it's going to be more than that and yet to be determined on kind of the magnitude of more. Is that a fair summary? Yes, yes. Great, great, great. Thank you. Can you give us a little more color on the BMC-128, just kind of, you know, thinking on the timing for first enrollment? And then are you using, you know, genetic kind of – markers as far as in the individuals you're kind of targeting to enroll, and is that part of the program?
spk03: Sure. So, in regards to BMC-128, as we previously announced, this is a combination of four screens that were composed together in order to improve the anti-tumor activity for refractory cancer patients. I would say that in this study, we are hoping to be able to see, as I mentioned, the safety and tolerability first and to see some clinical signals. In regards to genetic elements for inclusion criteria, we are not looking for any genetic criteria in order to include the patient. And hopefully, the first patient will be enrolled in the study any day. So that's kind of our expectation to have the first patient very soon.
spk05: Great, great. And then if you could just remind me, and I apologize, I shouldn't remember this, but off the top of my head, I don't. Can you remind me kind of what's the targeted size of the trial?
spk03: The targeted size? Yeah, sure. So altogether, we'll be enrolling 12 patients. Those patients would be either with non-small cell lung cancer, RCC, or melanoma. All of them have been previously responding or not responding at all to immunotherapy.
spk07: Great. Thank you so much.
spk04: There are no further questions at this time. Before I ask Mr. Ophiel Chavis to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin two hours after the conference. In the U.S., please call 1-888- 326-9310. In Israel, please call 032 Mr. Khabib, would you like to make your concluding statement?
spk02: Yes, thank you. I would like to thank all of you for joining us and thank you for your continued interest in Evogen. We look forward to speaking with you next quarter. Have a good day.
spk04: Thank you. This concludes Evogen's first quarter 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.
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