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Operator
Ladies and gentlemen, thank you for standing by. Welcome to Evagen's third quarter 2022 results conference call. All participants are 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 November 17, 2022. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evogen's management will constitute forward-looking statements that relate to future events, risks, and uncertainties regarding the business strategy, operations, and future performance and results of Evogen. I encourage you to review Evogen'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, there are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For example, Evogen is using forward-looking statement in this call when it discusses its expected paths to value creation, including potential fundraisings at the subsidiary level. It's in its subsidiary's expected trials and their expected results studies. product advancements, commercializations, launches, pipelines, milestones, potential collaborations, and other plans for 2022 and 2023, expected 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 as of the date of the announcement of results. Many of the factors that impact whether forward-looking statements will come true are beyond the control of EvoGen and and may cause actual results to differ materially from anticipated results. EvoGen is under no obligation to update publicly or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as otherwise required by law. 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. That said, I would now like to turn over the call to Ofer Habib, Evogen's CEO. Ofer, please go ahead.
Evagen
Thank you for joining our conference call, discussing and providing an update on our activities in the third quarter of 2022. My focus in today's review will be on two topics. The first one, Evogen's current financial status and our plans to strengthen it. And the second one, updates on the latest achievements of our subsidiaries. Following my review, Yaron Eldad, our CFO, will provide the financial summary. After that, we will open the Q&A session. As you all know, financial markets are currently very volatile, and company valuations, especially in the biotech sector, have fallen very significantly over the past year and a half or so. I want to highlight that Evogen has and we continue to successfully navigate those difficult times despite the many challenges. Beyond that, the activities of our subsidiaries are advancing nicely and strengthen our belief that each generates significant value for the Evogen Group. To address our cash position, as of end of the third quarter, we have a consolidated $38 million on Imogen's balance sheet. We expect that, based on our business plan, it will be enough and take us toward late 2024. The strategic steps we continue to pursue, many fund raising for our subsidiaries and collaborations with non-dilutive payments, we believe will ultimately extend this runway out further. With respect to fund raising, For the subsidiaries, we are working hard to identify and bring value-adding partners and investors. This would achieve several goals at the same time. Any investment at the subsidiary level brings a new source of capital to the subsidiary and lowers the demands on Evogen's balance sheet, enabling us to extend our cash resources. It brings a value-adding partner to the subsidiary, which has a strong share in the ultimate success and upside of that subsidiary. And for Evogen specifically, the valuation at which the investment is made allow us to identify shareholders' value by demonstrating its inherent financial value and Evogen's holding in it. In parallel, We are pursuing collaborations for both Evogen and its subsidiaries, the basis of which are the tech engines for Evogen and the product under development for the subsidiaries. Such collaborations will include a revenue stream of non-dilutive payments, as well as extend Evogen's potential market and establish market access for the product of our subsidiaries. I would like to now continue with an update on our subsidiaries, starting with LaviBio, our subsidiary focusing on developing ad biologics, utilizing Evogen's MicroBoost AI tech engine. A key event during the third quarter was the investment into LaviBio by ITL, a leading $11 billion New York-listed global mineral company. ICL provides LaVie Bio with a $10 million investment of new capital for its development activities. For LaVie Bio, ICL is much more than just an investor. The investment is part of a collaboration that will strongly broaden its product pipeline. I would like to repeat a statement made by ICL in the recent conference call with regard to their investment in LaVie Bio. La Vie Bio's unique approach leverages big data and advanced artificial intelligence, and our collaboration with them focuses on developing novel biostimulant products to enrich fertilizer efficiency. Combining La Vie Bio's ag-biological experience and cutting-edge technology with ICL-advanced knowledge of fertilizer use and farmers' needs will help facilitate the development of new and innovative products for the agriculture industry. ICL shares our vision that by combining LaVie Bio's agri-biological expertise, Avogen MicroBoost AI technology with ICL Fertilizer experience, the goal of our collaboration is to create a new type of biostimulant product to enrich fertilizer efficiency, a product which will be highly synergistic with ICL existing product portfolio. This is the second leading global player to which LaVie is now partnered with, the other being Corteva, a New York-listed $46 billion major agriculture company. These partners, Corteva and now ICL, are fully aligned with us and all have a strong interest in LaVie Bio's long-term success and growth. The ITL investment, combined with the fact that LaVie is now at the commercialization stage with its first product, Tribus, enables us to reduce Evogen's financial resources focused on LaVie Bio. At the same time, it ensures that LaVie Bio is moving ahead at full speed and has the resources to meet its full potential in line with our long-term strategy. In October, Labib Bio submitted the registration package to the United States EPA, the Environmental Protection Agency, for Lab 311, its novel biofungicide product, which is the final step prior to commercialization. Lab 311 is a biofungicide targeting fruit rot and powdery mildews based on novel bacteria naturally presented in nature, which was selected utilizing Evogen MicroBoost AI. The standard timeline registration tended to take 18 months, and we hope to soft launch for the 2024 growing season, pending the regulatory approval. All in all, especially in time of food security, Increasing prices and macroeconomics uncertainty, La Vie Bio brings a strong solution to enhance global food quality, agriculture sustainability, and increased productivity. I believe that La Vie Bio is in the right place at the right time and can attract strong value-adding investment even during those challenging times. Moving on to Biomica, our subsidiary, focusing on developing drug-based on human microbiome, leveraging our MicroBoost AI tech engine. Back in July, the first patient was those in Biomica's phase one clinical trial for BMC-128, Biomica's microbiome-based immune oncology drug candidate at Rambam Health Care, campus in Haifa, Israel. In recent weeks, we have now progressed to the third patient out of 12. The trial is designed primarily to evaluate the safety and tolerability of BiomiCAD BMC128, a consortium of microbes selected utilizing Avogen MicroBoost AI tech engine in combination with an immune checkpoint inhibitor in cancer patients. As the trial is open-label, we expect preliminary results and a data readout in spring 2023, as the first few patients concluded their treatment programs. We are targeting to complete the trial in the later part of 2023. We are greatly encouraged with the positive progress we are seeing in the broadened human microbiome drug-based industry, giving the recent announcement made by Ceres and Fering with regard to the advancement in the regulatory process of the Candida drug by the FDA. Moving on to Canonic, our subsidiary is focusing on developing medical cannabis products, leveraging generator AI tech engines. In September, the company announced the launch of its second generation product with higher level of THC and unique terrapin profiles. These new and improved products were developed using genetic markers, which our generator AI tech engine identified. In October, the sales of these products was initiated in the Israeli market with two new brands, Synergy and combo, both with 24% THC, while the maximum percentage of the THC allowed in Israel is 24.4%. The market feedback in Israel so far has been excellent. THC is the primary psychoactive ingredient in cannabis. Terrapins are plant compounds known to provide relief for many medical symptoms, including pain relief, anti-inflammation, anti-anxiety, anti-depression, and more. They also influence the aroma and the scent of cannabis inflorescence. In addition, in September, we announced a licensing agreement with a Portuguese cannabis cultivation company, Grovida, for the commercialization in Europe of two of our new cannabis lines. Under the agreement, Grovita will cultivate market and sell products based on those varieties and will pay canonic royalties. Grovita has been our partner for cultivation and testing of our cannabis varieties in the EU throughout 2022. Their interest in broadening our relationship to a new stage is a testament to the quality of Canonic's varieties and to Grovita's belief in the commercial potential of our strains in the European market. Europe is a key target market for Canonic, with total medical cannabis market sales estimated at approximately 400 million euro, while still at an early stage in its growth cycle. Finally, last week, we announced a change in leadership at Canonic. Dr. Arnon Heyman, CEO of Canonic, will leave the CEO position at the end of the year. He will continue to serve Canonic as a member of the board of directors. Arnon has been with Canonic since the beginning and was instrumental in developing our incredible market-leading product, and we are thankful he will continue to play a role from the board level. Canonic has appointed Eyal Ronen, who also served as Evogen's current Executive Vice President, Business Development, as Canonic's new CEO, effective January 1, 2023, in parallel to his role in Evogen. As Canonic advances itself in Israel and globally, I believe that Eyal's strong business development background and broad experience will enable Canonic to move on to the next stage in its growth in sales and development. To conclude my review on the subsidiaries, I would like to highlight Castera, our Caster 6 technology developer, and focus on the latest announcement we released just a few days ago. Caster Oil and its derivatives have a wide range of users today and are a growing $1.2 billion market worldwide. Applications include oil for lubricants, industrial human health, such as cosmetics, and plastic polymers, giving it high durability and elasticity, and as a source for biofuel. Global demand for biofuel is increasing. As we look to replace fossil fuels with biofuels, such as those derived from culture beans, we will see an increase in the demand for culture oil. Castor beans have high oil and energy content and giving extensive environmentally friendly cultivation practice, it can serve as an effective source for the biofuel industry. Castero's latest announcement informed it has signed a long-term exclusive production and distribution agreement with Titan Castor Farm, a Zambian cultivator and distributor of castor oil, This agreement is at first a new and important step in leveraging Castera's technology into the African continent. Titan will provide Castera royalties on sales of its Castor oil products, which are expected throughout Zambia and the surrounding South-Eastern Africa region, starting in 2023. In summary, as a group, We have met several important milestones in the past few months, and the inherent value of our subsidiaries continues to increase. It shows that our hard work in building, investing in, and strengthening our subsidiaries, all of which are leveraging our underlying computational predictive biology tech engines, is the right strategy and is creating value. At the same time, our cash position is strong, and we believe it's more than adequate to weather the current capital market volatility. Our mid-term target is that each subsidiary will have its own financial resources to support its activities until its success. While it's evoGen, in addition to being a major shareholder, we'll continue to play a major role in maintaining and building the competitive advantages through our tech engines. In parallel, and just as importantly, we are targeting and exploring the potential to establish new partnerships and activities that can benefit from our technology. We hope to highlight more such successes in the coming quarter. Let's end my summary and now over to Yaron for the financial review. Yaron.
Yaron Eldad
Thank you, Ofer. I will now provide the financial summary. Evergen continues to maintain a solid financial position for its activities with approximately $38 million in consolidated cash, cash equivalent and marketable securities as of September 30, 2022. Approximately $12 million of Evergen's consolidated cash is appropriated to its subsidiary, La Vie Bayeux. We do not have any bank debts. During the third quarter of 2022, the consolidated cash usage was approximately $7.3 million or approximately $4.7 million, excluding La Vie Bayeux. To date, in the first nine months of the year, our consolidated cash burn was $25.9 million which included $3.3 million from the impact from foreign exchange and the decrease in market value of marketable securities on Evergen's balance sheet. For the full year of 2022, excluding the impact from foreign exchange differences and the change in market value from marketable securities, we expect our consolidated cash burn rate to be in the range of $27 to $28 million. We are aiming to reduce the cash burn in 2023 and are currently building our budget. We hope to provide you with more color in our next conference call in February of 2023. I would like now to highlight some specific items on the P&L. Revenues for the third quarter were $466,000 in comparison to $151,000 in the same period the previous year, and were primarily due to revenues recognized per the collaboration agreement of one of our subsidiaries. R&D expenses for the quarter, which are reported net of non-refundable grants received, were $5 million. in comparison to $5.8 million in the same period the previous year. The main contributors to R&D expenses were La Vie Bio's activity, supporting the production and commercialization of its inoculant product, and Biomica's ongoing Phase 1 trial. Business development expenses were approximately $0.9 million for the third quarter of 2022 in comparison to $0.8 million in the same period the previous year. G&A expenses were $1.6 million in the third quarter of 2022 in comparison to $2 million in the same period in the previous year. Operating loss for the third quarter of 2022 was $7.1 million in comparison to an operating loss of $8.6 million in the same period in the previous year. The net loss for the third quarter of 2022 was $7.2 million in comparison to a net loss of $8.3 million in the same period in the previous year. As Ofer mentioned, our business plan is to pursue strategies to strengthen Evergent's consolidated cash position, ensuring our subsidiaries are well capitalized. With that, both Ofer and I would now like to open the call for any questions you may have. Operator?
Operator
Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If 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 polled in the order they are received. Please stand by while we poll for your questions. The first question is from Kristen Kluska of Cantor Fitzgerald. Please go ahead.
Kristen Kluska
Hi, good morning, good afternoon, everybody. Thanks for taking my questions. So the first one I had is if you could please elaborate more on your business plan. What specifically are you changing or deprioritizing in order to extend your cash balance now for two years? And could you speak to which subsidiaries in particular you think there could be some near-term opportunities for non-dilutive fundraising, whether that's through partnership or other items?
Evagen
hey hi christian this is the offer um i will start by addressing the the second part of your question so i think that in the short term and probably one of the companies that are more uh better position for fundraising uh is the biomica but i believe that next year i'm expecting that at least another two company will be on the road for additional fundraising. I think that the amount of money we raise for Labib Bayou probably it's nice what we raise the $10 million but we should target for a higher amount and I think that also a canonic or act plan should start the process of fundraising as well. So for the short term I will put more emphasis and on Biomica, but mid-term, I think that at least another two companies should initiate the process of fundraising. This is with respect to fundraising. With respect to non-dilutive collaborations, I think that actually here, there is the company such as Acplanus, and also Canonic, they are in a good position to move forward with it. And also Castera, as I mentioned lately, this field of cancer beam became, again, very interesting due to increased demand in the area of biofuel. The first question was related. Can you remind me, what was it? what activity we are planning to reduce. So I think that with respect to the activity that we are going to reduce is that if you remember, as you probably remember, according to our business plan, we are all the time looking for a new activity, a new initiative that can benefit from our technology. So this is probably something that we will reduce significantly the level of activity, meaning the business development and, you know, maybe developing technology which could be relevant for new field of activity. So this is probably we are going to put on hold, and we will focus mainly on our existing activity and pull them further. As an example, in the past we have an activity focusing on producing protein in plant to replace the egg protein. This is a small activity that we conduct in Evogen, but probably now this is an example that probably will put it on hold until we will have additional financial resources to expand our activity. So when you're talking about the companies such as Labibio, Biomica, and also ActPlanus. So we are not going to increase the budget, but we are not going to reduce it significantly. We are not going to reduce it. Canonics, as an example, probably we are going to focus more on commercial activity. The main reason is that what we succeed to build until now is quite amazing in the research level. And we have some very, very promising variety. Some of them we already launched, and I can update that we're quite happy with the launch of this product, and I hope that we will be able to see some of the effects on the revenue for next quarter. So there will be a shift. from focusing on R&D activity and trying to develop a variety for more to the medical aspect of the cannabis product, and more focusing on what we already develop, which there is a clear current demand in the market for high THC products, and we already have a nice variety, a nice collection of products already available. this is what we are going to do, focusing more on the commercial aspects and less on the R&D aspects. I hope this has addressed your question.
Kristen Kluska
Yes, it does. Thank you, Ofer. And then can you give us some context to what we could expect to see in the spring 2023 update for Biomica? Is this primarily going to focus on safety, or do you think we'll get some clues into early efficacy signals at this time? And then are you targeting to present at a medical conference in the spring?
Evagen
So, actually, the reason that Iran is not participating in this call, as an example, is because he participated in a conference in Boston in a very important panel, and I received a very positive feedback from this event. And, yes, we will participate in different conferences, and we are going to publish it, and we are going to present the results. With respect to what I'm expecting, you know, in spring 2023, The clinical trial is focusing on safety. So, of course, we are going to disclose information about safety, but the thing that you can already see some indication that we are in good shape, otherwise we won't be able to move to the third patient, and hopefully after we will receive positive feedback from the second and the third, to recruit the additional nine patients. So I think that, again, you know, you can never know until you have all the results, but safety, this is definitely what we're going to focus on, and I think that we, at least until now, we are in good shape. With respect to efficacy, so of course, if we are going to see some indication for efficacy, we're going to disclose this information, Please remember that the patient that we are recruiting for this experiment, they are all suffering from cancer. They all received already one treatment of, you know, Optivo or Tetruda that didn't help them. And now they're entering into another cycle of treatment with, you know, the Optivo, but this time with our microbes. So if we are going to see some positive effects, it's really going to have a lot of meaning and make us very, very excited. So we are not targeting for this because the number of patients is relatively very small. It's only 12. But if we are going to see some indication like this, of course, we will share this information with the public.
Kristen Kluska
Okay, thanks. And last question from me is if you could talk a little bit more about the work that you're doing to understand the financial resource requirements moving forward for each of the subsidiaries.
Evagen
So we have, each of our CEO is establishing a clear target for 23 and 24. Each one of our subsidiary is building the required budget, and we are building our financial plan according to this need. And I think that based on the financial plan that we already established, I think that we are in good shape, and as I said, I can't disclose much, but I believe that at least some of our subsidiaries will be able to raise money in the short term or maybe in the mid-term, and this definitely will support their activity. And I can't disclose more than this, but we are aware of the challenging environment, And the fact that we're currently keeping all of the activity moving forward, I think it should send a message that we are confident on our ability also to fund this activity, at least during next year. And I hope that if our plan will materialize, we will be all with a big smile also for 2024. Great. Thanks again.
Operator
If there are any additional questions, I repeat, if you have a question, please press star 1. There are no further questions at this time. Before I ask Mr. Ofer Habib 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 039255-91901. Internationally, please call 9723-9255-901. Mr. Khabib, would you like to make your concluding statement?
Evagen
Yes, thank you. Thank you all for joining the call today. I look forward to updating you on our progress in our next call. Thank you once again.
Operator
Thank you. This concludes Evogen's third quarter 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.
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