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Operator
Ladies and gentlemen, thank you for standing by. Welcome to Evogen's second quarter 2023 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 on August 17, 2023. 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 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 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 statement in this call when it discusses the establishment of collaboration agreements with leading companies in new domains of activity, target select, or ability to identify novel target proteins for innovative products, the BMC-426 and BMC-427 for IBS treatment effectiveness in reducing visceral pain and related studies and trials, future milestone payments, and royalties from Corteva's sales of LaVie Bio's products, the resources needed to execute the company's plans effectively and in a timely fashion, return on investment for farmers who use Thrivis, and the enhancement of AgPlanus' ability to identify new pesticide mechanisms due to the use of Evogen's target selector applications. 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 may cause actual results to differ materially from anticipated results. Evagen 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. Starting the call today is the President and CEO of Evogen, Ofer Chaviv, joined by Evogen CFO Yaron Eldad, CEO of Castera, Eyal Ronen, CEO of LaviBio, Amit Noam. That said, I would now like to turn the call over to Ofer Chaviv, President and CEO of Evogen. Mr. Chaviv, please go ahead.
Evagen
Thank you and good day, everyone. Today I will review Evogen's activities and recent achievements and provide you with an update on Evogen's potential catalyst expected in the near future. I will also discuss some of our subsidiaries' recent accomplishments, which leverage Evogen's AI-driven tech engines as their main competitive advantage and demonstrate the power of our technology underlying their product development process. I will end my part reviewing Evogen's recent fundraising and how it improves our financial stability. I would like to state that the second quarter of 2023 has been a remarkable one. We made significant achievements on all fronts, and I hope that you will share this view at the end of our call. As we have many new listeners on today's call, I would like to briefly review Evogen's core technology. Evergen has been using its computational predictive biology platform, the CPB, to direct and accelerate the discovery and development of life science-based products. The CPB is the foundation of our three tech engines. MicroBoost AI supports the discovery and development of micro-based products. Generator AI supports products based on genetic elements. And campus AI supports small molecules based products. Our AI driven tech engines aim to tackle the main challenges in life science product development. Identifying winning candidates from a vast number of prospects and meeting complex criteria for successful commercial products. Our AI driven tech engines efficiently find the needle in a high-tech. therefore increasing the probability of full success within a competitive timeframe and at a cost-efficient manner. On July, we unveiled the latest enhancement of our campus AI tech engines, TargetSelector, a groundbreaking application designed to streamline target protein discovery using predictive machine learning algorithms and genomic data. With this new technology, Researchers across various industries can efficiently identify novel target proteins for innovative products while significantly reducing research and development time and resources and increasing the likelihood of success. Proteins are crucial for developing therapeutics and life science solutions and play a pivotal role in biological processes across pharmaceuticals, agriculture, and environmental applications. As mentioned, Campus AI Tech Engine is a cutting-edge platform for the identification of small molecules. The addition of the target selector applications now enable a broader scope of finding the optimal target protein for those molecules. Our subsidiary, Agplanus, which focuses on developing ag chemicals, is the first to benefit from this new improvement applying it to identify novel mechanism of action for pesticides. We consider this significant advancement in Avogen Campus AI tech engine to strongly position us to forge strategic partnership with industry leaders, expediting product development and delivering novel solutions to pressing global needs, such as developing sustainable new pesticides and therapeutics. Evogen's business model is to establish a product development ecosystem around each tech engine through two main business structures. Independent subsidiaries focusing on specific life science market segments with a licensed used Evogen tech engine for product development or a joint development with leading companies for defined products utilizing Evogen tech engines. Typically, partners lead later stages of development and product commercialization. In recent years, our focus has been on the establishment of various subsidiaries that nowadays show impressive results, which I will soon discuss. I would like to emphasize that this year, Avogen increased its efforts to establish collaborations with leading companies in new areas of activities not covered by our subsidiaries for product development leveraging our tech engines. Those just recently initiated, the response we received to our unique offering is positive, and we hope some of those discussions will materialize into collaborations agreements in the near future. With respect to our subsidiaries, they have accomplished multiple achievements and have several upcoming milestones of significant potential value creation. I would like to start my review with Biomica, a subsidiary of Evogen that is developing microbiome-based therapeutics for human health. Biomica leverages Evogen's MicroBoost AI tech engine to identify and characterize microbes with therapeutic potential. In April 2023, Biomica completed a $20 million financing round, led by a $10 million investment from Shanghai Healthcare Capital. The transaction was done at a post-money valuation of $50 million. This external and independent endorsement of Biomica validates our belief in Biomica's long-term potential. Biomica's leading product candidate, BMC128, is for the treatment of immune oncology patients, now in phase one clinical trial. The trial, conducted in Israel at the Rambam Healthcare Campus, aimed to evaluate BMC128 safety and tolerability, alongside BMS Opdivo. Immune therapy for respiratory patients with NS-CLC, melanoma, or RCC. The trial is planned to include 10 to 12 patients, and until now, six have enrolled. In August, Biomica opened a second site in Israel at the Davidoff Cancer Center to open the trial to additional potential patients. In addition, this quarter, Biomica reported positive and trim results for its IBS program's preclinical studies. The studies were performed in a collaboration with the lab of Professor Kera Gross-Margolis at NYU and demonstrated the efficiency of Biomica's live bacterial consortia BMC426 and BMC427 in reducing visceral pain, a major IBS symptom. Given the limited options for IBS treatment, and a significant unmet need. These findings present promising new treatment possibilities. Biomeca intends to further assess BMC426 and BMC427's efficiency in additional preclinical studies in the near future in preparation for its clinical trials for IBS. The second subsidiary which is also using Evogen MicroBoost AI tech engine, is Labibio, developing next-generation ag-biological products. In addition to Evogen's majority ownership, we are happy to emphasize that Labibio has two additional major shareholders, Corteva, a public multinational ag-tech giant, and ICL, a public global mineral and an ag tech company, which last year made a $10 million investment into La Vie Bio under a safe agreement. In addition to equity investment, Corteva and ICL are also collaborating with La Vie Bio on the development of novel ag biologicals. In July, La Vie Bio announced that it entered into another licensing agreement with Corteva. The agreement grants Corteva exclusive rights to further develop and commercialize two of La Vie Bio's lead biofungicide product candidates, LAV311 and LAV312, targeting fruit rot. The agreement follows two years of independent field validation trials conducted by both companies. La Vie Bio is set to receive an initial payment of approximately $5 million into installment, and will also be eligible for additional future milestone payments and royalty from Porteva's sales of those future products. Stay tuned to hear directly from Levy Bio's CEO, Amit Noam, as he shares in-depth insights into this remarkable achievement and other ongoing activities. Now, I would like to review Act Plans. our subsidiary leveraging the KEMPATS AI tech engines. ActPlanus aims to discover next-generation innovative crop protection products, including herbicides, insecticides, and fungicides, and commercialize them through collaboration with world-leading partners. Major ag-chemical companies, such as BASF, Bayer, Corteva, and Syngenta, dominate today's crop protection industry. They look to smaller ag-tech companies like ACPLANUS to discover new target proteins and small molecules that inhibit such target proteins, serving as the active ingredient in commercial crop protection products. ACPLANUS is exactly the company that addresses this need, and it explores partnership with these major industry players. The need for new crop protection products is enormous. due to their growing resistance of pests and weeds to existing commercial solutions. Herbicide resistance weeds today are flourishing, and there has not been a new commercial herbicide with a novel mode of action for over 30 years. AgPlanus looks to change that. There is a growing interest in AgPlanus' product pipeline, especially in our lead target protein, APTH1, and the small molecules that bind to this protein as candidates for a novel herbicide with a broad weed control spectrum. We hope to update in the future on strategic collaboration based on APTH1. As I mentioned earlier, the new application, TargetSelector, that is now part of our campus AI tech engine, which serves as the infrastructure of ACK Planus' technology platform, We allow the company to accelerate and improve the identification of novel mechanism of actions for pesticides. I expect that this significant advancement will better position Act Planus to forge strategic partnerships with industry leaders. Lastly, I would like to congratulate Dr. Adrian Percy on joining the Act Planus Board of Directors. Dr. Percy is a highly accomplished agricultural scientist with over 20 years of experience in the industry. Dr. Percy also serves as a member of Evogen's board of directors since 2019. We wish all of us good luck. Before I move on, I would like to encourage you to review Agplanus' new presentation, available on Agplanus' and Evogen's websites. I will now review the activities of Castera and Canonic, our subsidiaries that utilize Evogen's generator AI tech engines as their main technological advantage. Starting with Castera, which reached a major milestone in the last quarter, Castera focused on developing an integrated solution to enable large-scale commercial cultivation of castor beans, through its unique elite seed varieties. The goal of Castera is to address the global demand for a stable cultural oil supply, mainly for the biodiesel industry. The past few months were pivotal to Castera. Our vision of becoming a major player in the biodiesel industry progresses with seed orders from a world-leading energy and gas company totaling $11.2 million for castor cultivation in Africa to support the growing demand for biodiesel. This is just the beginning. For more details on Castera's activity and its impressive achievements, we will later hear from Castera's CEO, Eyal Ronen. Moving on to Canonic, which focused on developing best-in-class medical cannabis products using Evogen's generator AI tech engine. As we disclosed in our previous analyst call, Canonix's main targets for the near term are to grow its cannabis sales in Israel, benefiting from its elite unique strains, while significantly reducing Canonix's expenses. As Canonix's go-to-market strategy includes out-licensing to third-party the commercial growth of the cannabis strain toward the final product, it is crucial to select subcontractors that have the right skills and expertise to maximize the genetic value of canonic strains meeting the premium market criteria. To this end, during the past month, the company has been evaluating and negotiating with various subcontractors, including growers outside Israel, and indoor growth facility. We hope to update on this matter in the coming months. I would now like to address the successful completion of Evogen's latest capital raise. On July 17th, we raised $8.5 million through a registered direct offering from institutional investors, including SilverArk Capital Management, Altium Capital Management, LP, and CVI investments. While within the whole Evogen group, we do have a substantial amount of funds, a significant portion is assigned to the subsidiaries. The additional funds raised for Evogen itself will now allow more financial flexibility, strengthen our position, and will ensure continued growth as planned. For more details on Evogen's financials, we will later hear from Evogen's CFO, Yaron Eldad. To wrap up, the second quarter of 2023 has been an exceptional period of achievement in the Evogen group. And in my view, it is a pivotal point in the transformation Evogen is going through, which started with the creation of our three AI tech engines. Announcing purchase order in the accumulated amount of $11.2 million for Castera's castor seeds. Licensing agreement between Labibayo and Corteva, which includes an upfront payment of $5 million, milestone and royalties. Closing a financial round for Biomica on the amount of $20 million. And last but not least, receiving the trust of high-quality investors demonstrated by purchasing 8.5 million ordinary Evogen shares in our recent financing round, all happening in a relatively short time, signals a clear message that Evogen is on the right path of success. I will now hand over to Amit Noam, Laveen Bio's CEO, who will be followed by Eyal Ronen, Castera's CEO, and finally, Yaron Eldad, Evogen's CFO, who will elaborate on the latest Evogen fundraising and our financial results for the second quarter. Amit?
Generator AI
Hello, everyone. I'm delighted to be joining Evogen's earnings calls for the first time. It has been an incredible journey over the past four months since I joined La Vie Bio as the company's CEO. I've had the pleasure of meeting a remarkable group of people and talents, and I'm confident that together we will drive La Vie Bio to new heights in our business endeavors. I want to express my gratitude to Evogen's CEO, Ofer, his management team, and the entire Levy Bio board of directors for their warm welcome and unwavering professionalism. Thank you all for your support. I would like to update you on three of Levy Bio's main achievements in the last quarter and provide some insights into our future plans. One, the commercial progress of our first product, Trivus. Second, the licensing agreement with Corteva for two of our leading biofungicide candidates. And the third, the advancement in our product pipeline. Back in May, the company updated that it had received regulatory approval from the Canadian Food Inspection Agency for its bioinoculant seed treatment, Trivus. This approval triples the product sales territory, expanding its global reach. Tribus, which increases hard red spring wheat production by enhancing soil nutrient availability and efficiency while mitigating environmental stresses, has already demonstrated its efficacy in the U.S., with an average of 3 to 4 bushels per acre yield increase, providing a 4x return on investment for farmers. La Vie Bio plans to extend tribal supplication to other crops in the near future. The product, developed using La Vie Bio's BDD platform, powered by Evogen's MicroBoost AI tech engine, exemplifies the company's commitment to sustainable agriculture and enhancing productivity for farmers worldwide. Recently, we announced that Plavib Bio successfully entered into a strategic licensing agreement with Corteva. This significant agreement grants Corteva exclusive rights subject to reaching certain commercial milestones to further develop and commercialize Love 311 and Love 312, our promising lead biofungicide candidates which target fruit rots. These candidates were originally discovered and developed by La Vie Bio, showcasing our commitment to innovative solutions in the ag biological industry. As Ofer mentioned, in the frame of this collaboration, La Vie Bio is set to receive an initial payment of approximately $5 million U.S., In addition, we are eligible for additional milestone payments in the future based on achieving certain patent rights and regulatory approvals. Most importantly, this mutually beneficial agreement also allows us to receive royalties from Corteva's sales of these future products. We are thrilled about this strategic partnership and confident that Corteva's proven capabilities in the ag-biological space will help propel our lead biofungicides, LAV311 and LAV312, towards commercial success. This agreement aligns perfectly with La Vie Bio's vision to provide farmers with environmentally friendly and sustainable tools that effectively combat fruit rot, a highly destructive disease causing substantial annual losses in the agriculture sector. In the second quarter, we continue to advance six additional programs in our pipeline, showing satisfactory progress. We also refined the company's strategy of being a leading ag-biological product development company with the goal of consistently and repeatedly bringing high-quality, commercially viable ag-biological products to the market that are competitive in performance to the synthetic chemical solutions but superior in their sustainability benefits. These product programs will support our two go-to-market strategies, direct sales by La Vie Bio, like we're doing with Trivis, and licensing agreement and collaboration, like the one we just signed with Corteva. I'm excited about the future of La Vie Bio and our commitment to supporting farmers worldwide with cutting-edge solutions. Thank you for your continued support, and I look forward to updating you on our progress in the future. Thank you all, and now Eyal Ronen, Castera's CEO and Evergen's EVP business development, will provide his update.
La Vie Bio
Hello, everyone. Thank you, Amit. I'm delighted to join the call today and provide a brief overview of Castera's recent activities and our plans for the future. Our mission is clear, to transform the castor oil industry by providing an integrated, holistic solution for industrialized cultivation, ensuring a consistent supply of high-quality grains for the industry's value chain. Through our profound knowledge of genetics and innovative agro and technical solutions, we are committed to creating a continuous single-season industrialized solution for the best castor crop performance. Let's review last quarter's activities. In the second quarter of 2023, Castera achieved significant milestones with purchase orders totaling to $11.3 million for the supply of our high-yield, high-oil proprietary castor seeds for the cultivation of castor plants to produce oil for sustainable biofuels. I would like to elaborate on this achievement. In June, we announced a signing of a framework agreement with a prominent oil and gas company, securing initial purchase orders worth $9.1 million for the supply of our castor seeds to be cultivated in specific African territories. Additionally, in July, we unveiled one more purchase order valued at $2.2 million for additional territories in Africa. Now I'd like to give a short review of the biodiesel market and its value to Costera. The biodiesel market per President's research site was valued at $92 billion in 2021, which is 9% of the global diesel market, and is expected to reach $190 billion by 2030. Biodiesel currently consists of 93% to 95% fossil oil and 5% to 7% non-fossil oil from plants or other sources. The demand for non-fossil oil in biodiesel could rise due to the biodiesel segment's growth or an increase in non-fossil components. Castor is a standout non-fossil oil candidate with carbon-natural properties thriving in marginal lands without competing with edible crops. Spare-heading this development is Castera, using advanced computational biology technologies to develop high-yield castor varieties. I would like to note that we are thrilled to receive these significant purchase orders, which confirm our value proposition for the sustainable biodiesel industry. As we eagerly hope to secure more orders in the future, these accomplishments reinforce our ongoing commitment to delivering exceptional eco-friendly solutions to meet the ever-growing global demand for renewable energy. Castera plans to increase its global spend and invest more companies in the oil and gas space. Additionally, in its R&D, it targets to expand its activity to sustainable aviation fuel, SAF market, and develop virtually free resin varieties for animal feed. After more than a decade of hard work and investment of millions of dollars in developing our unique varieties and underlying technology, we are proud that Castera is now a trusted and reliable supplier in this growing market. Thank you for the attention, and I look forward to addressing any questions you may have. And now I want to pass the mic to my colleague, Yaron Eldad, Avogen CFO. Yaron?
Castera
Thank you, Eyal. As previously mentioned by Ofer, in July, we successfully concluded a fundraising round securing total gross proceeds of $8.5 million. I must emphasize that the securities issued in this round were common stock only, and it did not include any warrant coverage. As of June 30, 2023, Evergen had consolidated cash, cash equivalents, and short-term bank deposits of approximately $33.9 million. Of this sum, Biomica accounted for $16.8 million, and La Vie Bio holds $7.1 million. Evogen, together with Castera, Canonic, and Ad Planus, possessed an aggregate of $10 million in cash. The injection of funds from this last round in July strengthens Evergen's financial position and provides us with the resources needed to execute our future plans effectively and in a timely fashion. An example of such financial need is a significant increase in the required working capital of our only-owned subsidiary, Castera, in order to produce the custom seeds needed to fulfill purchase orders received in the last month, totaling $11.3 million. It is important to note that the $10 million reflected in the cash balance of Evergen, together with Castera, Canonic, and AgPlanus, do not include funds raised by Evergen in July, and any amount due to the purchase orders received by Castera in the last few months which are expected to be supplied during the second half of the year and at the beginning of next year. Further note that the $7.1 million reflected in the cash balance of La Vibayo does not include the $5 million expected to be received as the upfront payment from the licensing agreement with Corteva, which was announced in July. During the second quarter, the consolidated cash usage was approximately $5.6 million or approximately $2.8 million, excluding La Vie Bio and Biomica. I will now review the P&L main items. Revenues for the second quarter of 2023 were approximately $654,000 compared to approximately $312,000 in the same period the previous year. The revenue increase was primarily due to revenues recognized by the collaboration agreement of evidence subsidiary Agplanus with Coteva and from sales of La Vie Biotrivus products. R&D expenses for the second quarter of 2023, which are reported net of non-refundable grants received, were approximately $5.4 million and remain stable as compared to approximately $5.4 million in the same period in the previous year. Sales and marketing expenses were approximately $928,000 for the second quarter of 2023 and slightly decreased as compared to approximately $962,000 in the same period in the previous year. The main contributor to this decrease in expense was a reduction in personal expenses at Canonic. General and administrative expenses were approximately $1.8 million in the second quarter of 2023 compared to approximately $1.7 million in the same period in the previous year. The increase is mainly due to expenses related to share-based compensation. Operating loss for the second quarter of 2023 was approximately $7.9 million compared to an operating loss of approximately $8 million in the same period in the previous year. Financing income for the second quarter of 2023 was $0.1 million in comparison to financing expenses of $1.7 million in the same period in the previous year. This difference was mainly due to the US dollar and Shekel exchange rate differences between periods, a decrease in marketable securities value in the second quarter of 2022, and an increase in interest income during the second quarter of 2023. Net loss for the second quarter of 2023 was approximately $7.8 million compared to a net loss of approximately $9.8 million in the same period in the previous year, mainly due to the financing expenses, differences, and mentioned above. With that, Ofra and I would like to open the call for any questions. 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 Ben Cleave of Lake Street Capital Market. Please go ahead.
Ben Cleave
All right. Thanks for taking my questions here. I have a few. I'd like to start with a couple on Castera. For this initial $11 million order that is underway, can you clarify how much of that order is going to be filled by seed inventory that you already had on hand versus contract production that is out now to satisfy that order?
Castera
Hi, Ben. This is Ofer. I will ask Eyal to address this question.
La Vie Bio
Hi, Ben. Basically, the amounts that were received as an order are substantial amounts, so we are producing and continue producing the extra capacity which is required to submit for these orders. It's not something that we had in inventory. The inventory was mainly used to supply the common demand that exists in the market. The additional orders were requiring us to add more in our production. This is exactly what we are doing now, and we'll continue in the coming months to accomplish all the quantity required for that deal.
Ben Cleave
Okay. Okay, great. Thanks. And so this is, I think, you know, clearly in excess of what I certainly was expecting would be possible here in year one, which is fantastic to see. I'm wondering if you can help us understand kind of your outlook for next year. And specifically, do you know what kind of the limiting factor will be for Casdera revenue next year? Is it going to be, you know, capacity for your biofuel partners? Is it going to be access to farmers to actually plant the seed? Is it going to be available inventory? I mean, what do you think the limiting factor is going to be for Casdera in its second year?
Castera
Yael, can you continue?
La Vie Bio
Yes. Based on the estimation that we received from the clients and based on the preparations required in terms of land, I do not see at the moment any limitation that will be restricting us from producing the substantial amounts that are required. The main challenge, I believe, in having those capacities shifted to the client is a logistic one. So we are improving and preparing all kinds of adjustments over there to attend the supply itself. From production perspective, we don't see any limitations. Land is quite available. Whether you produce this amount or another amount, the additions that are required are not something which is beyond our reach. I see it mainly as a challenge in the logistics that we need to shift substantial amounts from one place to another. Production-wise, we are settled down, and whether they will be increasing dramatically, we are able to supply the quantities.
Evagen
I would prefer to be a little bit more conservative, and I will say that based on what we know could be the orders for next year, so we believe that we are in a good position to support it. Still, it will need to strengthen our infrastructure, as an example. probably we need to have additional de-hooling machine, additional harvester, and we need to prepare more land. But I think that this is things that we can handle. Of course, if it would be a dramatic increase in the demand, which is something that we currently are not expecting, you know, something that, you know, 10 times more, I think then probably it will be more difficult to address it. But at least To what we know now, yes, we're expecting to see increases in demand, and we believe that we would be able to address this increase. And we are working very, very hard, in some cases even day and night, in order to be able to address this challenge.
Ben Cleave
Great. Great. Thank you. One last one on Castera, and then I have a quick one on Lobby. So for Castera, I heard your comment about ambitions in the world of sustainable aviation fuel. I'm curious if your unnamed partner in this space is going to be your expected partner for this end market, or if you're looking to strike additional collaborations with other energy players in the world of sustainable aviation fuel.
Evagen
So maybe I will take this question. It's very interesting because I think maybe 10 years ago, Acostera had an ongoing relationship with NASA from the U.S. and with an aviation company where we evaluate the probability of converting biofuel into fuel. converting castor oil into jet fuel. And we succeeded to demonstrate that it's really working. This project didn't move forward because, again, there was the decline in the oil price during 2014 and on. And it's a little bit reduced the motivation of the bigger company to move into this direction. So we already have, we already in the past had a collaboration with one of the big airplane manufacturing and NASA, and we demonstrated it can really work. Now we are talking with new companies, new partners. We can't of course disclose the names, but I think that hopefully next year we will advance, maybe even before, but we will advance a little bit faster and maybe this is something that we can disclose. But we already have a nice experience in this field. In a way, we are now continuing what we did in the past and what we stopped, and now I think we are really in a good position to see nice results pretty soon.
Ben Cleave
Okay, great. Thanks, Ofer. One more on Levy, and then I'll get back in queue. I'm wondering if you can comment about the Thrivus performance so far this year, kind of what your expectations were for this product when you entered the year versus how it's shaking out, and then kind of what you're doing to really accelerate Thrivus revenues in 2024.
Evagen
Thank you for this question, and I will ask Amit, Amit, the CEO of Labibio, to address this question.
Generator AI
So Tribal Sales in 2023, again, we're just in the beginning of entering the market, but we saw this year two main things. One is we continued the growth compared to last year, but we've encountered some production challenges that limited the amount of product that we were able to produce this year. We fixed it for next year. Next year, we're supposed to be able to produce a lot more than we did this year to be able to grow the sale. Second thing we're doing is that we got regulatory approval for Canada, so next year we will sell also in Canada, which triples the land area that is addressable for us to sell. Canada is twice the size of the U.S. in our relevant crops. And the second thing that we're doing is that we're advancing to additional crops. We're currently running field trials in different crops, Durham and barley and oats and others. And hopefully next year we'll be able to, in addition to adding another country, add additional crops, and that will enable us to accelerate the sales.
Ben Cleave
Great. Great. Very helpful. Thank you. Well, congratulations on all the progress year to date. Thanks for taking the questions, and I'll get back to you.
Castera
Thank you.
Operator
The next question is from Red Reese from Jenny Montgomery Scott. Please go ahead.
Jenny Montgomery Scott
Good morning, gentlemen. Thanks for the opportunity to ask a question or two. First question, I just want to understand the flow of the cash management on the caster seed part of the business. If you get continued large orders, you have to lay out capital to the entities producing the seeds. And then once the seeds are delivered to the customer, we get paid and reimbursed. What is the timing on all of that?
Evagen
Eyal, can you take this question?
La Vie Bio
Yes, basically there are many pathways to conduct those businesses or those deals. We normally take the responsibility to produce the seeds and bring them to the port, and from that port, whether it is in Latin America or in Africa, the client is responsible for dispatching and taking the goods on his behalf. In terms of the recognition of the revenue and the income, some of it is obviously paid in advance in order to support the production, especially if we talk about substantial production. And later on, once the goods are arriving at the port of the client, we are receiving the final completion of the payment. So that's in terms of the support of the capital to provide the cultivation of the cost.
Evagen
Maybe I will add a little bit more. We have three different sites where we are producing the seed, which this is the product that Castera is selling to its partner. The smallest one is in Israel. Then we have one in Africa, and the other one is in South America. When we collect the purchase order from our partners, then we instruct our subcontractors how much we would like them to grow and produce for us seeds to support the purchase orders. In some cases, yes, we have already some seeds in the inventory, but especially when there is such a significant increase in demand, like that we have been exposed this year, so of course we can't support such a quantity based on existing inventory. So we ask our subcontractors in all of these locations to start to grow the seeds that we are going to distribute to our partners. And, of course, they are using our genomics. They are using our protocols. And we are escorting our subcontractors during the growing season. And after four months, we have the seeds. And then, you know, our subcontractors are doing the harvesting. the dehulling, coating the seeds, packaging them, and then they're ready to be shipped to our partners. And when the seeds are on the way, so then, of course, there is a certain portion of the money that we receive that we transfer the goods at the harbor, and the rest we receive it when the seeds arrive to our customers. So there is a gap between the amount of money that we pay to our subcontractors to produce the seeds, and then we get our rewards with all the margins from our partners after we supply the seeds. So this is how it depends. And the purchase order that we receive, it's not something that our partners can cancel. So in a way, it's like there is a guarantee that we're going to receive the money based on the supply of the seeds in a certain period of time. So this is why we feel comfortable to invest in growing the seeds. And sometimes we even support our subcontractors to strengthen the infrastructure in order to support the high-quality seeds to our partners. And then, in a way, we have a guarantee that we receive the money from our partners when they will receive the seed.
Jenny Montgomery Scott
That was helpful. But in the future, I mean, we're all looking and hopeful that seed orders are really going to explode. Do you have enough existing... working capital you know since there's a lag between the time you get the order and you get paid to uh you know to support this robust sales growth that you know we're all hopeful is going to come so uh for this year one of the reasons that we raised money it was also to support this growing demand in working capital according to our estimation
Evagen
After we will go through this round with the $11 million seed supply and with the current financial position of Evogen, I don't think that we will need additional capital. And maybe if we'll do so based on a purchase order that, you know, we might even, if needed, we can take a loan from the banks, credits, in order to support the seed production. I think that this year we felt that maybe the right thing is to raise money in order to do so. In the future, I intend to believe that or that we will have enough from our internal resources or that if we need to receive some credit from the bank, I believe that this is another option in order to fund the working capital needed.
Jenny Montgomery Scott
Great. Thank you for that answer. Different question. The collaborations you're working on with companies in areas not covered by your subsidiaries, could you share with us, do you have a kind of template of what the structure of these potential deals and collaborations will look like?
Evagen
Yes, I can give you two examples. One ongoing discussion that we have which is advancing nicely, is actually in the area of food tech. And here we are talking about producing protein in plant, protein that today we all consume through eating meat. So we would like to use, there is specific investors and companies that are interested in this field of protein production in plant. to replace a mammalian protein that we are all consuming. So this is one field and here you can imagine that we can use our generator AI technology and also maybe in certain way also campus AI in order to identify the genes, the genomic mechanism that you would like to improve in order to produce those proteins. Another example, it's related to MicroBoost, you know, animals such as the chickens and maybe others they also suffer from different type of problems that you can treat them using microbes and we might enter to some relationship in the field that we are using our microbiome AI tech engine in order to identify microbes that can improve animal health. So this is another example. But there are many other opportunities. You know, this was just a few that currently are under discussion, but there is much more that we are now pushing forward.
Jenny Montgomery Scott
Great. Thank you very much for the opportunity to ask questions, and carry on, sir.
Evagen
Thank you very much. I appreciate it.
Operator
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. There are no further questions at this time. Before I ask Mr. Ofer Chaviv 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 03-9255-901. Internationally, please call 9723-9255-901. Mr. Khabib, would you like to make your concluding statement?
Evagen
Yes, thank you. So thank you all for joining the call today. It was really a tremendous quarter. We all look forward to updating you on our progress in our next call. Thank you.
Operator
Thank you. This concludes Evagen's second quarter 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.
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