Evogene Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Evagen's fourth quarter and full year 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 March 7, 2024. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evagen's management will constitute forward-looking statements that relate to future events. This investor call contains forward-looking statements relating to future events. These statements may be identified by words such as may, could, expects, hopes, intends, anticipates, plans, believes, scheduled, estimates, or words of similar meaning. For example, Evagen is using forward-looking statement in this investor call when it discusses the further partnerships with industry leaders, increased sales of subsidiary products like Castera's Elite Caster Varieties and Levy Bio's Bio-Inoculant Yalows. Expansion beyond its current sectors, continued revenue growth for the Evagen Group in 2024, potential transfer of Canonix operations to a third party, increased production of Castera, commercialization of Agplanis and Levy Bios products, and the timing and results of the clinical trials and preclinical trials of Biomica's products. Such statements are based on current expectations, estimates, projections, and assumptions, describe opinions about future events, involve certain risks and uncertainties which are difficult to predict, and are not guarantees of future performance. Therefore, actual future results, performance, or achievements of Evagen and its subsidiaries may differ materially from what is expressed or implied by such forward-looking statements due to a variety of factors, many of which are beyond the control of Evagen and its subsidiaries, including, without limitation, the current war between Israel and Hamas, and any worsening of the situation in Israel, such as further mobilizations or escalation in the northern border of Israel, and those risk factors contained in Evagen's reports filed with the applicable securities authority. In addition, Evagen and its subsidiaries rely and expect to continue to rely on third parties to conduct certain activities such as their field trials and preclinical studies. And if these third parties do not successfully carry out their contractual duties, comply with regulatory requirements, or meet expected deadlines, Evagen and its subsidiaries may experience significant delays in the conduct of their activities. Evagen and its subsidiaries disclaim any obligation or commitment to update these forward-looking statements to reflect future events or developments. or changes in expectations, estimates, projections, and assumptions. 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. Today's call will feature Ofer Khabib, President and CEO of Evogen, alongside Yaron Eldad, CFO of Evogen, and Yoash Zohar, CEO of Castera. Additionally, a representative from each subsidiary will be present at the Q&A session. That said, I would now like to turn over the call to Ofer Khabib, President and CEO of Evogen. Mr. Khabib, please go ahead.

Hi, and good day, everyone. In today's conference call, I would like to start with a review of the Evogen Group achievements during 2023 until today and provide you with an update on our activities in as well as potential catalysts during the next 12 months. Following my review, Castera's new CEO, Yoash Zohar, will introduce himself, provide an update on Castera's activity, and outline the company's goals for the coming years. Evogen's CFO, Yaron Eldad, will then provide a financial summary and update. After that, we will open the Q&A session. What a year it's been for the Evogen Group since our last earning call, summarizing 2022. Despite the challenges we are facing collectively here in Israel, this year marked a significant shift in how the industry views our technology and products, translating into growing collaborations with world-leading companies. The number and caliber of partnerships Evogen and our subsidiaries have formed speaks of volumes. LaviBio, partnering with Corteva, ICL, and Syngenta. ActPlanus, partnering with Bayer and Corteva. Castera, partnered with Global Oil and Gas Company. Biomica, securing investment from Shanghai Healthcare Capital. And Evogen, collaborating with Verbiotics and Colors, all highlight our growing presence and impact in the life science industry. This expanding collaboration momentum validates the value of Evogen's AI tech engines, MicroBoost AI, Campus AI, and Generatory AI, relying on our CPB platform, which we have been developing for over a decade. Looking ahead, we anticipate further collaboration with industry leaders directly or through our subsidiaries, an increase in the volume of sales of products by our subsidiaries, such as Castera's elite cultural varieties and La Vie Bio's bio-inequivalent Yalos, and expanding Evogen's reach behind its current sectors of activity. These efforts not only validate our contribution, but also strengthen our financial position through non-dilutive funding and revenue streams from upfront payments R&D fees, milestones, and direct product sales, as reflected in the revenue the company reports today, totaling approximately $5.6 million, compared to approximately $1.7 million in 2022. We expect to see continued growth in the Avogen Group revenue in 2024. As we have new listeners on today's call, I would like to briefly review Avogen's core technology and our value proposition. Avogen has been using its computational predictive biology platform, the CPB, to direct and accelerate the development of life science-based products. The CPB is at the foundation of our three AI tech engines, MicroBoost AI, supports the development of microbe-based products. Campus AI supports small molecules-based products. And Generator AI supports products based on genetic elements. Our AI-driven tech engines aim to tackle the main challenges in life science product development, candidate discovery, and optimization. Identifying winning candidates from a vast number of prospects and meeting complex criteria for successful commercial products. The value proposition of our AI-driven tech engines stems from the efficient finding of the needle in the haystack, therefore increasing the probability of the success within a competitive timeframe and in cost-efficient manner. After reviewing our technology, on to our business model. Our business model revolves around two main strategies for leveraging our AI technology. Licensing. Evergen offers time-limited license to third parties, such as our subsidiaries or related entities, allowing them to use our tech engines for product development within a specific commercial domain. This model typically generates revenue through license fee, R&D reimbursement, but more importantly, dividends to Evogen as a shareholder, or significant one-time payments upon an exit event, particularly if Evogen is a major shareholder. Collaborations. Evogen collaborates with industry leaders to jointly drive product development. In these ventures, our partners often take the lead in later stage development and commercialization, while we contribute our unique tech engine to identify and optimize product candidates. Revenue from this model usually came from upfront payment, R&D fees, and royalty from sales of future end products. As of now, we are commercializing MicroBoost AI through licensing agreements with LaviBio for ag-biological and with Biomica for human microbiome-based drugs development, and Avogen is also collaborating with Verbiotic to develop probiotic products. Campus AI is commercialized through a license agreement with our subsidiary, Agplanus, for ag-chemical product development. Generator AI is commercialized through license agreement with Castera, for castor seed varieties, and Canonic for medical cannabis products. Evogen is also collaborating with ColorPharm LTD on crustacean gene editing technology through Generator AI. I would like now to review in more detail the collaboration that Evogen is engaged in with third parties, and then briefly review the main achievements of our subsidiaries. At the beginning of February 2024, we proudly announced a partnership between Avogen and Verbiotics, an innovative probiotics company. Our collaboration with Verbiotics allows us to tap into the growing probiotics market using Avogen's MicroBoost AI tech engines. Together, we are working on identifying and designing probiotic bacteria that produce highly sustainable quantities of microbial metabolites known to improve human health and vitality. With the probiotics market projected to double to around $114 billion by 2031, we are seizing the opportunity to revolutionize this industry and provide cutting-edge solutions for consumers worldwide. Earlier this year, we reported collaboration with Colors Farm and Ben-Gurion University to pioneer castration gene editing technology, aiming to enhance castration traits. The collaboration is powered by a grant from the Israel Innovation Authority and utilized Evogen's generator AI tech engine. Another milestone worth mentioning is that our AXI division secured a 1.2 million euro grant to develop oilseed crops with enhanced CO2 assimilation and drought tolerance. The program known as the EIC 2022 Horizon Program supports business addressing climate focus and sustainable crop development. In this program, we utilize Evogen Generator AI tech engines capabilities as well. These partnerships exemplify our business approach and demonstrate how we use our tech engines to bring innovative products to market in sectors not covered by our subsidiaries. It's important for me to emphasize that all of these collaborations are all generating revenue to Evogen. Now, let's review our subsidiaries' achievements. I would like to start with Castera, Evogen's fully-owned subsidiary, which focuses on developing an integrated solution to enable large-scale commercial cultivation of castor beans, benefiting from its unique elite seed varieties, utilizing generator AI tech engines. Castera's solutions aim to address the global demand for a stable castor oil supply mainly for the biodiesel industry. The past year was pivotal for Castera. Its vision of becoming a significant player in the biodiesel industry progresses with a seed order from a world-leading oil and gas company totaling $11.3 million for caster cultivation in Africa. In September, Castera successfully delivered its first shipment of high-yield, high-oiled castor seeds from Brazil and Zambia to an African region, generating revenue of approximately $1 million. Established earlier this week, the company recently signed agreements with existing and new seed producers in Brazil and Africa to increase its production capabilities of castor seeds in 2024 which are expected to add approximately 400 tons. This new agreement will enable the company to support the existing seed orders. Looking forward to 2024, Cacera is committed to expanding its castor seed production capacity through securing agreement with additional subcontractors in Brazil and Africa, on which we expect to update. Finally, on January 2024, we welcomed Yuash Zohar as Castera's new CEO, who will later present himself. Yuash brings a wealth of experience in global ag projects, and I'm confident in his ability to propel the company forward. I wish him and the rest of Castera's team good luck. Now, I would like to review our wholly-owned subsidiary, Agplanus, aiming to discover next-generation innovative crop protection products, including herbicide, insecticide, and fungicide, and commercialize them through collaboration with world-leading partners. Actlanus utilized Avogen Campus AI tech engine to accelerate and direct its product development. Major agrochemical companies dominate today's crop protection industry. Still, They look to smaller agtech companies to discover new target proteins and small molecules that inhibit such target proteins, serving as the active ingredient in commercial crop protection products. Agplanus is the company that addresses this need. As I stated in the previous call, there is a growing interest in Agplanus product pipeline. And recently, we were fortunate to see that interest materialize. In February 2024, AgPlanus announced the signing of a licensing and a collaboration agreement with Bayer's crop science division. Under the agreement, AgPlanus will use its AI-driven computational modeling technology to design and optimize the molecules identified for their broad-spectrum herbicidal activity, targeting the APTH1 protein, a new mode of action identified by Acplanus. Bayer will have the exclusive license for developing and commercializing products developed within the collaboration. Acplanus will be entitled to receive an upfront payment, ongoing research funding, milestone payment, and loyalty based on future product sales. Another impressive and important announcement was the milestone achievement in the ongoing collaboration with Corteva for the development of novel herbicides. The milestone marked the successful identification of a new family of molecules exhibiting herbicidal effect through a novel mode of action, APCO12, discovered by Agplanus. In the next phase, the collaboration will optimize the identified molecules toward commercial-level products, utilizing Agplanus cutting-edge computational technology powered by Evogen's campus AI tech engine. These two collaborations strengthen Agplanus' financial position and overall perceptions in the agriculture market. Last but not least, we introduced Dr. Dan Jacob Gervan as ACK Planus' new CEO. Dan's extensive experience and proven track record well positioned him to guide ACK Planus through its next phase of growth and innovation. ACK Planus' former CEO, Dr. Brian Ember, has transitioned to Chief Business Officer. I would like to thank Brian for his contribution and leadership to Agplanus, and I look forward to continuing our work together in his new role. Agplanus is looking towards an exciting year with new management in place, the collaborative agreements signed with Bayer in February, and the milestone reach in the Corteva collaboration in March. 2024 is looking bright for the company. Alongside those, ACK Planus will continue to advance its pipeline based on the campus AI tech engine and seek additional collaboration with existing and new partners. I would like now to continue with the two subsidiaries using MicroBoost AI to accelerate and direct their product development, Biomica and LaviBio. Biomica, specializing in developing microbiome-based therapeutics for human health utilizing Evogen's MicroBoost AI tech engine to discover and optimize microbes with therapeutic potential. In April, 2023, Biomica completed a $20 million financing round with Shanghai Healthcare Capital investment of 10 million. This investment made at the post-money valuation of $50 million, serve as an external validation of Biomica's long-term potential. Biomica's flagship product candidate, BMC128, targeting immune oncology patients, is currently undergoing phase one clinical trials. The trial, initiated at the Rambam Healthcare Campus in Israel, aims to assess BMC128 safety and durability in combination with Bristol-Myers Squibb's Optivo Immune Therapy. In August 2023, Biomica expanded its operations by opening a second site at the Davidov Cancer Center in Israel to facilitate additional patient recruitment for the clinical trial. In January 2024, Biomica reached a significant milestone by completing phase one trial enrollment for its microbiome-based immune oncology drug with preliminary results showing promising outcomes. Initial data point readout is anticipated during 2024. In July 2023, Biomica reported positive interim results from preclinical studies on its IBS program conducted in collaboration with Professor Hira Gross-Margolis' lab at New York University. These results demonstrate the efficacy of Biomica's live bacterial consortia, BMC426 and BMC427, alleviating visceral pain, a major symptom of IBS, presenting promising new treatment avenues. Biomica intend to conduct further preclinical studies on BMC426 and BMC427 to prepare for clinical trials. Looking ahead, Biomica remains committed to addressing its efforts and aims to submit an IND application for BMC128 targeting immune oncology patients during the third quarter of 2024, a pivotal step in preparing for Phase II clinical trials in the US. In addition, the company will continue to advance its candidates in the IBS and IBD programs towards Phase I clinical trials. Now to Lavi Bio, who leverages Evogen's MicroBoost AI tech engine to develop next-generation agri-biological products. In addition to Evogen's majority ownership, La Vie Bio has two additional major shareholders, Corteva, a New York-listed multinational ag tech giant, and ICL, a New York-listed global mineral and an ag tech company. In July 2023, La Vie Bio entered a licensing agreement with Corteva conferring exclusive rights to Corteva for advancing and commercializing La Vie Bio's lead biofungicide Lab 311 and Lab 312, targeting fruit rots. This agreement followed two years of independent field validation trials conducted by both companies. Under the agreement, La Vie Bio received an initial payment of $5 million and will also be eligible for additional future milestone payments and royalties from Corteva's future sales of the product. Another major step for La Vie Bio was the recent announcement in February 2024 of the agreement with Syngenta for the discovery and development of new biological insecticidal solution The collaboration will leverage LaVieBio's unique technology platform to rapidly identify and optimize bioinsecticide candidates. These two collaborations strengthen LaVieBio's financial position and overall perception in the agriculture market. Now, let's move from collaborations to product sales. LaVieBio's first bioiniculant product, Yalos, achieved several impressive milestones. In May 2023, YALS obtained regulatory approval from the Canadian Food Inspection Agency, expanding its territory significantly and tripling its reach. In November 2023, YALS expanded its scope to include Durham and barley varieties across the U.S. and Canada. This expansion followed successful field trials in 2023, demonstrating an average of approximately 7% of yield increase in Durham and Barley. In December 2023, La Vie Bio secured an exclusive distribution agreement with Winfield United Canada for Yalos Aiming to drive sales growth in key Canadian agriculture regions, including Saskatchewan, Alberta and Manitoba, the focus of the distribution agreement is on spring wheat, Durham and barley crops. Overall, YALOS made significant strides in regulatory approval, product expansion and distribution partnership, positioning it as a valuable tool for enhancing crop productions and addressing environmental challenges in the agriculture industry. Looking forward to 2024, LaviBio will continue to focus on three main pillars. The first will be to grow the sales and distribution of the company's bio-equivalent product, Yalos, in the US and Canada. The second is to continue driving the company's pipeline of innovative product toward commercialization, including special focus on the company's strategic partnership with Corteva, ICL, and the recent one with Syngenta. The last pillar will be to continue advancing the company's unique technology platform, the BDD, powered by Evogen MicroBoost AI tech engine, with new tools and capabilities. Finalizing my review of our subsidiaries, I would like to update on Canonic, which provides tailored medical cannabis products. Following my previous update in Q3 2023, in which we noted that we have decided to reduce our investment in Canonic due to the challenging market conditions of the medical cannabis sector, we have recently engaged in advanced discussions relating to the potential transfer to a third party of Canonix operations. There is no assurance that such transfer will be completed or on what terms. We will continue to update you on this matter. No doubt, 2023 was an exciting year for the Erbogen Group, filled with achievements. Looking forward to 2024, we expected to see continued growth and additional collaborations benefiting from Evogen 3 AI tech engine. We ended 2023 with a solid cash balance of approximately $31.1 million and are expecting additional cash injections from collaborations and product sales. This concludes my review of the Evogen Group activities. Now, Yoash Zohar, Castera's new CEO, will take the lead.

Thank you, Ofer, and good day, everyone. I would like to start by thanking the exceptional team at Castera for welcoming me during this pivotal moment for the company and expressing my sincere gratitude to the Evogen management for their support. As we face the challenges ahead, I'm filled with optimism, driven by the great potential I see in Castera. Ensuring a reliable and stable supply of custard seeds is crucial in meeting our customers' demands while contributing positively to local economies. Our recently signed agreements with seed producers in Africa and Brazil strengthen our supply chain and mark a strategic change towards diversifying our production sources. I believe Evogen's innovative AI technology will play a crucial role in shaping the future of castor seeds, solidifying Castera's position as a world leader in the field. Together, I am confident that we will leverage this technology to maintain Castera's competitive edge and achieve unparalleled success in the global market.