Evogene Ltd.

Welcome to Evogen's second quarter 2025 results conference call. All participants are present in listen-only mode. Following management's formal presentation, we will open the question and answer session. You may send questions via chat. Please type your name and company before your question. As a reminder, this conference is being recorded August 19, 2025. 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. This presentation contains forward-looking statements relating to future events and Evogen LTD, the company, may from time to time make other statements regarding our outlook or expectations for future financial or operating results and or other matters regarding or affecting us that are considered forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995, the PSLRA, and other securities laws as amended statements that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements may be identified by the use of such words as believe, expect, anticipate, should, planned, estimated, intend, and potential, or words of similar meaning. We're using forward-looking statements in this presentation when we discuss our value drivers, commercialization, efforts and timing, product development and launches, estimated market sizes and milestones, pipelines, as well as our capabilities and technology. Such statements are based on current expectations, estimates, projections, and assumptions. Described opinions about future events involve certain risks and uncertainties, which are difficult to predict and are not guarantees of future performance. Readers are cautioned that certain important factors may affect the company's actual results and could cause such results to differ materially from any forward-looking statements. that may be made in this presentation. Therefore, actual future results, performance, or achievements and trends in the future 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 our control, including, without limitation, the current war between Israel-Hamas and Hezbollah and any worsening of the situation in Israel. such as further mobilizations or escalation in the northern border of Israel, those described in greater detail in Evogen's annual report on Form 20F, and in other information Evogen files and furnishes with the Israel Securities Authorities and the U.S. Securities and Exchange Commission, including those factors under the heading Risk Factors, except as required by applicable securities laws. We disclaim any obligation or commitment to update any information contained in this presentation or to publicly release the results of any revisions to any statements that may be made to reflect future events or developments or changes in expectations, estimates, projections, and assumptions. The information contained herein does not constitute a prospectus or other offering document, nor does it constitute or form part of any invitation or offer to sell or any solicitation of any invitation to offer or purchase or subscribe for any securities of Evagen or the company, nor shall the information or any part of it or the fact of its distribution form the basis of or be relied on in connection with any action, contract, commitment, or relating thereto or to the securities of Evogen or the company. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of our products or services. With us on the line will be Ofer Khabib, President and CEO of Evogen and Yaron Eldad, CFO of Evogen. Now I will turn the call over to Ofer Khabib. Mr. Khabib, please go ahead.

Hello, everyone. Thank you for joining Evogen's second quarter 2025 analyst call. Today, I will provide an overview of significant developments during the second quarter and through August, resulting from the strategic transition we announced earlier this year. I will also share our outlook for the remainder of the year. Following my remarks, our CFO, Yaron Eldad, will present the financial results and we will then open the call for questions. I will start with the financial highlights. In reviewing our financial results for the first half of 2025, it's important to note that LaviBio, Evogen's subsidiary, and MicroBoost AI for ad operations are presented as a single line item in the consolidated profit and loss statements. This appears under the line titled loss from operations hold for sell net. This accounting treatment follows the intention to sell the majority of LaviBio's activity and the MicroBoost AI for Ag as of June 30, 2025. Moving to revenue performance. Total revenues for the first half of 2025 were approximately $3.2 million, compared to $2.3 million in the first half of 2024. This increase was primarily driven by a strong seed sale from our subsidiary, Castera. In addition, during the first half of the year, Evogen initiated and executed a cost reduction plan. Most of this plan was completed by the end of the second quarter. While the financial impact is partially reflected in our first half results, we expect to see the full benefit of these reductions in the second half of 2025. Turning to our operation expenses, research and development expenses for the first half of 2025 were approximately $4.8 million compared to approximately $6.5 million in the same period last year. This decrease is primarily due to reduction in R&D activities at Biomica and the discontinuation of operation at Canonic. Sales and marketing expenses totaled approximately $800,000 in the first half of 2025, down from approximately $1.1 million in the first half of 2024. The reduction reflects lower headcounts across several of our subsidiaries. Overall, total operating expenses net for the first half of 2025 were approximately $7.7 million, compared to approximately $11.1 million in the same period last year. This significant decrease is mainly attributed to the reduced level of activity in our subsidiaries. As of the end of the first half of 2025, Evogen's cash and short-term bank deposit stood at approximately $11.7 million. It is important to note that this cash balance does not include the expected proceeds from the sales of LaviBio's assets and the MicroBoost AI for AgTech engines to ICL. This transaction was completed during the third quarter of 2025. Avogen is currently undergoing a strategic shift focused on maximizing the value of campus AI, our proprietary platform for AI-driven discovery and optimization of small molecules in both the pharmaceutical and agriculture industries. As we shared earlier this year, our strategic priorities include strengthening campus AI as core asset, expanding collaboration efforts in small molecule drug discovery, integrating at Plenus, our subsidiary focused on crop protection product development Based on small molecules into Evergen and expanding its business collaborations. Enhancing cash flow primarily from our subsidiaries and streamlining operational expenses across Evergen and its subsidiaries. We executed several impactful actions aligned with this strategy during the second quarter and through August. With respect to the strengthening our campus AI, in June, we announced the completion of version one of our first-in-class generative AI foundation model for small molecule design developed in collaboration with Google Cloud. This model significantly enhanced campus AI's capability by addressing a major challenge across pharma and agtech, the identification of novel molecules meeting multiple complex criteria. Trained on a proprietary data set of approximately 38 billion molecular structures and deployed on Google's advanced AI infrastructure, This model lays the groundwork for continued technological leadership and future product development. As part of our efforts for collaboration in pharma, last week we announced a collaboration with Professor Ehud Gazit from Tel Aviv University, a global expert in biomolecular self-assembly to develop a small molecule therapeutics targeting disease caused by the accumulation of metabolites such as gout and PKU. This collaboration leverages campus AI to identify novel compounds that inhibit the self-assembly of metabolites, a promising and largely untapped therapeutics area. To align our operation with the new strategic direction and as part of the integration of ActPlanus activity into Evogen, we implemented significant organizational change, including a reduction of over 40% in headcount at ActPlanus. We expect this change to allow for a more effective use of campus AI to enhance ActPlanus pipeline. The most important event that took place since our last analyst call was the transaction with ICL that significantly enhanced our cash flow. In April, we announced the sale of most of LaviBio's activity to ICL for a total consideration of $15.25 million. In addition, Avogen MicroBoost AI platform for agriculture was sold to ICL for $3.5 million. As part of the transaction, LaviBio redeemed the safe investment, which was made by an ICL affiliate. This transaction was completed in July and generated cash for Evogen, both directly through the sale of MicroBoost AI for Ag, and indirectly through dividends as Evogen remains a major shareholders in LaviBio and preserve the upside from an continuing collaboration agreement between LaviBio and one of its existing partner, which is excluded from the transaction. As I stated, our strategic priorities included streamlining operational expenses across Evogen and its subsidiaries. I would like to share with you the steps taken in Biomica and Evogen. In the second quarter, we began a streamlining process at Biomica, which included a significant workforce reduction and organizational change at the management level. During this time, Mr. Elran Hever, CEO of Biomica, stepped down from his role due to health reasons. We extend our best wishes for his full and speedy recovery. In the interim, I have assumed direct responsibility for overseeing Biomica's operations. Biomica is now focused on two key goals. completion of its clinical trial expected in early 2026, and securing partners to take the lead on its development programs. As of now, Biomica holds approximately $4 million in cash, enough to complete the clinical trial. We will share more updates as progress continue. With respect to Evogen, to support our new strategic focus, we implemented major organizational structuring, which included workforce reduction of approximately 30%. As stated, the effect of this organizational streamlining will be reflected in our financial report starting the third quarter of 2025. In addition to this impactful action, we succeeded in strengthening the company's financial position by offering new shares supporting our ability to implement our strategy over time in june we successfully raised 4.4 million dollars through our at the market facility with lake street capital market at an average price of approximately $2.31 per share based on our shelf registration. We have no further capacity under this ATM facility. The offer met with strong investor interest, signaling confidence in our strategic direction. Combined with the LaviBio transaction I have already described, we now have a solid financial foundation and operational runway of approximately 18 months. Let me now outline our expectation for the remainder of 2025. As stated earlier, our new strategy centers around a single computational engine, our campus AI platform for accelerating small molecule based innovation. Our primary target is to continue investing in the unique offering of our engine cutting edge. To maintain our competitive edge, we intend to continue advancing our technology, including partnership with global tech leaders, such as Google, and elevating our platform performance to new heights. We intend for this platform to serve two key verticals. Pharma, for the discovery and optimization of small molecules therapeutics. Agriculture, for the development of crop protection products. With respect to the pharma vertical, the collaboration engagement with Tel Aviv University is part of a broader plan to establish Evogen's partner ecosystem in pharma across academic and industry in Israel and internationally. This is the first of several such initiatives we are currently advancing. We will establish a dedicated business development arm led by a senior executive to accelerate growth in the pharma vertical. In agriculture, we will continue to operate through Agplanus, which maintains strategic collaboration with Bayer and Corteva. We anticipate further growth in this area, including new partnerships later this year with both existing and new partners. Now let's continue with our expectation for our other subsidiaries in line with our strategic focus. LaviBio. Following the sale of the majority of the company's activity, LaviBio will maintain only its existing collaboration agreement with its existing partner and is expected to distribute funds to its shareholders with Evogen as the majority holder. No additional activity are expected. Biomica is expected to complete its clinical trial in early 2026 and continue efforts to secure partners to lead its current development programs. No additional activities are expected. Our plans for Castera, our wholly owned subsidiary, offering an integrated solution for growing castor as a feedstock differ from our other subsidiaries. Even though it's not directly tied to our strategy and core technology, we intend to continue supporting the company's activity in the future. Over the past few months, Castera has began entering new markets and marketing channels, and we see strong potential in its operations to build a sustainable revenue stream. The company is advancing multiple business initiatives and we will update you as these develop. In summary, we are progressing steadily with the execution of our new strategy. The step taken this quarter reflect a clear commitment to focus operational discipline and long-term value creation. Beginning in September, I will have the honor of presenting Avogen's update corporate strategy at selected industry conferences and professional events. I encourage you to follow our official publications for updates, and I would welcome the opportunity to connect with you at these engagements. We will continue to keep you, our shareholders, partners, and analysts informed as we advance toward our goals. Thank you for your continued support. Yaron Eldad, Evogen CFO, will now present our financial results for the second quarter. Thank you.

Thank you, Ofer. consolidated cash, cash equivalents, and short-term bank deposits of approximately $11.7 million. The consolidated cash usage during the second quarter of 2025 was approximately $2.4 million. Excluding Navibio and Biomeka, Evogen and its other subsidiaries used approximately $1 million in cash during the second quarter of 2025. Revenues for the first half of 2025 were approximately $3.2 million compared to approximately $2.3 million in the same period the previous year, reflecting an increase of approximately $0.9 million. This increase was primarily driven by higher revenues recognized by Castera, attributed to seed sales on the first half of 2025, partially offset by a decrease in ag planus revenues, mainly due to revenues from a licensing agreement with Bayer recognized in 2024. Revenues for the second quarter of 2025 were approximately $0.9 million, a slight increase compared to approximately $0.6 million in the same period last year. Research and development expenses net of non-refundable grants for the first half of 2025 were approximately $4.8 million, a decrease of approximately $1.7 million compared to $6.5 million in the first half of 2024. The decrease was primarily due to reduced R&D expenses in Biomeka and the cessation of Canonics operation at the beginning of 2024. In the second quarter of 2025, R&D expenses were approximately $2.3 million, down from $2.9 million in the same period of 2024. This decrease is mainly attributable to the decreased expenses in Biomica and Castella. Sales and marketing expenses for the first half of 2025 were approximately $0.8 million. a decrease of approximately $0.3 million compared to approximately $1.1 million in the same period last year. The decrease was mainly due to reductions in Evergen, Agplanus, and Biomica's personal costs. Sales and marketing expenses for the second quarter of 2025 were approximately $0.4 million, reflecting a decrease of approximately $0.2 million compared to approximately $0.6 million in the second quarter of 2024. The decrease was mainly attributable to reduced expenses in Evogen, Biomeca and Ad Planus as mentioned above. General and administrative expenses for the first half of 2025 decreased to approximately $2.3 million from approximately $2.9 million in the same period last year. The decrease is mainly attributable to lower personnel costs in Evergen, a decrease in DNO insurance costs and lower non-cash compensation expenses in Castera, Biomica and Alplanus. General and administrative expenses for the second quarter of 2025 decreased to approximately $1.1 million compared to approximately $1.4 million in the same period of the previous year. mainly due to decreased expenses in Evergen as mentioned above. Other income of approximately $191,000 was recorded in the first quarter of 2025 as part of the accounting treatment related to a sublease agreement. The decision to cease Canonics operation in the first half of 2024 resulted in other expenses of approximately $0.5 million primarily due to the impairment of fixed assets recorded in the first quarter of 2024. The operating loss for the first half of 2025 was approximately $6.1 million, a significant decrease from approximately $9.4 million in the same period of the previous year, mainly due to decreased operating expenses as mentioned above. The operating loss for the second quarter of 2025 was approximately $3.1 million, a decrease from $4.6 million in the same period of the previous year, mainly due to decreased operating expenses as mentioned above. Financing income net for the first half of 2025 was $732,000 compared to financing income net of $373,000 in the same period of the previous year. The increase is mainly associated with accounting treatment of pre-funded warrants and warrants issued in August 2024 fundraising. As a result, during the first half of 2025, the company recorded net financial income related to pre-funded warrants and warrants of approximately $663,000. Financing expenses net for the second quarter of 2025 were $393,000 compared to financing income net of $97,000 in the same period of the previous year. The decrease is mainly associated with accounting treatment of pre-funded warrants and warrants issued in August 2024 fundraising. Loss from operations held for sale net for the first half of 2025 was approximately $2.2 million compared to approximately $0.8 million in the same period of 2024. For the second quarter of 2025, the loss from operations held for sale net was approximately $1.2 million compared to approximately $1.4 million in the second quarter of the previous year. These amounts mainly reflect the financial results of LaviBio and expenses related to the development and maintenance of MicroBoost AI for Ag which are presented as a single-lined item in the consolidated statements of profit and loss. This accounting treatment follows the intention to sell the majority of Levy Bio's activities and the MicroBoost AI for Ag as of June 30, 2025. All prior periods amounts were reclassified to conform to this presentation. The net loss for the first half of 2025 was approximately $7.7 million compared to approximately $9.8 million in the same period last year. The $2.1 million decrease in net loss was primarily due to decreased operating expenses and increased financing income, net, partially offset by the increased loss from operations held for sales, net, and reduced revenues, The net loss for the second quarter of 2025 was approximately $4.7 million compared to approximately $6 million in the same period last year. The $1.3 million increase, decrease in net loss was primarily due to decreased operating expenses, decreased loss from operations held for sale and increased revenues partially offset by increased financing expenses