Welcome to Evogene's First Quarter 2017 Results Conference Call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded May 17, 2017. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evogene'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 Evogene. I encourage you to review Evogene's filings with the U.S. Securities and Exchange Commission and read the note regarding forward-looking statements in their earning releases, which states that statements made in those earning releases 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. 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 Evogene and may cause actual results to differ materially from anticipated results. Evogene 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 Haviv, Evogene's CEO. Ofer, please go ahead.

Thank you and good day everyone. We appreciate you joining us today for our first quarter 2017 conference call. With me today is Alex Taskar, our CFO. My comments today will focus on the recent progress we have achieved, in both our collaborative and internal key product programs. This progress, includes an overall key corporate initiative, to expand our capabilities and activities at the discovery phase, and into the early and even advanced development phases. This initiative is anticipated to result in both significantly increased commercial opportunities, and the ability to obtain a greater share of revenue from the developed product. Following my comments, Alex will discuss our financial results for the first quarter of 2017. We will then open the call for your questions. With that, let's review some of the recent progress we have made in each of our three core business areas, Ag-Biological, Seed Traits, and Ag-Chemicals. I will begin with Ag-Biological, a field based primarily on microbials of plant extract based product. Ag-Biological products are increasingly being adopted by farmers to supplement existing seed and protective chemicals solutions. Currently, we are focusing our Ag-Biological efforts on the development of microbial based biostimulants, that address yield, drought, and plant health challenges. We are also involved in an activity for the development of microbial based biopesticide, that address various insect and fungi control, manage through our collaboration with Marrone Biotechnology Innovations. With respect to our internal biostimulant program, late last year, we disclosed that we had achieved positive initial free trial results in corn under drought conditions. Results demonstrating, both increased efficacy and stability. Today, I am pleased to disclose that Evogene is now undertaking second year field testing in corn for approximately 20 promising microbial strains, in order to further validate performance of this strain, as well…

Thank you, Ofer. Let me begin with reviewing our balance sheet. Evogene continues to maintain a strong financial position with $83.4 million in cash, cash related accounts and bank deposits as of March 31, 2017, which represents a decrease of $4.8 million from December 2016. With respect to cash use, viewing the currently expected course of business, and no new revenue sources from existing or new collaboration, we continue to estimate that our net cash usage for the full year 2017 will be in the range of $16 million to $18 million. Let's now turn to statement of operations; to-date our reported revenues consisted primarily of research and development revenues, reflecting R&D costs for investment and our collaboration agreement. Looking forward, we expect the main contributor for revenues in profit will be milestone payment, royalties or other form of revenue sharing from our current and future collaborations. Specifically, total revenue for the first quarter of 2017 was $0.7 million compared to $2 million for the first quarter of 2016. The decline in revenues reflect the net decrease in research and development cost to investment, in accordance with the old plan under Evogene's various collaboration agreement. This decline is mainly due to the advancement of our collaboration agreement with Monsanto from gene discovery to pre-development efforts, resulting in a reduction of activity scope. As we look forward, we expect this revenue trend to continue. Our cost of revenue consists of collaboration related R&D expenses. Therefore, the decrease in cost of revenues to $0.6 million in the first quarter of 2017 from $1.5 million from the same period in 2016, relates mainly to the decrease in revenues from such period and the specific terms for investment according to each relevant agreement. Moving on as Ofer described, we continue to increase our investment…

[Operator Instructions]. The first question is from Christopher Parkinson of Credit Suisse. Please go ahead.

Hi. Good morning everyone. This is Graeme Welds on for Chris. I just had two quick questions, one on genome editing; this has been a hot topic in the industry and I am just curious, Ofer, you could go -- you offered some color, and I am curious if you could just speak a little bit more about how you are thinking about investing and developing this technology across the platforms that you already have? How does that affect your cash spend, and what do you think are kind of the challenges to getting up to speed there, and also, how Evogene will compare to some of the other larger players we are participating in growing this technology?

Hi Graeme, this is Ofer. Thank you for this question and I agree with you that genome editing is quote evolutionary technology that allowed the industry to develop innovate a better and new type of product. I think that the most important thing to understand, when you are talking about genome editing, is that there is two questions that you need to address, in order to develop an improved Seed Trait. The first question is, what is the change need to be done, in order -- in the genomics itself, in order to improve the trait? And the second is how, how you are doing this change? So genome editing is a technology that address the second question, how to do the edit. And Evogene, from its initiation, was focusing mainly on the question, what is the edit or what is the change needed to be done, in order to improve the trade. So if in the path [23:52], we can utilize our technology, which answers the question on what is the change that needs to be done, through what is called a genomic transformation, meaning to insert gene using other [ph] bacteria into the plant genome. So today, we can utilize our technology, leverage our understanding what is the right edit, using the new approach, which is that genome editing. So from my perspective, this new technology can be implemented in the majority of our program, that are focusing on improving Seed Trait, with maybe one exception, that genome editing, the major advantage is when you are talking about changes, they are not very significant. It could be a few [indiscernible] seed that you want to change in the genome, when usually there is few hundred of [indiscernible] in each gene, already in a way, maybe you want to…

Got it. Thanks a lot for that. That was actually really helpful. And so then just one more quick question for me is just, you have been making -- approach other company towards kind of moving your operations a bit more downstream. I am just kind of curious as to, what has that process been like for you guys? What have been kind of the growing pains into moving into that area, and ultimately, what are some of the greatest sort of partnerships that you expect to potentially arise from your move more into the developmental path? And of your three kind of key business areas, where do you see the greatest opportunity there?

Okay. So first, maybe towards to emphasize that, we select very carefully, the area that we want to move to the early development phase or maybe even to advanced phase. It's an area, where we believe, Evogen with its growing budget and capability, we can manage this type of volume and budget needed. I can give an example, in case of yields [indiscernible], where the validation of hundreds of genes like Monsanto do for a company like Evogene, it will be too expensive -- I mean, in such a type of activity, we will prefer to do the early development phase, using our partners skills and budget. But in cases like insects control, where after a relatively short period of time, you are focusing on a very small number of genes, or also in chemistry, that again after a set of screening systems, which are not very expensive, you are focusing on a much more smaller number of molecules. This is the type of products program that I can envision Evogene with its current budget, can support early development, and in some cases even advance development. And maybe I should even refer to advanced development, we are planning to do it, mainly for now only, in Ag-Biological type of products, because over there, the whole infrastructure and also the budget we estimate, is something that we can handle internally. So this is first how we judge what area to move into the early development, or maybe even advanced development. And in all cases, it's something that we believe that we can support from various perspectives. What does it mean from the commercial terms? It could be quite significant; because, actually it reduced a significant portion from the risk, from your partners and you are in a much more advanced stage in the product process. As an example, in Ag-Biological, it's very nice to find the right bacteria that can improve the trait, improve yields, as an example, biostimulant. But another very important question is, do you know how to -- what is the right way to do the fermentation. So this is a type of additional knowledge, that if you bring to your partners, it reduces significantly the risk of reaching to the product with this new technology. And of course, it should be reflect in the commercial terms that you will receive it.

Got it. Thanks for that. Very helpful.

The next question is from Brett Wong of Piper Jaffray. Please go ahead.

Hey, thanks for taking my questions. Ofer, I just wanted to ask a continued question on your last comment around the improvements in your collaboration, given the more focus -- increased focus on more downstream capabilities. Can you share, kind of what -- maybe just generally, what percentage ranges of value capture you see, given this focus more downstream compared to the just discovery?

I think what we disclosed in the past, that in case of Seed Trait, if you deliver genes after the discovery phase, so we are talking about one digit, something more close to the 6%, 5% royalty rate, and if you deliver it in a more advanced stage after a proof-of-concept in [indiscernible] plant, it will be even two digit, something between 12% to 15%. And I think this is quite significant, and I think that also, it can -- again I can't get into the details, because its classified, but you will see a very-very significant change also in Ag-Biological from a bacteria that you -- become evident in a small field trial, compared to a broad field trial, meaning that you also know how good is the formulation and fermentation, especially if you are talking about seed coating. This is a modern double [ph] the royalty or the payment that you can look for.

Great. That's very helpful. And then just wondering, you touched a little bit about this, but maybe, more granularity around the increased costs, you have been more downstream in terms of the fermentation asset building team, that kind of team? And why not work with a lab or something that has these capabilities already in place?

Okay. So we need to make very important distinguish. There is one thing to use a lab to produce a product for -- when in the commercialization phase, meaning to produce a huge quantity. This is something that I don't think that Evogene should do it, actually something that we expect our partner to take responsibility, and I won't be surprised if even he will use a third party to do so. When we are talking about fermentation and formulation, we are talking about in the development phase, meaning that we are doing it in small quantity, just to have that right protocol to know how to do it. We are not going to build a factory to do so. It's a -- we are talking about a team of relatively very small number of people, that need to reach to the right protocol that later on, you will scale it to a commercial level, with a third party. So the budget -- if you can see, the run rate that we see for this year, precedes the same like previously, and I am not expecting to see it increase also in the future, because of us doing development activity. If this is addressing your question?

Yes. Yes I mean -- and I understand that it's not a commercial scale-up. I was just wondering, if there is clearly places publicly, that you already collaborate with, that have these capabilities and the personnel, I was just wondering why not just use what they have. But I understand that and thanks for the color. And then just last for me, I know it has kind of been a short stint since you last updated us, but you provided some nice color on your expectations for the year. Just wondering if you are seeing anything different over the past 2.5 months that changes your focus or your expected progress that you have in mind, that you got over 2017?

Okay. So just one comment regarding the previous question; again, without getting into the details, certain from the bacteria, that we are focusing on today, it belongs to families that you need to develop the protocols for fermentation formulation internally, and this is why we need those people to develop it, because it's not necessarily this type of technology exists among our partners. And this is part of the reason why we believe that also our products are going to make a difference in the market. But it's not just in order to improve the commercial terms, it's also because we are going to generate some unique fermentation and formulation technology for this specific product. But we can -- maybe we can discuss it later on also offline. Regarding what we see; I am quite -- I think that in this call, I can say that I have started to be much more optimistic about the general atmosphere in our industry. I have seen this process of merger and acquisition. In many cases, the big companies are -- there is much more clarity on what's going to happen, and what's going to be the responsibility of each company in the future. And we don't see again, an increase of the activity in research level and interesting to start to talk again on a collaboration. So from my perspective, I think as we start to see a change in the overall atmosphere in our industry, which I think that also would have an effect on ongoing discussions between Evogene and its partners. And this is something that it's -- I started to see it in the last two, three months, but it's getting stronger as time is passing. I think that the fact that there was more clarity about the merger between DuPont and Dow, it has really helped for these two companies to know what they want to achieve. I think that Syngenta and ChemChina is more clear, and I think that also from Evogene's perspective, we are really advancing it in certain area, even faster than what we expected in our internal product program. I am very excited with the results that we have seen in the Ag-Biological, the chemistry and insect control. I am also very excited with our product program in plant disease, for improving Seed Trait. So I am really looking more positive way than I was in the beginning of this year, for the second half of 2017.

Great. Thanks so much.

[Operator Instructions]. There are no further questions at this time. Before I ask Mr. Ofer Haviv to go ahead with his closing statement, I'd 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 1888-295-2634. In Israel, please call 03-925-5937. Internationally, please call 9723-925-5937. Mr. Haviv, would you like to make a concluding statement?

Yes, thank you. I would like to thank you all for your participation on today's call. We look forward to speaking with you again on our next call. Thank you.

Thank you. This concludes Evogene's first quarter 2017 results conference call. Thank you for your participation. You may go ahead and disconnect.