Ladies and gentlemen, thank you for standing by. Welcome to Evogene's Third 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. [Operator Instructions] As a reminder, this conference is being recorded November 15, 2023. 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 today's earnings release, which states the 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, Evogene is using forward-looking statements in this call when it discusses the additional orders for Casterra's castor seeds and new collaborations to generate cash flow for the group, Biomica enhancing in preparing for our pre-IND meeting for BMC128 expected tests of LAV312 in fields trials by several multinational companies and Casterra's ability to mitigate production risks and to retain additional seed production subcontractors. 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 through or 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. Starting the call today is the President and CEO of Evogene, Ofer Haviv, joined by Evogene's CFO, Yaron Eldad. That said, I would now like to turn the call over to Ofer Haviv, President and CEO of Evogene. Mr. Haviv, please go ahead.

Thank you, and good day, everyone. Today, I will review Evogene's activities, our financial stabilities and recent achievements. I will also provide an update on Evogene's potential catalyst expected in the near future. I will discuss some of our subsidiaries recent accomplishments and their positive impact on Evogene. Bear in mind that our subsidiaries leverage evidence technology as their main competitive advantage and their accomplishments demonstrate the power and the value of our AI driven tech engines underlying their product development process. But first, I would like to start with a personal note in life of the war with Hamas. The recent events in Israel, starting October 7, 2023 have brought significant changes to our nation. We find ourselves at the time of profound reflection. Our hearts go out to all those directly and indirectly impacted by those evil acts. We pause to remember and honor the memory of [indiscernible], a cherished member of the Evogene Group and his wife [indiscernible], who tragically lost their life during this brutal attack on Israel. May their souls rest in peace and may their memory serve as a reminder of our people's enduring strengths and resilience. I want to emphasize [ph] the deep loss only deepens our results to succeed and thrive and carry our business forward getting back to Evogene's ongoing operations status amidst those challenges. Together with our subsidiaries, we stand strong in our commitment to innovations and progress. Our strategic focus remains strong and our dedicated team continues to work tirelessly to achieve our objectives for 2023 and set the course for 2024. I would now like to review Evogene's positive financial status, beginning with our cash balance across Evogene and its subsidiaries and our new terms financing strategy. As of the end of the third quarter, Evogene had a…

Now I would like to review the main achievements of our subsidiaries in the last few months, who as part of their competitive advantage are all using Evogene's tech-engines under exclusive license for their product development. I would like to start with the two subsidiaries using MicroBoost AI to accelerate and direct their product development, Lavie Bio and Biomica. Lavie Bio is at the forefront of next generation ag-biological products with Evogene as its majority shareholder. It's worth noting that Lavie Bio has two additional significant shareholders; Corteva, a multinational Ag-tech leader and ICL, a global mineral and Ag-tech company. Behind their equity investments both Corteva and ICL are actively engaged in collaborative efforts with Lavie Bio to innovate and develop novel agriculture biological solutions. In July, Lavie Bio announced that it entered another licensing agreement with Corteva. The agreement grants Corteva exclusive rights to develop further and commercialize two of Lavie Bio's lead bio-fungicide product candidates, LAV311 and LAV312, targeting fruit-rots. The agreement follows three years of independent field validation trials conducted by both companies. Under this agreement, Lavie Bio was set to receive an initial payment of approximately $5 million in two installments. The first payment of $2.5 million was already received in September 2023 and the second payment is expected in the first quarter of 2024. Lavie Bio will also be eligible for additional future milestone payments and royalty from Corteva's sales of these future products. This collaboration with Corteva not only strengthen Lavie Bio's financial position, but also significantly enhance its overall perception in the Ag market. Furthermore, the revenue generated from this collaboration mitigates the need for external financing, further solidifying Lavie Bio's financial stability and ability to continue advancing its cutting edge Ag-biological products. Last week, Lavie Bio announced significant progress in its bio-fungicide…

Capturing the patient's attention is challenging, leading to price dropping even for premium products. To address this challenge, Canonic is focusing its marketing efforts on the frequent launching of new products in limited batches. During the third quarter, Canonic launched two new products, Tango and Two Aces, and this week an additional product SouthSide, was launched.

Capturing the patient's attention is challenging, leading to price dropping even for premium products. To address this challenge, Canonic is focusing its marketing efforts on the frequent launching of new products in limited batches. During the third quarter, Canonic launched two new products, Tango and Two Aces, and this week an additional product SouthSide, was launched.

AgPlenus is the company that addressed this need and explores partnership with these major industry players. As I stated in the previous call, there is a growing interest in AgPlenus' product pipeline, especially in our lead target protein APTH1 and the small molecules that bind to this protein as a candidate for a noble herbicide with a broad weed control spectrum. We believe that this interest can lead to a collaboration agreement between AgPlenus and a leading industry player. As described, all the subsidiaries are advancing their business targets. As the shareholder Evogene is very proud of this progress. Bear in mind that the subsidiary's success is testimony to the power and value of Evogene's AI tech-engine to accelerate and direct life science best product developments. Looking forward when evaluating the needs of our wholly-owned subsidiaries and the commercial potential of each, we intend to invest more efforts and resources in Casterra since we see significant potential in the biodiesel market which castor oil can support while reducing our investment in Canonic due to the challenging market condition of the medical cannabis sector. With this, I'll pass the call to Yaron Eldad, Evogene's CFO, to review our financial reports for the third quarter. Yaron?

Thank you, Ofer. As of September 30, 2023, Evogene had consolidated cash, cash equivalents and short-term bank deposits of approximately $37.2 million. Biomica accounted for $14.6 million of the sum and Lavie Bio holds $7.1 million. Evogene, together with Casterra, Canonic and AgPlenus, possessed an aggregate of $15.5 million in cash. The injections of fund from the last round of investment in July strengthens Evogene's financial position and provides us with the resources needed to execute our future plans effectively. As Ofer already stated, the $15.5 million reflected in the cash balance of Evogene together with Casterra, Canonic and AgPlenus, do not include any amount due to the purchase orders received by Casterra in the last few months, which were partially supplied during the third quarter of 2023 and that the $7.1 million reflected in the cash balance of Lavie Bio does not include the $2.5 million which represents the second half of the upfront payment from the licensing agreement with Corteva that is expected to be received at the beginning of 2024. During the third quarter, the consolidated cash usage was approximately $4.8 million or approximately $3.2 million excluding Lavie Bio, which provided positive net cash of $1.1 million due to $2.5 million upfront payment from the licensing agreement with Corteva, Biomica and $1.2 million of advanced payments to Casterra's subcontractors for castor seed production. I will now review the P&L main items. Revenues for the third quarter of 2023 were approximately $3.8 million compared to approximately $0.5 million in the same period the previous year. The revenue increase was primarily due to revenues recognized by Lavie Bio that the licensing agreement with Corteva and due to revenues recognized by Casterra for the supply of castor seeds during the third quarter of 2023. R&D expenses for the third quarter…

Thank you [Operator Instructions] At this time we will begin the question-and-answer session. Also in the Q&A part are with us today, Eyal Ronen, CEO of Casterra; Amit Noam, CEO of Lavie Bio; Elran Haber, CEO of Biomica; Nir Arbel, CPO of Evogene; and COO of AgPlenus. [Operator Instructions] The first question is from Ryan Mayer of Lake Street Capital. Please go ahead.

Hey, guys, thanks for taking my questions. First one from me. So, for the initial $11 million Casterra order, you obviously had initial shipments here in Q3, but the rest expected in Q4 and Q1 of next year. Is this the type of seasonality that you would expect from future Casterra orders going forward?

Can you repeat on the last sentence of your questions?

Yes, just wondering if this is the kind of seasonality that you would expect going forward.

So I will address this question, and maybe Eyal can add a little bit more. So, based on our discussion with our existing partners, so they are expecting to see growth in their needs in the future for additional Casterra [ph] grain to feed their crashing factory because they are planning to increase and expand the biodiesel production. So assuming this plan will take place. So I believe that we should expect to see increase in demand to Casterra seeds such as Casterra is developing and providing to the market. I would recommend people who are listening to this call maybe to look for a nice article that was published about E&I as an example for a company in the field of energy based on veggie crop on their future plan, which I think this is an example to how the market can look in the future. It's public information that was published by E&I and this is just one example to what might happen in this field. And we will be more than happy to take part from this trend and to see Casterra progress in the future.

Got it. And then can you just talk about the level of capacity that your energy partner has to take more volume of cash receipt from you guys?

We can disclose much about our partner's capacity, but I think that there is still a room that we can grow and increase our revenue before we'll reach to the limitation of what they have now. Please remember that they can always decide to build more factories that can crush tasks or grain to oil in order to produce biodiesel.

Great. That's it from me. Thanks for taking my questions.

The next question is from Brian Wright of ROTH Capital. Please go ahead.

Thanks. Good morning. Let me just start out with, I guess you made a comment about the remaining part of purchase order being delivered in the first quarter. I just wondering that should we think about that whole, does any of that go into the fourth quarter just given kind of some of the logistical issues you had talked about in Africa and working with additional partners.

So I'm not sure that I hear correctly what you said, but I believe that your question was referring to timing and when we can supply the purchase order that we receive. So what we believe is that we will be able to deliver the majority, if not all, of the seed that was ordered through the purchase order that we already received till the first half of 2024, while the majority of it will be during the first or mid after the end of the first quarter. And this is mainly due to the climate change and the irrigation system that we need to put in place. There is no question if you can deliver the quantity. It's now more a timing issue. And as I mentioned in my speech is that we are investing a lot of efforts these days in strength, our infrastructure with respect to seed production, in more than one location, more than one continent, in order to be able not just deliver grain in the quantity needed, but also at time as planned. We should all remember that this revolution that the castor seed that the crop is going through is really something that took place only in the last nine months and it's really the beginning and there is some struggles. But we are -- I'm so excited to see how we are addressing all of these challenges. We expand the number of employee work for Casterra, and we are recruiting also people in the target location where we grow the seed to escort the activity over there on a daily basis. But we're still in the process of building all of these infrastructures. I think that starting from the second half of 2024, we will start to see the impact of all of these things in the way that we are expecting.

Okay. It really sounds like, based on what I just heard, and I just want to make sure I'm interpreting this correctly, just general weather conditions, like typical issues with lack of rain, probably was a major issue, and that's just part of the business. Is that a fair interpretation of what you just said?

Yes. Again, I don't think that the question is not if we will deliver. The question is really more timing and solving problems such as climate issue that you cannot control, et cetera. But I think that we are now in a spot where we know what we need to do, and our subcontractors are getting better and understanding what they need to do. I think almost every business in the first year or two, you always struggle with scale up in the production, and we are exactly going through this process. But I'm quite confident that we will be able to deliver I mean the quantity that we promised. And so I hope that address your questions.

Great, great. Thank you. Can I do just real quick follow up? I understand gross merging was really good in the quarter, and I think some of that has to do with Corteva payment and how that's recognized. But it still looked pretty good in the quarter. Am I reading too much into it? You probably your Casterra margin was probably, even with everything that's happened, was probably a pretty good gross margin for Casterra in the quarter as well.

I can disclose the gross margin of our business. We prefer to keep this information internally. But I think that if you review the margins of other companies in the field of sell seeds, so usually the margin are pretty high. But it makes sense because don't forget the time that you need to invest in order to develop the seed for seed company the R&D costs are quite heavy. The good news from Casterra is that we reached to this variety that we are offering now to our partners. We investing in this activity in the last 10 years and we invest around, I think, $20 million through the years. So now we are starting to see the benefit from this investment. And this is also what put us ahead to any other company that would like to move into this field. So the margin in the seed bins are pretty high because they supposed to cover the expense and the risk that companies are putting in the development of the elite variety, exactly like Evogene did, like Casterra did in the past 10 years.

Great. Thank you so much.

The next question is from Ben Haynor of Alliance Global Partners. Please go ahead.

Good day gentlemen, thanks for taking the questions. First off, for me just on AgPlenus' on the APTH1 target, how quickly do you anticipate a collaboration for our partnership could materialize there? And what are you doing or what can you presently do to kind of advance development of the target?

Nir, would you like to take this question or you prefer me to address it?

If you want, you can go ahead. If not, I’ll…

So I will try to address it. And Nir, if you want, you can add. So I think that usually working with big corporation, usually it takes a while before you engage in agreement. It includes the validation period, it still include negotiation times. But I think that usually when a company feel comfortable to emphasize that there is an interest in one of its program, at least the way that Evogene is working. So, it means that we have some confidence that we are not far away from the point where we might announce such a collaboration. So again, you never know if it will happen. This is why we, this is the nature of the business. But we feel comfortable that we are in the stage that there is a some probability that we will engage in such collaboration. I think that AgPlenus' is an amazing example to what Evogene, the technology company can develop and offer to our partners. AgPlenus' is using ChemPass AI tech engine and the progress this engine made in the last year, it was remarkable. We announced about TargetSelector, we announced about some other app that we developed. And I think what is attract the attention of our potential partners is not just the result that you can see on what we achieve until now, but it also gets excited from our ability to improve the efficacy and increase probability of success by using the tech engine of Evogene. So what I’d like to speak, what was hope to see in a future collaboration that AgPlenus' will be engaged, is not just maybe a nice upfront payment, but also ongoing collaboration with R&D fee, et cetera. So there is high expectation from what AgPlenus' can do. Yes, it's still in early stage. Yes, we still need to demonstrate more and more the power of our technology, but the company is definitely in the right direction in achieving this target. Nir, would you like to add something?

No, I think you covered the point, but I agree. I think this past 12, 18 months was very pivotal for AgPlenus'. And I think we have a lot of confidence in the platform and what we are doing, and we are expecting that we'll see this manifest in 2024.

Okay, very helpful, thank you for that. And then you kind of segue into my next question. With the advancements that you've made in ChemPass AI and particularly TargetSelector, it sounds like that's attracted interest, but can you share any more on potential positive developments that have come with the new application or new functionality like TargetSelector that have occurred here recently?

So I think TargetSelector in particular attracts a lot of attention. I think that this it’s really addresses unmet need within the space, the way we operate. And I think that's why this past period has been very crucial for AgPlenus' is not only developing these tools, but having a proper validation process. And we see within that interest the need to see how we validate. And as we progress. We see more and more interest and better validation and confirming that the tools are good and that work as we expect. And therefore that's why our confidence is very high in the platform itself and what the future focus on.

Okay, sounds so raises the confidence in the platform. And then lastly for me on the Crustacean Gene Editing collaboration, the announce does that have the potential to lead to another subsidiary? And then is that part of what you alluded to on your last call regarding some of the more food tech oriented things you had going on? Just a little bit more on the Crustacean gene would be helpful.

So at first, yes, I remember that in previous call I was talking about potential activity of Evogene in the area of food test. But honestly I didn't think about the Crustacean project when I was talking about it. There is some other activity that hopefully will materialize into agreement and we will share it with our investors. Hopefully maybe in the next quarter or so, but so there is more under the hood than what we disclose in this call. With respect to Crustacean project, I don't see it developing into a new entity. You never know how big it could be. But at least in this point of time we don't see it. Actually through this collaboration we are covering 100% from our cost, so we see even a little bit of revenue from this activity. I think this is part from Evogene capabilities in the field of gene editing. In the past we were leading the biggest consortium here in Israel in the field of gene editing. And I think that Evogene has some unique capabilities in this field that we can use to help other companies to improve different traits in different organisms. But at least for now, we don't see it evolving to a separate entity.

Okay, great. Well, thanks for taking the questions, gentlemen. That's all I have.

Thank you.

Thank you.

[Operator Instructions] This concludes the question-and-answer session. Before I ask Mr. Ofer Haviv 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. Haviv, would you like to make your concluding statement?

Yes. Thanks you all for joining the call today. We look forward to updating you with our progress on our next call. Thank you once again.

Thank you. This concludes Evogene's third quarter 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.