Evogene (EVGN) oversees five subsidiaries: Biomica, agPlenus, Lavie Bio, Castera, and Canonic. Each company uses Evogene’s unique artificial intelligence (AI) platform to develop products for different human medical needs and the agricultural industries. Their CPB platform, which stands for computational predictive biology, provides efficient ways to map plant phenotypes and microbial genomes. Their subsidiaries employ this AI technology to improve plant genetics, commercial fertilizers, and human medicines.
Evogene produces revenue via its subsidiaries in two ways. It brings in benchmark and licensing payments from companies, who use its products and research. The main function of each subsidiary is to conduct research within their specialties using the CPB platform. The company also makes revenues from at-the-market sales of some of its products, including medical cannabis and wheat seed stimulant.
Evogene’s stock price has been on the long-term downtrend which mirrors the trend of current market conditions. Global economic destabilization, ongoing bank crises, and historical interest rate hikes have diligently wrecked ideal market conditions for all stocks. These conditions may get worse and promise to stick around for a while. Buy ratings must be considered under these volatile conditions.
Evogene has managed to stay afloat and its financial performance has continued to improve throughout this bearish period. Revenues are increasing for the company and each of its subsidiaries have new developments in their pipelines. The company’s stock price is trading at or near its all-time low and is undervalued at the moment. The situation may present an opportunity for investment with an eye to long-term growth.
Updates on Evogene’s subsidiaries
Lavie Bio uses Evogene’s MicroBoost AI engine to innovate agricultural supplements, like growth stimulates and fertilizer. The company recently received a $10 million investment from ICL (ICL) under a SAFE agreement. The company will collaborate with ICL to develop new agricultural products, here fertilizer. ICL is a global manufacturer of products made with specialty minerals.
Lavie Bio currently has a growth stimulant on the market called Thrivus. Their spring wheat seed treatment, a microbiome-based bio-inoculant, was released on the market in the US during 2022 and sold out initially. The product increases summer wheat yields by up to four bushels per acre. The company plans to expand sales of Thrivus to other countries, like Canada and Europe.
Lavie Bio also has a bio-fungicide, up for approval by the US EPA, which fights fruit rot and powdery mildew. It hopes to bring the fungicide to market in 2024 with focus on treating grape harvests.
Biomica uses Evogene’s MicroBoose AI to develop microbiome-based medical treatments. The company currently has three drug candidates, which are undergoing clinical research and trials.
BMC-128 is being developed to treat solid tumors in humans. The drug candidate is currently being tested on cancer patients in a Phase 1 clinical trial for human safety. The company hopes to begin Phase 1b/2 in 2024.
The company’s second drug candidate, BMC333, is a microbiome therapeutic for treating inflammatory bowel disease. The drug, consisting of a combination of four live bacteria strains, has been tested on animals and found to reduce inflammation and tissue damage along the GI tract. The company plans a phase 1 trial in 2024.
Biomica’s third drug candidate, BMC426, is being considered for the treatment of irritable bowel syndrome. The company has completed discovery with its candidate and has moved into pre-clinical trials.
Biomica recently received a $20 million investment round led by Shanghai Healthcare Capital. The deal received regulatory approval from China today and allows for future investment rounds.
AgPlenus uses Evogene’s ChemPass AI technology to develop commercial herbicides, insecticides, and fungicides. The company is currently focused on developing an herbicide which is effective on herbicide resistant weeds in commercial crops.
AgPlenus’s current candidate, APH1, is an herbicide for treating unwanted weeds in large commercial grow operations. The company is in a partnership with Corteva (CTVA) for developing new herbicides. AgPlenus discovers new herbicide candidates, while Corteva tests them and ultimately licensing them. AgPlenus has other products under development, including a fungicide.
Casterra, Evogene’s newest subsidiary, uses the company’s GeneRaptor AI technology to innovate novel castor plant varieties. Castor seeds processed into oil are used worldwide for bio-diesel and are currently in high demand. The company recently signed an agreement with a European energy company to provide castor seeds and technical support for a set of cultivation sights in Africa. Casterra has another agreement with Titan Castor Farms in Zambia for production and distribution of its castor seeds. The company feels that castor seeds may be the next major catalyst for its financial performance and shareholders.
Canonic uses Evogene’s GeneRaptor AI technology to map and breed cannabis genetics for medical applications. The cannabis strains are bred to have specific traits for treating certain medical conditions. The company has recently released its second-generation cannabis products in the Israeli medical cannabis market. These new genetics were perfected at Canonic’s cannabis research facility and boast a high THC potency of 24%. The products consist of a selection of dried flowers and THC oil tinctures.
Evogene’s financial performance
Over the last four quarters, revenues have increased for Evogene. In their Q3-2022 filings, the company reported revenues of $466K showing a more than 200% increase YoY. In their recent Q4-2022 filings, the company reported revenues of $660K more than 100% increase YoY and a 40% increase from last quarter. The company also reported its 2022 fiscal year performance. Revenue increased more than 80% from $930K (2021) to 1.675 million (2022).
Evogene receives revenues through benchmark and licensing payments from companies usings its products and research. The company also has revenues from medical cannabis sales by Canonic and from sales of Lavio Bio’s wheat stimulant. The company expects future revenues from Casterra and its recent agreements to supply castor seed and support. The market consensus for Q1-2023 revenue estimates is $2 million, a significant increase from previous quarters. Whether or not the company hits that estimate, its revenues should continue to grow from quarter to quarter.
Evogene reported a net loss of $3.8 million for Q4-2022, which is less than previous quarters. The company has a cash position of $31.860 million and receives enough money in receivables to continue its business and research strategy for some time. Evogene is set to receive $3.5 million from Bayer (BAYRY) for their seed trait collaboration agreement. The company’s largest operational cost is funding research and development. The company has no bank debt. The company requires about $4 million per quarter to operate.
Evogene competes with such companies as Schödinger (SDGR), Ginkgo Networks (DNA), Exscientia (EXAI), and Relay Therapeutics (RLAY).
Evogene is currently undervalued
Evogene’s stock price has been trading under a $1 per share since September 2022. In January, the price began an uptrend towards a dollar per share, but in February a new down trend emerged. The price now sits near its all-time low around $.63 per share. There is a possibility that the company’s stock will have to undergo a reverse split to meet the minimum price requirements of $1 per share.
So long as the stock price is low, the company remains undervalued. Its stock is currently trading at .49x NTM Total Enterprise Value / Revenue. The situation may present an opportunity to begin a long-term investment in the company’s stock. Evogene’s financials are sound and its research and product pipelines are robust. Greater market volatility may be the largest barrier in giving the company a strong buy rating for the time being.
Conclusion
Keep your eye on Evogene’s financial performance and research developments from its five subsidiaries. The company has been perfecting AI technology for a long time and its applications have produced innovative products. The company will continue to raise revenue numbers with its at the market products and benchmarks payments. Evogene has plenty of incoming receivables to fuel its research agenda and business strategy. The company’s stock is at an all-time low, while the company’s financial performance is on par with expectations. The metrics show that the company is currently undervalued and an investment opportunity may soon present itself. Larger market conditions will help decide if a long-term investment is tenable.
Originally published at TalkMarkets.
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Author Disclosure: No position in EVGN at the time of writing.
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