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Evogene Ltd. (EVGN) CEO Ofer Haviv on Q3 2020 Results – Earnings Call Transcript

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Evogene Ltd. (NASDAQ:EVGN) Q3 2020 Earnings Conference Call November 18, 2020 9:00 AM ET

Company Participants

Ofer Haviv – Chief Executive Officer

Elran Haber – CEO of Biomica

Dorit Kreiner – Chief Financial Officer

Conference Call Participants

Kristen Kluska – Cantor Fitzgerald

Geoff Gilbert – Inukshuk Investment

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Evogene’s Third Quarter 2020 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, November 18, 2020.

Before we begin, I would like to caution that certain statements made during this earnings conference call by Evogene’s and Evogene’s subsidiaries 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. These statements may be identified by words such as “may”, “could”, “expects”, “intends”, “anticipates”, “plans”, “believes”, “scheduled”, “estimates” or words of similar meaning.

For example, Evogene is using forward-looking statements in this earnings conference call when it discusses its and its subsidiaries’ targets, objectives, pipeline and goals and the expected timing thereof, its support of its subsidiaries, the sufficiency of its funding to achieve key objectives and to continue to enhance and expand its computational predictive biology platform, its estimated cash usage for 2020, capturing the value of its technologies and subsidiaries, entering into collaboration agreements, its upcoming milestones and potential alternatives to capitalize on the Company’s subsidiaries’ achievements.

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 earnings releases, which states that statements made in those earnings releases and in the 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. Therefore, actual future results, performance or achievements of Evogene 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 Evogene and its subsidiaries, including, without limitation, the global spread of COVID-19, or the Coronavirus, the various restrictions deriving there from and those risk factors contained in Evogene’s reports filed with the applicable securities authorities.

In addition, Evogene and its subsidiaries rely, and expect 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 including as a result of the effect of the Coronavirus, Evogene and its subsidiaries may experience significant delays in the conduct of their activities.

Evogene and its subsidiaries are 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. Evogene and its subsidiaries 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.

Ofer Haviv

Thank you and good day everyone. We appreciate you joining us today to our third quarter 2020 conference call. Joining me today is Ms. Dorit Kreiner, our CFO; and Dr. Elran Haber, CEO of our subsidiary Biomica. I will begin my comments today by providing an overview of the company’s various activities, some context to our recent fundraising and discussing our plans to unlock the value of our subsidiaries. I will then hand the call over to Elran to discuss Biomica’s activity in more detail, focusing specifically on its immuno-oncology program and the recent progress. Following Elran’s comments, Dorit will summarize Evogene’s financial results for the third quarter of 2020. We will then open the call for your questions.

Before I begin my comments, I would like to address the impact of the COVID-19 pandemic on Evogene’s operations. I’m pleased to say that to date the impact has been minimal. As of today, the company has resumed full activity. While we are fully operational, I want to ensure our shareholders that the company and its employees are working in compliance with the restrictions and guidelines provided by the Israeli health authorities and applicable governmental authorities and we continue to do so.

So let’s start. I would like to begin by taking this opportunity to thank our shareholders, new and old for the continued support of the company. As the company enters a new era, advancing its technological platform through three products solutions, MicroBoost AI, ChemPass AI and GeneRator AI and its subsidiaries progressing towards the development of valuable assets and commercialization, we hope to continue to earn your confidence.

For our new investors, I would like to give a brief overview of our company’s activities. As you know, Evogene’s vision is to revolutionize life science product development by utilizing computational biology technologies.

With so many complex challenges associated with the development of biological based products; including high development costs, long development time and most importantly, low probability of success, we believe that now it is the right time to leverage the revolution in the computational world to biology.

Over the last decade, at an investment of tens of millions of dollars, incorporating deep scientific understandings, together with big data and artificial intelligence, Evogene has developed a unique computational predictive biology platform. This proprietary technology is called the CPB platform.

Today, building on this technology Evogene has three product solutions that we believe will help to accelerate and direct life science product development based on the following core components: microbes, small molecules and genetic elements called MicroBoost AI, ChemPass AI and GeneRator AI, respectively.

We aim to capture the value of these three solutions through two avenues, product development through partnerships at the parent company level and product development through our subsidiaries.

Throughout Evogene’s early years, we focused largely on the first avenue. Partnering with leading companies for defined products using Evogene technology, while later stage development and commercialization of the product was typically undertaken by the partner.

This avenue was our main business model until about 2014. During those years, Evogene was engaged with leading ag-companies including Bayer, DuPont, Monsanto and Syngenta mainly for the development of new GMO seed traits. Looking forward, we aim to engage in partnerships along this business model in additional market segments.

The second avenue for capturing the value of Evogene’s technology is product development through its subsidiary. Evogene established subsidiary to focus on defined commercial field with an exclusive license to use the CPB platform in the respective field of activity.

I would like to emphasize that these subsidiaries may commercialize their future products, either independently or with partners according to the product type and end market. Some of the strategic partnerships Evogene subsidiaries currently have are with world leading companies such as BASF and Corteva. Today, Evogene has several main subsidiaries under this business model as follows: in the area of human health, we have Biomica, which aims to provide therapeutics based on microbes that exist in the human gut.

Currently, Biomica has three main product programs based on microbes; the first to improve the efficacy of immunotherapy, the second to provide therapeutics for IBD and the third to provide therapeutics for IBS, the latter two of which are GI-related disorders. Evogene holds approximately 90% of Biomica.

During the quarter, Biomica announced positive preclinical results in its immuno-oncology program. These results showed that Biomica’s live biotherapeutic drug candidate BMC128, given prior to and in combination with immune checkpoint inhibitors, significantly improved anti-tumor activity. This program was further strengthened by the initiation of scale-up and GMP batch production of BMC128, which we also announced during the quarter, in order to support Biomica’s anticipated first-in-man proof-of-concept clinical trials to be initiated next year.

Elran, who will be speaking in a few moments, will give more information on this program and other programs Biomica is advancing. The second company in the area of human health is Canonic, active in the area of medical cannabis. Canonic aims to develop two types of products; the first is MetaYield – cannabis varieties with overall increased yield, and the second is Precise, increased yield of specific compounds in the plant to address medical indications such as inflammation and pain.

Evogene holds 100% of Canonic. Canonic recently announced that it has received approval from the Israeli Medical Cannabis Agency for the propagation of medical cannabis seedlings. This will allow Canonic to proceed with the execution of its commercialization plan. As you might recall, Canonic aims to release its first product in Israel in 2022.

Moving on to Agriculture, the first company in this area is AgPlenus, which is active in the development of ag-chemicals. AgPlenus is focused on the development of two main types of crop protection products, novel mode-of-action herbicides and new site-of-action insecticides. Evogene holds approximately 98% of AgPlenus.

I would like to take this opportunity to congratulate Doug Eisner for joining AgPlenus in September as its new CEO. Doug brings over 20 years of versatile business and legal experience, previously holding various senior leadership roles, and leading successful fundraising rounds and a company acquisition. I have no doubt that Doug will have an important contribution to the success of this company and achieving its targets in the next few years, focusing on advancing our strategic relationship with Corteva and BASF, and advancing our internal novel herbicide pipeline.

The second company in Agriculture is Lavie Bio focused on ag-biologicals. Within this field, the company is focused on two main types of live-microbial products. The first is bio-stimulants which when applied to the plant improve its performance. The second is bio-pesticides, which when applied to the plant protect it from pests such as fungi and insects. Evogene holds approximately 72% in Lavie Bio, with Corteva, a world leading ag company, holding the remaining 28%, following its investment in the company in 2019.

Lavie Bio recently announced positive results in its bio-fungicide program for LAV311 and LAV312. These positive results were achieved in a series of vineyard trials for bunch rot diseases conducted in Europe and the United States and showed that vineyards treated with each of LAV311 and LAV312 demonstrated 60% to 70% reduction in crop damage in comparison to the control.

I would like to note that this was only a short overview of the company and its subsidiaries. We have prepared some great informational materials on each of these subsidiaries and I urge you to view the presentations section on our website to view these materials.

Moving on, I would like to provide some more information on Evogene’s recent fundraising activities. I would like to start by emphasizing that over the years, Evogene has taken a very disciplined approach to its capital allocation, and the company has made significant developmental progress over the years with the resources it had.

During the past year, the subsidiaries’ advancement was very rapid and in certain areas even exceeded plans. Therefore, we decided to raise additional funds in order to support their ambitious business targets. I am pleased to say that Evogene recently completed two rounds of fundraising totaling $22 million.

I am also pleased to say that the investors that took part in these fundraisings are top-tier institutional investors including ARK Invest. I would like to note, for those of you who are not familiar, that ARK is one of the world’s leading innovation funds investing in the technologies of tomorrow, and we are honored to be part of their distinguished portfolio.

As published, Evogene intends to use the net proceeds from the fundraising to further develop its and its subsidiaries’ product pipelines, to enhance and expand its computational predictive biology platform, and for working capital and general corporate purposes.

Looking forward, as a whole, we intend to continue to be capital efficient while working towards our business targets, which include the following: in Biomica, we intend to support preclinical and clinical trials. In Canonic, we intend to support development of unique varieties as well as cultivation and commercialization of its medical cannabis products. In AgPlenus, we intend to support herbicide development towards the stage of “Optimized Lead”, as well as expand the insecticide program. In Lavie Bio, we intend to support the route to commercialization of a wheat bio-stimulant as well as support the product development in its bio-pesticide programs.

Evogene also intends to enhance and expand its product solutions, MicroBoost AI, ChemPass AI, GeneRator AI, in order to maintain its technological and computational competitive edge. Likewise, Evogene expects to expand its efforts in genome editing and to capitalize on its legacy seed traits activities.

With both these rounds of fundraising, we believe that Evogene and its subsidiaries have the funds to support their near-term business objectives, including reaching important milestones such as initial sales in Lavie Bio and Canonic, and valuable assets in AgPlenus and Biomica’s product pipelines.

I also would like to mention that these capital raises bring us closer to opportunities to unlock the value of our subsidiaries. Reaching the important developmental milestones, we outline in our company presentation, could put our subsidiaries in an attractive situation to capitalize on their achievements, such as in the form of investment of a strategic or financial partner, M&A or even an IPO.

To summarize, it has been a very productive quarter for Evogene and we are pleased with the advancements made in our subsidiaries despite the objective difficulties COVID-19 has presented. I would like to once more thank our investor community for their support in the company.

I will now turn the call over to Dr. Elran Haber, CEO of Biomica. Elran

Elran Haber

Thank you, Ofer. I am happy to be on the call today. I will start with a short introduction on Biomica. Biomica is an emerging biopharmaceutical company developing innovative microbiome-based therapeutics for the treatment of cancer, immune-mediated and infectious diseases.

Biomica’s underlying premise is that our gut microbiome or basically the microbes that lives in our gut has an impact on our health and plays a significant role in a wide array of illnesses. This has been well-documented in the scientific literature and is supported by an increasing body of clinical evidence.

The main question that most of the microbiome companies are now facing is to know how to identify the microbes that provide the desired effect. Biomica aims to answer this question through the use of computational biology. At Biomica, we aim to discover and develop novel therapies for microbiome-related human disorders using a rationally based design approach enabled by computational predictive biology. In this regard, Biomica has exclusive access to Evogene’s proprietary technology, the CPB platform, which was developed over the past decade at an investment of tens of millions of dollars.

The potential of the microbiome is clear to the big pharma and virtually every company now is taking a stake in this space. Since 2014, more than $4 billion has been invested in microbiome companies. Rapidly growing with a projected 70% of compound annual growth rate, according to recent market reports the microbiome market space provides a multi-billion dollar market opportunity.

Biomica is focused on the unmet high-value clinical programs, including the three domains, the first is immuno-oncology, immuno-therapy. The second are GI-related disorders, gastrointestinal related disorders and the third are antimicrobial resistance.

In our call today, I would like to focus mainly on our immuno-oncology program. It has been shown in various studies published in the scientific literature that one of the key reasons that some patients may not respond to immuno-therapies is due to differences in the patients’ microbiome.

One example of this, which you might have heard of, is the use of FMT, FMT stands for Fecal Microbiota Transplantation, in which out of two groups described, some patients who initially did not respond to immunotherapy drugs saw positive response after receiving a stool donation from patients for whom the drugs worked. The main unresolved question is exactly which microbes helped to obtain the desired immune activity. Our program’s initial target is to identify the microbes which can improve the efficacy of immune checkpoint inhibitors, or ICI shortly, that are the leading therapy today for cancer patients.

Using Biomica’s computational biology platform, PRISM, that is powered by Evogene’s MicroBoost AI, we were able to rationally-design two live bacterial products, each comprised of four unique bacterial strains, which are natural inhabitants of the human intestinal tract. These strains harbor specific functional capabilities which has the potential to enhance immunological therapeutic responses and facilitate anti-tumor immune activity through multiple biological processes.

Rationally-designed bacterial consortia are multi-strain products designed to restore diversity and specific functionality to the host’s microbial community. These drug candidates were tested together with immune checkpoint inhibitors in a preliminary preclinical trial in 2019 and presented positive results with improved anti-tumor activity in mice.

After careful analysis of these results, we decided to focus on four strains derived from our initial two drug candidates, with the highest functionality. This led to the design of our leading drug candidate BMC128. In 2020 we continued with broader preclinical trials, testing our drug candidate in various dosing protocols, not only in addition to immuno-therapy, but also as a prior treatment of prior to the immune checkpoint inhibitor therapy.

In these trials the animals were divided into various treatment groups, and BMC128 was administered to mice bearing cancer tumors prior and during ICI therapy. In September of this year, we announced the positive results of these trials, demonstrating that the treatment with BMC128 prior and in combination with the administration of immune checkpoint inhibitors, significantly reduced the tumor volume and increased animal survival compared to immune checkpoint therapy alone.

It seems that Biomica’s bacterial consortia administered prior to immune checkpoint inhibitor therapy primes the immune system for an efficient and well-orchestrated anti-tumor response, ultimately leading to the most reduced tumor volume and best survival rate out of all groups. The response to the combination treatment was 50% higher in comparison to the group that received only immune checkpoint inhibitors therapy.

Looking forward, in 2021, the company aims to enter proof-of-concept clinical trials in Israel. For this purpose, Biomica contracted the services of Biose Industrie, a leading French CDMO, for the scale-up production of our microbes according to GMP standards. The large-scale production of our leading drug candidate, BMC128, has been initiated following the successful completion of the initial R&D stage of drug product development and manufacturing.

Now I would like to update you that we are currently in discussions with a number of leading medical centers in Israel regarding conducting this proof-of-concept study, pilot study in 2021. In regard to our other programs just a quick note. We are currently advancing our IBD program in the preclinical phase, having initiated new preclinical studies at the University of North Carolina at Chapel Hill, at the lab of Professor Balfour Sartor, who is Biomica’s Scientific Advisory Board member, and is one of the leading researchers and thought leaders in IBD in the USA.

In regards to our IBS program, this is progressing according to the plan and we are currently concluding the discovery phase, with the computational identification of microbes with the desired functionality to address this disorder.

I would like to end by mentioning that we have recently been seeing announcements of companies in the microbiome space regarding positive Phase 3 clinical data. These announcements provide strong validation for the utilization of microbiome therapeutics and help validate Biomica’s science and clinical approach, and demonstrate the potential value proposition of Biomica.

With that, I would like to turn over the call to Dorit.

Dorit Kreiner

Thank you, Elran. I will begin by reviewing our cash balance, which includes approximately $43.5 million in consolidated cash, cash related accounts and bank deposits as of September 30, 2020. This amount includes a $10 million investment received by the company during September.

I would like to add that approximately $13.6 million of Evogene’s consolidated cash is appropriated to its subsidiary, Lavie Bio. The September 30th cash balance does not include an additional investment of $12 million received after the date of the financial report.

During the first 9 months of 2020, the consolidated net cash usage was approximately $13.4 million, or $9.3 million, if excluding Lavie Bio. During the third quarter the consolidated net cash usage was approximately $4.6 million, or $3 million, if excluding Lavie Bio. For the full year of 2020, we continue to estimate that our net cash usage, excluding cash usage of our subsidiary Lavie Bio, will be within the range of $13 million to $15 million. The Company does not have bank debt.

Let’s now turn to the statement of operations. R&D expenses for the third quarter of 2020 were approximately $4 million, in comparison to $3.6 million in the third quarter of 2019. R&D expenses were mainly attributed to preclinical trials in Biomica, field trials for Lavie Bio and strengthening Evogene’s technology with new capabilities.

General and Administrative expenses for the third quarter of 2020 were $1.2 million in comparison to $0.9 million in the third quarter of 2019. This increase is mostly attributed to an increase in the cost of the company’s D&O insurance. Operating loss for the third quarter of 2020 was $5.6 million in comparison to $4.9 million. The increase in loss is attributed to the aforementioned operating expenses.

The loss for the third quarter of 2020 was $5.4 million in comparison to a loss of $4.5 million during third quarter of 2019. The increase in loss is attributed to the increase in operating expenses and a decrease in net financing income.

With that said, we would like now to open up the call for any questions you may have. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] The first question is from Kristen Kluska of Cantor Fitzgerald. Please go ahead.

Kristen Kluska

Hi. Good afternoon, everyone. Hope you’re all doing healthy and well at this time. So I had a few questions related to Biomica. So the first is regarding this BMC128 data. Could you please discuss what some of the remaining preclinical work that you’re hoping to conduct is? And then how are you starting to think about some of the early thoughts related to the proof-of-concept study next year? So, for example, how long do you think it takes for BMC128 to condition the immune system? And then given the unique nature of microbiome based medicine, how do you think about testing different dose levels and disease status of these patients, considering that’s a limitation for a lot of other therapies in development right now?

Ofer Haviv

Sure. Thank you, Kristen. So as for BMC128, we have conducted a number of preclinical studies so far, and we are aiming now mainly to optimize the dosing regimen for BMC128 and to evaluate the effectiveness of this drug candidate in additional tumor types. So this is in part what we are doing in means of preclinical trials. As for our certain proof-of-concept in humans, this is something that we announced is aimed to be in 2021, the second half of 2021, and which are currently scaling the production and preparing the clinical batch for this proof-of-concept study. I would say that in means of how we are addressing the doses, I think one of the things is related to our unique approach in which we are trying to minimize the number of strains that we are providing the patient in order to obtain the direct therapeutic effect.

So we are basically trying to maintain the standard of dosing in means of microbes. But since we are using less a number of strains, eventually the drug product would be something that could be more easily administered to patient. So I think this is in part. We are evaluating a number of different dosing as well in preclinical models. So this is some insights that we are — we will have more in the recent — in the near future.

Kristen Kluska

Thank you. And then on your comment related to looking at different tumor types here, I was wondering if we could take a step back. And I know initial focus might include an NSCLC, but broadly speaking, how do you look at the landscape? So, for example, which cancer types would you view as having the greatest unmet need based off of the low response rates that are observed for immune checkpoint inhibitors alone?

Ofer Haviv

So obviously non-small cell lung cancer is one of the tumor, the unmet medical needs that obviously needs to be addressed since the response rate in this type of cancer is very low. But we are also aiming for other types of solid tumors. So one of the things that we are evaluating now is the effectiveness in RCC. We know based on the data that we worked from the clinical data source that we analyzed that RCC and non-small cell lung cancer basically obtain the same results for us. So we are pretty certain that it could be an additional indication that we could pursue.

Also I think that other types of solid tumors as melanoma could be relevant. So we are not necessarily limited to non-small lung cancer and potentially the proof-of-concept that we will conduct could include patients from various types of solid tumors.

Kristen Kluska

Okay, great. Thanks so much for taking the questions.

Ofer Haviv

Sure.

Operator

The next question is from Steven Goldman. Please go ahead.

Unidentified Analyst

Oh, yes. Hello and congratulations on the progress you’ve made over the last number of months. It’s been quite impressive. I have a few questions regarding Biomica, AgPlenus and Lavie Bio. And with respect to Biomica, when are you planning to provide more detailed data from your preclinical trials you’ve conducted?

Elran Haber

Hi, Steven, thank you for the questions. So we’ve shared some additional data in the recent presentation that was shared by Evogene. And I think one of the new updates was also in the call today. So we’ve announced that we’ve received 50% additional response in comparison to the immune checkpoint inhibitor therapy. But we are planning to present the entire set of results in one of the most, I would say, important conferences in the microbiome space, it will be the largest European microbiome conference. It will be in January, and we are presenting our results in this conference.

Unidentified Analyst

Okay, thank you. I look forward to hearing that data. Can you provide just a little explanation of sort of the process in Israel, you refer to it as the proof-of-concept pilot study. I take it similar to a Phase 1 study that you would see in the U.S?

Ofer Haviv

So it’s, I would say not identical, but it’s similar to Phase 1, Phase 2a, kind of study. Basically we will have a small group of patients that will be dosed. So it will be patients, cancer patients, not health individuals. The numbers will be approximately between 10 to 15 patients, of them failed prior to immunotherapy and we will treat them with the combo treatment of our microbes BMC 128 and immunotherapy. It will take place in one of the leading medical centers in Israel, at least one of them. We are now evaluating maybe to extend two additional sites in Israel, but this is something that currently is under discussion. Let me know if you have additional questions regarding this.

Unidentified Analyst

No, that’s why I just want to learn more about the process as time goes on. But what plans do you have to take this to the U.S., and are you going to use the data from the, I guess, your initial Israeli study to get an IND in the U.S.?

Ofer Haviv

Absolutely. Yes. So I think one of our objectives and this is [indiscernible] study not only just to evaluate the safety, tolerability and to some extent the efficacy, but it will be also to collect data that we could use in our IND discussions with the FDA and to initiate our studies in the U.S., I believe, in 2022. So that’s the main idea. I think one of the advantages of working in Israel will allow us to get quicker as to first human studies and to be able to use the data that will be collected from the study in our discussions with the U.S. FDA.

Unidentified Analyst

Okay. Thank you. And finally my last question for you Elran is do you have any comments or observations you can make as to why you think Biomica’s approach with its, I guess it’s four strand [ph] microbiome therapeutic candidate would do better than, for example, one of your competitors is using a single strand microbiome candidate also for immunotherapy.

Elran Haber

Definitely, yes. So I think one of the advantages working with rationale [ph] designs live biotherapeutic product in comparison to a single screen method is the ability to provide a patient with targeted functional combination, microbial functional combination. So we are aiming to affect the disease by a number of modes of actions. And a single strand is limited by the number of modes of action that it could affect by combining and providing more training, but with a certain amount not providing [indiscernible] because it could actually provide us with higher risk potential. You are basically enhancing the [indiscernible], the effectiveness of this drug product in comparison to a single strand method in which you are basically limited by the number of modes of actions that this single microbe could affect.

Unidentified Analyst

I see. Well, we look forward to seeing your data as it comes out. Thank you, Elran. I have a couple of questions regarding AgPlenus. Does this go back to Ofer?

Ofer Haviv

Yes.

Unidentified Analyst

In your press release, in discussing the use of the $22 billion of funds recently raised, you discussed that some of the funds will be used for AgPlenus’s development of its herbicide. I assume that’s HERB32 from a lead to an optimized lead. But your — I have not seen, and perhaps I miss this. Is HERB32 now officially a lead?

Ofer Haviv

So the answer is no. We didn’t officially announce our candidate as a lead. We are now collecting the data from the field experiment conducted by the third-party in USA. And we are expecting to finalize this process, including the statistics hopefully in the next two weeks. And I hope that then based on these results, we can announce hopefully achieving the lead phase. So when we mentioned and yet this is what’s included, we are planning to use part from the money we raised to support these candidates [indiscernible] from the lead to optimize the lead stage. It was based on the assumption, hopefully, that we will get a positive result. We are all expecting to see what is the result. There’s a lot of enthusiasm and a lot of excitement because it’s going to be like an important step for AgPlenus. Still I would like to mention that there is a gap between lead and optimize lead, this is the next step that I was mentioned that we are going to support financially during next year, if there was any funding to support [indiscernible] achieving the target, because based on the market analysis we did, the value of optimize lead in the eyes of the big guys is quite significant compared to lead, because you have more safety data, more efficacy data, more field trial data. And this is all the type of things that we can do. We can achieve them, assuming that we will achieve the lead phase, and especially I’m feeling comfortable because I’m relying on Evogene’s technology to optimize if needed the — our lead component. So to summarize, yes, we are going to support AgPlenus activity moving from lead to optimize lead. We didn’t announce yet that we reached the lead phase. It’s something that we are planning to do, hopefully to be able to achieve till the end of this year. And we are really looking forward assuming we will achieve this target, which also optimize lead base because this is where the big, big money is.

Unidentified Analyst

Yes, that’s my understanding. And your advance candidate HERB32 is that how you describe it? I take it that’s — that would be a potential replacement for like Monsanto, Bayer [indiscernible] is that right? Is my understanding, correct?

Ofer Haviv

Yes. This type of a product, again, we need — one of the things that we now also validate is what is the type of weed that it’s really effective? Again, what is really nice and I really hope that we also will be able based on the results, of course, to disclose the ability of our small molecules to address the resistance issue that was developed in different type of weed, which if you have not just ineffective, but also is a need — a mode of action herbicide, this is have a lot of value. Still there is the question, you need to validate and what the geography [indiscernible] and what is the level of efficacy on the different weeds. But we are now feeling quite positive about the early results we receive and we are looking forward to see an additional result should come from our [indiscernible] next year.

Unidentified Analyst

Okay, well I look forward to that news when it gets released. And finally, just a couple of questions regarding Lavie Bio. Your most advanced product is your LAV211, which is a bio stimulant. And if I recall, when I — last was looking at this, you had hoped that you would be in commercial sales by early 2022. But what are your plans now in 2021 for next year for LAV211?

Ofer Haviv

So first, we are now collecting the results from two area where we conduct field trials for LAV211. First one is North Dakota. The second one is in Montana and I believe that, again, until the end of this year, we will give a short update on [indiscernible] program, spring wheat program and also some other programs that we are now delivering the results into statistics. So this is the one thing that we are planning to do this year. And next year the idea is that we are going to validate our LAV211 in a commercial, a level meaning that we are going to distribute LAV211 to a big regular farmers is going to be a part of their ongoing activity and hopefully to see the results. And this will be probably the last phase before we can start to initiate the commercial activity for this product, which is expected, as we mentioned to take place in 2022.

So summarize next year, commercial field trials, big farmers are going to use this as a candidate.

Unidentified Analyst

Okay. And are you able to provide any feedback on that? So that’s the spring wheat markets that you’re initially going after. And are you able to provide any feedback on the size of that market and your marketing strategy?

Ofer Haviv

So there was [indiscernible] that may be less aware? There was two types of wheat, spring wheat and winter wheat. We’re focusing on the spring wheat, it is a smaller market compared to the winter wheat, but still it’s quite significant. We didn’t disclose number, but our — there was two options how you can reach to the market with this product. We can use local distributors or we can work with one of the big companies. We are now evaluating these two channels. There is an interest in both directions from the other side — from — big companies or from the local distributors. So we are in a good shape in validating two opportunity when we get more close to the launch, and the commercial launch. I believe that we can disclose more detailed information in what is the — what is our final decision.

Unidentified Analyst

Okay, that’s great. And finally, I guess some weeks ago, Lav video announced the positive trial results from LAV311 and LAV312, and those are trial pesticides, I guess, for use in the I guess, [indiscernible] etcetera. So what are the next stages in development there and what’s the significance in terms of market size, etcetera and timing?

Ofer Haviv

Okay. So let’s start with the last questions of timing, I think, in the first place, we mentioned that the commercialization of this product, it will take more time than they love to 1:1: Here you’re talking about [indiscernible]. So there with relationship process, it’s a little bit longer. So we expect to read-through the market at 2024. Please remember this last one. One is expected to reach the market in 2022. So you know first of all, that 2022, second product 2024. So this is with respect to timing. And next year we are expecting to conduct a broader field trials in more location. I can tell you that this is one of the most lucrative type of product for vineyard. So we are very excited about this opportunity and with respect to the results, so, again, we didn’t disclose the specific numbers. But what we mention is that the performance of our candidate showed it was better than the competitor, meaning other biological products trying to address the same [indiscernible]. But we also mention, and this is for me, very important, that if I am showing a nice result, even compared to the chemical, product and this is a very strong statement because usually if there is a disadvantage to [indiscernible] their performance are not close to a synthetic molecule. And if we’re claiming that we feel comfortable using our products, we even compare to chemistry. This is a very strong statement and also can reflect what would be the gap between our products or what is available today in the market when you’re talking about [indiscernible] designs. So we are really very excited and I think that we also had a nice picture today in press release. So sometimes, you know, even a picture can send a very, very nice message. And it was just one example from the picture that we get from these field trials. So we are very excited from this specific program.

Unidentified Analyst

So how does your LAV311, 312 compared with in terms of toxicity, compare to what’s currently being used?

Elran Haber

You are talking about the efficacy toxicity. So I think that, I would — I think this type of question I need to ask Ido the CEO of Biomica — sorry, Lavie Bio. I don’t have this information in front of me, so I don’t want to say something that I’m not sure about.

Unidentified Analyst

Okay. But — so what is the advantage of the product compared to your competition [indiscernible]?

Ofer Haviv

Currently what we’re talking about is mainly the efficacy. And efficacy is how you reduce the damage of the fungi in the vineyard compared to the other products in reducing the effects of the fungi that we are trying to address.

Unidentified Analyst

Thanks [indiscernible].

Elran Haber

The idea of a biological it is that they are supposed to replace or reduce the need of a chemistry because at biological, this is a microbes exist in nature. And the whole idea of using ag biological is that they are supposed to be greener to use versus the Ag chemicals. So this is the main reason why there is a strong trend of using a microbes versus the synthetic molecule.

Unidentified Analyst

Okay.

Operator

The next question is from Geoff Gilbert of Inukshuk Investments. Please go ahead.

Geoff Gilbert

Good afternoon, Ofer. Congratulations on your recent momentum. I just have two questions for you, if you don’t mind. If you could comment on the level of engagement from each of your large ag partners, specifically, have there been any interruptions in regard to the pandemic? And I’m wondering if you can comment also specifically on Bayer. Are they more engaged or stronghold after acquisition of Monsanto?

Ofer Haviv

So Monsanto has been acquired by Bayer and the agreement that we were committed to Monsanto they were also transferred to Bayer. Last time we checked, they are still holding their share — the share that Monsanto holding Evogene. So nothing changed in their holding in the company. This was one of your question with respect to the engagement, and we have two ongoing collaboration with them. One of them is in the field of improving situate for Fusarium. So this is an ongoing program. Actually, the last time that I look into the annual report of Bayer when they describe their ongoing collaboration, so they mentioned in their chart their relationship with Evogene.

The second collaboration that we were a little sponsor for Monsanto to Bayer, it was the yield [indiscernible] collaboration between government developing a GMO product. So this is also one of the reasons they’re still working on some of the genes that we deliver to them. I can’t disclose much because of the confidential agreement that we have with them. But this is — this professional agreement was also mentioned in their annual report. Apart from their relationship with BASF in the field of improving yield and the drought tolerant corn and soybean via GMO type of product. So I hope that answer your question, if I understand it correctly.

Geoff Gilbert

Yes, in general, it sounds like they’re more engaged than they might have been the last few years when they were trying to digest Monsanto’s effort.

Ofer Haviv

I think that now, when Bayer acquired Monsanto, I can imagine that this is the beginning, it wasn’t easy to [indiscernible] such a big company. But now things are more smoothly and we are in contact with them on a regular basis. And we have some of the people that we know very well in Monsanto today, they are in a major role in Bayer. So we also have a good relationship with Bayer management team these days.

Geoff Gilbert

That’s great to hear. I know there’s a lot to cover, and so I appreciate your general overview as well at the beginning of the call. Just my final question. You mentioned a couple of times the commercialization plan for Canonic. I was wondering if you could give a little bit more detail there. Is that direct to market, are you going to produce traits and then license them and sell them. Can you give more detail?

Ofer Haviv

So I think that there are certain products family that we are targeting. The first product and it will be based mainly on a Evogene [indiscernible] technology to identify from a very broad germ plasm, some very promising, a line that even without improving them in a sophisticated genomic technology, they could reach the market and show a high standard. And this would be the first product that is expected to be launched in 2022. Actually, we — this quarter we announced that we received the approval for seedling greenhouses to grow cannabis, we can deliver them to third-party to grow into a human Israel. And then we can produce a product that will be ready for sale. So we saw this announcement in a way, we complete the full, a — pathway to commercialization.

The second product, the second type of product which is expecting to reach the market in 2023. It will be a unique variety that will be based on a breeding using what is called genomic markers that are — that we are now identified and using Evogene technology. And this product will show a unique criteria compared to what exists today in the market. In the far in the midterms in 2023 and on. I’m expecting to see more and more unique type of product that we will base not just on Evogene technology, but also on some medical or technical study that we are conducting around this product, which later on — all of this information is integrated into our system in order to identify specific pathways and how to modify the genomics, not necessarily through GMO approach, could be what it was mutagenesis already or maybe even genome editing technology.

So in order to improve specific manufacturing or specific cannabinoid that again, it will again address the specific need in the medical cannabis area. So the first products to reach into the market will be mainly based on the unique technology of what is called phenotypic, meaning to identify based on the existing genomics of the crop, what is — what could fit to the market needs. Then immediately after this, there will be a unique line based on a Evogene technology using genomic markers and also [indiscernible].

Geoff Gilbert

That’s great detailing. And just so I’m understanding correctly, Canonic will be growing and selling. So we expect to see some growth in the marketing team, etcetera. Will this be licensed out and distributed through other sales channels?

Ofer Haviv

So at least for now, it’s in between and I will explain. Canonic is responsible for developing the unique variety. And currently we have also the authority, the license to produce fettling or in a week or so could be seen. And then we are planning to use third-party that we are already in advanced negotiation with them, that they will grow. They have the license to grow cannabis in greenhouses here in Israel. And the flowers and the cannabinoids, we are going to extract it from these growers and we will be responsible on the sales. And then we can sell it through a sort of directional channels or we can use distributors, but we will be responsible also on the phase between the growing and the consumer. So we will — be in high level, we will be responsible from developing the variety [indiscernible] telling the end product. But there will be pieces in this on the way that we are going to use third-party mainly Growers, because I don’t think that there is any real advantage for Evogene to invest money in a growing facility. And I would prefer to always — we prefer always to use and look for the best grower of cannabis in Israel or abroad to grow it for us.

If we come to the conclusion that no know economically or maybe there is a reason for us to move into this direction, we might decided to do so. But it is in the first year. I’m not too much excited to invest too much capital in growing facility when other people can do it in a very, quite competitive price and to do it for us and we can be responsible and get the value from selling the end product because [indiscernible] this is really the big margin.

Geoff Gilbert

Great. We look forward to your growth. Thank you.

Operator

There are no further questions at this time. The company would now like to answer questions received from investors prior to the call.

Ofer Haviv

Hi, this is Kelly Green on the part of medicine group Evogene’s External Investor Relations team. We actually have two questions submitted over email from investors. Our first question is a financial one for the week. Your recent deal included Prefunded warrant. Can you shed some light on what this means in terms of the company?

Dorit Kreiner

Yes, of the prefunded was included in the second deal, actually, the ones that were already paid for and we already received the money from. So actually the one size was two point four nine, which means $0.01 discount versus the share price in the deal 2.5. The reason for this structure is effectively the share price was due to wish of a particular investor that had internal limits on the amount of Evogene stock they could own, but not they’re willing. So actually and basically, it was a technical solution to a technical problem. So, as I said, the warrant was already paid for. There is no element of future dilution in the company and there was practically no discount to the overall deal.

Ofer Haviv

Okay, thank you for that. And the next question is for Ofer. Do you expect to use the funds raised recently to accelerate existing programs or into new programs in new areas?

Ofer Haviv

So established in our filing and as mentioned on the call, we intend to use the proceeds from the fund raising first and foremost for support of our subsidiaries, existing programs and to maintain Evogene’s competitive edge.

Unidentified Company Representative

Okay. Thank you, Ofer. That’s the questions we received. So back to the operator.

Operator

[Operator Instructions] 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 97239255901. Mr. Haviv, would you like to make your concluding statements.

Ofer Haviv

Yes, thank you. Thank you all for joining the call today. We look forward to updating you with our progress over the next few months. Thank you and good day.

Operator

Thank you. This concludes Evogene’s third quarter 2020 results conference call. Thank you for your participation. You may go ahead and disconnect.