Evogene Ltd. (EVGN) Earnings Call Transcript

Welcome all of you to Evogene's 2021 Investor and Analyst Day. My name is Kenny Green, Director of Evogene Israel, and I will be hosting this call today together with Aviva Banczewski, Investor Relations of Evogene. Before we begin, I would like to draw your attention to the safe harbor statement. To summarize, certain statements made during this webinar may constitute forward-looking statements, and I refer you to this slide that refers to these representation. After my opening introduction, Ofer Haviv, President and CEO of Evogene will open the day with an overview of Evogene, and then we will move to each subsidiary CEO for a short presentation of approximately 10 minutes followed by 5 minutes for Q&A. The order of subsidiary presentations will be as follows: Dr. Elran Haber, CEO of Biomica; Dr. Arnon Heyman, CEO of Canonic followed by Mr. Doug Eisner, CEO of AgPlenus. And we will end with Mr. Ido Dor, CEO of Lavie Bio. We have already received many questions in advance of today's event. By the Zoom app, you can send us a question at any time. We will aim to address some of these between each presentation and in the open Q&A session at the end of the webinar, but please bear in mind that to keep the day within a reasonable time frame, we may not be able to answer all your questions. I note that this webinar is being recorded and will be available for viewing in the coming days with a link on the Investor Relations page on Evogene's website. In addition, the new company presentations are also available on Evogene's website. And now to start the event, we would like to present Evogene's brief new company film introducing Evogene. [Presentation]

With that exciting initial taste of Evogene and its subsidiaries, I would now like to hand over to Ofer Haviv, President and CEO of Evogene. Ofer, over to you.

Can you allow me to use my camera, please? Thank you. Thank you, Kenny, for your opening words, and good day, everyone. Thank you for joining me today for Evogene 2021 Investor Day. My name is Ofer Haviv, and I'm Evogene President and CEO. In my part today, I would like to give a brief introduction to Evogene's current and anticipated activity, which will also provide a good starting point to our subsidiaries presentation to follow. Let's start with our mission. Evogene's mission is to change the way lifestyle companies are developing their product. And the manner we want to achieve this target is by using the most advanced computational biology technology that we developed. We aim to revolutionize product development in life science industries. Why the product development in life science industries needs revolutionizing? Is there a really need for a change? I believe you all know the answer. There are many challenges associated with development of biology-based products with the most pressing being high development costs, long development time and the most importantly, low probability of success. So we believe today, there is a great opportunity to overcoming those challenges by harnessing the computational revolution for the benefit of life science industries. As you are aware, the computational revolution we have experienced in the last decades has had an impact on so many different industries, and we believe that now is the time for life science industries as well. Our vision is focused on utilizing computation ability to lead the change to substantially to increase the probability of success while reducing the time and cost of life science product development. When we are talking about computational biology, we are talking about a comprehensive technology platform comprised of big data and artificial intelligence, combining with deep understanding of biology to direct, accelerate and support the development of life science-based products. To execute this vision, Evogene has developed over the last 2 decades, a unique computational predictive biology platform at an investment of tens of millions of dollars, incorporating deep scientific understanding together with big data and artificial intelligence. In essence, we took things of biologists and chemists together with computational advantage to build proprietary technology called the CPB platform, which stands for computational predictive biology. We have a long list of collaboration with board leading companies and results obtained by our product development teams that support the validity of our approach and technology. On this unique platform, the CPB, we established 3 main engines to direct and accelerate the discovery and development of products based on the following 3 core biology and chemistry components: microbes, small molecules and genetic elements. The MicroBoost AI is the engine that supports the discovery and development of products based on microbes. The second engine is ChemPass AI to support the discovery and development of products based on small molecules and GeneRator AI for products based on genetic elements. So every company out there that develops products that are based on 1 of those 3 core components can significantly benefit from the technology that Evogene has developed as a solution for directing and accelerating its product development efforts. I would like to explain the implementation and uniqueness of our engines. As you probably know, when developing product in life science, there are 2 main phases, discovery and development. The discovery phase based on product definitions require the identification and selection of reasonable number of candidates for initiating the development phase towards a successful product. The challenge is that the number of possible candidates from billions to infinity together with a significant number of criteria that need addressed for the successful product is extremely complex. This is exactly what our technology was designed to address. The prediction of the most promising candidates that indicate true potential for a successful product. In addition to narrowing down the candidates number in the discovery phase, we are also supporting our partners in the development phase. In the development phase, the chosen candidate undergo trial validation and optimization processes on the way to becoming a commercial product with the desired attributes. The uniqueness of our approach is that we can propose a comprehensive solution for optimization, which can avoid a common situation where modification made to improve one attribute, wind up creating problems with other attributes. For instance, by improving the safety profile, the efficacy of a product can unintentionally be reduced. As our technology can take into account numerous variables for specific candidates product, we can provide this comprehensive solution that can significantly decrease these development problems. So how we capture the value of this amazing technology? Evogene has 2 different business models. The first, which is more common in our industry and was our main business model until 2014 is product development through collaborations. In this business model, Evogene engage with a partner for a joint development of a defined product requested by the partner. In this frame, Evogene conducts the initial R&D activity, discovery and early-stage development, while later-stage development and commercialization is conducted by the partner. Until 2014, Evogene engaged in several conversion of these types with Bayer, Monsanto, DuPont and Syngenta focused on improving seed traits using GMO approach. Evogene's second business model is rather unique. Starting 2015, Evogene made a strategic decision that in addition to product development with partner based on the partner request, it will begin developing its own product pipeline, each focusing on a specific industrial segment, benefiting from our unique technology. When such a product pipeline reach a certain level of maturity and they reach this stage rather fast due to the quality of our technology, we spin this activity into dedicated subsidiary. Each subsidiary is focusing on continued development of its pipeline and adding new products to its specific market segment while all using Evogene technology as its core competitive advantage. Today, Epogen has 4 main subsidiaries, each focused on a different field of activity. I would like to emphasize that each subsidiary has its own Board of Directors, separate management, separate scientific advisory board and its own R&D team that focus on developing its own pipeline, while they all benefit from using Evogene technology. According to the end market, the subsidiaries can decide to commercialize their products independently or in collaboration with the partner. I will now move onto discuss the fields of activity in which the company is current -- which Evogene is currently operating and could potentially expand to in the future. Starting on the left, we have the CPB platform, as already mentioned. We have -- we now have 3 engines, which emerge from this technology, MicroBoost AI, ChemPass AI and GeneRator AI. Given the broadly applicable capabilities of our technology that's provided through its 3 engines, we can potentially enhance and improve product development in a variety of life science industries, including human health and agriculture. Currently, we are applying MicroBoost AI engine to direct and accelerate the discovery and development of 2 type of products. Human microbiome based therapeutics in the human health, and ag-biological products in agriculture segment. We are applying ChemPass AI engine for the discovery and development of 2 type of products, drug based on small molecules in human health and ag-chemicals such as herbicide, insecticide in agriculture. Lastly, we are applying GeneRator AI engine for the discovery and development of 3 types of products: medical cannabis in human health, improve seed traits in agriculture and improve castor variety to support the castor oil production industry. As I described earlier, we have 2 business model to capture the commercial value of our technology through direct collaboration with partners and through subsidiaries. As you can see in this slide, most of our activity has been translated to dedicated subsidiaries. Today, only our seed trait activity, our legacy activity in the field of agriculture is organized as an internal division in Evogene. In human health, we have 2 subsidiaries: Biomica, focusing on microbiome based therapeutics and Canonic focusing on medical cannabis products. In agriculture, we have 2 subsidiaries, Lavie Bio focusing on ag-biological and AgPlenus focusing on developing ag-chemicals. In other industry, we have 1 subsidiary, Casterra focusing on ag-solution for castor oil production. But this is just the beginning of tapping into the potential of our technology. We are continuously looking for new fields of activity where we can implement our capabilities and increase the value of Evogene. Currently, we're evaluating the initiation of discovery and development of life-science based product in various new fields, including the following. Microbial based product for the aquaculture industry using MicroBoost AI, drug optimization for human health using ChemPass AI and developing high-quality plant-based food using GeneRator AI using genome editing. I look forward to updating you on the exciting development in those potential fields in the future. Before I complete my presentation, my part in this Investor Day, I would like to give an overview on the Evogene Group structure. It's important for me to state that Evogene holds all the rights to its unique technology, the CPB platform and the 3 engine, while providing the right to use this technology to its subsidiary, each in their specific area of activity. I would now provide additional information on the Evogene Group structure. In human health, Evogene hold 90% of Biomica, which aim to provide therapeutic based on microbes that exist in the human gut. Our second subsidiary in the area of human health is Canonic, which focuses on medical cannabis product, currently Evogene hold 100% in Canonic shares. In agriculture, we have AgPlenus, which focuses on developing ag-chemical for crop protection, mainly focusing on all the herbicides. Currently, Evogene holds approximately 98% of AgPlenus' share. Also in the agriculture area, we hold 72% in our subsidiary Lavie Bio. Lavie Bio is focused on bio-stimulants, which when applied to the plant improve its yield and bio-pesticides protecting crops from pests such as fungi, disease and insects. The remaining 28% in Lavie Bio is hold by Corteva, one of the world's leading ATM companies following $27 million investment in the company in 2019. Next is our seed trait division aiming to genetically improve seed trait for the benefit of both farmers and consumer. Finally, we have a small activity in the area of castor oil production This oil is used for a wide variety of industrial use, but currently, the supply of this oil is unstable due to the unmodernized nature of the cultivation of this crop. Casterra of which we hold 100% and to provide a modern solution for castor cultivation, which is based on a new seed variety and advanced growth protocol. I would like to end by saying that we look forward to continuing with our rapid growth and achieving our target for the success for the Evogene Group. Thank you.

Thank you, Ofer. Thank you very much for your overview. I would now like to introduce our next panelist, Dr. Elran Haber, CEO of Biomica. Elran, please take it away.

Thank you, Kenny. It's my pleasure to be here today. And maybe before I start to introduce Biomica just by way of introduction, my name is Elran Haber, I'm the CEO of Biomica. By training I have a PhD in pharmaceutical sciences, also hold an MBA, major in finance and financial engineering. Prior to Biomica, I managed a private investment firm in Israel, specialized in life sciences and later on, served as the CEO of a publicly credit company in Israel, which I led to a successful IPO on NASDAQ. So I'd like to introduce Biomica to you today, and I will start with our mission and focus. So our mission is to discover and develop novel therapies for microbiome-related human disorders and doing that by leveraging our unique computational predictive biology platform. So things that most important thing for you to know is that Biomica is positioned as a biopharmaceutical company, and we are currently focused on 3 main domains. The first one is for the treatment of immuno-oncology. The second is gastrointestinal-related disorders in which we have currently 2 active programs. One is for inflammatory bowel disease, and the second is for functional bowel disease, meaning IBD and IBS. The third domain that we are active in is infectious disease with specific focus on antimicrobial resistance. Again, we have here 2 programs. One is an internal program for treatment of C. diff infection. And we have another program that is in collaboration with the Weizmann Institute in Israel with a group of the Nobel Prize Laureate Prof. Ada Yonath In general, I would say that our drug pipeline is enabled by unique computational predictive biology platform, basically combining big data with AI-based technologies. Biomica was founded in Israel in 2017, and our main and largest shareholder is Evogene. So to have everyone recognize the same kind of terms, I would like to first introduce the term microbiome as you heard this term in Haviv's presentation as well. So as we are talking about microbiome, we are talking about the trillions of microbes living in and on our bodies acting as the other genome. And we've known for years that those microbes play a critical role in wide diversified bodily functions ranging from food digestion, protection from disease and production of nutrients. In recent years, we've seen more and more clinical evidence being accommodated that those microbes have a significant role as well in wide array of illnesses. And Biomica as other companies in the microbiome space are targeting a phenomena called dysbiosis, a state of microbial imbalance in order to develop new therapeutic modalities. So just describing the landscape, the market landscape, the microbiome space is a rapidly growing space. Since its beginning in around 2013, 2014, it has been growing rapidly, representing a multibillion-dollar market opportunity. The key drivers in this industry are mainly the big pharmaceutical, multinational pharmaceutical companies. We've seen the activity of prominent VCs, OrbiMed, Seventure, Flagship. And today, we have a number of companies that are being traded on national exchanges, both in the U.S. and in Europe. As for the main areas of interest for microbiome companies, I think that the largest one is the GI-related disorders, but we've seen a shift in the beginning of 2018 when more and more companies started to work and develop products for cancer and autoimmune diseases. Minority of companies working on other applications, including derm and CNS. Since this industry is relatively young, most of the drug candidates are still either in discovery or preclinical phase, but we've seen great examples of products that reach clinical phase and I will relate it in the end of my presentation. So I would like now to describe the major challenge in the microbiome space as microbiome space is becoming more and more big data driven. And when I refer to big data, I'm talking about the Multi-OMICS big data that includes the microbial genomics, metabolomics, proteomics and so on. In addition, you need clinical data and putting them together in order to address a specific biological question. And the question is how to cope with the enormous amount of information. And to be honest, most of the industry today, is taking the conventional, traditional pharmaceutical approach of trial and error, basically trying to collect samples from patients to try to have equivalent profile of those patients compared to healthy individuals, and this is a long and exhausting process. It's like an attempt to find a needle in the haystack or to get the lottery numbers. We believe that you should take a different approach, and that is something that we do through our unique computational technologies. We have the ability to integrate massive amounts of data to perform high-resolution analysis and eventually to obtain robust predictions. And those things are being done by 2 main pillars in our system. The first are the unique and proprietary databases that's been generated in our company and together in collaboration with Evogene. And the second are the unique computational tools that are being used to mine the data. I think that one of the most important statements in this slide is that I would like to relate is the fact that Biomica although is a young company, we didn't start from scratch. We had a privilege to leverage the extensive know-how, experience and expertise that has been generated in Evogene. Evogene, as Ofer mentioned, invested in the last 2 decades, tens of millions of dollars developing the CPB platform. So our task was to try to tailor this platform for our own needs for the discovery of novel drug candidates based on microbes. As we approach the patients, we have basically 2 ways of intervention. The first one is through a selective elimination of pathogenic microbes. And this is something that we do through a unique platform that Ofer described the ChemPass platform. They basically enable us to screen a specific targeted protein in the microbes. And by that, to try to find the most selective small molecule that will bind to this protein and will inhibit the activity of this protein. The second way of intervention is by supplementation of beneficial microbes to the patients. And this is something that we do through our unique platform called the PRISM, which is powered by Evogene's MicroBoost platform. We are using this approach in our immuno-oncology and GI disorders programs. Biomica has targeted a high-value clinical programs. As I mentioned at the beginning, including immuno-oncology, GI-related disorders and infectious disease, all of them represent a multibillion-dollar market opportunity and that's something that we are advancing now into our pipeline. And as I would like to describe our pipeline, I think that it's important to mention that although we have 3 segments that we are active, our most advanced program is our immuno-oncology program in which are now completing our preclinical studies and approaching our first-in-human proof-of-concept studies that will take place later this year in 2021. We have 2 drug candidates undergoing preclinical phase for IBD, BMC321 and 322. We have 1 drug candidate for IBS that completed the discovery phase and now enters the validation phase. And as I mentioned in the beginning, we have 2 programs for infectious disease. One is for C. diff infection, which completed the discovery phase and one collaboration with the Weizmann Institute with the group of Ada Yonath -- Professor Ada Yonath that is still in the discovery phase. I would like to show you now a case study how we can translate in silico insights and the use of big data in order to develop drug candidates that are being validated in, in vitro and later on in vivo assays and that are on being taken into the clinical phase. So our drug candidate for cancer, BMC121 was demonstrated to show superiority over anti-PD1 stand-alone therapy when we tried it in various cancer models. I would like to start with our first results that I would like to share here is the recent published results from October of 2020 when we demonstrated the superiority of the combo treated mice with our BMC128 and anti-PD1 in comparison to anti-PD1 stand-alone and you can see that in various parameters. The first I would like to show here is the survival rate in the study. When we used anti-PD-1, you could see that approximately 30% of the animals could survive through the study when compared to the control untreated mice, none of them survive. But when we treated the mice with a combo of our BMC128 together with anti-PD-1, we were able to increase the survival rate and almost double it reaching to approximately 70% of survival. When we looked on the resist criteria, which represent the overall response to the treatment, you can see here in the right that when we treated the mice with anti-PD1 alone, we could gain a lower effect. But when comparing to our combo treated mice, we were able to increase the overall response by 50%. So that was a very compelling result that was, for us, very exciting. As we move forward, we were able to show -- and this is something that we recently announced that these results are repeatedly kept on coming when we try our combo in various types of cancer, including melanoma. In this case, I would like to show you how we were able to significantly reduce the volume of the tumor when we treated the mice with a combo in comparison to anti-PD1, Nevertheless, if we talk about the untreated mice, we were able to show the effect of this combo, not only in the tumor -- the volume of the tumor, but more than that, in the overall response rate as was published in our recent PR and in other parameters, including shifting the tumors from being called to hot tumor, meaning increasing the infiltration of immuno types into the tumor to fight the cancer. We are now moving forward, and we announced last year that we started the work on scale of production and eventually production of a clinical batch for our first-in-human studies. And this is something that we are keep on working. We hope that we'll be able to start our first-in-human study, and this is exactly what we intend to do by the end of this year in 2021. As we look forward, we have a number of inflection points that I would like to refer in this presentation in 2021 and 2022 that relates to our most advanced program. First, in our IBD project, we are now looking forward to expand our preclinical studies and to gain more results. Obviously, in our immuno-oncology program, we would like to initiate our proof-of-concept study first-in-human that will start by the end of this year. In 2022, we expect that we'll be able to start the scale of production and the preproduction of our drug candidates for IBD and to obtain our results from the proof of concept first-in-human that will be done in our immuno-oncology program. Last but not least, I would like to refer to the recent positive results that were shown and published by late 2020 from various companies in the microbiome space, just demonstrating and validating the utilization of microbiome-based therapeutics. This is a great example to show that, that could validate as well Biomica science and clinical approach to demonstrate the great value potential of Biomica. Thank you for listening, and I would be more than happy to take any questions.

Thank you for that, Elran. That was very interesting. I think we have time for only 2 questions. So we received these from investors. First question, why have medicines targeting the microbiome reemerged recently? And please discuss why you think now is the right time to be in the space?

Okay. Thank you, Kenny. So I think that, first, the recent results that I just described coming in late 2020 was a great example that this space not only is growing rapidly, but it keeps the good momentum. And I can just relate the fact that in 2020, it was new highs of investments in microbiome space. New extensive amounts of clinical trials that were generated in the U.S. and in general, in the world, approximately 600 clinical trials started in the microbiome space. And we are looking forward to have the first maybe drug that will be based on microbes being approved in 2021. So I think the momentum is great. And the fact that Biomica is part of this industry, I think it's very exciting, and we're looking forward to gain more insight as time will go by.

Okay. And second question, how does Biomica differentiate itself from other microbiome-based companies?

Okay. So I think there are a lot of differences that we could talk about in this session, but I think the most important things are the 2 main elements that I described in the presentation. The first one is the fact that we have a very strong robust computational predictive biology platform that we use in order to develop best-in-class products. The second I think that is important to mention is that we are using this platform in kind of a different approach. While most of the industry are looking on the taxonomic analysis, meaning they're trying to identify the specific trends that are associated with disease, we are looking deeper into the mechanistic features. So we are looking to understand the modes of action in which microbes could change in effect a specific disease. And this is something that we do quite differently from other companies.

Okay. Elran, thank you very much. We're now going to move over to Dr. Arnon Heyman of Canonic. Arnon?

Hi, Kenny. Hi, everyone. Just a minute, I'll start my video. So hi, everyone. Thanks for joining us today. My name is Arnon Heyman, and I'll present you -- just a minute, yes. So my name is Arnon Heyman. I'm the CEO of Canonic. My background is PhD in biotechnology from the Hebrew University, spending a few roles in the Israel biotech industry and 6 years ago joined Evogene. In the last 2 years, I am leading Canonic, which is Evogene's subsidiary in the sales of medical cannabis. So today, I'll present you our activity, starting by our vision. So Canonic vision is to commercialize effective, precise and stable medical cannabis products based on novel cannabis varieties for optimized therapeutic impact. And we are here because genetics can make cannabis much more effective. Looking at the global cannabis market, the market is divided to medical cannabis and recreational cannabis. The medical cannabis is more than 60% of the global market today. Global spending is expected according to analysts to go over $40 billion in the next 4 years. And the main territories are North America, followed by Europe and the rest of the world. Interesting to mention here that Israel is the third largest market in medical cannabis today, which is an interesting fact for such a small country. From numbers, I would like to go to the challenges in our markets. So 3 main challenges that I would like to mention today, stability, yield and specificity. The first challenge, stability is from substantial variations within varieties that produce inconsistent products. We see today, physicians and patients report inconsistent results from the products they use and this is the challenge in stabilizing those specific varieties and products. The second challenge is yield, we would like to get more active compounds and of course, yields in income per square foot from our cultivation sites. And the third challenge is specificity. This challenge derived from a significant knowledge gap that we have today that actually prevents the match of active compounds from the cannabis plant to the medical indication and their therapeutic effects. Meaning that in order to design specific products, we need to have much more knowledge about the activity of those compounds in the patient's body. From there -- from here is also the opportunity for Canonic. Because with state-of-the-art plant genomic expertise at Canonic, we can solve major market challenges. And why do I say that? Why would plant genomics, we can actually get 2 new products because plant genetic know-how is the basis for the development of premium cannabis varieties. And with premium varieties, we lead to novel medical cannabis product. So from plant genetics to medical cannabis products, this is the route that we have chosen to take. And I believe that with the know-how that we have, we can actually achieve this vision. Now let me present some of the capabilities that we have along the development strategy. Today, Canonic is the only company in Israel holding both computational genomic capabilities and full plant infrastructure to execute our work plan. Starting from left to right, the large genetic breeding collection that we have bought from around the world, more than 100 different cannabis varieties, state of the art data collection tools allowing us to characterize those varieties typically, genetically and chemically. The computational genomic tools that we have from Evogene, allowing us to actually find those genes, select those markers and from there to breed in our advanced breeding facility, one of the biggest facilities in Israel with also fully equipped molecular labs and tissue culture rooms and the propagation farm that we've also set in our site in order to actually propagate our genetic material and deliver the material to our cultivators. So focusing on the specific computational genomics activity that we do, which is one of our biggest advantages, taking big data and using artificial intelligence tools, we transform data to know-how. So from left to right, our database is based on the -- more than 10 billion data points on 200 different plants. This is the legacy we got from our mother company. On that, we have added proprietary cannabis data collected on more than 800 lines over the last year and also preclinical data that we have collected on some of those lines in our internal experiment. This is our big data. This is the cannabis tailored unique database that we have already built. From here, taking artificial intelligence tools that we have as the GeneRator platform on the CPB. With those specific tools, we can find the right genes, we can connect those gene to specific traits in the cannabis plant, design the genetic markers from here to varieties and to new products, which we intend to deliver. Those variety cannabis are divided into 2 main families that we are developing now. The first one on the left MetaYield enhancement of total plant compounds in the plant. Here, we'll focus on agronomic and consumer traits. Agronomic traits, are traits like high yield, time to flower, disease resistant and so on. And consumer traits are traits relating to the specific inflorescence. Inflorescence size, inflorescence density, color, strength and so on. And with this specific variety family, we expect to launch our first product next year. On the right, the precise family where we enhance specific active compounds focusing on therapeutic traits. We have decided to focus on pain and inflammation, which consists of more than 60% of prescriptions in the medical market. And in this specific family, we intend to launch our first product in 2023. Now that I've explained about our products, the technology and facilities, let's go and take a look on the cannabis value chain from genomic to product. Starting on the left, the R&D facilities developing the varieties through the propagation farms, cultivators, manufacturers, to the distribution and to pharmacies in order to present the products to the patient. Canonic sits on both sides of this value chain. On the left, with our R&D facilities and the propagation farm, all the capabilities, computational tools and infrastructure that I just mentioned are allowing us to develop the new varieties. From here, we work with service providers, with cultivators and we signed an agreement to work with Telcann, which is an Israeli cultivator. Formulator, production and distribution and agreement was signed with Tikun Olam. And from there, to sales and marketing. This is something that we are building our marketing strategy under our brand in order to sell our products under the Canonic brand. This specific business model is -- fits the Israeli market and is specifically optimized for the Israeli market. Once we go outside of Israel, we intend to collaborate with global players in order to co-brand our products outside of Israel. Now to the specific products that we intend to commercialize next year. In our first varieties, as you can see here on the left, as they appear in our warehouse, variety is expressed in High THC and High yield and so on. We are at the precommercial stage and intend to launch those specific products next year. Our next-generation varieties will focus on inflammation and pain. Those varieties are developed with the help of 2 research centers, Hadassah Medical Center and Migal Research Center, where we conduct preclinical studies in order to direct our breeding program, and we expect to launch those products in 2023. Another important part of the Precise product development is the collaboration we signed with Tikun Olam-Cannbit. Tikun Olam is one of the first cannabis producers in Israel with tens of thousand patients that already use their varieties and the data that they have help us in focusing our product definitions in order to co-develop the next generation varieties for specific medical indications. So our short-term milestones are for this year, 2021, this is our pre-commercial year. In the MetaYield program, we will reach our first commercial variety and we've already signed production and distribution agreements in order to commercialize our varieties next year. Next year is Canonic's first commercial year. MetaYield commercial launch will occur with the initial sales of our first product. And with the Precise plan, we will reach the first commercial variety and prepare for commercial launch the year after. So to summarize with 2 main points to take our message. We are using unique computational genomic capabilities to develop premium cannabis varieties as the source for our novel medical cannabis products, and we intend to enter the Israeli market with new varieties and commercialize premium products as of next year. Thereafter, we plan to expand to Europe and of course, to North America as well. Thank you very much for listening. And of course, I'll be happy to take any questions that you would like to have.

Okay. Thank you very much, Arnon. That was very helpful. We have a couple of questions I received. So our first one is, what are the advantages of Canonic's products over the existing products in the market?

Okay. So first line of our products are suited for the premium market. This specific characteristics relates to the concentration of active ingredients and product appearance, which important to mention that it's very important for patients when they choose their product. In addition to this, we expect our first lines to demonstrate higher yields compared to the [indiscernible] which creates a significant advantage over existing crops. The next generation products, I've mentioned some of them are expected to see improved fit for medical needs according to indication that we choose to work on. And of course, the genetic stability and product consistency, which is something very fundamental in our work developing the variety genetics.

Okay. Thanks for that. Second question, can you talk about any interest from global companies for what you have to offer? And when can we expect to hear about international developments 2021, 2022?

Okay. Great question, Kenny. We actually see many companies, and we have received many approaches from global and the local companies alike. They contact us asking to work with our genetics with the specific difficulties that they face and asking for solutions from the genetic side. Currently, our business strategy, the business strategy that we pursue is to focus on building our local go-to-market, as I mentioned, and under our economic brand. This was our main focus in the last year. I believe that soon, we will resume connection with global companies as well and build the right partnerships in the international markets in order to take us forward as well.

Okay. Thank you. And I think we have time for one more question. What are the differences and advantages that Canonic has compared with other cannabis companies?

Okay. So the cannabis industry is a fascinating industry, and it's very early stage. It's a very young industry, where we see a clear need for a state-of-the-art technology in order to bring this market to meet the expectations because our expectations are quite high from next-generation products. I see our technology as a game changer for the cannabis industry. Only a few companies in the world work on cannabis genetics, and the tools they possess are relatively limited. Our approach, the technology that we have, the data that we collect and the way, the know-how we have about the plant genetics allows us to shorten the development plan significantly and achieve quick wins in -- with well-defined products in a very lucrative and interesting market.

Okay. Thank you very much, Arnon. That's what we have time for. Let's move over now to Doug Eisner of AgPlenus. Doug?

Hi, Good morning. My name is Doug Eisner, I'm the CEO of AgPlenus. I joined the company last year in September. Prior to AgPlenus, I have been in the AgBiotech industry for almost 15 years. I was the co-founder and Chief Operating Officer of a company called Grassroots Biotechnology. We had a collaboration with Monsanto and then they acquired us in 2013, and most recently, I was the CEO of a company called AgPlenus. So our vision at AgPlenus is to design next-generation effective, sustainable and safer crop protection products by leveraging predictive biology and chemistry. And we're an agricultural chemical company producing pesticides, and there are 2 very favorable market forces that are driving our company forward. So the first of those is a growing market, a growing market for crop protection chemicals. In 2019, the market was estimated to be $63 billion and that's projected to grow to $90 billion by 2026. So even as there's a demand for new agricultural chemical products, product introductions have lagged. And you can see from the graph on the right, the decrease in the number of new active ingredients that have been released per decade. So if you look at the third part from the right, the 1990s saw over 120 new active ingredients released and that has decreased until the last decade when there were less than 40 new active ingredients released into the market. So more significantly than the lowering of active ingredients is the fact that there have been no new mode of action in herbicides for the last 3 decades. So there's no new mechanisms for new Modes-of-Action or biological functions to handle resistant weeds. Major ag companies have failed to meet the demand for innovation. The crop protection industry is dominated by 4 major ag chemical companies. Those are BASF, Bayer, Corteva and Syngenta. And these companies control 70% of the ag chemical crop protection market. And because their pace of innovation has slowed, they're increasingly looking to smaller ag tech companies to develop new small molecule candidates. And among the many small companies that have entered this market to fill this need, AgPlenus is leading the integration of computational technology to discover small molecules. And we're focusing on developing products with new MoAs, new Modes-of-Action. And this is designed to handle a particular problem for farmers that has arisen recently. And that's the rapid growth of resistant weeds. Because there have been no new MoAs and because existing MoAs have been overused, this has generated tremendous selection pressure. And so as a result, 263 herbicide-resistant weed species have evolved recently. One of those species is pictured on the left. You can see the farmer in the field holding a glyphosate-resistant Palmer amaranth plant. This is a particular storage of farmers across the globe. It's a very aggressive weed that's very difficult to handle. And resistant weeds, all told, lead to substantial economic losses for farmers, because they increase the cost of production in addition to reducing the yields of that production. So in the United States, an example is soybeans, which now for soybean farmers, it is an additional $35 per acre to control resistant weeds. And all told, U.S. farmers have lost approximately $2 billion per year from increased costs and lost yields. So AgPlenus' target-based technology addresses the challenges. So traditional agriculture, traditional legacy programs from the major ag companies, they employ what's called a spray-and-pray approach. And this involves taking an enormous physical library of hundreds of thousands of chemicals, spraying them in a lab and seeing how it works, and then hopefully elucidating the Mode-of-Action of those chemicals. We take a totally different approach. We start with the target. And the target is the protein within the pest that we want our chemistry to bind to in order to kill that pest. So we start with the target identification, and we use our computational program to then do a virtual screen for hits discovery, those are candidates. And then to move from hits to leads and lead optimization. In this entire process, this entire kind of very directed process of starting with the target is really the result of advancements that we've made in computational technology, specifically the CPB and ChemPass enables us to design chemistry. The ability to find a target, to locate a binding pocket within that target and design chemical that combine to that is really powered by computational technology, and that's a new development that we are spearheading at AgPlenus. This slide shows the product development stages from the very beginning, the discovery all the way through commercial product. And AgPlenus operates in the first half of that discovery, from target to hit to lead to optimized lead. That's where our expertise lies, that hardcore computationally driven research and development. And as we move products through different stages, from target all the way to optimized lead, risk decreases and the value of those candidates increase. Particularly at this stage from lead to optimized lead, during that stage, we conduct multiple field trials, multiple safety trials to really derisk the product, and we expect to see a very significant increase in value of the product from lead to optimized lead. So as we move products to our -- the various stages, we will sign licensing and collaboration deals with partners. Our partners will end up taking our products all the way to commercial market. And our revenue from these will be license fees for access to the technology; research and development fees to cover our costs that we incur in R&D; milestone payments as we advance our products to key milestones to derisk the products, improve the work; and finally, royalties, and we expect to see very significant revenue from royalties. A successful herbicide can garner hundreds of millions of dollars per year in the market and successful herbicides in our program should lead to very high royalties as a result of our partners' activities. One such collaboration we have is the Corteva collaboration. This is an early-stage deal that we signed with them. And the deal is designed to develop new MoA herbicides to target resistant weeds. We entered into the collaboration in March of 2020. As part of this collaboration, we conduct our early-stage research and development discovery and optimization of herbicide candidates. Corteva will conduct testing and product development. They have an exclusive license to our products. Anything that comes from this collaboration, they have exclusive license to that. And we will be compensated by research fees, milestone payments and royalties. And our goal for 2020 is to continue performing on this contract to advance collaboration compounds to various stages in the R&D program. So in addition to the products that we're developing for Corteva, we also have our own rich product development pipeline, which is shown here in this slide. The left column shows the different targets that we're going after. There are a number of targets, APTH1 initially and then insecticide targets at the bottom. The bars represent our different chemistries and their advancement through the pipeline. So we're continually moving our pipeline from hit to lead and then ultimately to optimized lead. The first compound listed here, APH1 is our leading compound. And APH1 is a new herbicide that has reached the lead stage. And these photos show our first translation from the greenhouse to the field, which is a very significant and important step for crop protection development. The proof that compounds that work in the greenhouse also work in the field is established by this initial trial. So on the left, you see the solvent control, a bunch of weeds. They're growing wildly, happily without any control with a solvent. In the middle is our treatment, APH1. It shows that across this broad panel of weeds, there's significant control. And on the right is glyphosate, which is the industry standard. And we are showing equivalent levels of control to glyphosate. So APH1 has great promise. It's a broad -- it provides broad spectrum weed control, meaning it tackles weeds across many different species. And it does so at commercial dosage rates, which is very important. And critically, as I mentioned, this is a new MoA herbicide. And as a new MoA herbicide, it attacks a different biological Mode-of-Action within the plant. And as such, it is effective against resistant weeds, including Palmer amaranth. That was that picture you saw in the beginning with a farmer holding that monster weed. We are effective against that resistant strain of Palmer amaranth. So our expected main near-term value drivers for 2021 are to reach a proof of concept for herbicide tolerance trait for a lead herbicide under development. So that would be ultimately a companion product that we would sell with our herbicide. So that's a seed, a corn seed or a soy seed that was resistant to our herbicide and make it be sold together as a companion product. In 2021, we're also looking to sign a licensing agreement for a leading candidate. In 2022, we want to move to the optimized lead phase for herbicide in our program. And then finally, to sign a strategic deal around an optimized lead with a partner, with a collaborator to take that to commercialization. So right here, you see our wonderful AgPlenus team. This team is focused on achieving 2021 goals and beyond. Thank you very much.

Okay. Thank you for that, Doug. We have time for 1 or 2 questions. So we've received a couple. The first one, please talk about the benefit of partnering with large ag companies like Corteva.

Yes, certainly. So Corteva really is advantageous for us. We do what we're good at, which is discovery and optimization but Corteva has tremendous resources, tremendous expertise in actually taking products and bringing them to market. They also have a robust market channels. And so if we're successful with Corteva, we expect to see our herbicide some sold across the globe through their market channels and relying on their expertise in product development and marketing.

Okay. Thank you. Second question, how does AgPlenus address safety issues?

Yes. Safety is critically important for agricultural chemicals. So most importantly, our target-based approach helps us tremendously. So with our target-based approach, we pick a target, that's the protein in the past. And we can pick -- we have the luxury of picking a target that's not present in mammals or humans. So initially, our chemistry should have no effect on higher-level species. In addition, we move our safety and toxicity tests in our environmental test quite early in the pipeline in order to ensure that anything we develop, it has been shown to be safe from the very beginning.

Okay. Thank you very much, Doug. That's all we have time for from you. Now we'll move over to Ido Dor of Lavie Bio. Ido?

Hi, Kenny. Thank you for that. Okay. So nice to meet you all. My name is Ido Dor. I'm by training engineering with the MBA as my background. Prior to joining Evogene, I had a career in management consulting. And also in the software industry, when I was part in the SAP management of Israel, leading sales and channels in local territory. And with the Evogene Group since the end of 2011 and since then taking various business-related roles, including being member of Evogene's management. And since 2015, I'm leading a bit the Ag-Biologicals Division within Evogene. The division spun out as Lavie Bio in February 2011, and I'm happy to tell you the story of Lavie Bio today. So let's start with the need and the need is about us, the consumers. We as a consumer in the last 5 to 10 years went quite a long past in understanding how important is what we consume, what we put in our bodies, and we are coming and demanding for more better quality, better health, better considerations we take about our food. An additional thing that is important for us as consumer is the sustainability, which becoming a big issue. We care about our planet. Unfortunately, the way we produce today in the agriculture is not exactly like that. And in a way, today, we put $200 billion of chemicals in the field. It's about chemical fertilizers, it's about core protection chemicals. And that's a big challenge, and this is something that both us as consumers, but this also translate to the regulator, which proves out some of those tools because of safety issues, sustainability issues and health issues. And that's exactly where Lavie Bio is focused at. So our mission is about improving food quality, sustainability and ag productivity. And we do it through microbiome-based ag-biological technologies and products. What we aim to achieve is to bring solutions, which are unlike some of the existing ag-biologicals are not less in the efficacy or consistency or commercial viability than the core protection and fertilizer chemicals. But we aim to supply and generate the next generation of ag-biologicals, which means ag-biologicals, which are healthy, sustainable and also addresses the trades of existing chemical products. So as good as or even better than existing chemical products. And the way to do it is through our focus at the microbiome. So one word about the microbiome, and there are billions of microbes. The microbiome are those microbes that are very, very closely related to the target organism, which will be the best, which could be the plant. And as they are part and integral to the plant, they evolve with the plant and practically hold the largest functional bank in nature. And what we do is stepping into this bank and not only being able to tap into this bank is powerful, but also the fact that we use those microbe as a live organism. In a way, we send the length or the manufacturing into the field to work with and for the plant along the season. Now that's a very big, ambitious and very challenging task because there are billions of microbes and the interaction is so complex. And in order to solve this challenge, we harness our BDD platform. BDD stands for Biology Driven Design platform. That's what we call internally the microbiome operating system. And this is the big data and AI platform that is powered by Evogene's CPB platform and also by the Taxon platform that we acquired and integrated into our BDD platform. What's unique about the BDD platform that it harness the functional understanding based on the genetics. In order to do discovery, which is looking at millions and billions and staying with promising few. But what we realized about 5 years ago that, that's not enough. And the main challenge is to go from those promising few into products. And that's why we developed the BDD platform to be instrumental in optimization, which is how to fix or to make better the existing microbe with potential in order to overcome all the hurdles in order to become a product. Recently, we also started on how to use this exact same understanding in order to leverage this platform in order to do the best type of application. And this is connecting the microbe and its capabilities into farmers' fields with a precision approach. In order to simplify the explanation of the platform, and I know that it's quite complex to try and grasp the full power of it. I will try to use LEGO because it's always simpler. So let's think about the left side of the slide, the nature's functional diversity. So think about the building blocks of the LEGO, things about millions of them. And each one represents maybe a gene or genes or any function that is part of the microbe. If we are able to capture nature's diversity and to do things better by nature, that's very powerful. However, there is infinite types of functionality. So how can we use it? And if we move to the middle picture, we can see what one of our main uniqueness brings to the table. So in a way, we know how to look on the genomic prism and on the function, but we also know how to choose and to model the right function. So in the middle, you can see the building books that are really important. So we have the wheel and we have the black cube, and each one of them has a different type of fold. And when we understand the key functions of the key building blocks, we can, in a way, design what we want to achieve. In this right picture, we designed the tractor, but in a way, we can design almost every type of application that will bring benefit in the field. That translates into our main capability that allow us to go ahead and develop products. And in order to commercialize them, we have our business model, which is comprised of 3 main pillars. The first one is the direct approach. So we are taking products all the way to the market. We are going to work with distributors in local territories and expand from there. But we will bring the label and the product into the field and work on the brand. The second type of model is a collaborative model in the middle. And this model is a model and we apply when it makes sense. For example, if we want to develop seed treatment for corn, and 72% roughly of the corn market is controlled by 2 players. Probably, if we want to be on their seats, we want to work with one of them. So this type of collaborations make a lot of sense with respect to go-to-market and also, of course, contribute to risk reduction and earlier revenues. The third type of model is a model that in a way we developed in the recent year or 1.5 years. And we felt that this platform is so powerful, that it doesn't make sense to use it only for our product. So we expanded, and we are now initiating the work of our optimization technology. So we can fix existing microbial-based product, but not only ours but also others' products. So in a way, if a leading company has a microbe-based product, and it needs to fix something in order to harness the already done investment in the development of the product in order to open it for larger acres, bigger markets, we can contribute with our technology. Of course, it's not a service, we also benefit from potential upside from this type of product. So that's in a way our current focus and test to the market. And now I will give you a taste on how this technology and the focus translates into products. So we focus on 2 types of products. One of them is bio-stimulants, which is about enhancing the yield. And the other one is bio-pesticide, which is about mitigating pests or giving protection against pests. In both types of products, the end goal is protecting the yield, increasing and protecting the yield. This is our product pipeline. So you can see that it splits between 6 programs, 2 of them are bio-stimulants and 4 of them are bio-pesticides. The most advanced bio-stimulants is expected to be launched next year. This is LAV211. And the most advanced bio-fungicides, which is part of bio-pesticide, is LAV311 or 312, which we target though, aim to launch in 2024. To give an example, so this is our LAV211 in the middle, you can see some pictures also some scientific advantage in the field. On the right, you can see the value that it generates. Each bar is a field in multi-location field. And the goal here is to generate on average around 4 bushels per acre for the farmer. This translates roughly for the farmer to $20 per acre. This is quite significant, taking into consideration its revenue. This could be a bottom line, improve the profitability to the farmer, more than 50% for the season. And also, this was tested against leading benchmarks and is significantly and in big magnitude brings better value. Another example is our bio-fungicide which is LAV312 in this case. And here, you can see in experiments across location in Europe and U.S.A. and South Africa, how it brings the significant value not only better than existing benchmark biologicals but also equivalent to the benchmark chemicals. This is quite dramatic when you consider a product that targets lucrative crops such as grapes. And you can see also in the picture, how dramatic is the impact when applying this type of product. So that's really very excited for us. Another benefit that we harness is, of course, our shareholders. We are back with 2 strategic shareholders. One of them is Evogene, which brings the cutting-edge computation and biology technology and keeps us updated and enable us to drive and to be on the cutting edge also in the future. And on the other side, Corteva, which is one of the leaders in agriculture globally, that beyond the fact that they are a strategic shareholder, we also collaborate with them and work with them and that, of course, brings a lot of value. Now to share with you short term or 3 years ahead, the milestone road map. So 2021 is about finalizing the pre-commercial phase of LAV211. We are going to launch it next year. We are establishing the commercial team. We are advancing the other products in the pipeline and preparing LAV311 and 312 for next year's regulation submission. And in 2022, first dollar sales from products and additional revenues from collaborations. And when we look at '23 and '24 additional launches in additional countries, extending to new crops and adding new products to the pipeline as commercial products with sales. That's a very tangible target. We work on them at the moment, and it's covering our day-to-day last. But the opportunity that we look at and in parallel are progressing is much bigger. So in this presentation, I touched the tip of the iceberg, which is a significant focus for the next years, of course, and this is the farm. So we are going to replace chemistry on farm, which is $200 billion opportunity. However, the opportunity is also impacting the post harvest, which based on estimation 30% of the produce getting lost in the post-harvest segment. And we believe that our products applied on farm can contribute dramatically also to post harvest. And in the future, we aim to work also on traits that are important for consumers. So it's not about killing the pest or increasing the yield, it's also about using exactly the same technology in order to bring values that will impact the value that the consumer gets by adding functionality to the end produce. With that, I am happy to address any questions and...

Okay. Thanks very much. That was very helpful. We only have time for one question. But it's so far a detailed question. Your lead product, LAV211, is focusing on improving spring wheat yield where you're initially looking at North Dakota, Montana and Western Canada. Could you please walk through some of the testing you conducted with LAV211, including yield improvements observed? In addition, how do you believe these results could correlate with cost savings?

Okay. Thanks, Kenny. So this product is a result of close to 5 years of activity. That's one of the first products in the pipeline. For the last 3 years, we are working on this in North America and also other territories. The main focus is bring yield in a week. And that's because it's with respect to go-to-market makes a lot of sense. It's 25 million acres quite in a compact area. So the reach is a bit easier for us. We have good field data cost location with various types of trials from the last 3 years. This year, we launched the farmer network. So we have a farmer network to real farmers working with real products and with our products on their seats. And this is like the last broad acre trial in commercial kind of trial that we are conducting this year before the launch. In parallel, we are planning and already working on expanding it to additional costs. So we have the product. It's working. We have the formulation, we have the fermentation. We built a contractor for upscaling, and we want to take it further to additional crops to additional acres. As we already announced, we got registration for the product already in North Dakota and Montana. We are in a process in Western Canada. And that's it in high level. Sorry, for the cost point. So as I mentioned, the average potential value to the farmer with current commodity price is around $20, $22 per acre on average, which is quite dramatically when you understand the P&L of wheat acreage. So it can contribute between 50% to 60% to its bottom line. So that's in a way.

Ido, thank you very much. I would now like to invite all the panelists to open their lines and cameras. And we will -- for the coming 50 minutes or so, we will open the call for further questions. [Operator Instructions] Okay. So we have a couple of writing questions. First one for Ofer. Do you plan on listing or selling off any of your subsidiaries?

First, I would like to thank to all the participants for their nice and very clear presentation. With respect to your question, Kenny, I think that I said that we are very excited from the progress that our subsidiary showed until this point of time. And I think that they are getting to the state that we can start to think about preparing some of them to be able to go public in a reasonable time period. So this is one of the things that we are now starting to talk internally. I can't be more specific from what I just now shared, but this is clearly an option on the table that we are now starting to evaluate for some of our subsidiaries, especially the ones that they are in a hot area that we know that the capital market is really looking forward and want to invest in.

Okay. Thanks for that. We now have Kristen Kluska who would like to ask a question. So Kristen, I'm going to open your line. Kristen, can you hear us?

Can you hear me as well?