Evogene - Edison Open House Interview

Thank you for this question. Today, the whole world is going through a revolution where more and more industries are adopting the power that computational can bring to develop a completely new type of product. And when we are talking about computational biology, we are talking about integrating the potential that exists in big data and how you analyze this data with artificial intelligence. And when you combine these two tools together with a deep understanding of biology, you create a very powerful technology platform that actually can help scientists to develop their products. When you develop a product based on biology, the number of variables you need to take into consideration is huge. To do it with the human brain or with a network and paper and pen is impossible. Only very sophisticated algorithms and a huge quantity of data can really take all the variables into consideration in order to choose the most promising candidate that will be the basis for your product development. Also, when you are starting the development process and need to validate your candidates toward commercialization, the number of variables you need to take into account to optimize a specific candidate is huge. This is another place where you can use our technology to direct and accelerate your product development process.

I think that this is something that, at the basis of Evogene from its initiation, we from day zero recognized that with all the respect to the computational power, without understanding the biology, it's not going to work. So from day zero, the founders of the company, they are biologists that understand that there is a huge value in integrating the computational power into the root. Only when you integrate them in a very strong way, you really capture the value of the computational power. In many cases, and sometimes even a little bit sorry to say, there are companies that are more focusing on the computational aspects without really digging into the biology. This is not the way that Evogene operates. This is why today we can offer three different types of products to our partners and customers to use in order to develop their products. The first solution we are offering is called MicroBoost, for companies that want to develop a product based on microbes. The second solution we are offering is called GeneRater, and this is if you are developing a product based on genomic elements, you would definitely like to use this technology. And the last one is called ChemPass, and this is for scientists that want to develop a product based on small molecules. In all cases, we integrate into this platform three important capabilities: deep understanding of science, big data, and artificial intelligence.

When you have such an amazing technology that can really accelerate and direct product development, the question is how you capture the value of this technology. So we developed in Evogene two types of business models. The first one, which is more common, is that we enter into an engagement with one of the big companies, one of the first-tier companies, where we together decide what is the product we want to develop. Usually, it's coming from the big company, this is the product that is interesting. Then we're using our technology to identify the most promising candidates. It could be a product based on microbes, and then we will use our technology to identify the microbes. It could be a product based on small molecules, and then we are going to identify the molecules. We also conduct some early development phase, we do some optimization, and then we deliver the candidate with all the information to our partners for further development and commercialization. The revenue that Evogene can see in such a case could be based on R&D fees or licensing fees, later on milestone payments when our technology is advancing in our partner pipeline, and probably the most important is royalty from the end product. But this is only one channel on how we commercialize our technology. Starting from 2015, we built a new type of business model. The idea was instead of developing a product or assisting to develop a product for our partners, why not develop the product for Evogene? So what we decided to do is, in a specific segment in the industry that can benefit from our technologies, we bring a small group of scientists and we ask them, please use the Evogene technology and develop a specific pipeline for this specific segment. For example, we're bringing chemists and we ask them to use our technology to develop herbicides, insecticides, fungicides. And then we bring another group of scientists and we ask them, please use our technology to identify microbes in the gut system of humans that you can use as drugs. What we did is that after a while, we found out that this group of scientists succeeded to build a very promising early-stage pipeline with very promising product candidates. So what we decided to do is actually to spin out this group of scientists with their product pipeline into a separate legal entity, where in the beginning we are holding 100% in this company. This company has its own board, which are all focusing on the specific segment in the market. Therefore, they are developing products for that market. What is unique for all of these companies is they all have a license to use the Evogene technology exclusively for their specific target market. We, as the shareholders at the beginning, support this company with the technology, with funding, and of course also with some corporate issues. But these companies are expected to grow and they are all expected to stand completely by themselves, including funding. And we are going to benefit from these subsidiaries as shareholders. So this is a very unique business model. And today, when you look at the Evogene group, we have Evogene, the public entity that holds all the rights to the CPP platform and the three engines I mentioned earlier. But then you have a list of subsidiaries, each one of them focusing on a specific market segment, developing their own products for this market segment, and they are using the Evogene technology as their main competitive advantage for developing these products and adding new products to the pipeline.

Biomica is focusing on what are the microbes that exist in our gut system that, by increasing or using their quantity, you can cure disease. I will give you an example that comes from the lead program that Biomica is focusing on. In September last year, 2020, Biomica announced that four microbes called BMC128, that Biomica identified by using Evogene's MicroBoost technology, and these four microbes already exist in our gut system, that when you add them to a patient that suffers from cancer, a patient that maybe didn't respond positively to the most advanced therapeutic drug that exists today, what is called the checkpoint inhibitors, that at least one of the drugs that many people are familiar with called Keytruda, that when you add these four microbes together with the drug I mentioned, you improve the efficacy of the drug significantly. We conducted two experiments, still in the pre-clinical stage, when we validated our microbes. We divided the experiment on mice into four different groups, all of them suffering from cancer. The first group that didn't receive any treatment, of course, they all died. But when we give the anti-PD1, this is the checkpoint inhibitor, around 40% of the mice survive. But when we give the same drug, this time with BMC128, more than 50% of the mice survive. And the fourth group of mice, which from our perspective is the most interesting one, what we did is we gave the BMC128, the four microbes, 10 days before we started the treatment with the drug, and we continued to give these microbes in parallel to giving the drugs. And in this case, close to 75% of the mice survive. This is really amazing results. And according to our plan, and this is something that we already disclosed, we are planning to initiate our first-in-human clinical study this year to validate BMC128 in humans. The idea here is to have a few patients that maybe didn't respond to the existing treatment, and we are now going to repeat giving them the same checkpoint inhibitors, but this time with BMC128. And if we succeed to see that some of them respond positively, this is amazing. And then of course we will move directly to phase two and on. But this would be something that we will be very, very proud of because if you can help and increase the efficacy of cancer treatment, I don't need to tell you what is the value and how much is important for us also as human beings.

Okay, so I will focus mainly on the four subsidiaries that you mentioned. With respect to Biomica, I think that again, hopefully, we'll have positive results in our first clinical trial. There are other two programs in addition that Biomica is focusing on. Some of them are expected to end the pre-clinical trial this year, 2021, and hopefully, with positive results, it will move to the clinical trial in 2022. So this is with respect to Biomica, but as I said, the most promising and exciting program is the immuno-oncology activity. With respect to Canonic, this is our company that's focusing on cannabis and medical cannabis. I'm sure that you know that here in Israel, which is the third market in size in the world, it's legal, and I'm talking of course only on medical cannabis. And we are focusing on developing new varieties by improving the cannabis genome to address specific needs in the medical cannabis market. So again, we are using our technology to change the plant genome. Again, maybe it's worth mentioning that it's non-GMO modification, it's through a different approach. And the idea here is to bring a completely new variety which leads to a completely new type of product to the cannabis market. The expectation is that our first product will be launched in 2022, and hopefully, we'll be able to announce the first variety entering into commercialization production during 2021. Moving on to AgPlenus, AgPlenus is our company that's focusing on developing herbicides and insecticides. I will focus on the herbicide program. This is, by the way, there is a huge need in the ag-chemical industry for novel herbicides. In 2020, at the end of the year, we announced that we succeeded to achieve what is called the elite phase, which means that we validated our chemistry in the field level and we showed that our chemistry can kill weeds that develop resistance to the existing commercial products. And next year, we are going to expand the experiment with these lead compounds and also go through some safety validation. And my expectation is that this could lead to a strategic collaboration agreement with one of the big chemical companies. I can tell you that we are already talking with a significant portion of these companies on this specific candidate. Last but not least is Lavie Bio, our company that's focusing on biologicals for agriculture. I am here talking about a biostimulant, which is a microbe that when you put it in the field, you improve yield performance and strengthen the crop. And they're also focusing on biopesticides with these microbes. When you put them in the field, you protect the crop from different types of fungi or insects. By the way, this is the segment that's growing the fastest in the last few years because most of the consumers are looking for a product that was grown by using a biological type of product and not using chemistry or genomic modification. So the lead product of this company is the biostimulant for spring wheat and is expected to reach the market in 2022. And next year, we will hopefully finish the last field trial together with local farmers in North Dakota, USA. It's going to be the fourth year of validation of our leading product, and this is another important milestone for Lavie Bio for next year. In high level, in Evogene, we are very happy with the progress of these four companies, but we already started to continue to validate new opportunities, new areas where you can use our technology. And one of the areas that I'm very, very excited about and we start to explore is how we can use the CRISPR technology to develop new types of products.

So you're 100% correct. The revolution that this concept of CRISPR brings to the world, it's amazing. It's a technology that can really modify the genome in a very precise way. Still, using this technology for commercial application, the level of technology you need is a little bit higher than where it is today, which is okay for the academic research and for publication, but not necessarily good enough when you're moving to the commercial level. And there are a few challenges that we identified that you can address them using computational technology, and then you can take this technology to a level that commercial companies can start to benefit from. One area is what is called guide RNA. If you know, to make it very simple, Cas9 is like a scissor that is cutting the DNA in a specific place, and then you can do some modification, and then the DNA is closed again. But now it looks different, and of course, then it leads to different activity of the cell. The problem is how you guide the scissor to the specific place you want to cut in the DNA. And the DNA fragment that is telling the Cas9 where to do it is called guide RNA. And to design what is the right guide RNA that will take the Cas9 to the specific place is not a trivial question. And we are in Evogene, together with some other companies and academic institutions here in Israel, we established a consortium that is funded by the Israeli government, by the Authority of Innovation. And we are trying together to solve certain questions that could today limit the use of the genome editing technology, which is CRISPR. And hopefully, we will succeed to come up with a new solution. And then, together with the other parts of Evogene technology, we can offer something very, very unique to the industry in the area of genome editing. And of course, we will take it internally to specific utilization and with commercial purpose.

Thank you very much. I enjoyed the talk as well.