Biotalys NV (BTLS.BR) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Biotalys Half Year 2025 Financial Figures and Business Highlights Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Toon Musschoot, Head of Investor Relations and Communications. Please go ahead, sir.

Thank you very much, Sharon, and welcome, ladies and gentlemen, to the Biotalys webcast following our press release detailing our results for the first half of '25, which was issued earlier this morning. I'm joined today by our CEO, Kevin Helash; and CFO, Luc Van Fraeyenhoven. At the end of the presentation, we will be, of course, happy to take your questions. You can ask them both through the webcast tool via the chat function and the conference call. Let me just remind you of our disclaimer on Slide 2, which is a standard part of our deck and which you can also consult in the tool of this webcast. Everything we say today is covered by these legal provisions. And with that, I will now turn the call over to our CEO, Kevin Helash.

Thank you, Toon, and to everyone joining us on the call today. This year has been shaped by 2 powerful narratives. First, the critical pursuit of securing final regulatory approvals for Evoca in both the United States and Europe; and second, the equally transformative, though less visible groundwork underway to prepare us for the commercial phase in our evolution as a company. Today, I will share updates on both the visible progress and the momentum building behind the scenes. The market dynamics for our technology remain compelling. The $40 billion global fungicide and insecticide market continues to expand, yet growers face increasing challenges. Resistance to existing active ingredients is rising, while regulatory and consumer pressures are restricting the use of traditional chemical solutions. As a result, growers are actively seeking innovative, effective alternatives that can be integrated into their pest management program to protect both their crops and their livelihoods. Biotalys is uniquely positioned to fill this gap. As a pioneer in the precision biocontrols category, we're developing a new class of protein-based solutions that are designed to combine the performance of chemicals with the safety and sustainability of biologicals. Our platform is scalable across crops, geographies and markets, positioning us as a clear leader in this emerging segment. Turning to Evoca's registration progress. The rationale for precision biocontrols remains compelling. As with any breakthrough innovation, however, the regulatory process takes time. While we had anticipated final EPA approval in the United States by the end of the third quarter, recent discussions with the agency indicate additional time will be required to complete the review. That said, we remain confident the process is in its final stages. In Europe, progress remains on track. The Dutch authorities have recommended Evoca for approval as a low-risk fungicide to the European Commission, a milestone that clears a path for market entry into the world's largest fruit and vegetables crop protection market. In addition, we are preparing to submit a regulatory dossier for Evoca in Brazil to support the entry of our pipeline of products into this important agricultural market. As we await regulatory approvals, we're making significant progress to ensure we successfully execute on our commercialization objectives and fully capitalize on our technology platform. I will touch upon both in more detail in just a few minutes. Growers urgently need novel solutions to continue to protect their crops, but they cannot risk inconsistency or underperformance. Efficacy and reliability are nonnegotiable when their livelihoods are at stake. Our technology eliminates the long-standing trade-off between performance and profitability on one hand and sustainability and safety on the other. Only a select few companies are exploring comparable approaches, and Biotalys stands at the forefront with protein-based solutions that have the potential to bring novel modes of actions to crop protection. Supported by the depth of our R&D expertise, a solid intellectual property portfolio and meaningful regulatory progress in both the United States and Europe, we are well positioned to help shape this emerging category and contribute to the next evolution of the global crop protection market. As we think about our go-to-market strategy, we will be utilizing a model that is designed to maximize efficiency and profitability by focusing resources where we create the most value, discovery, research and development and regulatory advancements. Rather than building costly subscale infrastructure for manufacturing, marketing and distribution, we are partnering with established industry leaders to meet these needs. This model accelerates market entry drives early share capture and reduces risk while avoiding significant capital investment. To support this strategy, we are actively engaged with Novonesis and other leading players to secure the critical components required to bring our platform to the market. From a production standpoint, we collaborate with world-class manufacturers, including Olon, as announced in early 2022 and are in discussions with additional potential manufacturing partners to ensure optimal flexibility. Regarding product distribution to growers, we are leveraging the market presence and global reach of established industry leaders. Key collaborations are already in place with Biobest covering specialty markets, AgroFresh focused on post-harvest applications and with Syngenta with whom we are developing a novel bioinsecticide. We are also advancing discussions with other top-tier organizations to extend our reach into the broader pre-harvest markets. By the time we launch Evoca NG, we are confident that all critical elements of our commercialization strategy will be firmly in place, ensuring comprehensive market coverage and a strong foundation for long-term success. Looking ahead, we believe our platform has the potential to deliver products with improved performance and lower cost of goods, critical success factors in our ambition to capture market share across the industry. This belief is reinforced by field trial results from our first BioFun-6 candidate, a next-generation fungicide targeting botrytis and powdery mildew. This candidate demonstrated strong efficacy in the United States and European trials this year, not only against current commercial standards, but also when applied at significantly lower dosage rates than Evoca. A key strength of our AGROBODY platform is its ability to generate multiple lead candidates for a given pathogen, giving us to borrow a sports analogy, multiple shots on goal. In the case of BioFun-6, a second lead candidate will be tested this fall in the Southern Hemisphere, enabling us to select the best candidate for further development based on manufacturability, field performance and other critical parameters as we move into the 2026 Northern Hemisphere field trial season. Before I turn the call over to Luc, our new CFO, I want to express how pleased I am to welcome someone of his caliber to the team. In just a short time, he has already made a meaningful impact, not only in finance, but also as a strategic partner across the company. I'm fully confident that Luc will help us maintain our disciplined approach to financial management and support the successful execution of our commitments as we move forward. Luc, over to you.

Thank you, Kevin, and thank you to everyone on the call. I'm excited to be part of the Biotalys team and look forward to meeting our investors and analysts in person. Allow me to quickly introduce myself here. I consider myself a team player and will work together with the management team and all the colleagues here to deliver on Biotalys ambitions. I do not see finance as an isolated function, but rather as an integrated part of the organization. I like financial discipline and the distinction must be made clearly between must-haves and nice to haves. Priority setting is key. Transparency towards all stakeholders is also key in my way of working. It's imperative to drive success and commit to deliverables. As Kevin mentioned, it was clear to me upon joining that the company has been by selective about where it deploys capital, focusing on R&D and regulatory milestones that advance the platform and accelerate the path to commercialization. Our first half year results reflect this focus as we continue to invest in our unique technology platform and product pipeline, leading to an increase in R&D expenses, partially offset by lower spending for Evoca as it moved out of the development phase. General and administrative expenses were largely in line with the same period last year, only showing a small increase reflecting amongst others the indexation of salaries. We also have been able to keep a tighter ring of our uses of cash. Our net cash used in this period of EUR 6.9 million was in line with the first 6 months of last year, resulting in a cash position of EUR 15.7 million at the end of June. This is EUR 1 million higher than the end of June last year, providing us with the runway into May 2026. Next to the key financial numbers from our first half year, I would like to take this opportunity to provide clarity on our financial strategy during this critical phase of growth. Beyond product innovation, we continue to execute with operational discipline. Over the past 2 years, we have restructured operations, tightened costs and improved efficiency reducing cash burn by approximately 40% compared to uses of cash in 2022. From the revenue side, we will continue to investigate opportunities to generate income from partnerships, whether through milestone payments, cost compensations or royalties on our products. From the spending side, we plan to further fine-tune our targeted R&D approach and develop our pipeline of candidate products in collaboration with key academic and industry partners. In addition, we will focus on earning regulatory approvals from Evoca in the U.S. and Europe and on the submission of a regulatory dossier in Brazil and the preparation of regulatory dossiers for its commercial version Evoca NG. As we move into the next phase for the company, we will consider additional funding options to increase our cash runway. This will allow us to complete key regulatory approvals, advance multiple pipeline candidates, fine-tune our technology platform and prepare for Evoca NG's commercial launch, all this with the aim to effectively execute our strategy and further exploit the potential of our unique technology platform to help farmers grow their crops more sustainably. With the lean cost base, capital-efficient model and non-dilutive revenue from partnerships, we believe Biotalys stands out in our sector as a compelling combination of innovation and financial discipline. Again, it's my pleasure to join Biotalys at this exciting juncture in the company's history. I look forward to being a part of future growth.

Thank you, Luc. As you've heard today, Biotalys is rapidly advancing towards the next phase of our evolution, pioneering a novel technology that establishes a new and critical class of crop protection products. With precision biocontrols, our ambition is to set new standards for performance and sustainability, positioning this category as a global benchmark with Biotalys at the forefront. While final regulatory approvals for Evoca are still pending, the outlook remains positive. In the background, we are preparing for market launch, expanding our pipeline and advancing a lean partnership-driven model built on strong science, disciplined execution and a clear vision. We believe this dual focus on regulatory progress and market readiness will enable us to deliver lasting value to all our stakeholders, including growers by supporting their efforts to produce safe, healthy and affordable food more sustainably. Thank you, and I'll now turn the call over to Toon to begin our Q&A session.

Thank you, Kevin and Luc. So Sharon, we are now happy to take questions from the audience.

[Operator Instructions] And your first question comes from the line of Christian Faitz from Kepler Cheuvreux.

Just one question for the start. Can you please talk a bit about the efficacy of BioFun-6 versus Evoca in more detail, i.e., for example, how much lower is the dosage rate versus Evoca?

Christian, thank you for your question. So as I mentioned in my remarks, we have multiple candidates that we are looking at for BioFun-6. We took one lead candidate out to the marketplace this past year. And we were extremely pleased with the efficacy we witnessed in the field. And we're talking about rates approaching half the dosage rates of Evoca and seeing similar performance results. We also have others, as I mentioned, that we're looking at. We're going to take a second candidate into the Southern Hemisphere, looking at botrytis control on grapes. And then as we move into the Northern Hemisphere, we'll make some further decisions in terms of which candidates we can move forward. So a couple of points I'd like to make here, Christian, is that we're extremely excited about the potential of our AGROBODY platform to develop multiple candidates that we can look at and screen. And secondly, the first candidate that we took to the marketplace was a proof of concept and that we believe we can continue to bring products to the marketplace with increasing efficacy, lower dosage rate. And of course, that serves to lower our cost of goods and allow broader penetration into the marketplace. I hope that answers your question, Christian?

And our next question comes from the line of Guy Sips from KBC Securities.

My question is on the time line of the, let's say, of the news that will come in. What is -- how do you see the Evoca announcements, meaning will it be suddenly in the morning that there will be a press release that it's a yes or a no? Or is it -- is there a pre-announcement? Or how do you expect this to work?

Guy, it's Kevin. Good to hear from you. So in terms of the U.S., I would say that the next public piece of information will come out is when the EPA puts out the recommended registration for public comment. Of course, that will be out in the marketplace, and we anticipate we will also likewise make an announcement. So that will be what we see as the next milestone in terms of information we can provide to the market. But now of course, if there's something we receive that is material and reliable information beforehand, we certainly will be very happy to share that as well.

And the second question is also on BioFun-6. So this is actually the second, let's say, step and second proof of concept. How important should we see this?

Well, we definitely see BioFun-6 as a next-generation product. I mean Evoca -- if you think back to our intention, Evoca really was meant to be our proof-of-concept product. We're super happy with how it has performed in all aspects, both in terms of the efficacy and an integrated pest management program for control of botrytis and powdery mildew, the ease of handling of the product from a farmer's perspective, storability, et cetera. But that's not the end game, as Guy, you've heard us speak about. We have, I would say, a robust pipeline in the works now. And as we mentioned earlier, we anticipate adding new projects to our pipeline as we move forward. So yes, of course, we are eagerly looking forward to advancing BioFun-6 as well as the other candidates that we have and other pathogen control products that we have in our pipeline. So it's kind of like asking which one of your children do you like the best, right? I mean we love them all, and we're excited for them all.

That's helpful. Yes. And the last question is on the production and the yield of the production of -- how is that evolving? Are they taking steps in the production yields?

Yes. So we've made significant progress in terms of moving towards final production of Evoca NG or what we anticipate to be Evoca NG through a contract manufacturer. I can say that from where we were 18 months ago to where we are today, there is an absolute step change. And then great -- I would say, great thanks to our work with Novonesis, who we continue to work with and discuss about options moving forward in terms of helping us ensure that we have the maximum production capability and producibility that is possible. So yes, we're quite happy with the progress we've made. We still got some work to do there to nail down all the components, Guy, from a production standpoint, final production standpoint, but we're certainly happy with the progress we've made thus far.

There are currently no further phone questions. I will hand over to Toon for webcast questions.

Thank you very much, Sharon. We have a couple of questions in the tool. First of all, a question from [indiscernible]. A question for you, Kevin. Can you elaborate on the partnership with AgroFresh and in particular, what role they intend to play during R&D and marketing and for which pipeline candidates this collaboration will work?

No, thank you for the question. So we are very pleased to have announced a collaboration with AgroFresh. They are the leader in post-harvest control of food and produce, and they operate globally. So we couldn't have picked a better partner, I think, for that -- for access to that marketplace. In terms of the collaboration, you can think about it as truly a partnership all the way from formulation all the way through to final product application and market research. So we have quite an open and broad relationship with AgroFresh. And in terms of which products we are going to work with them on. I would say our thinking is that the entire portfolio will be in discussion with them. And of course, we'll make decisions together in terms of which ones we move forward into post-harvest application.

Thanks very much, Kevin. That's loud and clear. We have a next question for Luc. What type of additional financing are you considering?

Okay. Thank you, Toon, for the question. Perhaps there in the context of that question, I would like to iterate a number of elements here. I think first of all, we reconfirm with this earnings call that the cash runway that we have already given 6 months ago that is still recommitted to May 2026. I think that's an important element. Secondly, what we also said during the earnings call that we -- for the remainder of the period, we will further carefully look at our expenses and be cost conscious. So that's very important also to mention. Next, of course, we will further invest on our product pipeline and an important element there is also to work further, as Kevin also elaborated on the approval process of Evoca. And of course, the approval of Evoca will be an important milestone for the company. And yes, we will explore, we will consider different and all opportunities and possibilities in terms of funding. And that will be elaborated on in the next period. And so that we will come back to the market when the moment is right. to give more news on that. So all possibilities will be explored and considered.

Thank you very much, Luc. We do have a next question in the tool, Kevin, on Evoca, when do you expect to submit a regulatory dossier in Brazil?

Thank you, Toon. Yes. So we are quite excited to start our entry process into Brazil. We've been working on that already quite a bit this year. We -- let me just say that the time line and the cost to get into Brazil is substantially quicker and lower than going to the U.S. and into Europe. And we anticipate being able to launch Evoca NG about the same time as, let's say, U.S. and Europe, depending on how the regulatory process goes. So it's ongoing work. We're making good progress there. And due to the fact that it has an anticipated much quicker time line, the ultimate launch date will be in the same time frame. Yes. So we're really looking forward to our first step into the Latin American market and certainly into one of the largest in the world being Brazil.

Absolutely. Thank you, Kevin. The last question was from [indiscernible]. Sharon, I don't have any other questions at this stage in the webcast. I don't know whether you have other questions in the conference call.

There are currently no further questions on the conference call, sir.

Well, I think we've addressed the questions from our audience. I think Kevin and Luc were clear. I would like to thank everybody on the call. Feel free to get in touch with us via e-mail, for instance, at [email protected]. And we, of course, hope to see you again at one of our next events.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.