Biotalys NV (BTLS) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Biotalys Half Year 2026 Financial Figures and Business Highlights Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Toon Musschoot. Please go ahead.

Thank you very much, Razia, and welcome, ladies and gentlemen, to the Biotalys webcast following our press release detailing our results for the first half of 2026, which was issued earlier this morning. I'm joined today by our CEO, Carlo Boutton; and CFO, Luc Van Fraeyenhoven. At the end of our presentation, we will be happy to take your questions. You can ask them both through the webcast, through via the chat function and the conference call. Let me 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. As you may have seen in today's announcement, Carlo Boutton has been appointed CEO on a permanent basis following his interim appointment in March of this year. So please join me in congratulating Carlo. And Carlo, on behalf of the entire Biotalys team, we are very pleased that you will continue to lead the company and help driving the execution of our strategy. And with this, Carlo, I leave the floor to you.

Thank you, Toon, and welcome to everyone joining us on the call today. So we will review our business highlights and financial results for the first half of 2026. We will discuss the progress achieved over the recent months and provide an update on our priorities and outlook. But before we begin, I would like to sincerely thank the board of Biotalys for their confidence in appointing me as CEO of Biotalys. I am excited to take up the role because I'm still convinced about opportunities ahead, and I'm committed to execute our strategy to advance our mission and to create long-term value for all stakeholders involved, including, of course, our investors. The first half of 2026 has been a very important period of focus and execution for us, for Biotalys. Following our strategic refocus announced earlier this year, we have concentrated our resources on our most valuable assets. We streamlined our organization, strengthened our financial position and continue to advance the regulatory and development milestones that are necessary to bring our innovative protein-based biocontrol products to the market. So our objectives are clear: to transform Biotalys into a commercial-stage company by bringing novel, effective and sustainable crop protection solutions to growers, and we'll do that by starting in key markets. So let me begin with our product pipeline. And that, of course, starts with EVOCA and EVOCA NG. Our highest priority remains the advancement of EVOCA and its commercial success of EVOCA NG, which targets high-value fruit and vegetable crops affected by botrytis and powdery mildew. Following the EPA approval of EVOCA at the end of 2025, we achieved another important milestone in April this year with the first U.S. registration in Florida, which is marking the first state-level approval of an AGROBODY-based biocontrol product in the United States. Further, in the U.S., we have also continued to make meaningful progress in California, which remains a key strategic market given its importance to high-value crops. At the end of June, California Department of Pesticide Regulation initiated the public commenting phase following a positive human health assessment. And this consultation phase has now been closed, and the next steps are under way. And so, we expect state registration in California later this year. Switching to Europe, we also made significant advancements in our regulatory process in Europe. EFSA initiated its public consultation process in April. And following the completion of that consultation at the end of June, we submitted comprehensive responses to the comments received, and those responses are currently reviewed by EFSA and the Dutch Regulatory Authority CTGB. Biotalys now project a final regulatory decision in the course of 2027 for EVOCA. Importantly, all of this work is creating a strong regulatory foundation for EVOCA NG, our next-generation product based on the same active ingredient as EVOCA. And leveraging this foundation, it should significantly reduce the time required for future regulatory approvals compared to completely new active substance. EVOCA NG remains the product with which we intend to enter the market commercially, targeting large and attractive fungicide segments for control of botrytis and powdery mildew in fruit and vegetable crops. We continue to target a U.S. launch in 2029, and European launch in 2029 and 2030, addressing the combined market opportunity of more than USD 1 billion. A key and very important next step that we took for EVOCA NG is that we started the 5-batch production campaign in early August. And we should not underestimate that. This is not only an important regulatory requirement to initiate a regulatory studies for EVOCA NG, it also demonstrates consistency and stability in the manufacturing process, and we currently expect results from this 5-batch production by early November of this year. Finally, I'm pleased to share that EVOCA NG has been nominated for the prestigious Bernard Blum Award by the Association of Biocontrol Industry Manufacturers. The final award will be granted at the Annual ABIM Conference taking place in Basel, in Switzerland in the second half of October. Switching to BioFun-6 and having a highlight on the BioFun-6 progress, which is a major second priority, our second biofungicide program that is targeting botrytis and powdery mildew in fruit and vegetables. We are very much encouraged by the data generated so far in field trials. So during the fall of 2025 and early '26 growing seasons, our second lead candidate from our BioFun-6 program was evaluated in more than 40 field trials across multiple geographies and crops, including grapes, strawberries, tomatoes, cucumbers, and the results demonstrated consistent and strong disease control. Across many trial settings, the candidate outperformed existing biological alternatives available on the market today. In spray rotation programs, where a biological product replaces synthetic chemistry, BioFun-6 delivered disease suppression comparable to conventional solutions. In addition to our internal trials, we also received the latest results from independent fungicide evaluations conducted by the University of Florida. And while we are awaiting the official publication of that report, we can today already share that among the relevant programs evaluated, a spray rotation program that included our BioFun-6 lead candidate in a rotation with a standard synthetic fungicide achieved the strongest overall performance in controlling botrytis on strawberries. And both these internally commissioned and academic trials are very encouraging because they support one of the central premises of our AGROBODY platform, which is delivering biological crop protection products with efficacy levels that growers can depend upon in a real world farming conditions. For BioFun-6, we are now continuing additional field trials focused on evaluating performance at lower dose rates. These studies are intended to further optimize the product positioning, the product profile and the product economics, and we expect additional results of these trials around the year-end. In terms of manufacturing, another important development during the first half was a strategic partnership with 21st.BIO because commercial success requires not only effective products, it also requires scalable and cost-competitive manufacturing. And the partnership with 21st.BIO gives us access to advanced precision fermentation technology that can support both of these manufacturing objectives. So together with 21st.BIO, we are continuing to optimize our production process and manufacturing plans to ensure commercial competitiveness as we move towards market launch. And I'm very pleased to say that the first tangible result of this collaboration is our 5-batch production of EVOCA NG, which started a couple of weeks ago. At the same time, we are also engaging with potential manufacturing and distribution partners globally as part of our commercialization strategy. If we then move beyond EVOCA NG and BioFun-6 and the rest of the portfolio, our BioIns-2 collaborations with Syngenta achieved a research milestone, and we are currently evaluating the outcome of the research phase together with our partner and expect to provide an update about this collaboration during the second half of 2026. Our BioFun-7 collaboration with the Gates Foundation remains ongoing to the end of this year. Biotalys and the Foundation will jointly assess if there's a sufficient basis to continue this collaboration beyond 2026. And finally about BioFun-4 and BioFun-8 programs, respectively against oomycetes in potato and grapes, and BioFun-8, Alternaria in fruit and vegetables. We remain open here for potential collaboration with third parties. And in this context, we can mention that the third party is currently testing an AGROBODY bioactive against oomycetes in Belgium and the Netherlands. Then beyond the individual programs and more shifting towards the AGROBODY platform, a platform for us remains crucial in our strategy because it enables us to generate a highly specific protein-based bioactives against important diseases and it provides a basis for building further on a differentiated pipeline of sustainable crop protection products. Of course, we are also continuously building and strengthening our intellectual property, and have now also received a patent for EVOCA in Japan, building on our previous patents in key regions like Europe, U.S., Brazil and China. Also, the wordmarks EVOCA and AGROBODY are now registered as trademarks, protecting these as valuable assets for the company. With that, I will now hand over the call to Luc to discuss our financial performance. Luc?

Thank you, Carlo. Let me briefly review the financial results for the first half of 2026. Before going through the figures, I would like to emphasize that we continue to manage our financial position with discipline. We are closely monitoring our cash position and expenses and the cost-saving measures implemented earlier this year are progressing in line with our plans. Other operating income amounted to EUR 1.6 million, mainly reflecting R&D tax incentive and grant income supporting our innovation activities. Research and development expenses were EUR 6.2 million compared to EUR 6.5 million in the first half of 2025. This reduction reflects lower operating expenses following the organizational changes implemented earlier this year, partly offset by continued investment in our key pipeline programs. General and administrative expenses decreased to EUR 2.7 million from EUR 3 million last year, again, reflecting the impact of our cost-saving initiatives and streamlined organization. We also recorded EUR 1.9 million in restructuring costs related primarily to termination benefits associated with the strategic refocus. As a result, normalized net loss, representing the loss for the first half of 2026 adjusted for restructuring costs improved by EUR 0.9 million compared with the same period last year and amounted EUR 7.2 million. So the loss for the period was EUR 9.1 million compared to EUR 8.1 million for the same period last year. Importantly, during May, we successfully completed a EUR 12.05 million private placement supported by our key investor and shareholders. The financing strengthens our balance sheet and demonstrates the continued support for our investor base for our strategy and pipeline. At the end of June 2026, cash and cash equivalents amounted to EUR 11.9 million. Based on our current operating plans, we project our financial runway to extend through the end of first quarter of 2027. We are considering various options, both dilutive and non-dilutive to continue to fund the company to allow to become commercially active. The cost reduction measures implemented this year will continue to flow through the organization, and we expect these actions to contribute to a lower cash burn profile going forward, starting this year already and in full effect as from 2027 onwards. Overall, we remain on track with our current operating plan while continuing to carefully monitor our financial position and manage expenses with discipline. With that, I hand over the call back to Carlo for closing remarks.

Thank you, Luc. To conclude, the first half of 2026 has been all about creating focus, building momentum and advancing our key milestones that matter most for the future of Biotalys. We have strengthened the company through a strategic refocus, we secured additional financing, we advanced a regulatory process for EVOCA in both the U.S. and Europe, initiated critical regulatory activities for EVOCA NG, demonstrated encouraging field performance for BioFun-6 and made a lot of progress in our manufacturing strategy through the partnership with 21st.BIO. So we are on track. Before we start with questions, I would like to sincerely thank all the Biotalys colleagues for their commitment and resilience because this has not been an easy period, particularly following the restructuring earlier this year. The team, however, and all colleagues remain focused on our mission, and they continue to drive the progress that is needed to bring our innovative crop protection solutions closer to the growers. Looking ahead, our priorities remain unchanged. We will continue to advance EVOCA NG and BioFun-6, we will continue pursuing key regulatory milestones, we will further optimize manufacturing and commercial readiness, and we will continue operating with disciplined capital allocation. We believe that the fundamental opportunity for effective, safe and sustainable protein-based crop protection remains highly compelling, and we are committed to realizing the full potential of our AGROBODY platform for growers, for partners and for shareholders. So thank you again for joining and for your interest in Biotalys. I will now turn the call back over to Toon to begin our Q&A session.

Thank you, Carlo, and Luc. So Razia, we are now ready to take questions from the audience.

[Operator Instructions] We are now going to proceed with our first question. And the question come from the line of Guy Sips from KBC Securities.

Yes. I want to come back to the 5-batch production of EVOCA NG. The main question is, can you elaborate a little bit more on this? And especially, is this a binary process? Or is it yes or no? Or is the answer a potential yes, but answer? And what is the -- yes, so what is the expected news flow on this one? And the second question is on the general news flow, what news flow can we expect from now until, let's say, end of Q1 2027?

So thank you, Guy, for the question because we should not underestimate the value of the start of this 5-batch production. What it really means, and I try to be non-technical, is that we are finalizing the production process of EVOCA NG. It means that we come to a production process, which is robust, consistent and to a production process that will reflect the final material. And this is a necessary step to do regulatory trials, but also towards further commercialization. So it's not a binary process, it's a more complex process, but we are confident that the steps we have taken, it's a major hurdle and it's a major derisking factor that we took in the next step in commercial manufacturing. The second question, if I may, was on the further outlook of 2026. And part is, of course, that we, first of all, for the EVOCA, approval of EVOCA in California. Second, more news on the finalization of the 5-batch, which you expect around November. And then hopefully, by the end of the year, also some other results of the BioFun-6 trials. I think that's the main key factors. Luc, Toon, if I forget something, let me know. BioFun-6, I think, I mentioned BioFun-6 results of trials end of the year, 5-batch production and EVOCA in California.

Guy, is that clear? Did you have any other questions?

No, no. Thank you from my side and all the best.

We are now going to proceed with our next question. The questions come from the line of Christian Faitz from Kepler Cheuvreux.

And Carlo, congrats again on your now permanent CEO position. Two questions, if I may. First one is, would you expect any more restructuring expenses to come in the second half of this year or into '27? And second question is just a quick check on BioIns-2, you mentioned in your release, this morning's release that you and your partner, Syngenta are, "currently evaluating" their collaboration in view of the outcome of the first research phase of BioIns-2. Is there something in terms of earlier results you could already share, or do we have to wait until you are prepared to say something in the course of the second half of this year?

Thank you, Christian, and thank you on the wishes, very much appreciated. On the restructuring expenses, Luc, I'll hand over to you.