Evogene Ltd. (EVGN) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to Evogene's Third Quarter 2021 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded November 17, 2021. Before we begin, I would like to caution that certain statements made during this earnings conference call by Evogene's management will constitute forward-looking statements that relate to future events, risks and uncertainties regarding business strategy, operations and future performance and results of Evogene. I encourage you to review Evogene's filings with the U.S. Securities and Exchange Commission and read the note regarding forward-looking statements in today's earnings release, which states that statements made in the earnings release and in a similar way, on the earnings conference call that are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1999. For example, Evogene is using forward-looking statements in this call when it discusses its expected paths to value creation, its and its subsidiaries' expected trial studies, product advancements, pipelines, milestones, marketing activities, commercializations, launches and entry into new markets, potential collaborations, regulatory approvals and other plans for 2021, 2022, the potential advantages of its technology, the benefits of its products and its cash usage. All forward-looking statements made herein speak only as of the date of the announcement of results. Many of the factors that impact whether forward-looking statements will come true are beyond the control of Evogene and may cause actual results to differ materially from anticipated results. Evogene is under no obligation to update publicly or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. We expressly disclaim any obligation to do so. More detailed information about the risk factors potentially adversely impacting our performance can be found in our reports filed with the U.S. Securities and Exchange Commission. That said, I would like to turn over the call to Ofer Haviv, Evogene's CEO. Ofer, please go ahead.

Thank you, and good day, everyone. We appreciate you joining us today for our Third Quarter 2021 Conference Call. Joining me today are Dr. Arnon Heyman, CEO of Canonic; and Ms. Dorit Kreiner, our CFO. I will begin the call with discussing the recent advancement achieved in our subsidiaries and then move on to update on our plans for unlocking the value. Arnon will then go on to update on the advancement in Canonic. Dorit will summarize Evogene's financial results for the third quarter of 2021. We will then open the call for your questions. So as I mentioned, let's begin with our subsidiaries' progress in the last quarter. This past quarter, we had a few significant achievements we are very proud of, which indicate the progress we are seeing across the board in our different subsidiaries, which all rely on Evogene's technology as the competitive advantage. Starting with Biomica, our subsidiary, focused on the development of drugs based on the human microbiome. Biomica utilize Evogene's MicroBoost AI tech engine to achieve this mission. Biomica recently signed an agreement with Rambam Health Care Campus for clinical trial for its microbiome-based immuno-oncology drug. Just to quickly remind, treatment with Biomica's BMC128, in combination with immune checkpoint inhibitors immunotherapy significantly improved antitumor activity in various preclinical models, stimulating the immune system and improve antitumor profiles. Biomica expects to initiate its first-in-human proof-of-concept clinical trial with Rambam later this year and is currently waiting for the approval of the Israeli Ministry of Health in order to begin. With respect to Biomica program, for IBD, we expect to receive preclinical results later this year. Moving on to the second company in the field of human health, Canonic, our subsidiary focused on the development of medical cannabis products. Canonic utilizes Evogene's GeneRator AI tech engine to achieve this mission. I will only touch briefly on this company as Arnon will speak more in length shortly. After establishing its production and the marketing infrastructure during the first part of the year in September, Canonic initiated a product pre-launch campaign with a limited number of patients to receive market feedback. Following the positive feedback received, Canonic felt confident to move ahead of schedule with full commercialization of its 2 first products in October. I'm particularly excited and proud of this accomplishment. I want to remind that Canonic was established only in 2019, and it already has a product in the market based on its internal research activity, reaching its commercializations target ahead of time. Canonic has succeeded in creating brand awareness, and we hope that the quality of its product and marketing efforts will support market penetration over the coming year. Additionally, Canonic is working to achieve its milestone for the precise product program and identify lines that exhibit distinct effect in model systems for reducing pain or inflammation as part of its collaboration with local hospitals in Israel. I will now move to AgPlenus, our first subsidiary in the Ag industry segment. AgPlenus' mission is to develop and commercialize novel and safe crop protection products based on small molecules. AgPlenus utilizes Evogene's ChemPass AI tech engine to achieve this mission. I would like to use this opportunity and address some of the executive changes we recently announced. I would like to thank our exiting AgPlenus CEO, Mr. Doug Eisner, for his service and contribution to the company and welcome AgPlenus' new CEO, Dr. Brian Ember. Brian is coming in with relevant background and experience. He could even say he grew up in the ag chemical industry. He is excited to lead the company to commercial success and to capture the value of AgPlenus' R&D achievements. I would like to wish him a lot of luck, and we expect great things for AgPlenus in his leadership. Moving to Lavie Bio, our second subsidiary in the ag industry, aiming to improve agricultural productivity and sustainability through microbiome-based ag biological products. Lavie Bio utilize Evogene's MicroBoost AI tech engine to achieve this mission. We recently made an exciting announcement, the initial commercial launch of Lavie Bio first product. This product, which was previously identified as LAV.211 is now branded and being commercialized under the brand name result. result is an inoculant being introduced for spring wheat following achieving yield improvement in 4-year field trials, including commercial validation, broad acre fields in target territories. In field trial, it was demonstrated this result has the potential to contribute an additional 3 to 4 bushels per acre and showed increased yield improvement compared with industry benchmarks. The first phase of marketing and initial market penetration is planned for the upcoming 2022 spring wheat season. It will be limited to target region in North Dakota and will be accomplished under a non-exclusive distribution agreement with United Agronomy. Looking forward, following this initial commercial introduction, Lavie Bio intend to evaluate the opportunity for result through additional marketing channels in additional territories for spring wheat and for applications to additional cereals. In parallel, I would like to remind that Lavie Bio has additional products under development. The most advanced of this product is LAV311 and LAV312, a biofungicide targeting bunch rot initially targeted for grapes. We expect to finalize the analysis of our 2021 vineyard trials by the end of this year. As reported, we also had some executive changes in Lavie Bio. Mr. Ido Dor, the CEO of the company, decided to leave. I want to thank Ido, who has been an integral part of the Evogene group over the past 10 years and has had a very big hand in many of the activities and success over the years. After a long time with the group, Ido is moving on, and we wish him a lot of luck in his future paths. We are currently working on finding a replacement and intend to fill this position with a CEO that will support the stage the company is currently in and will be able to lead the company in its potential future stages. In the meantime, I will be taking a more active part in leading the company, together with Mr. Dotan Borenstein, who recently joined the company as Chief Business Officer. Finally, I would like to address our announcement from a few days ago, we received a notice from the Israel Innovation Authority that it has decided to fund second 18 months period of the CRISPR-IL consortium, which was established last year. Evogene is a key member in the consortium with Dr. Eyal Emmanuel, Evogene's VP New Directions, serving as the consortium's chairperson. I will remind that the consortium's mission is to develop and validate an end-to-end artificial intelligence system, Go-Genome for genome editing in multi-species for applications in pharma, agriculture and aquaculture. Beyond activities within the consortium's scope, companies participating in the consortium may use Go-Genome for their own product-oriented genome editing activities. In this respect, Evogene is currently conducting various proof-of-concept experiments in plant tissue, examining the feasibility of increasing the production of ingredients such as natural colors and anti-aging agents for food or cosmetics products. So like I mentioned, a lot is advancing across the board, and we are very pleased. With this rapid progress, we're now seeing significant inherent value developing within each of our subsidiaries and believe that valued separately, those companies would result in a far greater combined market value for Evogene shareholder. As we discussed in the past, one of the options we seek to unlock the value of our subsidiaries that we believe would benefit our shareholders is the possibility of turning one or more of our subsidiaries into public companies that will trade independently from Evogene. This should allow a greater number of investors to invest directly in the area they are interested in and assign independent valuation for each subsidiary. With this respect, we are undertaking the required preparations in our subsidiaries to support this process, and we are currently reviewing our options regarding investment banks to achieve this target. Of course, the decision if, when and how to spin out a subsidiary will depend on many considerations, including market conditions, the subsidiary financial needs, pipeline maturity, valuation, applicable regulations, et cetera. With that, I would now like to turn the call over to Dr. Arnon Heyman, the CEO of Canonic. Arnon?

Thank you, Ofer. I'm very happy to have the opportunity to address Evogene's investor base. Obviously, the most significant thing to report about was the commercial launch of our product, G200 and G150 in October in Israel. Both G200 and G150 are part of the G-nnovation product line under Canonic MetaYield product program. G200 products are targeted at patients that use percentage of THC higher than 20% and G150 for patients that want a percentage below 20% THC, more around 18%. I want to remind you that we decided to move ahead with the commercialization of this product after initiating a pre-commercial launch with a limited number of patients. In this pre-commercial launch, we received positive feedback from these patients regarding the characteristics of these products and their quality. Specifically, these products have very appealing inflorescence appearance, size, density and aroma, and they provide a good consumer experience according to what was reported. All this supported our decision to move ahead with the full commercial launch, which was initially planned for 2022. So we began marketing and sales in the middle of October, and we have been receiving very good market feedback. Looking at the orders we have been seeing from pharmacies, we are very encouraged. Obviously, this represents only the very beginning of market penetration, but it is in the right direction. Canonic is working to create brand awareness through digital campaigns in cannabis publication, which specifically cater to cannabis patients. I should mention that in Israel, it is against the law to market cannabis, unless it is in media that is specifically geared to the cannabis market. We are communicating directly with the Israeli patient community, hoping to create a loyal patient base. We will be able to see if we have reoccurring orders only in the next month or 2. Anticipating that all goes well, we are currently broadening our cultivation and production capabilities, which are based on third party contracts in order to ensure adequate production capacity for the demand in Israel in 2022. In parallel, we are also in contact with a number of entities in Europe in order to build our go-to-market there as well. The European market is growing fast, and Germany consists almost 50% of the market. As previously reported, we are aiming to start launching our products in Europe during 2023. In our R&D pipeline, we are in continued development of additional products in the MetaYield and the Precise program. In the MetaYield program, we are developing additional products with a higher concentration of active ingredients and improving additional consumer traits based on the feedback we are receiving on our current products in the market. In the Precise program, we are completing preclinical experiments in model systems in leading hospitals and regional centers here in Israel in order to identify the first varieties to enter clinical trials. In parallel, we are in discussion with physicians in preparation for clinical trials. I would also like to mention that our R&D program is unique in that it benefits from a large database of over 1,000 cannabis lines. Combining this database with Evogene's GeneRator AI allows us to identify unique genetic markers so that the more information we gather, the faster we are able to improve our varieties and expedite our development. So is to summarize, these days are very exciting for Canonic. We are happy with the initial market reception of our products, and we are looking forward to creating more brand awareness. In parallel, we are entering additional agreements to allow increased production capacity and are continuing to develop more products and build our go-to-market outside of Israel. With that, I would now like to turn the call over to Dorit Kreiner, Evogene's CFO. Dorit?

Thank you, Arnon. I will begin by reviewing our cash balance. Evogene continues to maintain a strong financial position for its activities with approximately $61.6 million in consolidated cash, cash related accounts, bank deposits and marketable securities as of September 30, 2021. Approximately $9.3 million of Evogene's consolidated cash is appropriated to its subsidiary, Lavie Bio. During the first 9 months of 2021, the consolidated cash usage for approximately $17.3 million or $13.6 million if excluding Lavie Bio. This is in comparison to the first 9 months of 2020, during which the consolidated cash usage was $13.4 million or $9.3 million if excluding Lavie Bio. These sums in 2021 exclude approximately $29.6 million net raised through our ATM offerings, including $2.6 million raised under our current ATM, of which we announced in March 2021 and exclude $1 million proceeds from our grants and exercise of options. During the third quarter, the consolidated cash usage was approximately $6 million or approximately $4.6 million if excluding Lavie Bio. This is in comparison to the third quarter of 2020 during which the consolidated cash usage was $4.6 million or $3 million if excluding Lavie Bio. The burn rate during the first 9 months of 2021 and in the third quarter was higher than the same period in 2020 for the following reasons. During the third quarter of 2020, the burn rate was relatively low due to certain measures the company initiated in the second quarter of that year to mitigate the impact of the COVID-19 pandemic on the company. And during the third quarter of 2021, Evogene's subsidiaries significantly expanded product development activities, including Biomica's ongoing preparation for the initiation of first-in-human proof-of-concept study in the immuno-oncology program later this year. Lavie Bio's activities supported the commercial launch in 2022 of its inoculant product branded as result. And Canonic's prelaunch campaign in September 2021, prior to product commercialization, which took place in Israel during the first quarter of 2021. We continue to estimate that our cash usage for the full year of 2021 will be within the anticipated range of $20 million to $22 million. These guidelines exclude cash usage of our subsidiary Lavie Bio. The company does not have bank debt. Let's now turn to the statement of operations. Revenue for the third quarter of 2021 was $0.2 million in comparison to $0.3 million in the same period of the previous year. R&D expenses for the third quarter of 2021, which are reported net of grants received, were $5.8 million in comparison to $4 million in the third quarter of 2020. The increase in R&D expenses in this quarter was mainly attributed to the expansion in product development activities of the company and its subsidiaries as mentioned above. Business development expenses were approximately $0.8 million for the third quarter of 2021 in comparison to $0.6 million in the third quarter of 2020. The increase is attributed mainly due to Canonic's and Lavie's preparation for commercialization. General and administrative expenses for the third quarter of 2021 were $2 million in comparison to $1.2 million in the third quarter of 2020. The increase is attributed mainly to the increase of the cost of directors' and officers' insurance and a relative increase in salary expenses, following temporary reduction in such expenses in the corresponding quarter in 2020. The loss for the third quarter of 2021 was $8.3 million in comparison to a loss of $5.4 million during the third quarter of 2020. The increase in loss is attributed to the increase in product development activities and increase in commercialization and marketing expenses and an increase in directors' and officer insurance costs. With that said, we would now like to open up the call for any questions you may have. Operator?

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

And congratulations on your progress, including these 2 launches. I think, first, it would be helpful if you could remind us of the time for Lavie Bio and Canonic it took from generating an idea to entering the clinic and what would have been expected if it weren't for the CBP platform capabilities. Just trying to understand how much CBP drove the speed of getting these products to market. And what potential learnings do you think you could carry over to other areas or products that you're building from these companies as well as your other subsidiaries?

Kristen, thank you for your -- for the compliments. And I will try to address your questions. So the CBP platform and the 3 tech engines relying on this platform, they have 3 main targets to achieve. The first one is reduce time. Second is reducing cost of development. And the third is, which I think is the most important, is increase the probability of success of developing products in the 3 different segments using our technology. So I think that what we saw here, especially in this quarter, is the combination of these 3 elements that are coming from the use of our technology. I think that when you look at Canonic, that was established in 2019, which is less than 2.5 years and now they have 2 products out there. I think this is -- and it's not product that we import and we are selling. It's product that's coming from our own research activity. I don't -- I'm not familiar with many companies that can demonstrate such an achievement. But I think more than this, more than this is the quality of the product. We were targeting to achieve 2 products, a product that fits to the category of THC 20 and the second one THC 15. But what was important for us is not just that we will have a product out there, but also the quality of the product. And what we are very excited is that we received a very positive feedback from the people that were using the product. And actually, even though that we launched the product only 1.5 months ago, we've started to see repeat customers buying our products. So we are very excited about it. Moving to Lavie Bio. Maybe here, the time to develop the product is not significantly lower than what you might expect till you can -- I think that even here, we succeed to save a year or even 2 years from the time it takes to develop such a product if it's around 5 to 6 years. But the thing that what we are very, very excited is the efficacy of the product. So it's not that we just have a biostimulant for spring wheat, it's also that when we compare this product to other products exist in the market, the performance of our product was much better. So it's not just we improve yield. We also improve yield better than commercial product available in the same segment. And taking also into account the total burn rate of our company and think about the number of activities taking place under the umbrella of Evogene and with the current burn rate, we can achieve all of these targets and of this activity thanks to the quality of our technology that really minimize the number of candidates we need to validate, really direct us to what to focus on and how to really find shortcuts in order to reach to the product that we are looking for. So yes, without the CBP platform, I don't think that we can reach to this achievement in such a short period of time with the current budget and with the quality of our product as they demonstrated to the market.

Got it. And maybe I could ask you where you see the vision of Evogene over the longer term in light of potentially considering the spinning out of one or more subsidiaries into public companies? While you look to, of course, support these companies with your technologies, are you thinking about long term looking to further expand upon the potential applications and spaces for usage?

So with respect to the future, currently, we are -- I think, more than 90% of our activity is focusing on advancing, building and increase the internal value of our subsidiary using Evogene technology, but of course, also using the technologies also develop in each specific segment in each company for their own need. And I think that as I stated in previous call and also in this call is that we believe that the value of each company, if you combine all of our subsidiaries, it's greater than the current value of Evogene. And our intention is to help investors to explore the value of each subsidiary and the way that we want to do it is by spin them out, and it could be through the public market or maybe through private fundraising. And this is already a decision that was taken, and we are now executing this plan. We are focusing on building each company as a completely separate entity from legal perspective, financial perspective, also they should have their own corporate and not rely on Evogene corporate as it used to be until now. And in addition we also evaluate our opportunity with different investment bankers in order to learn more on what is the possibility we have in order to capture the value of our subsidiaries through the capital to market. So this is with respect to the subsidiaries, and I really hope that the next year, we will have some news in this regard. With respect to new area, I think that the Evogene technology, the 3 tech engine, MicroBoost, GeneRator and ChemPass, each one of them can support and be a competitive advantage to much more number of subsidiaries' activities, product type. And we start to learn more about this opportunity. I think that in the past, I disclosed some of this activity. Actually, even in the last press release coming from Evogene, with respect to the approval of the CRISPR-IL second phase -- second period, so we -- there was one paragraph that mentioned that we are evaluating our ability to use CRISPR-IL technology in order to produce different materials in plant tissue, and we mentioned 2 types of materials colors for the food industry, natural colors for the food industry and also an anti-aging material for the cosmetic industry. So this is just an example how we can use our technology and our understanding. And you can think about other alternatives, maybe protein that can replace protein today we consume from animals. So this is another area that we have actually everything needed in order to initiate this type of activity. But at the end of the day, we need to focus, and we also have some limited financial resources. So when at least 1 or 2 from our subsidiaries will have their own financial resources and they will be hopefully even traded in the public market, we can -- and actually, we built now the infrastructure to expand our activity to the new area that we are now validate.

Okay. And then last question for me. You noted in one of your responses that you've seen some initial repeat customers. Curious if you could share any specific feedback about what the customers like about the product or anything that you think is important to note.

I think that I will let Arnon, Canonic's CEO to respond.

This is Arnon. Thank you for the question. So regarding the feedback that we're just starting to see from the market. First, I would like to mention maybe those who weren't following our launch activity that before launching on full scale, we conducted a pre-launch campaign in order to get as much feedback from the market as possible and in order to offer the best possible products. So in this pre-launch campaign, we recruited a focus group of patients that tried our product, and the feedback we received was very positive. First of all, patients were very happy to be brought into the process and for their opinion to be taken into account. And most patients were impressed with the products, consumer traits, such as appearance, inflorescence, size, density, smell and so on. As we mentioned before, this was one of the objectives that we set forth for those products and this was very encouraging for us. Now post-consumption, we are collecting feedback from patients on the user experience. And while every patient has their own medical indication, I can say that we were very proud to see broadly positive feedback regarding symptoms relief for many patients. So the decision to move forward to full launch was based on those positive feedback from this focus group at the point where we felt that we know enough about our products to allow full distribution to pharmacies. Beyond being happy with the positive feedback, it also confirms us that we succeeded in developing the products that we intended to. And this gives us confidence in our development process and in our technology to continue developing additional products in our pipeline. I hope this answers your question, Kristen.

Yes, it does. And congratulations again.

The next question is from Nathan Weinstein of Aegis Capital.

Great to see the progress on so many fronts. So to begin with on Biomica, you signed an agreement with Rambam Health Care Campus. Perhaps you could give us some more context on the institution, discuss their size and reputation and the confidence level that you have in them?

Thanks for this question. Rambam Hospital is located in Haifa. This is the biggest city in Israel, in the north part of Israel. And they give a medical service to all the people who live in the north part of the country. For good and bad, they have a lot of experience in -- due to the number of population they are serving. And also, at least in the past, they also have a lot of experience in working with the Israeli Army due to tense that we had in the north part of our country. So they have a lot of experience, and it's quite -- I think it's one of the biggest hospital in Israel, and it's well-known in the world. One of the reasons that we choose Rambam is because we believe that -- and I'm sure that you know that when you conduct a clinical trial, one of the important issue is also the number of patients that you can recruit to your experiment. And we believe that based on our validation, we expect that the number of patients that we want to recruit in this -- for this experiment, we will be able to do so in a reasonable time period because of the significant number of population that this hospital is giving a service.

Great. That's very helpful. And then turning to the commercialization with Canonic and Lavie Bio, maybe you could help us think about what type of sales and marketing resources you'll put behind both of those efforts? And then second part, when you think about the geographic expansion potential, how should we think about that beyond the initial markets?

So with respect to Canonic, I will ask Arnon to respond, but with respect to Lavie Bio, so our first initial market is North Dakota in U.S.A. And this is -- will be our main focus for next year. Year after, there will be additional territory for wheat spring in the U.S.A. and hopefully also Canada. In parallel in next year and in 2023, we are planning to expand the uses -- the use of result to additional crop, not just for spring wheat, but also to some other cereals. And based on some initial results, we have a expectation that we will be able to achieve this target starting from 2023. So to summarize, next year, main focus on North Dakota; the year after still spring wheat, and so it will be additional territory in the States and also Canada. And hopefully from 2023 and on, we hope to expand the use of this biostimulant to additional crop.

This is Arnon. So if I understood correctly, you asked about the marketing infrastructure, sales and the geographic expansion. I'll try to answer those 3 points. So in terms of marketing, Canonic has its own marketing team based here in Israel. A very active team and knowledgeable in the medical cannabis sector. Our marketing strategy was carefully built during this past year to bridge the gap between us and the end consumer, which are the patients of course. I can definitely say it worked out very nice with high brand awareness in a very, very short time here in the Israeli market with this specific launch campaign. In terms of sales, so sales are progressing quite well, but we just started sale in mid-October. So it's a little early to reach a conclusion at this point. I can say that we are selling at almost 50 pharmacies. In Israel, we are very well geographically spread from north to south, executing our marketing strategy, keeping very close contact with patients and pharmacists to create brand awareness and support sales. So I'm quite optimistic looking forward on how we penetrate the Israeli market. Now the last point, in terms of the geographic expansion, I can share with you that we are already in contact with the number of key players in Europe. And while we are already -- we've already started this go-to-market campaign in Israel, our intention is next year to build our go-to-market strategy outside Israel, starting in certain European countries and then expanding within Europe with the eventual goal to enter the North American market also.

And then Nathan, I just want to complete my answer with respect to Lavie marketing infrastructure. So we are tackling this topic in 2 directions. The first one is that we have our internal marketing team that we strengthened. Currently, we have 3 people in this department. But what is more important is that we are working with distributors. We already announced a distribution agreement with United Agronomy. In -- they are very strong in North Dakota. We are also already -- we already started to talk with some additional distributors in North Dakota, but in different regions. And I think that I can also mention that we started to see some interest with the first tier type of companies in what we are doing in -- with result. And I can envision in the long-term -- in the next few years, maybe also a distribution agreement with a multinational company for our product. So bottom line, I don't think that we -- I don't see Lavie Bio building its own marketing channel. I think that we will rely on distributors and the strategic distribution agreement with big companies such as Corteva, which is a shareholder in Lavie Bio and other companies. And this probably will be the fastest way to reach to a broad range of acreage with minimal expenses. Yes, of course, we are losing part from the revenue that you can generate on your product, but this will help us to maximize the potential of our product in relatively short period of time.

Okay. And it's great to see all these advancements and such an exciting time for Evogene. So much appreciated.

The next question is from Brett Reiss of Janney Montgomery Scott.

Question is on the Canonic G200 and 150. Let's flash forward to 2024. So 2024, you'd have 2 years of commercial launch in Israel and a year under your belt in Europe. Could you, if possible, share with us a kind of base case range of revenue potential from just this product that you'd be selling in Israel and Germany?

So I can flash forward and give you some more information about what kind of products we would like to release in the next few years. But in terms of sales, we are just less than a month launching those products. And as we get positive feedbacks from the Israeli market, they might behave differently in different markets. The medical cannabis markets in Israel, in Europe, in North America, are very, very different in many aspects. So I don't really feel it's responsible from my end to give such a projection going ahead.

Let's put it this way. I mean, of course, we have our own projection internally. Each company has its own projection, but since we didn't disclose it, I think that it won't be appropriate to do it in an analyst call. Of course, we have our own expectation. And of course, it's -- we have a very aggressive expectation, but we can't disclose it in an analyst call. When we will feel that it's the right time, we will do so in a regular manner. I'm sorry that we can't add more information to this question.

Fair enough. Okay.

The next question is from Brian Wright of ROTH Capital Partners.

Really impressive 3 product launches within a short amount of time. So congrats to the team on being able to produce that. My first question is on Lavie Bio. With result, is there any kind of like -- how do we think about production capacity? Could you -- if United -- given if you look at United Agronomy's kind of market share, what percentage of that market share could you all supply if the demand was there in 2022?

First, thank you for the compliments. And honestly, we are working very hard to achieve all of these targets. And as the CEO of the group, I'm very proud with all this achievement. With respect to your question, you touched a very important point with respect to production. So first, according to our business model, the production is going -- will be conducted by third parties in target locations. We don't have, at least not in the short term, plan to have our own production facility. So we will use third-party to produce our product. And this is something that we need to do very carefully because we need to choose a high-quality producer because we want to make sure that to ensure the quality of our product, which is the live microbes. So currently, we have enough sufficient capacity for the projection of next year. And I believe that we will be able to support the demand coming from United Agronomy. One of the reasons that we didn't expand to more distributors and to more territory is also related to the production capacity. Because, as I said, there is -- there are more groups that can produce for us our product, more companies can produce for us the product. But one of the most important thing for us is to make sure that the quality of the product is according to the standard that we put in front of us for the benefit of our customers. And we are now started working with additional production company to ensure the expansion we expect to see in 2023 and on. So this year, it's really first time that we will produce abroad in a commercial scale to address the demand come strong. And again, it's something need to be checked, is the number of acreage that United Agronomy is supported. If I'm not wrong, it's -- no -- so we need to check it. I'm not sure exactly what is the number, but it's quite big. And it was published in one of our previous press release. So they -- and we have the development production, and we are expecting a significant expansion towards 2023. And in a way, 2022, significant efforts will be on expanding the number of distributors for result and also the production capacity. The product, we have a very high expectation and very strong belief in its performance. Now it's more to execute and reach to a significant market share.

Okay. And then kind of a similar kind of question with Canonic. Could production capacity there, we know the size of the Israeli market, could you all supply a 5% kind of demand if it were there, if demand got to that point, maybe by the end of the year, not saying like for the full year? Or like how to think about it? And I know these are kind of -- now is not the time to answer these kinds of questions. When you do decide to provide the kind of outlook for Canonic, like you had mentioned, if you could help us with Lavie as well, that would be great.

Brian, nice to talk to you again. This is Arnon. So in regard to kind of expansion or what kind of increase we can actually support with our producers. So if we have such demand for our products, we could definitely -- we are definitely able to supply and support the percentage that you mentioned. Currently, and this is what is nice with our business model since our cultivation and production capabilities are based on third-party contractors, it gives us the flexibility. So with the current agreements, we can already supply for market share of a few percentage, but we are also in touch with additional growers in Israel in order to guarantee the fast expansion of our production capabilities, if needed. And of course, according to the demand. So this is the picture for the Israeli market, which we are ready to support in 2022. And as I mentioned before, our main effort during 2022 in regards to geographic expansion is building similar capabilities for the European market.

[Operator Instructions] There are no further questions at this time. Before I ask Mr. Ofer Haviv to go ahead with his closing statement, I would like to remind participants that a replay of this call is scheduled to begin 2 hours after the conference. In the U.S., please call 1-888-326-9310. In Israel, please call 03-92-55-901. Internationally, please call 972-3-92-55-901. Mr. Haviv, would you like to make your concluding statement?

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

Thank you. This concludes Evogene's Third Quarter 2021 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.