Executive Summary / Key Takeaways

• Evogene is undergoing a significant strategic shift, concentrating its efforts and resources on maximizing the value of its proprietary ChemPass AI platform for small molecule discovery and optimization across the pharmaceutical and agriculture industries. This pivot is supported by a collaboration with Google Cloud to develop a first-in-class generative AI foundation model, enhancing its technological edge.
• The company has streamlined its operations through substantial cost reductions, including workforce reductions at Evogene and its AgPlenus subsidiary, and divested most of Lavie Bio's activity and the MicroBoost AI for Ag tech-engine to ICL (ICL) for a total consideration of $18.75 million, significantly bolstering its cash position.
• Evogene boasts an operational runway of approximately 18 months, supported by recent fundraising and the ICL transaction, with an expected cash burn from operations of $6 million to $7 million for 2025 (excluding subsidiary sales).
• Casterra, a wholly-owned subsidiary, continues to demonstrate strong revenue potential from castor seed sales and is expanding into grain cultivation, addressing the "huge" and "increasing" global demand for castor oil in biofuels and biopolymers.
• Key catalysts for the next 12-18 months include new collaboration announcements in both pharma and agriculture, as well as further disclosures of breakthrough capabilities from the ChemPass AI engine, which management believes will drive shareholder value.

Evogene's AI-Driven Evolution and Market Landscape

Evogene Ltd. (NASDAQ: EVGN) is a computational biology company established in 1999, with a long-standing commitment to revolutionizing life science product discovery and development. The company leverages advanced big data and artificial intelligence (AI) through its proprietary Computational Predictive Biology (CPB) platform, which is underpinned by three distinct AI tech-engines: MicroBoost AI for microbe-based products, ChemPass AI for small molecule-based products, and GeneRator AI for products based on genetic elements. This integrated approach has historically positioned Evogene at the forefront of innovation across human health, agriculture, and other industrial applications.

The company is currently undergoing a transformative strategic shift, intensifying its focus on the ChemPass AI platform as its core asset. This pivot aims to unlock substantial value in the vast pharmaceutical and agriculture markets by accelerating the discovery and optimization of small molecules. This strategic realignment is a direct response to the industry's increasing demand for novel solutions and the growing potential of AI to address complex R&D challenges. For instance, the global biodiesel market, a key driver for Casterra, was estimated at $36.48 billion in 2022 and is projected to reach approximately $79.12 billion by 2032, expanding at an 8.1% CAGR. Similarly, the herbicide market is estimated at $42.81 billion in 2024, highlighting the significant opportunities in crop protection.

In this competitive landscape, Evogene operates as a specialized innovator. While larger, diversified players like Corteva Agriscience (CTVA), Bayer AG (BAYRY), and BASF SE (BASFY) dominate the broader agriculture and chemical sectors with extensive R&D, established distribution, and robust product pipelines, Evogene distinguishes itself through its AI-first approach. Evogene's computational capabilities offer a unique value proposition in rapidly identifying and optimizing product candidates, potentially leading to faster innovation cycles and more precise solutions than traditional methods. However, Evogene's smaller scale means it faces challenges in market penetration and distribution compared to its larger rivals, which benefit from superior financial resources and established customer relationships.

Technological Differentiators: The Power of ChemPass AI

At the heart of Evogene's strategic transformation lies its ChemPass AI platform, a cutting-edge computational engine designed for the AI-driven discovery and optimization of small molecules. This proprietary platform is engineered to explore uncharted chemical space, producing precisely optimized molecules that meet complex product requirements with high potency. ChemPass AI integrates innovative chemo-informatics tools and a robust virtual screening platform, leveraging deep learning computational technologies to screen and identify small molecule candidates from an extensive database of over 35 billion molecules. This process is significantly more efficient in identifying optimal protein targets and small molecule candidates, addressing a major challenge in both pharmaceutical and agricultural R&D: the identification of novel molecules meeting multiple complex criteria.

A significant advancement for ChemPass AI is the completion of version 1 of its generative AI foundation model for small molecule design, developed in collaboration with Google Cloud in June 2025. This model, trained on a proprietary dataset of approximately 38 billion molecular structures (a substantial expansion from an earlier 6 million molecules) and deployed on Google's advanced AI infrastructure, dramatically enhances ChemPass AI's capabilities. The tangible benefits for investors include the potential for generating innovative molecules that more accurately address specific product requirements, shortening development timelines, and enhancing cost efficiency. This technological leadership is expected to strengthen Evogene's competitive moat, improve financial performance through reduced development costs, and attract meaningful collaborations. The company is already developing version 2.0 of this model, focusing on enhanced flexibility for multi-parameter optimization, incorporating customized parameters for therapeutic or agricultural contexts.

Beyond ChemPass AI, Evogene also maintains its MicroBoost AI and GeneRator AI tech-engines, which continue to support its subsidiaries in developing microbe-based and genetic element-based products, respectively. These platforms collectively reinforce Evogene's position as an AI-first company, integrating cutting-edge AI, computational chemistry, and life sciences expertise to accelerate the creation of novel small molecules and other life science products.

Strategic Transformation and Operational Focus

Evogene's strategic pivot is not merely a technological shift but a comprehensive operational restructuring. The company is actively integrating its AgPlenus subsidiary, which focuses on crop protection product development based on small molecules, directly into Evogene. This integration included a significant workforce reduction of over 40% at AgPlenus, aimed at fostering a more effective use of ChemPass AI to enhance AgPlenus's pipeline. Similarly, Evogene itself underwent a major organizational restructuring, including a workforce reduction of approximately 30%, with the full financial impact expected to be reflected starting in the third quarter of 2025.

A critical component of this strategy is generating cash flow and unlocking value from its subsidiaries. In April 2025, Evogene announced the sale of most of Lavie Bio's activity to ICL for $15.25 million, alongside the sale of Evogene's MicroBoost AI platform for agriculture to ICL for $3.5 million. This transaction, completed in July 2025, generated direct cash for Evogene from the MicroBoost AI sale and is expected to provide indirect cash through dividends, as Evogene remains a major shareholder in Lavie Bio. This move significantly strengthened Evogene's financial position, providing a solid foundation for its focused strategy.

Biomica, another subsidiary focused on microbiome-based therapeutics for human health, is also undergoing a streamlining process. Its operations are now concentrated on two key goals: completing its Phase I clinical trial for BMC128 (expected in early 2026) and securing partners to lead its development programs. Biomica currently holds approximately $4 million in cash, deemed sufficient to complete the ongoing clinical trial. Ofer Haviv, Evogene's President and CEO, has assumed direct responsibility for overseeing Biomica's operations during this transitional period.

Casterra, Evogene's wholly-owned subsidiary specializing in castor farming solutions, stands as a unique asset within the new strategic framework. While not directly tied to the core ChemPass AI technology, Evogene intends to continue supporting Casterra due to its strong potential for building a sustainable revenue stream. Casterra has demonstrated robust operational performance, delivering 250 tons of castor seeds in February 2025 alone, surpassing its total 2024 deliveries of 215 tons. The company is expanding into new markets and marketing channels, and has initiated proof-of-concept trials for grain cultivation in Kenya and Brazil, aiming to supply castor grain directly to crushing factories. This initiative directly addresses the "bottleneck" in castor cultivation, where the demand for castor oil is "huge" and increasing, but the supply of grain is limited. Casterra's unique position as the "only seed producer of Castor in Africa" provides a significant competitive advantage by reducing shipping and delivery challenges for its African partners.

Financial Performance and Liquidity

Evogene's financial performance in the first half of 2025 reflects the initial impacts of its strategic restructuring and cost reduction initiatives. Total revenues for the first half of 2025 increased to approximately $3.2 million, up from $2.3 million in the first half of 2024, primarily driven by strong seed sales from Casterra. However, it is important to note that first-quarter 2025 revenues of approximately $2.4 million were lower than the $4.2 million reported in the first quarter of 2024, as the prior year included $3.5 million in non-recurring license fee payments from Lavie Bio and AgPlenus.

The company has made significant strides in operational efficiency. Total operating expenses net for the first half of 2025 decreased to approximately $7.7 million from $11.1 million in the same period of 2024, largely due to reduced activity in its subsidiaries and the discontinuation of Canonic's operations. Research and development expenses for the first half of 2025 were approximately $4.8 million, down from $6.5 million in the prior year, reflecting reductions at Biomica and the cessation of Canonic. This disciplined approach led to a reduced operating loss of approximately $6.1 million in the first half of 2025, compared to $9.4 million in the first half of 2024. The net loss for the first half of 2025 also narrowed to approximately $7.7 million, a $2.1 million improvement from $9.8 million in the same period last year.

Evogene's liquidity has been significantly strengthened by recent strategic actions. As of June 30, 2025, the company held consolidated cash, cash equivalents, and short-term bank deposits of approximately $11.7 million. This figure does not include the expected proceeds from the Lavie Bio and MicroBoost AI for Ag transaction with ICL, which was completed in the third quarter of 2025. Furthermore, Evogene successfully raised $4.4 million in June 2025 through an at-the-market facility, demonstrating investor confidence in its new strategic direction. These combined efforts provide Evogene with a solid financial foundation and an operational runway of approximately 18 months. The company's expected cash burn from operations for 2025 is projected to be between $6 million and $7 million, excluding any cash inflows from potential future subsidiary sales.

Competitive Positioning and Market Dynamics

Evogene's competitive strategy centers on its AI-driven computational biology platforms, particularly ChemPass AI, which offers a distinct advantage in the discovery and optimization of small molecules. This technological edge allows Evogene to identify novel compounds with high potency and multiple desired properties more efficiently than traditional discovery methods. This is particularly relevant in the pharmaceutical industry, where the challenge of finding effective small molecule drugs is likened to "finding a needle in a haystack," and the industry is willing to invest in breakthrough technologies.

In the agricultural sector, Evogene's AgPlenus subsidiary, powered by ChemPass AI, is developing innovative crop protection solutions with new modes of action, directly addressing the growing challenge of weed and pathogen resistance to existing products. AgPlenus's collaborations with industry giants like Bayer and Corteva underscore the value of its computational approach in a market estimated at $42.81 billion for herbicides alone in 2024. AgPlenus CEO Dan Gelvan emphasizes that being a "computational company" sets them apart, enabling the generation of "new chemistry" which translates to "new IP, new patents and better protection, and downstream that's going to make better money."

Casterra's market positioning is also strong, particularly in the burgeoning castor oil market. The demand for castor oil is "huge and increasing," driven by its use in biopolymers and biofuels, with crushing factories eager to purchase more grain. Casterra's unique competitive advantage stems from its position as the "only seed producer of Castor in Africa," which mitigates logistical challenges and positions it favorably against competitors located outside the continent. Its focus on developing elite seed varieties and growth protocols designed to maximize yield versus expenses directly addresses the primary bottleneck in castor cultivation: educating farmers to effectively grow the crop.

While Evogene's AI-first approach provides a significant technological moat, its smaller scale compared to multinational conglomerates like Bayer and Corteva presents challenges in terms of market share and direct operational execution. These larger players benefit from vast resources, established distribution networks, and diversified portfolios, which can lead to more stable revenue and higher profitability margins. However, Evogene's strategic partnerships and its ability to rapidly innovate through AI could allow it to capture significant value in niche, high-growth areas. The company's focus on capital-efficient models, including subsidiary fundraising and potential divestments, aims to mitigate the financial pressures associated with its smaller scale.

Outlook and Catalysts

Evogene's outlook for the remainder of 2025 and into 2026 is anchored in the continued execution of its strategic shift and the realization of benefits from its cost reduction plans. The company expects to see the full financial impact of its streamlining efforts in the second half of 2025, with a projected continued decline in operating expenses across all categories. This operational discipline, combined with the proceeds from the Lavie Bio transaction, provides Evogene with an estimated operational runway of approximately 18 months.

Key catalysts for shareholder value creation in the next 12 to 18 months are expected from both the pharma and agriculture verticals. In pharma, Evogene plans to announce new collaboration agreements with academic institutions and mid-size biotech companies, leveraging its enhanced ChemPass AI platform and the generative AI foundation model developed with Google Cloud. The collaboration with Professor Ehud Gazit from Tel Aviv University to develop small molecule therapeutics for metabolic diseases is a prime example of this initiative. In agriculture, AgPlenus anticipates further growth, including new partnerships later this year, building on its existing collaborations with Bayer and Corteva.

Casterra is expected to be a significant revenue driver, with management anticipating "nice growth" in the second half of 2025 and even more in 2026, as more farmers adopt its high-yielding castor varieties and growth protocols for grain cultivation. Biomica is on track to complete its Phase I clinical trial for BMC128 in early 2026 and will focus on securing partners to advance its development programs. Management believes that announcements of new collaboration agreements and breakthroughs in its ChemPass AI technology will be critical in driving the company's share price.

Risks and Challenges

Despite the promising strategic direction, Evogene faces several pertinent risks. The ongoing geopolitical situation, specifically the "current war between Israel, Hamas and Hezbollah and any worsening of the situation in Israel," poses a significant risk to the company's operations and financial performance.

Financially, while the Lavie Bio divestment and recent fundraising have bolstered liquidity, Biomica's ability to advance BMC128 to Phase II clinical trials is contingent on securing additional funding, which will require substantial effort. In the agricultural segment, a key challenge for Casterra lies in educating farmers on how to effectively utilize its advanced castor seed varieties and growth protocols to maximize yield, which is crucial for widespread adoption and revenue growth. Furthermore, Evogene's business model, which heavily relies on strategic partnerships for product development and commercialization, introduces a degree of dependency on the success and commitment of its collaborators.

Conclusion

Evogene Ltd. is undergoing a profound strategic transformation, refocusing its core identity around the powerful ChemPass AI platform to unlock value in the pharmaceutical and agriculture sectors. This pivot, underpinned by a cutting-edge generative AI foundation model developed with Google Cloud, positions Evogene as a specialized innovator capable of accelerating small molecule discovery and optimization with unprecedented efficiency. The company's decisive actions to streamline operations, including significant cost reductions and the strategic divestment of Lavie Bio, have substantially strengthened its financial position, providing an 18-month operational runway.

While Evogene operates in competitive markets dominated by larger players, its technological differentiation in AI-driven predictive biology offers a compelling edge in innovation speed and precision. The continued growth of Casterra, addressing the surging global demand for castor oil, further diversifies Evogene's revenue streams and contributes to its financial stability. Investors should closely monitor the anticipated announcements of new collaborations in pharma and agriculture, as well as further technological advancements of ChemPass AI, as these are expected to be key catalysts for demonstrating the long-term value creation potential of Evogene's AI-centric strategy. The company's commitment to capital efficiency and its focused approach underscore a disciplined path toward realizing the promise of its computational biology expertise in addressing critical global needs.