Making the next generation of insect-resistant seeds will be one of the main growth engines for Evogene Ltd., an Israeli plant genomics company that beat global peers in 2015 with a 20 per cent stock rally in December.
“If in the past we only looked at the genomics of the plant, now we look at the genomics of bacteria. This is a whole new world,” Ofer Haviv the president and chief executive officer said in an interview at the company’s Rehovot, Israel offices. “This is a new field of activity for Evogene, which will be one of the main growth engines for the company in the coming years.”
The company applies algorithms to plant biology to identify genes that make seeds more resistant and higher yielding, addressing a global demand to produce more crops with fewer resources as populations grow and arable land declines. Now, its focus will also include bacteria.
Developing resistance
“There are products that make seeds resistant to insects, but the insects are developing resistance to these products, as they undergo mutations. So then we need to get something new. We are looking for the new product,” Haviv said.
The stock rallied 20 per cent in December to 31.12 shekels ($7.93) after the company announced a three-year collaboration agreement with BASF SE for the discovery and development of herbicides. Credit Suisse, which has a $19 price target for the share, said in a December 8 note the deal establishes Evogene’s presence in the global agri-chemical research and development market and potential revenue “could be in the billions.”
Haviv said that the commercialization of a new biofuel product from castor beans in partnership with Brazil’s SLC Agricola S.A. scheduled originally for 2016 may have to be delayed, due to a fall in energy prices.
Evogene’s shares have declined 10 per cent in the past 12 months, compared with an average 21 percent drop for global peers. The share was trading 1.8 per cent higher at 32.40 shekels at 1:38 pm in Tel Aviv.
“Evogene’s proven ability to work with the world’s leading seeds developers and chemicals companies makes it a very interesting share,” Roee Cohen, a fund manager at Migdal Mutual Funds Ltd., which manages 11.7 billion shekels ($3 billion) said by phone. Migdal Mutual Funds is a sister company of Migdal Asset Management, the second-largest stakeholder in Evogene, according to data compiled by Bloomberg. “The main problem with this kind of industry is that the development process takes so long and the market is impatient.”
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