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Evolva Announces 2011 Half-Year Results

Posted: September 13, 2011

Evolva Holding SA announced its financial results for the period January 1 to June 30, 2011. The company generated total revenues of CHF6.9 million in the first half of 2011, compared with CHF9.4 million in the corresponding period of 2010.The revenues were generated through R&D partnerships based on Evolva’s technology. The drop in revenues in the first half of 2011 was caused by two factors. The major factor was the winding down, as scheduled, of the US biodefense contracts. As a consequence, the US biodefense contracts only represented half of total revenues in the first half of 2011 versus 80% in the same period in 2010. The second key factor was the strengthening of the Swiss franc. More than three-quarters of total revenues were invoiced in euros and US dollars. The weakening of these currencies accounted for 1/3 of the reduction in revenues in the first half.

Total operating costs declined by CHF3.5 million. This was primarily due to a reduction in the activities related to the biodefense projects. In addition, since around half of the operating expenses are incurred in other currencies than the Swiss franc, the strengthening of the franc also lowered costs. Furthermore, the (non-cash) charge for the company’s option program declined to CHF2.5 million from CHF3.7 million in the first half of 2010.

Neil Goldsmith, CEO and managing director of Evolva, commented, “We have made strong progress across our business in the year so far. We have broadened our pipeline with the acquisition of Abunda, added new partnering contracts and hit our first milestone in the Roche collaboration. In addition, we have completed Phase I studies with EV-077 and achieved yields on vanillin that allow it to enter the market at a competitive price. At the same time, we have kept the costs under strict control and strengthened our financial position.”

The first half of 2011 saw significant progress in Evolva projects carried out in collaboration with external partners. In January 2011, the company entered into a collaboration and joint development agreement with International Flavors & Fragrances (IFF). The objective of the collaboration is to implement a commercially viable biosynthetic route for the production of a key flavoring ingredient, and the project is progressing as planned.

Additionally, with the acquisition of Abunda in July , the stevia high-intensity sweetener project became a proprietary program within Evolva. The research team successfully made key individual molecules of stevia via fermentation in yeast. Evolva believes the product has significant market potential by allowing for the first time the individual molecules to be blended to achieve customized taste profiles for particular products, in addition to greatly simplifying the stevia supply chain. Over the next year, the focus will be on optimizing the production host and associated manufacturing conditions.

Evolva also continued to work on its vanilla project initiated in 2010. The purpose of the project is to generate a commercially viable and environmentally acceptable process for the production of vanillin by fermentation. The production yield target that was expected in 2011 was achieved, and based on the yield, the production costs are lowered to a level where fermented vanillin would already be competitive in certain geographical markets. Recent EU regulatory changes have strengthened the competitive advantage of the proposed product, and the next step will be to further increase the process yield while preparing to scale up the process in 2012. The program is supported by FØSU (the Danish Council for Strategic Research).

During the year to date, Evolva also appointed new members to its management team and company boards. Among the new personnel are Norbert Bender, MD, Evolva’s new chief medical officer; Ganesh Kishore and Stuart Strathdee, new members of the board; Simon Waddington joining the company’s group management team; and Jay Keasling and Douglas Cameron as new members of the scientific advisory board.

The Evolva share showed a negative performance in the year to date, in line with the overall biotech sector. At the end of August, the stock traded at CHF0.95 compared with CHF1.55 at year-end 2010. Total revenues in 2011 from existing contracts are expected to be CHF10–11 million (2010: CHF18.6 million). The three factors behind the drop in revenues are expiring US biodefense contracts and currency effects, both already impacting the first half, as well as the Abunda acquisition. Evolva is in discussions about new partnerships with significant revenue potential, but the major P&L impact of these new contracts will be in 2012 and onward. Partnership discussions cover both Evolva’s technology platform and its product pipeline. Evolva expects the net loss for 2011 to be about CHF29 million, which compares to CHF23.3 million in 2010.