Evolva Publishes Results for 2016, Sales Growth Increase for Resveratrol and Nootkatone
30 Mar 2017 --- Evolva have announced its financial results for the period 1 January to 31 December 2016 and provides a business update.
Neil Goldsmith, CEO of Evolva said, “Whilst 2016 was in many respects a challenging year, it also saw Evolva successfully continue its transition away from being a pure-play R&D company to having its own launched products, supported by capabilities in areas such as manufacturing, regulatory, application development and sales. Regarding the stevia program, Evolva have seen good progress in the discussions with Cargill and expect to announce an agreement in the course of next week.”
Oliver Walker, CFO, commented, “Our commercial pipeline is developing very favorably, providing a basis for top-line growth. Our cash position going into 2017 is good and the recent Yorkville facility further strengthens and expands our financial toolkit.”
Product revenues increased almost fourfold in 2016 to reach CHF 1.1 million. Evolva had expected an even stronger increase. The primary reason for the shortfall was customer conversion taking longer than expected. Despite this the sales trajectory is clearly positive and the customer pipeline continues to improve.
Nootkatone and Valencene
Nootkatone is a citrus ingredient that is associated with the characteristic grapefruit smell. Evolva launched our nootkatone product in August 2015 as a Flavor & Fragrance (F&F) ingredient for use in the food, beverage, personal care and home care markets. As a spin-off to the nootkatone program, Evolva also launched valencene, an F&F ingredient associated with oranges, in December 2015. In the second half of 2016, Evolva switched production to a strain with approximately 50% better efficiency than the one Evolva used for launch. Production costs are already at a very competitive level for the F&F application. Evolva currently use contract manufacturers to make nootkatone.
Resveratrol
Evolva’s resveratrol has a high-purity (>98%) and is the only resveratrol product made entirely by fermentation using natural and sustainable feed stocks. It has Self-Affirmed GRAS status in the United States and obtained Novel Foods authorization for use in Dietary Supplements from the European Commission in January 2012. Evolva have applied for regulatory approval in countries outside North America and Europe. The key application currently is in dietary supplements.
Stevia
In autumn 2015, Evolva’s partner Cargill unveiled the branding of the next-generation zero-calorie sweetener under the name EverSweetTM. The product contains the great-tasting rebaudioside D (Reb D), and rebaudioside M (Reb M) and convincingly overcomes stevia’s previous taste issues. Evolva has developed yeast strains producing Reb M and Reb D. Stevia represented their largest R&D program during 2016.
Revenue from R&D, which derives from corporate and public partnerships, amounted to CHF 7.6 million, down 16% from 2015. Part of the decline can be attributed to the completion of Evolva’s active contribution to two projects (Roquette, Ajinomoto). In addition, new projects with external partners increasingly take place on a risk-sharing basis, meaning Evolva bear part of the R&D costs ourselves. If and when these projects result in marketed products, Evolva will also receive a larger share in the upside.
Other income in 2016 relates to a transfer of intellectual property rights from Evolva to a 20% associate company. The large amount of other income in 2015 involved the sale of the EV-035/GC-072 asset to Emergent BioSolutions.
Manufacturing expenses rose, reflecting the increase in sales of resveratrol and nootkatone, but also internal and external investments in improvement of the yield of these products.
R&D expenses decreased by 6% in 2016, but adjusted for non-recurring charges, they were up slightly – reflecting the development of the R&D headcount. The nonrecurring charges are related to an increase in provisions for a former DTRA contract.
Commercial, General and Administrative expenses rose by 18%, triggered largely by the increasing commercial headcount and by regulatory expenses for bringing our products to market, nootkatone in particular.
The main element within “Financial items and tax” is the tax benefit of roughly CHF 5.2 million related to deferred corporate income taxes. Currencies had a positive impact of CHF 0.8 million in 2016, versus CHF 0.3 million in 2015. Financial lease and interest income/expenses amounted to CHF 0.3 million on balance in 2016, roughly the same as in 2015.
Financial Outlook 2017
Evolva expect to continue successfully enrolling many more customers to test our products. Given the long lead time to acquire and ramp up customers, Evolva expect product sales to show broadly similar growth dynamics as in 2016. And subject to milestone achievements, Evolva expect revenues from R&D in the range of the achievements in 2015 and 2016.
As in previous years, Evolva expect to enter 2-3 partnerships for new products and/or for new R&D programs.
The cash outflow is expected to remain relatively high in 2017 but is overall covered by the current cash position and the additional financing facility from Yorkville.
