Ladies and gentlemen, thank you for standing by. Welcome to Evogene's first quarter 2022 results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded on May 26th, 2022. 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 this 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 1995. For example, Evogene is using forward-looking statements in this call when it discusses expected paths to value creation, including potential fundraisings at the subsidiary level and untapping value in its subsidiaries, its and its subsidiaries expected trials and their expected results, studies, products advancements, commercializations, launches, pipelines, milestones, potential collaborations, target markets, and other plans for 2022 and beyond, expected cash burn rate, the potential advantages of its technology, and its anticipated entry into new fields of activity.
All forward-looking statements made herein speak only of the date of the announcement of the 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. I now hand over to Ofer Haviv, CEO of Evogene. Ofer?
Thank you, and good day, everyone. We appreciate you joining us today for the first quarter 2022 conference call. I will begin the call introducing some of the recent changes we have made to strengthen management. Following that, I want to talk a little about Evogene's underlying computational predictive biology platform, our three AI technology engines, and the business ecosystem built around each tech engine. I will then address the matter of funding mainly for our subsidiaries. Following that, I will provide an update on the subsidiaries' activities and the recent milestones met. Elran Haber, the CEO of Biomica, is joining us today and will give additional color on Biomica's activity as we have made significant advancements there. Joining me today also is Mr. Yaron Eldad, Evogene's new CFO, and this appointment represent part of our recent changes to our management team.
Yaron brings significant CFO experience to Evogene, having filled various CFO positions over the last 25 years in both public and private technology, as well as biotechnology companies. I trust Yaron will prove to be a key asset to Evogene and its subsidiaries. Yaron will address you in a few minutes and cover the Evogene financials. We also recently appointed Tsafi Matzliach as the Executive Vice President in charge of corporate development, and he will be responsible for Evogene's relationship management with its subsidiaries. Tsafi has held various positions within Evogene since 2011, most recently as Evogene's Vice President for Legal Affairs and Corporate Secretary. I congratulate him on this promotion, and I know he will be excellent in his new role.
Finally, joining Evogene's management team, we appointed Liat Foigel as Vice President, Human Resources, having held various positions at Evogene since 2015, including most recently, Director of Human Resources. Liat has proven her capabilities over the years, and this is a key appointment which will ensure we retain leading talent here at Evogene, especially at the time of a very tight labor market globally, including in Israel. I believe that for a disruptive company at the crossroads of life sciences and leading-edge technologies, it is critical that we attract and retain the best people. I congratulate Yaron, Tsafi, and Liat on their new positions and wish Evogene management the best success. Now to introduce some of the continued improvements we have made to our technology and business processes.
As I previously mentioned, we are uniquely positioned at the crossroads between big data, AI, and life sciences, which is known as computational biology. Evogene's goal is to revolutionize the development process of new and novel life science-based products via our cutting-edge technology. Our three tech engines, relying on our computational predictive biology platform, are the driving force behind our activities, and they serve as the underlying competitive advantage of each our subsidiaries. These are MicroBoost AI, targeting to support the development of products based on microbes. ChemPass AI, targeting to support the development of products based on small molecules. Generator AI, targeting to support the development of products based on genetic elements. Each engine addresses multiple development challenges and aims to solve the problem of finding the right product candidate out of multitude of potentials, like finding a needle in a haystack.
Our aim is to increase the probability of product success while reducing development time, failure risk, and costs. Over the years, I have been asked, "Why don't you license out your technology?" Our goal is to maximize the value we can capture from our technology through the end product developed by us, rather than become a simple technological service company. In other words, we feel that licensing out our solution without taking a share in the upside of the end product leaves significant value on the table. Based on this understanding, we have built around each of our tech engines, and continue to build, a business ecosystem. This is primarily in the form of independent subsidiaries, each of which empowers multiple product development or through strategic collaborations focused on the development of a specific product.
Each ecosystem is both an interactive and also an iterative process work environment in which the more projects we embark on, the more enriched our databases and analysis capabilities become, contributing to better predictions down the road and improved probability of success for each product on its own. We expect value to be generated through our equity stack in the subsidiaries or, in the case of strategic partnerships, through success-based payments and royalties generated from the end product. To support the expansion of our tech engines ecosystems, we have recently focused on automations of processes that previously required the intervention of a bioinformatics engineer to fully autonomous implementation. This improves speed, reduces error, and most importantly, allows product developers to get more objective information in the product development process.
Looking ahead, we aim to continue to invest in our tech engines, addressing more potential discovery and better solutions to developmental challenges. I would now like to address the matter of funding. As you know, global financial markets are changing in the extreme at the moment, particularly in the U.S. for growth companies, and even more so for companies in the biotech space. Last year, Evogene raised some capital at a much higher market valuation to support today's advancements at our subsidiaries. Thankfully, we continue to maintain a solid cash position, providing stable runway for the coming year. As of March 31, 2022, our consolidated cash equivalents, bank deposits, and marketable securities were approximately $44.6 million, which includes $6.6 million held by Lavie.
As I updated last quarter, our 2022 net burn rate is expected to be similar to that of last year in the range of $26 million-$28 million, including Lavie, and $18 million-$20 million excluding Lavie, which manages its own cash position. While this gives us a long enough runway, even in the current negative market environment, we continue to work to diversify funding sources at a subsidiary level. Our goal is to accelerate the subsidiaries' growth and to strengthen their position as independent companies. As I will discuss in a few moments, we believe that we are at an inflection point stage whereby we are making critical milestones, and the inherent value of our subsidiaries is becoming increasingly obvious, even if the market value of Evogene doesn't reflect it yet.
Evogene's goal is to partner with value-adding companies and investors at the subsidiary level who can correctly value and appreciate the potential from the products that our subsidiaries are developing. This will allow us to demonstrate in a very public way the subsidiaries' very significant untapped value. We are currently in a number of discussions at various levels with potential strategic and financial investors towards potential fundraising and partnering. To the extent permissible under securities laws, we intend to provide updates. I will now move on to discuss our subsidiaries' activities. We will start with Biomica, our subsidiary focused on the development of drug based on the human microbiome. As mentioned, I would like to introduce Elran Haber, CEO of Biomica, to the call. Elran, please.
Thank you, Ofer. We are very pleased with Biomica's recent progress, which I want to briefly cover. In April, we announced an agreement with Sheba Medical Center, a global top 10 ranked hospital by Newsweek, for a joint microbiome clinical research. Together, we will conduct deep sequencing and high-resolution microbiome analysis of samples obtained from patients with inflammatory bowel disease, IBD. IBD represents an approximately $20 billion market opportunity, and over the past 20 years, multiple studies have shown the pivotal role of gut microbiome in the pathogenesis of IBD. The goal of this joint work will be to identify the potential profile biomarkers and therapeutic entities in order to gain additional and deeper understanding of the human microbiome in IBD patients. Our goal is to use those findings to expand our expertise in this field, furthering our capability to support development of new therapeutics.
We expect this analysis will be highly complementary to our previous work on IBD. As we updated before, Biomica reported positive pre-clinical results in our IBD program following the evaluation of BMC-333, a drug candidate in a DSS-induced colitis model. We demonstrated that BMC-333's ability to significantly reduce intestinal tissue damage from inflammation. We hope to begin the scale-up development process of BMC-333 later this year in preparation for an initial clinical batch production. Last week, we announced that the results from this work will be presented at the Digestive Disease Week, DDW 2022 conference by Biomica's CSO, Professor Yehuda Ringel. With regards to our drug candidate, BMC-128, a combination of four microbes for supporting immunotherapy, last year we announced positive pre-clinical results.
In a series of preclinical studies, BMC one twenty-eight, given in combination with immune checkpoint inhibitors immunotherapy, we were able to show significantly improved antitumor activity. Earlier this year, we received the clearance from the Israeli Ministry of Health to proceed with the first human phase I study, which is set to be held at Rambam Health Care Campus, the largest healthcare center in northern part of Israel, and we are currently advancing towards the enrollment of the first patient. This phase I study will evaluate the safety and tolerability of BMC one twenty-eight in combination with BMS Opdivo in patients with non-small cell lung cancer, melanoma or RCC, renal cell carcinoma. BMC one twenty-eight will be offered to oncology patients who have been found to be non-responsive to immunotherapy treatments. If BMC one twenty-eight shows any clinical signal, that would be a wonderful additional outcome.
Earlier this week, we announced that we will be presenting at the 2022 ASCO annual meeting and that our work was also selected for the 2022 JITC Advocate Choice Award. That ends my update. Back to you, Ofer.
Thank you, Elran. Moving on to the second company in the field of human health, Canonic, our subsidiary focused on the development of medical cannabis products. Focusing on the genetics of the cannabis plant was a good move from Evogene's perspective. The cannabis plant was an overlooked plant for which even relatively simple genetic step has made a huge impact, and it had the characteristic we were looking for. In October 2021, we moved ahead with full commercialization in Israel of our first two products from the MetaYield product line. Over these past few months, we have seen our brand awareness increase in Israel. I do note that while sales this year in Israel are still at an early stage and remain modest, we see Israel as more of a test bed market for us, and Europe is our main target market in the future.
As part of our preparation for the planned 2023 European commercial launch, a first batch of unique cannabis varieties was shipped in January of this year to a potential cultivation subcontractor in Portugal. Our current goal is to test our product under European growing conditions, as well as finding and ultimately entering into commercial agreements with local growers and manufacturers in Europe. Cannonic intends to introduce to the market additional products from the MetaYield product line in 2022. To this end, the company employed Evogene's GeneRator AI to identify several genetic markers, including for increased THC levels. We recently showed a statistically significant increase of more than 20% in THC concentration in a target cannabis population using these genetic markers. In parallel, the company is developing its Precise product line, targeting specific medical indications.
Over the past two years, we conducted pre-clinical trials which have identified cannabis varieties offering pain relief and anti-inflammatory properties. In January of this year, we announced positive results in Canonic pre-clinical studies that support the successful identification of specific cannabis varieties with anti-inflammatory and pain relief properties. We intend to gather additional clinical information over the course of 2022 to support the commercial launch of this product in 2023. I will now move to AgPlenus, one of our subsidiaries in the ag industry segment. The AgPlenus mission is a target-based design of novel and sustainable crop protection products based on small molecules. AgPlenus is currently working on expanding the data package regarding the company's leading herbicide product candidate, APH1, as part of preparation for a potential future collaboration.
In addition, together with Evogene's campus team, AgPlenus is continuously working to expand computational and validation capabilities to enhance the discovery of novel pesticide compounds. Moving to Lavie Bio, our second subsidiary in the ag industry, which is aiming to improve agriculture productivity and sustainability through microbiome-based ag biological products. During late 2021, Lavie Bio launched its crop inoculant, named Result, for the 2022 spring wheat season. A few weeks ago, we announced that Lavie Bio successfully produced and fully sold its first production quota to U.S. customers for Result. I want to stress that this product, Result, was launched to market at a very good time, and we believe it can help contribute to securing global food supplies.
Global wheat prices have recently increased significantly due to supply chain constraints and global shortages, which have been compounded by the war between Russia and Ukraine, the world's first and fifth largest wheat exporter respectively. Current high wheat prices have made it highly economical for growers to explore ways to increase wheat production by increasing yields. Our trials showed that result potentially contributes an additional three to four bushels per acre via yield improvements compared with industry benchmarks. Based on current wheat prices for farmers, this could provide growers an average of $30-$40 in additional revenue per farmed acre, which is very significant. We expect that the demand for wheat yield improvement products will remain high for the foreseeable future, and this is the reason we are already working on expanding production for the 2023 growing season compared to our original market penetration plan.
Looking ahead, we are aiming to broaden result sales throughout North American markets, including Canada in the near term, and later, European markets. We are also working to expand our label to include additional crops such as small grains and oilseed. With respect to Lavie Bio pipeline advancement, our bio-fungicide fruit rot program is continuing to progress. During 2022, we expect to submit a regulatory dossier with the federal U.S. EPA and California EPA for our leading candidate, LAV311. In summary, I hope I succeeded in demonstrating that as every quarter passes, our subsidiaries are all making continued advancements, reaching and surpassing their milestones. As you can imagine, we are very pleased with this achievement, which we view as a powerful demonstration to the quality and efficacy of our underlying tech engines, which support the discovery and development of these products.
I hope to bring further advancement in the coming quarters while working on demonstrating publicly the value in our equity, securing partners, and ultimately, new financing options within our subsidiaries. With that, I would now like to turn the call over to our new CFO, Yaron Eldad. Yaron, please go ahead.
Thank you, Ofer. I would like to start by saying I am pleased to have joined Evogene. This is a company in which I see very significant potential. I'm very much looking forward to embarking on this journey with what I found to be a very strong and positive team. I will begin by reviewing our cash balance. Evogene continues to maintain a strong financial position for its activity, with approximately $44.6 million in consolidated cash-related accounts, bank deposits, and marketable securities as of March 31, 2022. Approximately $6.6 million of Evogene's consolidated cash is appropriated to subsidiary Lavie Bio. The company does not have bank debt. During the first quarter of 2022, the consolidated cash usage was approximately $9.3 million, or approximately $7.6 million if excluding Lavie Bio.
This cash usage this quarter included $1 million of foreign exchange expenses due to the dollar-shekel exchange rate differences and a decrease in marketable securities value. And approximately $700,000 of non-recurring expenses, such as bonus payments to Evogene employees and establishing production capability to our subsidiary, the Lavie Bio. I remind that the estimated cash usage range for 2022 is expected to be $26 million-$28 million, of which approximately $7.6 million will be used by Lavie Bio. Let's now turn to our income statement. Revenues for the quarter were $237,000 in comparison to $333,000 in the same period for the previous year. Revenues were primarily due to the sales of Canonic products and a joint research project conducted by AgPlenus.
R&D expenses for the quarter, which are reported net of non-refundable grants received, were $5.6 million in comparison to $4.3 million in the same period the previous year. R&D expenses increased primarily due to, one, Biomica's ongoing preparation, including GMP microbial production for initiation of its first-in-human proof of concept study in the immuno-oncology program. Two, Lavie Bio's activities supporting the production and commercial launch of the result™ product, branded as result™. Three, Canonic's product commercialization effort in Israel. Business development expenses were approximately $908,000 for the first quarter of 2022, in comparison to $570,000 in the same period the previous year. The increase in the business development expenses was primarily due to the recruitment of business development personnel supporting the commercialization activities of our subsidiaries.
General and administrative expenses remained steady, and for the first quarter of 2022 were $1.6 million, in comparison to $1.5 million in the first quarter of 2021. Operating expenses were $8.1 million overall in the quarter, versus $6.3 million in Q1 last year. Overall operating expenses increased, among other reasons, due to an increase in the activities described earlier this call, as well as headcount and salaries increased due to a growth in market demand for highly skilled workers. The net loss for the quarter was $9.1 million, in comparison to $7.1 million last year.
The increase in loss is attributed mainly to a $1 million loss due to foreign exchange differences that I mentioned earlier, a decrease in marketable securities value, and to the increase in operating expenses. With that said, both Ofer and I would now like to open the call for any questions you may have.
Thank you. Ladies and gentlemen, at this time, we'll begin the question and answer session. As you have a question, please press star one. If you wish to cancel your request, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order that I received. Please stand by while we pull for your questions. The first question is from Kristen Kluska of Cantor Fitzgerald. Please go ahead.
Hi, everybody. Good morning. Good afternoon. Thank you for taking my questions. The first one I had was on Biomica. I was hoping to learn a little bit more about what we can expect at ASCO next week, and then also as it relates to the initial proof of concept data that's expected this year. Could you touch on, based on when you started the trial, what key questions you believe you'll have some early insights into at this time? Thank you.
Hi, Kristin. Thank you for the question. Yes, I'm very excited to be presenting at ASCO next week. In ASCO, we'll be discussing and showing the work we've currently done in Biomica so far regarding the discovery and technical results. In addition, we've discussed and demonstrated the methods and design of our clinical study, in which obviously the first and most important objective will be to monitor the safety and tolerability of BMC128 in combination with nivolumab. Since it's an open label study, we are kind of hoping to be able to monitor and get early signals from additional clinical variables through the course of the study.
The study is designed, as I mentioned on the call, to treat non-responsive cancer patients with either non-small cell lung cancer or melanoma. We already initiated the study, and hopefully very soon we'll be enrolling patients. Once we enroll the first patient, we will announce it obviously to the investors and press release.
Thank you. Appreciate that. For AgPlenus, could you talk a little bit more about the rationale for conducting more work ahead of a potential additional collaboration. Is this just based off of like feedback you've received in terms of more work that needs to be established? I guess I'm trying to understand what additional work you need to do in order to potentially gain more collaborations in light of what you've already reported here.
This is Ofer. Great talking with you. Yes, I think that you described it correctly. We are in a discussion with different potential collaborators, and from this discussion, we learned that we should conduct additional work in order to address certain questions that were raised. As much as we gather more information, so our negotiation position is better, and the interest is growing. I think this is the main work that we are doing, is just expanding the work to address additional questions that not necessarily we were focusing on in the previous work.
Okay, thanks. For Lavie Bio, in light of, you know, the positive momentum we've seen in 2022, maybe can you talk about what work you need to do to really scale up in order to, one, expand the sites where this could be utilized, but then two, to expand the label? Maybe here could you remind us, the potential market opportunity for small grains and oil seeds? Thank you.
According to Lavie Bio business model, we are doing the production of the product itself through subcontractors. For this year, we work with one subcontractor. Next year, we are planning to work with two subcontractors. Maybe it's also worth to mention that, you know, you need to decide on how much you want to produce a year before the actual selling season.
The quantity that we decided to produce for 2021, we made this decision in 2020. The quantity that we are planning to sell in 2022, the decision on how much we are going to produce, we took in 2021. Now we are going to take the decision on how much we are going to produce in 2023. Yes, there is enough subcontractors that can use their capacity to grow. I think that what we are more focusing now is on distribution channels to make sure that we can control and make sure that the product can reach to all the relevant customers.
We are now talking with different distributors in addition to United Agronomists, that we are working with them already. I believe that when there will be an agreement signed, we will announce it publicly. With respect to production and I think that we are in a good place. With respect to marketing channel, we are working on it. Still, you know, we are not going to jump like crazy with the quantities that we are going to produce for next year because we want to make sure that the quality of our product is according to our standards, and the production will be exactly the way we want it.
It's going to be quite significant compared to this year. I think that there will be a nice jump next year. I think that we can move to full scale-up; it's going to be 2024. We intend to believe that the current market positive condition for bio-inoculants for wheat will continue for the next few years. It takes a while to close the shortage, which we see today in the market with respect to wheat production, wheat grains, and it's reflected in the wheat price, as everybody is aware of. The potential is quite significant.
I honestly don't have the numbers here in front of me. Maybe, you know, I can talk also with the Lavie marketing team, and we can send you know, separately more information on the size that such a product can reach you.
Great. Thank you for taking my questions.
The next question is from Nathan Weinstein from Aegis capital Please go ahead.
Good morning, Ofer, Yaron and Elran. Thanks for taking my questions. Perhaps I'll just start with a couple on Canonic. First of all, I just was curious what is making Portugal the interesting place maybe to begin cultivation? Would you anticipate being able to service European demand solely from Portugal as your production base?
In Portugal, we have two benefits for medical cannabis production in Europe. First, it's located in Europe, and they're part of the European Union. Second, they have the right climate most of the year to grow cannabis with relevant cannabinoid concentration. This is why I think that in Portugal and actually also in Spain, you can find a nice number of cannabis growers that are willing to grow for a company like Canonic their product. This is the first answer to your first question. The second is, yes, we believe. Our end market is Germany.
This is in the market that we are focusing on. Our marketing team visited this country in a conference lately, and we are starting to build a relationship with local distributors and with the local advisors to assist us to build the right marketing approach for this market. Yes, we believe that Portugal and if needed also Spain can grow for us enough cannabis for our future marketing plan.
Thanks, Ofer. Okay. Maybe just staying with this theme of Europe and potentially selling cannabis into Germany. Like, what are some of the features of that market which make it attractive for you commercially, and then any challenges you foresee that you'd call out?
The reason the market is interesting from our perspective because it's quite advanced compared to other countries in the regulatory process, and the market is growing nicely. I think that the market there, at least at this point of time, is more focusing on medical indication and it's a little bit different from what we see here in Israel. In Germany, you need the doctor needs to give a, you know, clear analysis on why he recommended for a patient to use this cannabis and what product he's going to use.
It's more close to the business model of a drug versus, you know, a food supplement. I think that in Israel it's not like a drug. We need to build our marketing approach more close as we are launching a drug, meaning you need to think about the doctors and the pharmacy and to do a lot of work over there and less on the patients that are using the product. While in Israel, the audience that make the decision, it's more the patient rather the doctors.
It's a different marketing approach. Of course, when you need to convince doctors to recommend your specific product, you need to convince them with more data and more information. This is why we are planning to launch our product only next year, because we are now in the process of gathering the relevant medical data to support our product.
Okay. Fantastic. Thank you for the color there. Switching gears for a question on Biomica, and I'm curious about the GMP production of the microbes. Do you have the infrastructure in place internally to produce enough quantities for your clinical plans? Do you work with outside production partners? Can you just sort of discuss the production side?
Sure. The production of LBP, the live biotherapeutic product, is pretty complex, and we currently work with external vendor, with the CDMO, the largest one that is based in Europe. This facility is actually located in France and has the full experience and equipment in order to produce sufficient amounts of those microbes in the strict conditions that they require. All of the production process is being done in Europe, in France, under GMP conditions as required for clinical production drugs.
Okay, thanks. That's clear. So I just had one final question, and this is one that we've talked about before, but it may be a little early to bring it up, in the case that a subsidiary becomes monetized in some fashion and moves as its own separate company, just hypothetically, are there more technologies and potential companies coming up on the Evogene platform that could take their place?
The answer is yes. The only reason that we are not expanding our activity into new area is mainly because of focus and budget constraints. When we hopefully will raise money to our subsidiaries, and they will be completely independent and they will have their own financial resources, we will start to expand Evogene activity and the uses of our three tech engine into new area. We already, you know, as preparation, we are doing some early study and we start to build some possible infrastructure for this expansion.
It's first we need to make sure that the financial resources of our subsidiaries are stable and, you know, then we can also shift our focus to a new adventure.
Okay, great. Thanks again for taking my questions.
The next question is from Brent Rice of Janney Montgomery Scott. Please go ahead.
Good morning, gentlemen. First question, you said you sold all the plant production on your spring wheat. Did you realize any revenues from that? Because I didn't see that included in the $237 revenue number.
This revenue will be recorded only in the second quarter because we sold it only. We finished the production, and we shipped the product during, I think it was May or end of April, so it will be in the second quarter.
Oh, great. The $237 revenues which was Canonic and forgive me, I don't have the release in front.
Can-
Yes. Yes.
Mm-hmm.
Are you at liberty to give us a breakdown there? How much was contributed from Canonic?
Okay. We didn't give this breakdown, but I can say that the majority of this number came from Canonic. We had some higher expectation from revenue from Canonic, but we had some limitation on production with the third party that work for us. We hope it will start to see the revenue increase from the company activity in the second half of this year.
Ofer, I just wanna make sure I understood it. The majority of the 237 was from Canonic? Did I hear you correctly?
Yes.
There was, you know, headwinds that could have been, you know, even more?
Yes, we worked with a few sub-contractors that are supposed to grow for us the crop, and one of them the quality of the crop wasn't according to our expectation, so it was a little bit lower than what we expected. I think that the second half of the year there will be more production, more supply, and new type of products that we expected to improve the performance of Canonic for this year.
Right. Now, there's no seasonality to the Canonic sales. You know, it should kind of off this baseline, you know, continue to ramp up?
With respect to the demand, the demand is, as we see it, growing all the time. With respect to the supply, there is some seasonal effect on the quality of the product. The best time to grow cannabis is starting in spring and during the summertime. There is some effect on the quality of the product due to the season, but the demand is there and people all the time are looking for high quality product, which I think that our Canonic product is addressing this demand.
The products we are planning to launch in the second half of this year will come from our breeding program after we use our genomic markers and expecting even to be with a better performance, which can have a better market penetration rate compared to our first two products.
One last one. With conventional drugs that I'm more familiar with, if there are reimbursement protocols in place and additional studies, both those things in tandem, you know, tend to accelerate sales. Does that hold true for, you know, medical marijuana-type products?
Yes, probably not like in, as a food or drug. It have an effect, but not the same level of effect, and it's really changing from one market to another market. In a market like in Germany that is driven by, you know, the doctor that really decide what product the patient is going to use. There, definitely if you have a stronger evidence, if we publish article, so definitely it will have a positive effect on the revenue. In Israel, I think that, yes, I mean, if you will publish, you know, results coming from a survey that you conduct between patients on your product or you have some preclinical data from experiments you conduct in the hospital, it's good.
It helps you from marketing perspective, but I think that the market here is mainly driven from the concentration of the THC. This is something that the significant portion of the market is, and this is the main criteria he's looking at. Of course, how the flower looks, smells, taste. It's less medical indication.
Great. Thank you for taking my questions.
Thank you.
If there are any additional questions, please press star one. If you wish to cancel your request, please press star two. Please stand by while we poll for more questions. The next question is from Brian Wright of Roth. Please go ahead.
Thanks. Good afternoon. I have a couple questions. You know, just wanted to start off with Lavie. There was initial
Production target that you were thinking about for 2023 for result. Is it kind of fair just without getting into numbers, but just like how do we think about the magnitude? Or are you now kind of thinking given the market conditions and your ability to sell it out, you know, real quickly here this year, are you thinking orders of magnitude two to three times what you were originally kind of contemplating as far as production capacity or even something beyond that, or am I getting too ahead of myself there?
First, I would like to explain maybe this statement that we are expanding our production plan for 2023. It all rely on our original plan, you know, what we were planning before we saw the interest and the excitement in the market for products to increase for bio-inoculant that improve yields. We had, you know, a certain amount we were planning to produce, and we decided to increase it by a significant quantity. If one compare between 2022 to 2023, so a few fold, meaning more than 10 times than what we were producing this year.
It will be significant compared to what we sold this year. This year it was really to make sure that we can do the production correctly, to make sure that we can do the seed coating to distribute it. It was the proof of concept. Please remember that when we make the decision on the production, it was in 2021 before the crisis within Ukraine for China. The original plan was that in 2023 we are going to increase significantly the production.
As I said, we decided even to be more aggressive and it would be more than 10 times than what we have sold this year.
Okay. The original plan was 10 times, and then now it's gonna be more than that and yet to be determined on kind of the magnitude of more. Is that a fair summary?
Yes. Yes.
Great. Thank you. Can you give us a little more color on the BMC128, just kind of, you know, thinking on the timing for first enrollment? And then are you using, you know, genetic kind of markers as far as in the individuals you're kind of targeting to enroll, and is that part of the program?
Sure. In regards to BMC128, as previously announced, this is a combination of four strains that were composed together in order to improve the antitumor activity for refractory cancer patients. I would say that in this study, we are hoping to be able to see, as I mentioned, the safety and tolerability first and to see some clinical signal. In regards to genetic elements for inclusion criteria, we are not looking for any genetic criteria in order to include the patients. Hopefully, the first patient will be enrolled in the study any day. That's kind of our expectation to have the first patient very soon.
Great. If you could just remind me, and I apologize, I should remember this, but I off the top of my head, I don't. Can you remind me kind of what's the targeted size of the trial?
The targeted size? Yeah, sure. All together, we'll be enrolling 12 patients. Those patients will be either with non-small cell lung cancer, RCC or melanoma. All of them have been previously responding or non-responding at all to immunotherapy.
Great. Thank you so much.
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 two hours after the conference. In the US, please call 1-888-326-9310. In Israel, please call 03-925-5901. Internationally, please call 972-3-925-5901. Mr. Haviv, would you like to make your concluding statement?
Yes, thank you. I would like to thank all of you for joining us, and thank you for your continued interest in Evogene. We look forward to speaking with you next quarter. Have a good day.
Thank you. This concludes Evogene's first quarter 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.