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February 18, 2004
By Ora Coren
Haaretz Daily via
Checkbiotech.org
Leon Recanati believes in
Evogene, as does Zeev Mozes and Martin Gerstel. These three
men were among the investors who participated in the $3.5
million round of capital raising completed recently by the 15
employees of Evogene. The Israeli agricultural biotechnology
company was founded about two years ago as a spinoff of
Compugen, an Israeli company traded on the Nasdaq exchange.
Recanati invested in Evogene via GlenRock, the new fund he
established in 2003 after selling IDB Holdings. Recanati is
familiar with Evogene, since Compugen was one of the first
biotechnology companies in which Clal Biotechnology Industries
invested when it was controlled by Recanati in his capacity as
chairman of IDB.
Mozes invested in Evogene via Zina, a management and development
company in which he has an interest, and Gerstel, who is
currently Compugen's board chair, headed the group of investors
whom he recruited. Other investors in Evogene include a group
from France.
Evogene started out as a division of
Compugen when Compugen was
focusing on bioinformatics - the combining of biotechnology and
computerization, mainly in order to develop software programs to
accelerate the genome identification and classification process.
Until January 2002 Evogene operated on an investment of $2.5
million provided by Compugen, but then the subsidiary was spun
off and raised capital from new investors.
Evogene's first year was a difficult one for fund-raising, and
the company's employees were at a point when they had already
received dismissal notices. Then a year ago the first stage of
fund-raising ended with $2 million from several investors, and
now a further $1.5 million has been obtained from these same
investors. Sources at Evogene figure that by early 2005, the
company will have attracted more capital from new investors.
A growth spurt
"We have progressed from developing a technological platform to
developing products based on that platform," says Ofer Haviv,
Evogene's vice president of finances and operations. "We feel
that we are at the beginning of a growth spurt, and that the
market is still pricing us low, the way it prices a company that
has only a technological platform.
"That is why our additional capital came from existing
investors. We believe that toward the end of 2004 or the
beginning of 2005, we will need another round of fund-raising,
and that we will be able to obtain investments from outside
investors, such as venture capital funds," says Haviv.
"Our goal," says Evogene CEO Hagai Karhi, "is to show up at a
seed company with a bag of seeds for a target plant that
interests it, seeds that bear enhanced traits that interest the
company. That company will then nurture the plants normally (via
crossbreeding), a process that will last a year or two until the
final stabilization of the seeds."
Evogene is one of the few plant biotechnology companies in
Israel and focuses on enhancing the traits of vegetables, such
as sweetness in tomatoes or higher plant endurance in salty
soil. The technology developed by Evogene genetically modify a
plant by altering its existing genetic combinations. This
technology differs from that used by other companies that
enhance plant strains by introducing extraneous genetic
segments, such as from a bacteria or virus (GMO - gene-modified
organisms).
Nudging nature
The GMO method is controversial worldwide, and foodstuffs based
on this technology have been the subject of public criticism
that has even led to their boycott. "Evogene can develop an
existing trait in a plant such that it will be manifest more
strongly," explains Karhi. "The modification is done by the
genome of the plant itself, without the introduction of an
extraneous gene. This means that we are not talking about
transgenics, and are not producing something that nature would
not have been able to produce through natural evolution, it
would simply take nature much longer."
Evogene is planning to be the leading company in the process for
developing plants and plant-derived products, such as cotton
with longer and stronger fibers, or rice that resists pests and
can grow under harsh conditions. Evogene plans to reach this
goal by integrating computational biology and plant genomics
with classical breeding.
Evogene's computing technology uses Compugen software that help
Evogene to identify and split genes into a coding segment and a
regulatory segment. The coded segment determines which protein
will be produced, or which trait will be expressed in the plant
(proteins are responsible for plant traits). The regulatory
segment determines how the plant will express the trait and to
what degree.
Evogene employs a process that combines the two segments of the
genes that were identified as a target in the plant. For
example, Evogene can take the coding part of a gene responsible
for sweetness and combine it with the regulatory segment of
another gene in the same plant, responsible for the expression
of the trait in the fruit. This will result in a sweeter fruit.
Evogene's greenhouses grow the plants being used in the project,
using classic crossbreeding techniques to grow the strongest
plant of that strain. At the end of this process the transcribed
gene is introduced into the plant. The plant will then produce
seeds that bear the enhanced traits that the company plans to
market to the world market.
"At the beginning of 2003 we hooked up with
Verdant Partners,
an American investment bank and developed a strategy for
focusing our operations," continues Haviv. "We decided to work
on the cotton market and to enter the rice market, which is the
gateway to other grains such as wheat, barley and corn."
Evogene also decided to continue developing a technology that
will facilitate the production of plants containing proteins
that can be used for developing drugs and cosmetic products.
Verdant, which is active in agricultural ventures, will also
help Evogene gain entry to markets in North America and Japan.
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