Evogene's Turnaround Play: Can AI and Asset Sales Ignite a Comeback?

Evogene (NASDAQ: EVGN) has long been a company of contradictions: a computational biology pioneer with a portfolio of promising AI-driven platforms, yet one that has struggled to translate innovation into consistent profitability. With its Q1 2025 financial results now in hand, investors are asking a pressing question: Is this the inflection point for a turnaround, or another false dawn? The answer hinges on three near-term catalysts—and whether the market is ready to revalue the company at a fraction of its peers.

The Numbers: A Narrowing Loss, But Revenue Challenges Remain

Evogene’s Q1 2025 results reveal a company in transition. While its net loss narrowed to $3.0 million from $3.8 million a year earlier—a 21% improvement—the top line tells a starker story. Revenue fell to $2.4 million from $4.2 million in Q1 2024, as one-time licensing deals (including a $3.5M payment from Lavie Bio’s collaboration with Corteva in 2024) dropped out of the mix.

The good news: management has slashed costs aggressively. R&D expenses fell 33% year-over-year to $3.2 million, while operating expenses dropped 38% to $5.0 million. This austerity isn’t just about survival—it’s about redirecting capital toward high-potential ventures.

Catalyst 1: The Lavie Bio Deal—A Cash Lifeline and Strategic Reset

The most immediate catalyst is Evogene’s April 2025 agreement to sell most of its Lavie Bio subsidiary to ICL for $15.25 million, plus an additional $3.5 million for the MicroBoost AI for Ag platform. Closing this deal in Q2 2025 will inject ~$18.75 million into Evogene’s coffers, more than doubling its cash position from $9.8 million to ~$28.5 million.

But the transaction’s value extends beyond liquidity. By divesting a loss-making clinical-stage division (Biomica’s Phase I trials for BMC128 cost ~$2.8M in 2024), Evogene can pivot focus to its two most scalable businesses: AgPlenus (agricultural chemicals) and Casterra Ag (high-yield castor seeds). As CEO Ofer Haviv noted, the deal “simplifies our structure and accelerates our path to profitability.”

Catalyst 2: Casterra Ag’s Growth—A Recurring Revenue Engine

Evogene’s castor bean venture is quietly becoming a cash cow. In Q1 2025, Casterra Ag sold 250 tons of seeds in Africa—surpassing its entire 2024 output of 215 tons. With expansions into Brazil and Kenya (where trials for castor-based biofuels could unlock a $4B global market), this division now accounts for ~80% of revenue.

The kicker? Casterra’s margins are razor-sharp. At a 65% gross margin (vs. Evogene’s overall 33% in Q1), this business could single-handedly turn the company’s operating loss to profit by mid-2026.

Catalyst 3: AI-Driven Pharma Licensing—The Long Game

Evogene’s crown jewel, the ChemPass-AI platform, is now trained on 38 billion molecules—a foundation for drug discovery partnerships. While revenue from pharma licensing remains nascent ($0.4M in Q1), the potential is massive.

Consider this: In 2024, SaaS-driven drug discovery companies like Schrodinger (NASDAQ: SDGR) traded at 7.3x revenue, even as Evogene languishes at ~1.5x revenue. If Evogene can secure two major pharma deals in 2025 (a conservative target given its pipeline), its valuation could snap to its peers’ multiples overnight.

Valuation: A Discounted Bargain or a Trapped Asset?

To assess Evogene’s worth, we turn to the numbers. Using the AgTech sector’s median EV/revenue multiple of 5.2x (per First Page Sage), Evogene’s 2025 revenue forecast of ~$10M would imply a $52 million valuation—40% above its current $37 million market cap.

But that’s the low-end case. If Casterra’s margins hit 70% (as achievable by 2026) and pharma licensing adds $20M in ARR by 2027, a 9.0x–10x revenue multiple (comparable to SaaS peers) would push the valuation to $180 million, or a 400% upside.

Risks: Regulatory Hurdles and Dependency on Partners

The negatives are clear. Biomica’s Phase II trials for BMC128 will require external funding, and regulatory delays could derail Casterra’s biofuel projects. Additionally, Evogene’s reliance on third-party collaborators (e.g., ICL, Corteva) introduces execution risk.

Yet these risks are already priced into the stock. With $28.5 million in cash post-deal and a $37 million market cap, Evogene’s net cash position alone suggests a floor of ~$1.50 per share—versus its current $1.25.

Verdict: A Buy at a Discount to Turnaround Plays

Evogene isn’t a “sure thing.” But at a valuation that ignores its AI-driven pharma pipeline, Casterra’s margin tailwinds, and the imminent cash injection from ICL, it’s a compelling contrarian bet. For investors willing to look past near-term EPS noise, this could be the rare biotech play where the sum of the parts exceeds the whole—and by a wide margin.

Action to Take: Accumulate shares of EVGN ahead of the Q2 earnings report, which should confirm the ICL deal’s close and Casterra’s momentum. Set a price target of $3.00–$4.00 by year-end.

The question isn’t whether Evogene can turn the corner—it’s whether the market will finally catch up to its potential.