Origin Agritech Reports 24.6% Revenue Growth and Key Technological Milestones in Fiscal Year 2024

Rhea-AI Summary

Origin Agritech (NASDAQ: SEED) reported financial results for fiscal year 2024, showing revenue growth of 24.6% to RMB 113.4 million (US$16.2 million). The company achieved significant milestones in GMO development, receiving a safety certificate for transgenic maize BBL2-2 and advancing four GMO corn hybrids in national trials. Notable achievements include breakthrough gene editing technology published in NATURE and establishment of the Origin Marker Biological Breeding Service Consortium.

Financial highlights include operating expenses of RMB 52.7 million (US$7.5 million) and net income of RMB 20.7 million (US$3.0 million). Cash position stood at RMB 8.4 million (US$1.2 million) as of September 30, 2024. The company appointed new leadership with Weibin Yan as CEO and Patrick Cheng as CFO.

Positive

• Revenue increased 24.6% to RMB 113.4 million (US$16.2 million)
• Received GMO safety certificate for transgenic maize BBL2-2
• Four GMO corn hybrids entered national trials with potential approvals in 2025-2026
• Breakthrough in maize gene editing technology published in NATURE
• Established strategic consortium for GMO and gene editing technology commercialization

Negative

• Operating expenses increased 63% to RMB 52.7 million
• Net income decreased 62.6% from RMB 55.3 million to RMB 20.7 million
• Cash position declined 64.6% to RMB 8.4 million
• Net cash used in operating activities increased to RMB 15 million from RMB 5.5 million

Insights

Financial Analyst

Origin Agritech's FY2024 results present a complex picture of growth and strategic transformation. The 24.6% revenue growth to RMB 113.4M demonstrates improved market penetration, particularly in Xinjiang operations. However, several critical factors warrant attention:

The company's operating metrics reveal concerning trends:

• G&A expenses surged by 153.5% to RMB 36.0M, significantly outpacing revenue growth
• Cash position declined by 64.6% to RMB 8.4M, while operating cash burn increased to RMB 15M
• R&D investment increased by 36.5%, reflecting commitment to technological advancement

The technological milestones achieved in FY2024 could be transformative. The GMO safety certificate for BBL2-2 maize and the establishment of the Origin Marker Biological Breeding Service Consortium represent significant steps toward commercialization. The consortium's relationships with multiple breeding companies create a potential recurring revenue stream through royalties, which could improve margins and cash flow dynamics.

Looking ahead, the pipeline of GMO corn hybrids entering national trials, with potential approvals in 2025-2026, presents substantial revenue opportunities. However, the declining cash position and increased cash burn rate suggest potential need for additional financing to bridge the gap until commercialization of these technologies.

Agricultural Technology Expert

The technological breakthroughs achieved in FY2024 position Origin Agritech at the forefront of agricultural innovation. The BBL2-2 maize variety represents a significant advancement with its triple-stack technology:

• Two insect-resistant genes (Cry1Ab and Cry3Bb) provide comprehensive pest protection
• The herbicide-tolerance gene (Cp4-epsps) offers improved weed management capabilities
• This combination addresses major challenges in corn cultivation while potentially reducing pesticide use

The breakthrough in maize induction line gene editing, published in Nature, is particularly revolutionary. The development of the Hi3 genetic transformation system overcomes a critical bottleneck in corn breeding. This technology, combined with the ten new gene-edited induction lines featuring improved traits like drought resistance and optimized leaf angles, could significantly accelerate breeding programs and yield improvements.

The integration of wild corn genes achieving 10-15% higher planting density demonstrates practical applications of their breeding expertise. This development could translate to substantial yield increases, addressing food security concerns while improving farmer economics.

Announces Filing of Annual Report on Form 20-F for Fiscal Year 2024

BEIJING, Feb. 10, 2025 /PRNewswire/ -- Origin Agritech Ltd. (NASDAQ: SEED) (the "Company" or "Origin"), a leading Chinese agricultural technology company, today announced financial results for the year ended September 30, 2024.

Business Accomplishments and Highlights for the Year Ended September 30, 2024:

GMO Development & Commercialization:

• In May 2024, Origin received a GMO safety certificate for its transgenic maize BBL2-2, which contains two insect-resistant genes (Cry1Ab and Cry3Bb) and one herbicide-tolerance gene (Cp4-epsps);
• Four GMO corn hybrids entered national GMO hybrid trials during the first half of 2024, one hybrid is likely to get the approval in 2025 and two others are likely to be approved in 2026; and
• The Company submitted a new application for GMO bt/gt trait biosafety certification

Gene Editing Breakthroughs:

• In June 2024, the Company published research in NATURE describing their breakthrough in maize induction line gene editing technology, establishing the world's first efficient genetic transformation system for maize induction line Hi3; and
• The Company developed more than ten maize gene editing induction lines with various improved traits, including leaf angle reduction, drought resistance, and lodging resistance, and relevant verification and testing are on the way.

Strategic Initiatives:

• In October 2024, Origin established the "Origin Marker Biological Breeding Service Consortium" with China Golden Marker Biotechnology Co., to accelerate licensing and commercialization of the GMO and gene editing technologies of the Company; and
• The consortium established cooperative relationships with dozens of breeding companies across China and is working on improving over 100 corn varieties to expand the possibilities of the Company to collect royalties

Traditional Hybrid Development:

• Two new hybrid varieties completed three years of national trials and are expected to receive approval in the summer of 2025;
• Fifteen new hybrids entered national official registration trials;
• The Company successfully integrated a gene from wild corn into one of its elite commercial hybrids, enabling 10-15% higher planting density and a potential yield increase of more than 10%; and
• The Company has refilled its Hybrid varieties' portfolio and 8 new hybrid varieties which are anticipated to be launched to the market during and after 2025 to enhance the seed sales.

Corporate Leadership & Governance:

• In August 2024, the Company appointed Weibin Yan, Founder and former chairman of Ausnutria and executive at Longping High-Tech as CEO and Board Director, with Dr. Gengchen Han remaining as Chairman, and appointed Patrick Cheng as CFO and Board Director, bringing over 30 years of corporate management experience.

Fiscal Year 2024 Financial Results: 

For the fiscal year ended September 30, 2024, revenue was RMB 113.4 million (US$16.2 million), compared to RMB 93.3 million (US$13 million) for the fiscal year ended September 30, 2023. The increase in revenues was mainly due to the higher volumes for the corn seed sales as a result of the improvement of market competitiveness.

Total operating expenses for the fiscal year ended September 30, 2024, were RMB 52.7 million (US$7.5 million), compared to operating expenses of RMB 32.3 million (US$4.5 million) in fiscal year 2023.

Selling and marketing expenses for fiscal year 2024 were RMB 6.3 million (US$0.9 million), compared to RMB 8.4 million (US$1.2 million) in fiscal year 2023. The decrease was mainly due to the Company's strategy to form seed distribution joint ventures, which helped improve efficiency and control of labor costs

General and administrative expenses for the fiscal year ended September 30, 2024, were RMB 36.0 million (US$5.1 million), compared to RMB 14.2 million (US$1.98 million) year-over-year. General and administrative expenses from continuing operations primarily consist of salary and compensation, depreciation and amortization, legal fees, professional expenses, and other expenses, including travel and other general business expenses and office supplies.

Research and development expenses were RMB 10.1 million (US$ 1.4 million) in fiscal year 2024, compared to RMB 7.4 million (US$1.0 million) in fiscal year 2023. Research and development expenses from continuing operations primarily consist of salary and compensation expenses of personnel engaged in the research and development of our proprietary crop seeds and genetically modified products, traveling expenses, depreciation of plant and equipment, and expenses paid to certain research institutes to carry out research projects on behalf of Origin during the period.

Net income from continuing operations for the fiscal year ended September 30, 2024, was RMB 18.7 million (US$ 2.7 million), compared with net income from continuing operations of RMB 62.7 million (US$ 8.7 million) in fiscal year 2023. The net income from fiscal year 2023 was mainly from investment income by subsidiary disposal.

Net income attributable to Origin for the fiscal year ended September 30, 2024 was RMB 20.7 million (US$3.0 million), compared to the net income of RMB 55.3 million (US$7.7 million) for the fiscal year ended September 30, 2023.

Liquidity

As of September 30, 2024 and 2023, we had approximately RMB 8.4 million (US$1.2 million) and RMB 23.7 million (US$3.3 million), respectively, in cash and cash equivalents for continuing operations. Total borrowings as of September 30, 2024 and 2023 were RMB 4.95 million (US$0.7 million) and RMB-nil- million, respectively.

Net cash used in operating activities was RMB 15 million (US$2.1 million) during fiscal year 2024, compared with net cash used in operating activities of RMB 5.5 million (US$0.76 million) for the fiscal year ended September 30, 2023.

Net cash used in investing activities was RMB 5.0 million (US$0.7 million) for the fiscal year ended September 30, 2024, compared with net cash used in investing activities of RMB 11.2 million (US$1.6 million) for the fiscal year ended September 30, 2023.

Net cash provided by financing activities was RMB 4.5 million (US$0.6 million) for the fiscal year ended September 30, 2024, compared with net cash provided in financing activities of RMB 22.9 million (US$3.2 million) for the fiscal year ended September 30, 2023.

Management Commentary

Mr. Weibin Yan, CEO of Origin Agritech, commented, "Fiscal year 2024 marked a transformative period for Origin Agritech, with revenue growing to $16.2 million, driven mostly by the performance from our Xinjiang operations. While we saw increased operating expenses as we invested in our future, we achieved several milestone developments, including receiving our GMO safety certificate for BBL2-2 maize and establishing the Origin Marker Biological Breeding Service Consortium for commercialization. Our gene editing breakthroughs, particularly our publication in Nature and our high-yield corn inbred line development, position us well for future growth. With our new leadership team in place and our expanding partnerships across China, we are well-positioned to accelerate the commercialization of our innovative agricultural technologies and deliver long-term value to our shareholders."

Annual Report Now Available

The Company has filed its annual report on Form 20-F for the fiscal year ended September 30, 2024, with the Securities and Exchange Commission ("SEC"). The annual report on Form 20-F can be accessed on the SEC's website at http://www.sec.gov and the Company's investor relations website at https://originagritech.com/investor-relations/. 

CONFERENCE CALL & AUDIO WEBCAST

Origin will host a conference call on Tuesday, February 11, at 8 a.m. ET with the investment community to discuss the Company's financial results and provide a business update. ET The conference call will be led by Mr. Weibin Yan, Chief Executive Officer, and Mr. Patrick Cheng, Chief Financial Officer, who will be available to answer questions.

To access the call by phone, please call 1-800-245-3047 (United States) or 1-203-518-9765 (International) using the conference ID: ORIGIN.

To avoid delays, we encourage participants to dial into the conference call 15 minutes before the scheduled start time. The webcast can be accessed at the following link: https://viavid.webcasts.com/starthere.jsp?ei=1706334&tp_key=309410cd09.

A webcast replay will be available for two weeks.

About Origin Agritech Limited

Origin Agritech Limited, founded in 1997 and headquartered in Origin R&D Center, Songzhuang, Tongzhou in Beijing, is a leading Chinese agricultural technology company. In crop seed biotechnologies, Origin Agritech's phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China's Ministry of Agriculture. Over the years, Origin has established a robust biotechnology seed pipeline, including products with glyphosate tolerance and pest resistance (Bt) traits. For further information, please visit the Company's website at www.originagritech.com. The Company also maintains an X account for updating investors on Company and industry developments which is https://x.com/origin_agritech.

For more information, please contact:
Origin Agritech Limited Contact:
Kate Lang (Mandarin/English)
Director of Investor Relations
Phone: +86 186-1839-3368
Email: bing.lang@originseed.com.cn 

Investor Relations Contact:
Matthew Abenante, IRC
President
Strategic Investor Relations, LLC
Tel: 347-947-2093
Email: matthew@strategic-ir.com 

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SOURCE Origin Agritech Limited

FAQ

What was Origin Agritech's (SEED) revenue growth in fiscal year 2024?

Origin Agritech reported a 24.6% revenue growth in fiscal year 2024, reaching RMB 113.4 million (US$16.2 million).

What major GMO certification did SEED receive in 2024?

In May 2024, Origin Agritech received a GMO safety certificate for its transgenic maize BBL2-2, which contains two insect-resistant genes and one herbicide-tolerance gene.

How many GMO corn hybrids did SEED have in national trials during 2024?

Four GMO corn hybrids entered national GMO hybrid trials during the first half of 2024, with one hybrid likely to be approved in 2025 and two others in 2026.

What was Origin Agritech's (SEED) net income for fiscal year 2024?

Origin Agritech's net income for fiscal year 2024 was RMB 20.7 million (US$3.0 million), compared to RMB 55.3 million in fiscal year 2023.

What strategic consortium did SEED establish in October 2024?

Origin established the 'Origin Marker Biological Breeding Service Consortium' with China Golden Marker Biotechnology Co. to accelerate licensing and commercialization of GMO and gene editing technologies.