Evolva : publishes financial results for 2016 and updates on projects

30 March 2017- Evolva (SIX: EVE) today announces its financial results for the period 1 January to 31 December 2016 and provides a business update. The news release, annual report and Powerpoint presentation are available on the website. Analyst/media call details on page 7.

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Summary of key items:

• Strong growth in commercial pipeline for nootkatone, valencene and resveratrol
• Progress in build-up of commercial capabilities (including online sales)
• Distributor network widened significantly
• Further reduction of production costs across the board
• Expanded EverSweet^TM IP portfolio with pivotal patents for producing the best-tasting stevia sweeteners via fermentation
• Agreement with Cargill on the stevia project expected to be announced next week
• EverSweet^TM on track for launchin 2018
• Nootkatone on track for launch in insect control in 2018
• Solid progress on partnered projects

Financial items:

• Revenues of CHF 9.6 million (2015: CHF 13.4 million)
• Costs under tight control
• Cash position of CHF 47.5 million on 31 December 2016
• Finances recently strengthened with a standby equity facility of CHF 30 million

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 programme, we 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 favourably, 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.'

Operational Review

Products and partnerships

Evolva's technologies allow a wide range of natural ingredients to be made in a better way. It isour strategy to gradually build a portfolio of ingredients for use in the healthcare, nutrition andwellness sectors, with some being commercialised by us, and others via partners.

We have built a significant pipeline of ingredients, with everything being made inyeast. For some ingredients we finance all the work ourselves, for others we work withpartners, whilst yet others have come via acquisitions. In this section we will focus onthe progress of our three key products.

Product revenues increased almost fourfold in 2016 to reach CHF 1.1 million. We hadexpected an even stronger increase. The primary reason for the shortfall was customerconversion taking longer than expected. Despite this the sales trajectory is clearlypositive and the customer pipeline continues to improve.

NOOTKATONE AND VALENCENE

Nootkatone is a citrus ingredient that is associated with the characteristic grapefruitsmell. We launched our nootkatone product in August 2015 as a Flavour & Fragrance(F&F) ingredient for use in the food, beverage, personal care and home care markets.As a spin-off to the nootkatone programme, we also launched valencene, an F&F ingredientassociated with oranges, in December 2015.In the second half of 2016, we switched production to a strain with approximately50% better efficiency than the one we used for launch. Production costs are already at avery competitive level for the F&F application. We currently use contract manufacturersto make nootkatone.

We see global pest and disease vector control (including ticks and mosquitoes) asthe largest commercial market opportunity for nootkatone, although sales will not commenceuntil we have the necessary approvals in place. We are making good progress in theprocess with the US Environmental Protection Agency (EPA) for nootkatone'sapproval as insect repellent, and given this continues, we expect approval in 2018. Weare also working on regulatory approval of nootkatone in a number of other geographies.

In April 2016 we signed a license agreement with the US Centers for Disease Controland Prevention (CDC), granting Evolva the exclusive worldwide patent rights to developand commercialise nootkatone for the control of a wide range of disease and virusvectors such as ticks, mosquitoes, fleas, flies, lice, bed bugs, and other biting insects. Andin July we announced that the US National Institute of Allergy and Infectious Diseases(NIAID), part of the National Institutes of Health (NIH), is sponsoring studies to testEvolva's nootkatone against mosquitoes infected with Zika virus. The study evaluatesnootkatone in multiple formulations against wild type and insecticide-resistant mosquitoesthat carry the virus.

During 2016 we worked with multiple potential customers, as well as on our ownbehalf, in demonstrating the utility of nootkatone against a wide range of insects andrelated pests. We currently have more than 50 active discussions with potential customersand partners for pest and vector control, representing a more than doubling of the pipeline from end 2015 (though of coursethe majority of the discussions are still relatively early). Part of this work involves thedesign of new repellent formulation against mosquitos, ticks and bed bugs.

RESVERATROL

Evolva's resveratrol has a high-purity (>98%) and is the only resveratrol productmade entirely by fermentation using natural and sustainable feed stocks. It has Self-Affirmed GRAS status in the United Statesand obtained Novel Foods authorisation for use in Dietary Supplements from theEuropean Commission in January 2012. We have applied for regulatory approval incountries outside North America and Europe. The key application currently is indietary supplements.

Our resveratrol product generated its first sales in 2015, but initially sales werelimited by supply chain issues. We successfully removed these in mid-2016 and believesupply will no longer be a limiting factor going forward. This resulted in acceleratingsales growth in the second half of 2016.

In February 2017, we launchedVeri-teTM, the brand for our high-purity, sustainablyproduced resveratrol. With a strong brand reflecting the high quality of our resveratrol,the launch ofVeri-teTMopens up new opportunities for jointly branded finished products.

Cost of Goods Sold (COGS) continued to decline during the year and we believeit will continue to decline strongly in years to come, widening resveratrol's marketpotential.

We have further increased our commercial efforts by building up small sales teams in key territorieswhile at the same time signingagreements with distributors. The efforts are beginning to bear fruit as our sales pipelineincreased from c. 50 prospects in the spring of 2016 to c. 130 prospects currently.We intend to sign additional distribution agreements and widen both the geographicand product ranges that our resveratrol is sold into.

Looking ahead a bit further, we believe our resveratrol product can be applied invarious additional areas. We are exploring selected applications with potential keyaccounts and research partners, including in connection with improving bone calcificationand reducing periodontitis. In addition we are studying the product's potential inimproving the growth of livestock.

A surprising potential future use of resveratrol may be as a key ingredient for lightweightfire- and heat-resistant composites and coating materials. We are workingtogether with the US Navy in this area. We have produced and delivered a resveratrolformulation specifically targeted for this use and will continue to work with the Navy toadvance this new class of composites. In addition to the benefits for the US Navy, wesee potential for a broad spectrum of civilian applications.

STEVIA

In autumn 2015 our partner Cargill unveiled the branding of the next-generationzero-calorie sweetener under the name EverSweet^TM. The product contains the great-tastingrebaudioside D (Reb D), and rebaudioside M (Reb M) and convincingly overcomesstevia's previous taste issues. Evolva has developed yeast strains producing Reb Mand Reb D. Stevia represented our largest R&D programme during 2016.

We made solid progress in 2016. First, we were granted a pivotal patent (EP2742142)by the European Patent Office on a novel technique for producing the best-tastingstevia sweeteners ('steviol glycosides'). In February 2017 we received a pivotal patent grant (U.S. Patent No. 9,562,251) from the U.S. Patent & Trademark Office covering commercially highly viable production methods for manufacturing better-tasting value-added steviol glycosides. Of particular commercial importance, this patent protects methods for producing steviol glycosides for making Reb M by a number of production methods including fermentation, bioconversion, and other approaches.Evolva was the first company to identify and characterise several enzymes involved in Reb M biosynthesis pathways.

Including this most recent patent, Evolva now has 13 granted and 81 pending applicationsaround the world (including 2 in the US and 5 in Europe) related to production of steviol glycosides by various methods including fermentation, bioconversion, and other approaches.

Another key milestone was the issuance by the US Food and Drug Administration (FDA) of a GRAS (Generally Recognized as Safe) No-Objection letter, qualifying EverSweet™ for use in food and beverages.

We currently expect EverSweet™ to launch in 2018. Under the 2018 launch plan, EverSweet™ will be produced initially at Cargill's advanced, highly efficient, manufacturing campus in Blair, Nebraska (USA) through retrofitting existing facilities. Evolva and Cargill are additionally examining an accelerated move to a new facility that may also act as a production hub for other Evolva products, including nootkatone and resveratrol, and those of certain Evolva partners. This plan is subject to the successful completion by spring 2017 of ongoingnegotiations between Evolva and Cargill. It is expected that debt financing of some activities, notably production capex, will be involved.

Selected developments on other products and partnerships

Product	Application	Partner	Recent progress
Vanillin	F&F	IFF	On market. IFF and Evolva are evaluating commercial options.
Saffron	F&F, spice, colorant	-	Samples to potential customers. GRAS preparations.
Agarwood	F&F	UMP	Exploratory.
EV-077	Pharma	Serodus	Reached primary endpoint in clinical Phase IIa.
EV-035/GC-072	Pharma	Emergent BioSolutions	Preclinical.
Undisclosed	Personal care	L'Oréal	Partner reports good application results.
Undisclosed	F&F	Takasago	Second technical milestone reached in March 2017.
Undisclosed	Agri	Valent	Early milestones achieved.
Undisclosed	Pharma	Undisclosed	Pharma project started mid-2016.

Personnel

At year-end 2016, Evolva's total headcount amounted to 177 full-time employees (year-end 2015: 163), of which 131 (year-end 2015: 128) were primarily involved in research, development and manufacturing, while the remaining staff are employed with managerial, commercial and administrative tasks.

Financial review

Key financials

CHF million	2016	2015	change
Revenue from R&D	7.6	9.1	-16%
Product sales	1.1	0.3	+266%
Other income	0.8	4.0	-80%
Total revenue	9.6	13.4	-28%
Manufacturing expenses	-3.0	-1.6	+88%
R&D expenses	-33.0	-35.0	-6%
Commercial, General & Administrative expenses	-14.8	-12.5	+18%
Financial items and tax	+5.3	+3.9	+36%
Net result	-35.8	-31.8	+13%
Earnings per share	-0.09	-0.09
Equity financing *)	0.3	59.6
Cash and cash equivalents (year-end)	47.5	83.2
Change in cash	-35.7	+22.5
Equity (year-end)	173.1	203.4

^*) Gross proceeds from placement of shares and option exercises.

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 we bear part of the R&D costs ourselves. If and when these projects result in marketed products, we will also receive a larger share in the upside.

Product revenues showed an increase, both for resveratrol and nootkatone, but were still below expectations. The main reasons for the shortfall were the supply chain bottlenecks for resveratrol during the first half of the year and customer conversion taking longer than expected. Despite this, the sales trajectory is clearly positive and the customer pipeline continues to improve.

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 0.3million on balance in 2016, roughly the same as in 2015.

Balance sheet and cash flow

The net loss and the cash outflow from operating activities remained at high levels in 2016, as expected, impacting cash and equity positions. Cash and cash-equivalents at year-end 2016 stood at CHF 47.5 million and provide a good basis going into 2017. We recentlyfurther strengthened our finances by entering into a CHF 30 million equity commitment provided by the financial investor Yorkville.

Investments in fixed assets remained well under control, totalling CHF 1.0 million in 2016. In addition Evolva acquired CHF 0.2 million worth of laboratory and computer equipment under financial lease arrangements.

Financial outlook 2017

We expect to continue successfully enrolling many more customers to test our products. Given the long lead time to acquire and ramp up customers, we expect product sales to show broadly similar growth dynamics as in 2016. And subject to milestone achievements, we expect revenues from R&D in the range of the achievements in 2015 and 2016.

The headcount is planned to remain overall stable, but to show a shift from early research towards scale-up and applications development as well as sales and marketing.

As in previous years, we expect to enter 2-3 partnerships for new products and/or for new R&D programmes.

The cash outflow is expected to remain relatively high in 2017 but is well covered by the current cash position and the additional financing facilityfrom Yorkville.

Compensation 2016

At the beginning of 2017, the Board of Directors (BoD) determined that 50% of the 2016 goals had been achieved (compared with a 60% achievement of the 2015 goals). As a consequence, the BoD decided to skip the cash bonus for management (previous period: 3.5%). The amount of equity compensation was also strongly reduced. Overall Group Management Team compensation declined by 7% in 2016 to reach CHF 3.2 million.

The BoD compensation does not contain variable components, hence purely depends on the number of BoD members. In 2017 for the first time, the BoD's equity compensation takes the shape of RSU instead of options. In light of the poor share price performance, the BoD has decided to waive 50% of its RSU compensation, after waiving 25% last year.

Based on input from shareholders and proxy advisors, as well as a peer group analysis, the Compensation Committee recommended switching to Restricted Stock Units (RSUs) at the AGM of May 2016. The shareholders approved the related change to the Articles of Association, enabling their introduction. The BoD has decided to grant RSUs to everyone qualifying for the equity incentive scheme, starting with the grant in February 2017 (EVE10).

The BoD also decided to extend the vesting scheme for the 2017 grant such that the first vesting takes place three years after grant, followed by two other vesting in the following years. The total vesting period therefore extends 5 years. Like options granted in past, the staff member needs to earn these RSU by providing service to the company during the vesting period.

Share performance

During 2016, the number of shares outstanding rose by 0.8 million to 398.7 million due to the exercise of employee options. At year-end 2016, Evolva's market capitalisation was CHF 291 million. On average, 1.6 million Evolva shares were traded per day in 2016 on the Swiss stock exchange, compared with 2.1 million in 2015. The value traded per day amounted to CHF 1.1 million in 2016.

The Evolva share ended 2016 at CHF 0.73, down from CHF 1.15 at the end of 2015. The performance was in line with the average of our peer group. Only one of our nine peers managed an increase in 2016 while the other eight showed declines varying between 3% and 75%.

- Ends -

Press/analyst call at 10AM CET on 30 March 2017

Neil Goldsmith (CEO) and Oliver Walker (CFO) will provide an update on progress in a call for analysts and media. The dial-in numbers are:

[phone] (Europe)

[phone] (UK)

[phone] (USA)

A replay will be available as a podcast for 2 weeks after the call. The link to the podcast will be posted on Evolva's website.

About Evolva

Evolva solves the supply chain issues of nature through a 21^st century mix of biotechnology and brewing. We develop, make and sell natural ingredients that provide significant benefits to people in daily life, but whose supply chain issues have limited their use until now. Our flagship ingredients are stevia, nootkatone and resveratrol, but we work on many more, both on our own behalf and with others. To make our world sustainable requires nature and technology to work together as one, and our aim is to play a (small) part in achieving this transformation. We operate internationally. For more information see www.evolva.com. Questions about our approach? Have a look at our video.

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This press release contains specific forward-looking statements, e.g. statements including terms like believe, assume, expect or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of the company and those explicitly or implicitly presumed in these statements. Against the background of these uncertainties readers should not place undue reliance on forward-looking statements. The company assumes no responsibility to update forward-looking statements or to adapt them to future events or developments.