Hamburg, Germany | Oxford, UK - Evotec AG (Frankfurt Stock Exchange: EVT) reported today results for the first nine months of 2007.
Financials in-line with Evotec's full year expectations
Compelling results achieved in two proof-of-concept Phase II trials with lead insomnia drug candidate EVT 201
Sale of the Chemical Development Business to Aptuit and the proposed Renovis acquisition further emphasize the strategic transformation of Evotec towards a drug discovery and development company
Merger will create a global company with three clinical candidates, a strong late stage preclinical pipeline focusing on areas of neurological and inflammatory diseases, and a strong cash position; expected to close in Q1 2008
Expected year-end cash position increased to EUR 93-98 million, not yet including Renovis' cash
All amounts discussed in this press release are related to Evotec's continuing operations. The discontinued operations and a discussion of the business sold to Aptuit are provided in Evotec's full Third Quarter Report.
Revenues for the first nine months of 2007 were EUR 23.2 million, 23% below last year's level (2006: EUR 29.9 million). The decline is the consequence of (i) lower milestone income compared to the same period last year (approximately - EUR 3 million), (ii) the reduction of the library synthesis business following the transfer of this business into a joint venture with RSIL (reduction of EUR 4.0 million or 82%), and (iii) decline of the US dollar against Evotec's reporting currency Euro. At constant 2006 currencies (UK Sterling and US dollar), revenues would have been approximately one million higher (EUR 24.1 million). Excluding these three extraordinary effects Evotec's remaining business performed strongly, growing 6% from EUR 21.9 million for the first nine months of 2006 to EUR 23.2 million for the first nine months 2007.
The Group operating result for the first nine months of 2007 amounted to EUR (36.7) million (2006: EUR (25.0) million). The decline is a result of the reduced revenue and gross profit levels, high investment in the advancement and enhancement of Evotec's proprietary pipeline (R&D expenses: +22%) and a related 19% increase in SG&A expenses, including transaction costs for divestments and acquisitions. For the first nine months of 2007, net loss remained on last year's level at EUR 23.6 million (2006: EUR 24.6 million). This is due to a non-operating profit from the divestment of Evotec Technologies GmbH to PerkinElmer (EUR 11.2 million), the divestment of shares of Direvo Biotech AG (EUR 0.5 million) and high interest income due to increased cash levels (EUR 1.0 million).
In total, cash and cash equivalents at the end of September 2007 on a proforma basis including proceeds from the divestment of Evotec's Chemical Development Business to Aptuit, Inc. (approximately EUR 46.4 million) amounted to EUR 106.8 million. The reported cash position excluding the proceeds from the divestment to Aptuit was EUR 60.4 million (December 31, 2006: EUR 78.1 million). The decrease mainly results from high R&D investment and an increase in working capital by EUR 10.6 million compared to the extraordinarily low level of working capital recorded at year-end 2006.
Compelling proof-of-concept data achieved in two Phase II studies with insomnia drug candidate EVT 201
In adult insomniacs (first study), EVT 201 showed highly statistically significant effects on sleep onset and maintenance and was free of any subjective evidence of hang-over, thereby revealing a competitive drug profile
Top-line results of the second study in elderly insomniacs confirmed the robust effects seen in the first study and indicate that the same doses show hypnotic efficacy in the elderly as well as positive effects on day-time performance (less sleepiness)
Second proof-of-concept study in cognition started with Alzheimer/pain candidate EVT 101; start of Phase II neuropathic pain study delayed until mid 2008 following IND review
Phase I studies for EVT 302 (smoking cessation) progressing as planned; there were no significant adverse effect findings so far; further Phase I study started to confirm superiority of the compound (no liability with tyramine containing foods)
Disposal of Chemical Development Business to Aptuit for £31.5 million, effective November 2007
Proposed acquisition of US-based Biotech company Renovis and anticipated NASDAQ listing; expected to close in Q1 2008
Public-private-partnership "European Screening Port" established in Hamburg together with the City of Hamburg and the State of Germany
"The third quarter was a major one for Evotec. The sale of our Chemical Development Business to Aptuit and the proposed acquisition of Renovis are major milestones in the implementation of our strategic plan to transition into a drug discovery and development company for Central Nervous Systems (CNS) diseases. These transactions significantly strengthen our liquidity and accelerate our CNS pipeline development. Renovis adds complementary pipeline projects to our R&D portfolio and sufficient cash to fund their future development. Three Renovis programs in pain and inflammatory disease are expected to enter Phase I clinical trials in 2008/2009", said Jörn Aldag, President & Chief Executive Officer of Evotec AG. "In October, we also released compelling, top-line, proof-of-concept data in elderly insomnia patients for our lead compound EVT 201. These confirmed earlier data from adult insomniacs demonstrating desirable advantages in sleep onset, maintenance, and lack of hangover. We expect the compound to be attractive to potential partners as it addresses key limitations of competitive therapies. We aim to out-license EVT 201 in 2008."
2007 financial targets confirmed
Evotec confirms its financial targets for the year 2007. Revenues for the continuing operations are expected to be in the range of EUR 30 - 35 million. The sale of the Chemical Development business to Aptuit Inc. will contribute a non-operating profit of approximately GBP 17 million (approx. EUR 25 million) in Q4 2007 subject to the final closing of the books. Including the cash proceeds from this transaction, the targeted year-end cash position improves significantly to between EUR 93 million and EUR 98 million.
Evotec will hold a conference call today at 02.00 p.m. CET (01.00 p.m. GMT/08.00 a.m. US time East Coast) to discuss the financial results as well as progress in first nine months of 2007. Jörn Aldag, President & CEO, Dr Klaus Maleck, Chief Financial Officer, and Dr John Kemp, Chief Research & Development Officer, will lead the call.
Conference Call Numbers (listen only):
+49.(0)69.5007 1308 (Germany)
+44.(0)20.7806 1955 (UK)
US: +1.718.354 1389
Access Code: 4882161
A replay of the conference call will be available for 24 hours and can be accessed in Europe by dialing +49.(0)69.22222 0418 (Germany) or +44.(0)20.7806 1970 (UK) and in the US by +1.718.354 1112. The access code is 4882161#. The on-demand version of the webcast will be available on our website: www.evotec.com - Investors - Financial Reports.
Forward looking statements
Information set forth in this report contains forward-looking statements, which involve a number of risks and uncertainties. Such forward-looking statements include, but are not limited to, statements about the anticipated benefits of Evotec's products, the timing of the completion of the transaction between Evotec and Renovis, the anticipated benefits of the business combination transaction involving Evotec and Renovis, including future financial and operating results, the combined company's plans, objectives, expectations and intentions, the anticipated timing and results of the combined company's clinical and pre-clinical programs, and other statements that are not historical facts. Evotec cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. These include risks and uncertainties relating to: the ability to obtain regulatory approvals of the transaction on the proposed terms and schedule; the parties' ability to complete the transaction because conditions to the closing of the transaction may not be satisfied; the failure to successfully integrate the businesses; unexpected costs or liabilities resulting from the transaction; the risk that synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; competition and its effect on pricing, spending, third-party relationships and revenues; the need to develop new products and adapt to significant technological change; implementation of strategies for improving internal growth; use and protection of intellectual property; general worldwide economic conditions and related uncertainties; future legislative, regulatory, or tax changes as well as other economic, business and/or competitive factors; and the effect of exchange rate fluctuations on international operations.
The risks included above are not exhaustive. The most recent reports on Form 10-K, Form 10-Q, Form 8-K and other periodic reports filed by Renovis with the Securities and Exchange Commission contain additional factors that could impact the combined company's businesses and financial performance. The parties expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the parties' expectations or any change in events, conditions or circumstances on which any such statement is based.
Renovis has filed a Current Report on Form 8-K that includes as an exhibit the Agreement and Plan of Merger between Evotec and Renovis. Evotec intends to file a Registration Statement on Form F-4 with the Securities and Exchange Commission in connection with the proposed merger. Evotec and Renovis expect to mail a joint proxy statement/prospectus, which will form part of the Registration Statement on Form F-4, to shareholders of Renovis in connection with the proposed merger. This document will contain important information about the merger and should be read before any decision is made with respect to the merger. Investors and stockholders will be able to obtain free copies of this document and any other documents filed or furnished by Evotec or Renovis through the website maintained by the Securities and Exchange Commission at www.sec.gov. Free copies of these documents may also be obtained from Evotec, by directing a request to Evotec's Investor Relations department at Schnackenburgallee 114, 22525 Hamburg, Germany, or from Renovis, by directing a request to Renovis' Investor Relations department at Two Corporate Drive, South San Francisco, California 94080.
In addition to the documents referenced above, Renovis files or furnishes annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information filed or furnished by Renovis at the SEC's Public Reference Room at Station Place, 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. Renovis's SEC filings are also available to the public at the SEC's web site at www.sec.gov, or at their web site at www.renovis.com.