- VERY STRONG OPERATIONAL AND FINANCIAL PERFORMANCE IN H1 2017
- IMPORTANT MILESTONE ACHIEVEMENTS
- EXPANSION OF CUSTOMER BASE AND SIGNIFICANT NEW PARTNERSHIPS
- ACQUISITION OF APTUIT TO EXPAND LEADERSHIP IN EXTERNAL INNOVATION (AFTER PERIOD-END)
Hamburg, Germany, 10 August 2017: Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) today reported financial results and corporate updates for the first half of 2017.
FINANCIAL PERFORMANCE REFLECTING A STRONG BUSINESS
- Group revenues: 37% increase to EUR 103.4 m (H1 2016: EUR 75.5 m);
EVT Execute revenues up 26% to EUR 100.4 m (H1 2016: EUR 79.8 m);
EVT Innovate revenues up 78% to EUR 21.1 m (H1 2016: EUR 11.8 m)
- Adjusted Group EBITDA increased by 64%to EUR 26.0 m (H1 2016: EUR 15.8 m);
Adjusted EBITDA for EVT Execute up 26% to EUR 28.4 m (H1 2016: EUR 22.5 m);
Adjusted EBITDA for EVT Innovate of EUR (2.4) m (H1 2016: EUR (6.6) m)
- R&D expenses slightly decreased by 5% to EUR 8.5 m (H1 2016: EUR 9.0 m)
- Strong strategic liquidity position of EUR 187.0 m (prior to Aptuit acquisition)
EVT EXECUTE - CONTINUING HIGH-QUALITY STRATEGY & GROWTH
- Multiple new and extended integrated drug discovery agreements, e.g. with Dermira, Asahi Kasei Pharma, Blackthorn Therapeutics and STORM Therapeutics (after period-end)
- Significant progress within ongoing alliances (e.g. Bayer alliance in endometriosis)
- Cyprotex contributing positively and integration on track
EVT INNOVATE - MOMENTUM AND MILESTONES
- Important milestone achievements (e.g. kidney disease alliance with Bayer, iPSC diabetes alliance with Sanofi)
- Strong focus on iPSC platform through new strategic collaborations with Censo Biotechnologies and Fraunhofer IME-SP (after period-end)
- Unique biobank approach through NURTuRE consortium in kidney diseases
- BRIDGE model gaining momentum (e.g. two funding rounds in LAB282 projects)
- Grant from IFB Hamburg in immunotherapy/immuno-oncology
- Novo Holdings A/S new strategic investor in Evotec holding >10%
- Change in Evotec's Supervisory Board: Michael Shalmi joined Supervisory Board
- Continued strategic investments and company formation activities (e.g. Eternygen, Forge Therapeutics, Facio Therapies)
- Acquisition of Aptuit (after period-end)
GUIDANCE 2017 CONFIRMED
- All elements of the financial guidance comfortably confirmed
1. FINANCIAL PERFORMANCE REFLECTING A STRONG BUSINESS
In the first half of 2017, Evotec's Group revenues grew to EUR 103.4 m, an increase of 37% compared to the same period of the previous year (H1 2016: EUR 75.5 m). This increase resulted primarily from three factors: the strong performance in the base business, the Cyprotex DMPK business contribution (EUR 12.3 m) and increased milestone payments. Revenues from milestones, upfronts and licences increased significantly to EUR 13.3 m compared to the same period of the previous year (H1 2016: EUR 6.9 m) including predominantly milestones from the collaborations with Bayer in endometriosis and kidney diseases and Sanofi in diabetes. The higher milestone achievements also positively affected the gross margin, which increased to 35.8% in the first six months of 2017 (H1 2016: 34.5%).
The slight decrease of Evotec's R&D expenses to EUR 8.5 m (H1 2016: EUR 9.0 m) results from the reallocation of projects to the Celgene collaboration portfolio, which is recognised in costs of revenue. Evotec's selling, general and administrative (SG&A) expenses increased by 34% in the first half of 2017 to EUR 15.8 m (H1 2016: EUR 11.8 m) and were mainly impacted by Cyprotex administration as well as an increased SG&A headcount (Business development and administrative functions) in response to company growth and transaction expenses, e.g. Aptuit.
Adjusted Group EBITDA in the first half of 2017 increased by 64% to EUR 26.0 m (H1 2016: EUR 15.8 m). Evotec's operating income in the first half of 2017 amounted to EUR 18.2 m (H1 2016: EUR 8.4 m).
Liquidity, which includes cash and cash equivalents (EUR 87.9 m) and investments (EUR 99.1 m) amounted to EUR 187.0 m at the end of June 2017 (31 December 2016: EUR 126.3 m). This strong increase is mainly due to the capital increase with Novo Holdings A/S announced in February 2017, whereas floating loan facilities have been reduced significantly.
Revenues from the EVT Execute segment amounted to EUR 100.4 m in the first six months of 2017 and significantly increased compared to the prior-year period (H1 2016: EUR 79.8 m). Included in this amount are EUR 18.1 m of intersegment revenues (H1 2016: EUR 16.2 m). This increase is primarily attributable to a strong performance of the base business and the Cyprotex contribution. The EVT Innovate segment generated revenues of EUR 21.1 m (H1 2016: EUR 11.8 m), which consisted entirely of third-party revenues. This increase compared to the prior-year period mainly results from milestone payments from Bayer and Sanofi as well as revenues from the Celgene collaboration. Gross margin for EVT Execute amounted to 29.4% while EVT Innovate generated a gross margin of 46.1%. R&D expenses for the EVT Innovate segment amounted to EUR 10.4 m in the first half of 2017 (H1 2016: EUR 11.9 m). In the first half of 2017, the adjusted EBITDA of the EVT Execute segment was strong at EUR 28.4 m and significantly improved compared to the prior-year period (H1 2016: EUR 22.5 m). The EVT Innovate segment reported an adjusted EBITDA of EUR (2.4) m (H1 2016: EUR (6.6) m).
2. EVT EXECUTE & EVT INNOVATE
EVT EXECUTE - CONTINUING HIGH-QUALITY STRATEGY & GROWTH
The strong operational performance of the first quarter 2017 successfully continued into the second quarter 2017 in the EVT Execute segment. With EUR 12.3 m revenue contribution in the first half of 2017, Cyprotex had a very strong start and its integration into the Evotec Group is proceeding ahead of plan. Furthermore, Evotec has been consolidating its US footprint in the first half of 2017 to streamline processes and services.
In addition and amongst other highlights, Evotec entered multiple new integrated drug discovery alliances. In its new multi-year, integrated drug discovery collaboration with Blackthorn Therapeutics, the focus is on delivering best-in-class small molecules that modulate novel targets expressed in key brain regions for the regulation of behavioural disorders and on ultimately selecting a pre-clinical development candidate. Furthermore, Evotec extended its existing agreement with STORM Therapeutics shortly after period-end into an integrated alliance to focus on new small molecule epigenetic drugs for oncology and other diseases.
Furthermore, strong progress was achieved in Evotec's existing alliances. In the first six months of 2017, a significant pre-clinical milestone was reached in its alliance with Bayer in the field of endometriosis. Furthermore, a clinical milestone was reached in this collaboration shortly after period-end for the progression of the second programme from the alliance portfolio into Phase I clinical development. This alliance has been extended year until 2018.
EVT INNOVATE - MOMENTUM AND MILESTONES
The first half of 2017 in EVT Innovate was characterised by important achievements in strategic alliances (e.g. milestones in kidney alliance with Bayer and iPSC diabetes alliance with Sanofi) and an acceleration of innovation across various ventures.
Strong progress was made within the strategic iPSC-based alliance with Celgene in neurodegeneration. Evotec continues to invest into the further development and expansion of its iPSC platform and entered into new strategic collaborations with Censo Biotechnologies and Fraunhofer IME-SP (shortly after period-end) to strengthen its comprehensive iPSC network. Furthermore, Evotec joined the NURTuRE (National Unified Renal Translational Research Enterprise) consortium in kidney diseases, which provides Evotec with access to patient samples including kidney biopsies, blood, serum and urine for an in-depth histological and molecular analysis to identify and validate targets and biomarkers.
In addition, Evotec's BRIDGE model is also gaining momentum. This was demonstrated by the successful presentation of two rounds of awards in 2017 in its LAB282 BRIDGE alliance with Oxford University.
CONTINUED STRATEGIC INVESTMENTS AND COMPANY FORMATION ACTIVITIES
Alongside its EVT Innovate strategy, Evotec continues to participate in strategic investments and company formations. By doing so, Evotec demonstrates its willingness to accelerate innovation also by taking equity stakes in companies to ideally balance risks and rewards. Along these lines, Evotec further expanded its relationship with Forge Therapeutics by participating in Forge's latest funding round (Series A) and participated in Facio Therapies' 2017 funding round.
ACQUISITION OF APTUIT (AFTER PERIOD-END)
After period-end on 30 July 2017, Evotec announced a definitive agreement under which Evotec will acquire Aptuit, a partner research organisation for integrated outsourced drug discovery and development solutions for $ 300 m (approx. EUR 256 m; EUR/$ fx rate of 1.17) in cash. This acquisition is financed through a mix of existing cash reserves and an additional new EUR 140 m senior debt facility. This transaction will strengthen Evotec's position as the leading global player in the external innovation marketplace. Furthermore, it grows Evotec's business substantially and extends the value chain offering through to Investigational New Drug ("IND") submission and beyond to integrated drug substance and drug product and commercial manufacture. The acquisition will be accretive to Evotec's revenues, make a significant contribution to Evotec's EBITDA and is expected to close in Q3 2017.
4. GUIDANCE 2017 CONFIRMED
All elements of the financial guidance are comfortably confirmed.