- CONTINUED STRONG PERFORMANCE ACROSS ALL BUSINESS LINES DESPITE COVID-19 WITH AN INCREASE IN GROUP REVENUES OF 12%
- IMPORTANT STRATEGIC EXPANSION INTO BUSINESS FIELDS OF GENE THERAPY AND ANTISENSE THERAPY INCLUDING FIRST ALLIANCES
- FULL-YEAR 2020 GUIDANCE FOR REVENUES AND ADJUSTED EBITDA CONFIRMED AND INCREASED FOR UNPARTNERED R&D EXPENSES TO APPROX. € 45 M
- WEBCAST AND CONFERENCE CALL TODAY AT 02.00 PM CEST
Hamburg, Germany, 12 August 2020:
Evotec SE (Frankfurt Stock Exchange: EVT, MDAX/TecDAX, ISIN: DE0005664809) today announced its financial results for the first half-year of 2020.
OVERALL POSITIVE FINANCIAL PERFORMANCE REFLECTING GROWTH ACROSS ALL BUSINESS LINES
- Significant Group revenue growth of 12% to € 231.0 m (H1 2019: € 207.1 m)
- Revenue growth in both business segments: EVT Execute revenues up 16% to € 228.2 m (H1 2019: € 196.8 m); EVT Innovate revenues up 8% to € 44.6 m (H1 2019: € 41.2 m)
- Adjusted Group EBITDA amounting to € 47.3 m (H1 2019: € 58.2 m)
- Increased investments in unpartnered R&D of € 21.6 m (H1 2019: € 18.7 m)
- Robust liquidity positon of € 275.7 m (31 December 2019: € 320 m)
- No material impact by COVID-19 pandemic on overall financial and strategic development so far; slight delays in conclusion of contracts and milestone achievements
CONVINCING OPERATIONAL PROGRESS
- Multiple new and extended drug discovery and development agreements
- New 5-year contract with the US Environmental Protection Agency
- Just – Evotec Biologics strengthens its position: contract with U.S. Department of Defense to develop and manufacture monoclonal antibodies for treatment and/or prevention of COVID-19 (after period-end)
- Construction of first J.POD® biologics manufacturing facility in Seattle, WA, USA progressing well
- Evotec partner Zogenix received marketing approval from FDA for FINTEPLA®; Evotec as supporting long-term partner will supply commercial API (Active Pharmaceutical Ingredients)
- Continued progress in co-owned pipeline, despite certain COVID-19 related delays
- New QRbeta initiative based on Evotec’s iPSC-based beta cell replacement therapy regained from Sanofi
- New BRIDGE (“Autobahn Labs”) and equity participations as well as successful follow-on financings
INCREASING EXPANSION OF INFRASTRUCTURE IN MULTIMODALITY
- Establishment of new site Evotec GT in Austria, dedicated to gene therapy-based projects; multi-year gene therapy research alliance between Evotec GT and Takeda
- Further expansion of Evotec’s multimodality platform into Antisense Therapy through cooperation with Secarna Pharmaceuticals
- Virtual Annual General Meeting 2020 approved all proposed agenda items
- Election of new Supervisory Board Member Mr Kasim Kutay
- Acquisition of “Biopark By Sanofi SAS” in Toulouse making Evotec the full owner of the Toulouse site; rebranding of the site into “Campus Curie Toulouse” (after period-end)
GUIDANCE FOR FULL-YEAR 2020 CONFIRMED WITH REGARD TO REVENUES AND ADJUSTED EBITDA, HIGHER INVESTMENTS IN R&D PLANNED
- Unchanged business outlook in terms of revenue and adjusted EBITDA, taking into account currently visible COVID-19 effects
- Group Revenues from contracts with customers expected to range from € 440 – 480 m (2019: € 446.4 m)
- Adjusted Group EBITDA expected to be in the range of € 100 – 120 m (2019: € 123.1 m)
- Due to promising investments in EVT Innovate, increase of guidance for “unpartnered R&D” to approx. € 45 m (before approx. € 40 m)
STRONG FINANCIAL POSITION
In the first six months of 2020 Evotec continued on its growth path: Group revenues from contracts with customers increased by 12% to € 231.0 m (H1 2019: € 207.1 m) due to a positive performance across all business lines, for the first time added revenues from Just – Evotec Biologics (€ 16.3 m) and despite the anticipated loss of payments of Sanofi for the Toulouse site (€ 7.5 m) from April 2020. Also, favourable exchange rate effects had a positive impact of € 2.4 m.
Thereof, base revenues accounted for € 223.2 m, an increase of 19% over the same period of the previous year (H1 2019: € 188.0 m), while revenues from upfront, milestone and licence payments decreased to € 7.8 m (H1 2019: € 19.1 m).
Due to the significant lower upfront, milestone and license payments as well as the anticipated expiring payments from Sanofi for the Toulouse site from April 2020 onwards, gross margin decreased to 23.0% (H1 2019: 30.8%).
In the first half-year of 2020, Evotec continued to strongly invest into its unpartnered R&D. Thus, the expenses for unpartnered R&D increased to € 21.6 m (H1 2019: € 18.7 m), mainly due to intensified research investments into oncology and platforms such as PanOmics and cell therapy. The lower partnered R&D expenses of € 8.2 m (H1 2019: € 10.6 m) were primarily related to the infectious disease portfolio. Whereas costs of the partnership with Sanofi in this area are predominantly reported as R&D expenses the full reimbursement by Sanofi is recognised under other operating income. Total R&D expenses of € 29.8 m nearly remained stable compared to 2019 (H1 2019: € 29.3 m).
The Group’s selling, general and administrative (“SG&A”) expenses for the first half-year of 2020 increased by 22% to € 36.5 m (H1 2019: € 29.9 m), which mainly resulted from the overall staff increase and the related costs as well as from transaction and integration cost from equity engagements, the consolidation of Just – Evotec Biologics and the founding of Evotec GT.
Other operating result in the first six months of 2020 amounted to € 32.2 m (H1 2019: € 31.3 m) and was mainly influenced by R&D tax credits as well as recharges of Sanofi for ID Lyon. Due to a change in the tax regulations in Italian legislation, total R&D tax credits grew less as expected compared to prior period.
The operating income decreased to € 18.9 m (H1 2019: € 24.0 m), mainly due to the significantly lower upfront, milestone and licence revenues. Most of the half-year milestones are expected to be only slightly delayed, but not lost.
The lower upfront, milestone and licence revenues also affected the adjusted Group EBITDA which decreased by 19% to € 47.3 m (H1 2019: € 58.2 m). Favourable exchange rate developments had a positive impact of approx. € 1.7 m on the adjusted Group EBITDA.
The net result in the first half-year of 2020 amounted to € 7.3 m (H1 2019: € 10.7 m).
Evotec’s liquidity position in the first six months of 2020 continued to remain robust amounting to € 275.7 m (31 December 2019: € 320.0 m). The cash-outflow resulted mainly from the high investments in capex and equity investments.
CONVINCING OPERATIONAL PERFORMANCE IN BOTH BUSINESS SEGMENTS
In the first half of 2020, the EVT Execute segment continued its strong progress of the previous quarters.
Evotec signed multiple new drug discovery and development agreements, e.g. with Boston Pharmaceuticals and Ildong, as well as multiple undisclosed partners and extended or expanded existing long-term agreements (e.g. with Amgen, Takeda). Evotec’s wholly-owned US subsidiary Cyprotex was again selected by the US Environmental Protection Agency (EPA) as its preferred service partner for the next five years. The contract is worth up to $ 13 m.
Evotec’s fully-owned subsidiary Just – Evotec Biologics had a successful start with the J.POD® construction, progressing well, and its first J.POD® collaboration with MSD for the development of innovative technologies for the production of biologics of the highest quality. Further multiple new agreements were concluded (e.g. with ABL, Ology). After period-end, Just – Evotec Biologics entered into a partnership with the U.S. Department of Defense to develop and manufacture monoclonal antibodies (mAbs) for treatment and/or prevention of COVID-19. The contract with the DOD values up to $ 18.2 m.
Also, the Evotec Development Business showed very good performance and started strategic initiatives in the first half-year 2020, despite the extraordinary difficult circumstances especially at the Evotec site in Verona. In June 2020, Evotec’s long-term partner Zogenix received its marketing approval from FDA for the company’s drug FINTEPLA® for Dravet & LGS syndromes, securing 7-year orphan drug exclusivity for commercial exploitation in the US. Evotec will continue to be the commercial manufacturing partner of Zogenix.
In its second segment, EVT Innovate, Evotec was also very successful within the first half-year 2020.
Evotec expanded its leading position in iPSC (Induced pluripotent stem cells). After having regained the global development and commercialisation rights of the iPSC-based diabetes cell therapy programme from Sanofi, Evotec intends to move this programme forward within its QRbeta initiative. Multiple other unpartnered iPSC based initiatives showed very good progress in the first half-year 2020 (e.g. Retinal Diseases).
Evotec’s long-term partner, Bayer AG, continues to advance its P2X3 antagonist BAY1817080, an asset originating from Evotec. The Phase IIa-PoC study had a positive outcome in patients with refractory chronic cough. Preparations for a Phase-IIb study in patients with refractory chronic cough are ongoing, as are preparations for further studies in additional indications.
Together with Samsara, Biocapital and KCK Evotec initiated “Autobahn Labs”, a novel virtual early stage drug discovery incubator (BRIDGE) to design and execute an accelerated path to deliver transformational new therapies. Autobahn Labs already entered into a first-of-a-kind strategic collaboration with UCLA Technology Development Group to identify and advance the most promising areas of research.
Over the first half of 2020, Evotec continued to expand its strategy of generating upside through equity investments, e.g. in leon-nanodrugs, QUANTRO Therapeutics and Exscientia. Other equity participations were made as follow-on investments (e.g. Carrick) or small seed commitments (e.g. Cajal Neuroscience).
IMPORTANT STRATEGIC BUSINESS EXPANSION INTO NEW MODALITIES AND MARKETS
A very important step towards Evotec’s long-term vision of becoming a fully modality-agnostic drug discovery and development partnership company was the establishment of the new site Evotec GT in Austria, dedicated to research and development of gene therapy-based projects. In April, Evotec GT signed a long-term research alliance with Takeda covering selected Takeda gene therapy projects for core therapeutic areas like oncology, rare diseases, neuroscience and gastroenterology.
In June 2020, Evotec signed a strategic partnership with Secarna Pharmaceuticals in the field of Antisense Therapy and already initiated a first project with the aim to establish a pipeline of co-owned antisense oligonucleotide therapies.
Already in the first quarter of 2020, Evotec entered into the field of formulation nanotechnology by signing a strategic partnership with the Munich-based company leon-nanodrugs.
Evotec’s shareholders at the virtual Annual General Meeting 2020 approved all proposals the Company’s Management put to vote with the required majority. The shareholders elected a new Supervisory Board member: Mr Kasim Kutay, CEO of Novo Holdings A/S, succeeds Dr Michael Shalmi, who resigned from the Board.
In May, Kara Carter, Executive Vice President Infectious Disease of Evotec, was appointed as President of the International Society of the Antiviral Research (ISAR).
Shortly after period-end, on 01 July 2020 Evotec acquired the “Biopark By Sanofi SAS” in Toulouse including all land and buildings of the Sanofi site. The acquisition will allow Evotec to significantly expand its existing capacities at its Toulouse site and to secure further, long-term growth of its Toulouse-based operations. The site will be rebranded into "Campus Curie Toulouse".
FINANCIAL GUIDANCE 2020
At present, the management of Evotec confirms the financial guidance published in the 2019 Annual Report on 26 March 2020 and confirmed in the Q1 Quarterly Statement on 14 May 2020 with regard to revenues and adjusted EBITDA.
Due to additional very promising investments in innovative technology platforms and development candidates in EVT Innovate, Evotec plans to invest even more in research and development. For this reason, the forecast for "unpartnered R&D" has been raised from previously approx. € 40 m to now approx. € 45 m.
The Company is going to hold a conference call to discuss the results as well as to provide an update on its performance. Furthermore, the Management Board will present an outlook for the fiscal year 2020. The conference call will be held in English.
Conference call details
Date: Wednesday, 12 August 2020
Time: 02.00 pm CEST (08.00 am EDT, 01.00 pm BST)
From Germany: +49 69 201 744 220
From France: +33 170 709 502
From Italy: +39 02 3600 6663
From the UK: +44 20 3009 2470
From the USA: +1 877 423 0830
Access Code: 17056811#
A simultaneous slide presentation for participants dialling in via phone is available at https://webcasts.eqs.com/evotec20200812/no-audio
To join the audio webcast and to access the presentation slides you will find a link on our home page shortly before the event.
A replay of the conference call will be available for seven days after the conference and can be accessed in Europe by dialling +49 69 20 17 44 222 (Germany) or +44 20 3364 5150 (UK) and in the USA by dialling +1 844 307 9362. The access code is 315597273#. The on-demand version of the webcast will be available on our website: https://www.evotec.com/financial-reports.