Corporate | 14 May 2013 07:24


Evotec Q1 2013: Driving Innovation Efficiency


Evotec AG / Key word(s): Quarter Results

14.05.2013 / 07:24

Evotec Q1 2013: Driving Innovation Efficiency

– STRONG STRATEGIC POSITION SUPPORTS ACTION PLAN 2016 – INNOVATION EFFICIENCY

– EVOTEC’S DRUG DISCOVERY PLATFORM GENERATES GROWTH

– NEW HORMONE IDENTIFIED AS PART OF THE CURE BETA INITIATIVE

– GUIDANCE 2013 CONFIRMED

Hamburg, Germany – 14 May 2013 : Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) today reported financial results and corporate updates for the first quarter of 2013.

– Revenues without milestones increased in the first quarter of 2013 by 5% compared to the first quarter of 2012

– Q1 2013 revenues amounted to EUR 17.1 m (2012: EUR 20.1 m); up 5% compared to Q1 2012 revenues of EUR 16.2 m on a like-for-like basis
– Operating loss at EUR 2.7 m due to absence of milestone revenues
– Strong liquidity position at EUR 60.4 m
– High and stable equity ratio at 67.3%

– Good progress in EVT Execute business and EVT Integrate/EVT Innovate alliances

– Extension of alliance with Genentech validates Evotec’s technology platform and broad expertise in drug discovery (after period-end)
– Important strategic expansion of EVT Execute compound management capability (after-period end)
– Increase in revenues driven by integrated alliances
– New alliances with Yale University (December 2012) and Belfer Institute (after period-end) accelerate innovation strategy – New project to fuel future EVT Innovate collaborations: Co-development agreement with Apeiron Biologics AG
– Significant clinical datapoints ahead in 2013 /2014 – New hormone identified to treat diabetes as part of Evotec’s Cure Beta initiative (after period-end)

– Start of integration of CCS Cell Culture Service GmbH – Strengthening Evotec’s screening capabilities

– Financial guidance for 2013 confirmed

– Revenues are expected to grow to a level between EUR 90 -100 m
– Operating result before impairment and changes in contingent consideration, if any, is expected to improve over 2012
– R&D expenditure is expected to be around EUR 10 m in 2013
– Strong liquidity position above EUR 60 m

1. Operational performance

Revenues without milestones increased in the first quarter of 2013 by 5% compared to the first quarter of 2012
Reported Group revenues for the first three months of 2013 decreased by 15% to EUR 17.1 m (2012: EUR 20.1 m). Revenues for the first three months of the previous year included a milestone earned in Evotec’s development partnership with Andromeda/Teva with DiaPep277 (R) (EUR 3.9 m). Excluding milestones, Evotec’s revenues for the first quarter 2013 would have increased by 5% over the same period of the previous year. This growth was driven by an increase in revenues within the Company’s drug discovery alliances and from new integrated collaborations such as the Cure Beta partnership with Janssen Pharmaceuticals (‘Janssen’) and the multi-target alliance with Bayer entered into in the second half of 2012. As anticipated, the absence of milestones resulted in an operating loss for the first quarter of 2013 of EUR 2.7 m. As stated before, the operating result of Evotec may vary significantly between quarters as a result of the timing of performance-based milestone payments and partnering events.

Overall, the Company is on track to achieve increased full-year profitability over 2012 (before impairment and changes in contingent consideration, if any). Liquidity including cash, cash equivalents and investments at the end of March remained strong at EUR 60.4 m.

2. EVOTEC ACTION PLAN 2016 – STEP BY STEP FORWARD FOR INCREASED INNOVATION EFFICIENCY

Good progress in EVT Execute business and EVT Integrate/EVT Innovate alliances
Action Plan 2016 – Innovation Efficiency is the strategic framework that was initiated in March 2012. EVT Execute aims to deliver cost-efficient and industrialised services for drug discovery on a fee-for-service basis. EVT Integrate is the systematic approach to progress targets through the pre-clinic, on a research payments, milestone payments and royalties success basis. EVT Innovate involves accelerating promising drug discovery ideas and assets to partnerships with upfront payments, premium research fees, milestone payments and royalties.

A. EVT Execute
Extension of alliance with Genentech validates Evotec’s technology platform and broad expertise in drug discovery (after period-end)
In April 2013, Evotec extended its drug discovery alliance with Genentech, a member of the Roche Group, for three additional years.
The collaboration was initiated in May 2010.

Important strategic expansion of EVT Execute compound management capability (after-period end)
Evotec (US), Inc. has signed a multi-year lease on a facility located in Branford, Connecticut that is specifically designed to expand the offering of its compound management services on the US East Coast. The facility is expected to be fully operational in early Q3 2013 and will complement the existing facility in South San Francisco which will continue to be fully operational and serve existing clients.

B. EVT Integrate
Increase in revenues driven by integrated alliances
All integrated alliances achieved progress within their projects. Growth in revenues for the first quarter of 2013 was mainly driven by Evotec’s integrated deals, e.g. the multi-target alliances with Bayer started in the second half of 2012 and UCB.

C. EVT Innovate
New alliances with Yale University (December 2012) and Belfer Institute (after period-end) accelerate innovation strategy
An open innovation alliance was formed with Yale University in December 2012, starting in the first quarter of 2013. Under the agreement, Evotec and Yale will leverage first-rate science performed at Yale University together with Evotec’s drug discovery infrastructure and expertise into highly innovative discovery approaches in diseases of high unmet medical need and prepare these for partnering.

A collaboration to discover new oncology therapies targeting epigenetic mechanisms was formed with the Belfer Institute for Applied Cancer Science at Dana-Farber Cancer Institute (DFCI). The goal of the collaboration is to validate emerging epigenetic targets for oncology indications and to demonstrate the drugability of the selected target families. Evotec, DFCI and DFCI’s Belfer Institute will invest in enabling technologies, experimental target validation and the generation of chemical matter by leveraging existing expertise and platforms.

These new partnerships complement the already existing initiatives ‘Cure Beta ‘ and ‘Cure Nephron ‘ with Harvard University.

New project to fuel future EVT Innovate collaborations
In January 2013, Evotec and Apeiron Biologics entered into a research collaboration with the objective of developing immunomodulatory lead compounds for the treatment of cancer. Apeiron Biologics will contribute in vitro and in vivo pharmacology expertise to this collaboration while Evotec will be responsible for medicinal chemistry as well as chemical proteomics. The collaboration is based on the successful outcome of a phenotypic high throughput screen previously commissioned by Apeiron Biologics to Evotec.

Significant clinical datapoints ahead in 2013 /2014
The first Phase III trial on DiaPep277 (R) demonstrated the achievement of both its primary and secondary endpoints. Moreover, it was announced that the recruitment of the second Phase III trial was closed in September 2012. Results of this second pivotal trial are expected towards the end of 2014.

Roche started a substantial Phase II trial with EVT302 at the end of 2012 which aimed to recruit 450 patients in more than 120 centres worldwide to assess the efficacy and safety of this compound in patients with moderate severity Alzheimer’s disease (AD). This clinical trial is one of the very few late-stage trials in this AD patient population. Results are expected in 2015.

Evotec entered into a license agreement in December 2012 with Janssen for its NR2B subtype selective NMDA-antagonist portfolio for development against diseases in the field of depression. The Company expects that Janssen will initiate Phase II clinical trials for the treatment of depression during the course of 2013/14.

After period end, JingXin Pharma received approval from the Chinese Center of Drug Evaluation (CDE) to commence clinical trials with EVT201. EVT201 is a GABA A receptor partial positive allosteric modulator developed for the treatment of insomnia. Evotec had previously concluded two Phase II studies, providing safety and efficacy results. In October 2010, Evotec entered into a license and collaboration agreement with JingXin for EVT201. The agreement grants JingXin exclusive rights to develop and market the drug candidate in China.

New hormone identified to treat diabetes as part of Evotec’s CureBeta initiative (after period-end )
Evotec AG announced the publication of a scientific article by Prof. Doug Melton and his post doc Peng Yi in the journal ‘Cell’. Doug Melton is a University professor at Harvard University and a Howard Hughes Medical Institute (HHMI) investigator. In addition he is the co-director of the Harvard Stem Cell Institute and a key collaborator of Cure Beta , a strategic alliance between Harvard University, Evotec and Janssen in the field of beta cell regeneration.

The ‘Cell’ paper published in April 2013, describes the discovery of the new hormone betatrophin that controls beta cell proliferation. All intellectual property associated with these findings were licensed to Evotec in March 2011 and subsequently sublicensed to Janssen within the Cure Beta collaboration announced in July 2012.

3. ACQUISITION UPDATE

Start of CCS integration – Strengthening Evotec’s screening capabilities
Signed in December 2012 and effective 01 January 2013, Evotec acquired CCS Cell Culture Service GmbH (‘CCS’), a Hamburg-based company which supports the cell culture needs of biotech and pharmaceutical companies on a worldwide basis. CCS’ large-scale processes for cell production, freezing and storage, including the entire team of specialised cell culture scientists and technicians, are being fully integrated into Evotec’s Hamburg operations to realise cost synergies and efficiency improvements.

4. GUIDANCE

Financial guidance for 2013 confirmed
All financial targets published on 26 March 2013 in Evotec’s Annual Report 2012 (page 78) remain unchanged. In 2013, Evotec expects revenues to grow to a level between EUR 90 m and EUR 100 m. This assumption is based on the current order book, expected new contracts and contract extensions and on the achievement of certain milestone payments.

Evotec expects research and development (R&D) expenses in 2013 to increase above the levels of 2012. This is primarily due to additional investments in the strategic Cure X franchise primarily in the fields of metabolic diseases and regenerative medicine. In total, R&D expenses are expected to be around EUR 10 m in 2013.

On this basis the Evotec Group operating result before impairment and changes in contingent consideration, if any, for the year 2013 is expected to improve over 2012.

At constant year-end 2012 currencies, the Company expects to maintain its liquidity position above EUR 60 m at the end of 2013, excluding any potential cash outflow for M&A or similar transactions.

Webcast / Conference Call
The Company is going to hold a conference call to discuss the results as well as to provide an update on its performance:

Conference call details

Date: Tuesday, 14 May 2013
Time: 09.30 am CET (08.30 am BST, 3.30 am EDT)

From Germany: +49 (0) 6103 485 3001
From UK: +44 207 153 2027
From USA: +1 480 629 9673
Access Code: 4615712

A simultaneous slide presentation for participants dialling in via phone is available at www.equitystory.com , password: evotec1112.

Webcast details
To join the audio webcast and to access the presentation slides you will find a link on our home page www.evotec.com shortly before the event.

A replay of the conference call will be available for 24 hours and can be accessed in Europe by dialling +49 69 58 99 90 568 (Germany) or +44 207 959 6720 (UK) and in the US by dialling +1 303 590 3030. The access code is 4615712#. The on-demand version of the webcast will be available on our website:
http://www.evotec.com/article/en/Investors/Finance/Financial-Reports-2011-2013/188/6/26 .

ABOUT EVOTEC AG
Evotec is a drug discovery alliance and development partnership company focused on rapidly progressing innovative product approaches with leading pharmaceutical and biotechnology companies. We operate worldwide providing the highest quality stand-alone and integrated drug discovery solutions, covering all activities from target-to-clinic. The Company has established a unique position by assembling top-class scientific experts and integrating state-of-the-art technologies as well as substantial experience and expertise in key therapeutic areas including neuroscience, pain, metabolic diseases as well as oncology and inflammation. Evotec has long-term discovery alliances with partners including Bayer, Boehringer Ingelheim, CHDI, Genentech, Janssen Pharmaceuticals, MedImmune/AstraZeneca and Ono Pharmaceutical. In addition, the Company has existing development partnerships and product candidates both in clinical and pre-clinical development. These include partnerships with Boehringer Ingelheim, MedImmune and Andromeda (Teva) in the field of diabetes, with Janssen Pharmaceuticals in the field of depression and with Roche in the field of Alzheimer’s disease. For additional information please go to www.evotec.com .

FORWARD LOOKING STATEMENTS – Information set forth in this press release contains forward-looking statements, which involve a number of risks and uncertainties. The forward-looking statements contained herein represent the judgement of Evotec as of the date of this report. Such forward-looking statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

First quarter 2013 results

Key figures of consolidated interim income statement
Evotec AG and subsidiaries

In TEUR except share data and per share data

January to March
2013 2012 Change in %
Revenues 17,064 20,110 (15)
Gross margin in % 26.1 32.5
Research and development expenses (2,328) (1,912) 22
Selling, general and administrative expenses (3,925) (4,432) (11)
Amortisation of intangible assets (900) (526) 71
Other operating income 110 234 (53)
Other operating expenses (126) (1,183) (89)
Operating loss (2,716) (1,289) 111
Operating loss* (2,716) (974) 179
Net loss (2,851) (1,995) 43
Weighted average shares outstanding 117,760,945 116,987,597
Net income per share (basic and diluted) (0.02) (0.02) 0

* Excluding impairments and reversal of impairments and changes in contingent considerations

Key figures of consolidated interim statement of financial position
Evotec AG and subsidiaries

In TEUR

31 March 31 Dec Change
2013 2012 in %
Cash, cash equivalents and investments 40,609 39,065 4
Working capital 1,826 3,287 (44)
Current and non-current loans and finance lease obligations
17,377
17,402
–
Stockholders’ equity 149,439 152,547 (2)
Total assets 221,961 225,427 (2)



End of Corporate News

14.05.2013 Dissemination of a Corporate News, transmitted by DGAP – a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

DGAP’s Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

Language: English
Company: Evotec AG
Manfred Eigen Campus / Essener Bogen 7
22419 Hamburg
Germany
Phone: +49 (0)40 560 81-0
Fax: +49 (0)40 560 81-222
E-mail: info@evotec.com
Internet: www.evotec.com
ISIN: DE0005664809
WKN: 566480
Indices: TecDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart
End of News DGAP News-Service
210857  14.05.2013