Evotec Leading external innovation

Transcription

1 Evotec Leading external innovation Evotec AG, Company Presentation, December 2018

2 Forward-looking statement Information set forth in this presentation 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 presentation. 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. 1

3 Agenda Overview EVT Execute EVT Innovate Financials & Outlook 2

4 Leading external innovation to accelerate new drugs Evotec at a glance Evotec delivers a fast growing & profitable drug discovery and development business to Pharma, biotech and foundations Evotec and its partners are progressing a pipeline of approx. 100 co-owned first-in-class projects in major indications With > 2,100 scientists, Evotec is building a leading portfolio of drug discovery platforms and drug discovery projects 3

5 The macro trend in R&D productivity is just starting Market dynamics in external innovation Key growth drivers Macro trend in R&D outsourcing Market overview Revenues, in bn Capital efficiency Switch from fixed costs to variable business models % p.a ~30 ~33 Capital elasticity Ability to adjust investments proportional to portfolio needs and data points (e) 2019(e) 2020(e) 2021(e) 4 Source: Visiongain Drug Discovery Outsourcing Market Forecast and Evotec s estimates

6 R&D holds great potential for further outsourcing R&D outsourcing market by stage in bn 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% ~25 (~90%) ~3 (10%) ~30-36 ~85-90 ~10 ~ 130 bn ~7 (~70%) ~3 (~30%) 55 (~60%) 35 (~40%) 10% 20% 30% 40% 50% 60% 70% 80% Discovery Pre-clinical/IND Manufacturing & Clinical development 5 (~50%) 5 (~50%) 90% 100% Others Not outsourced Outsourced 5 Source: Visiongain Drug Discovery Outsourcing Market Forecast and Evotec s estimates

7 One stop partner for external innovation Evotec s integrated offering and core competences along the value chain Target ID/ validation Hit identification Lead optimisation Preclinical Tox testing IND Phase I Phase II Phase III Approval Market Evotec offers end-to-end platform solutions including and high-end CMC manufacturing 6

8 Consequent and fast forward AP 2022 Action Plan 2022 Leading External Innovation The strategic goals 2009 Restructuring Capital efficiency for sustainability Cure X/Target X investments 2012 Business segmentation Investments to build a world-class service platform Performance-based integrated discovery and clinical alliances, initial equity investments and first academic BRIDGES Sustainable profitability with strong positive cash flows 2018 Sustainable profitability with positive operating cash flows including milestone and royalty potential No 1 external innovation partner in drug discovery and development for Pharma, biotech and foundations Unique business model for service alliances, tailor-made risk-based collaborations and BRIDGEs Maturation of innovative platforms and co-owned product pipeline, including infectious diseases

9 Unique business model for high value generation Linking strategic goals with operational imperatives Value generation from three initiatives EVT Execute Expand critical mass, world-leading platforms, and maintain delivery culture Continued focus on operational excellence, innovation efficiency, long-term alliances Build most efficient translation into the clinic in the industry with INDiGO EVT Innovate Expand co-owned pipeline larger than to > 100 assets Bring first co-owned assets close to market launch and first royalty incomes Increase predictiveness in discovery through disruptive technologies (e.g. Artificial Intelligence in drug discovery, ipsc, ) Corporate acceleration Build portfolio of holdings with ~ 5-year value generation timeframe Expand BRIDGEs in USA and EU Successful integration of strategic measures and expand leadership positions through additional acquisitions or strategic alliances 8

10 Unique disease expertise coming together Global footprint Evotec s centres of excellence Hamburg (HQ), Göttingen, Munich (Germany) Abingdon, Alderley Park (UK) Toulouse, Lyon (France) Verona (Italy), Basel (CH) Princeton, Watertown, Branford (USA) ~540 employees ~660 employees ~520 employees ~610 employees ~110 employees Hit identification In vitro & in vivo biology Chemical proteomics and Biomarker discovery and validation Cell & protein production Antibody discovery Medicinal chemistry ADME-Tox, DMPK Structural biology In vitro & in vivo antiinfective platform Process development CMC and Commercial manufacture Pre-formulation Compound management Hit identification In vitro & in vivo oncology Medicinal chemistry ADME & PK Cell, protein & antibody production Anti-infective platform Hit identification In vitro & in vivo biology Medicinal Chemistry ADME-Tox, DMPK Biomarker discovery and validation INDiGO CMC In vitro & in vivo antiinfective platform Compound ID, selection and acquisition Compound QC, storage and distribution Cell & protein production ADME-Tox, DMPK 9

11 ONE stop-shop for external innovation The business model EVT Execute & EVT Innovate 10

12 Agenda Overview EVT Execute EVT Innovate Financials & Outlook 11

13 No 1 in quality and R&D efficiency EVT Execute Comprehensive integrated service offering 12

14 Integrated and systematic working on all modalities M&A/Capabilities upgrade along the value chain since 2010 Biological validation Technological validation Disease relevance & production Target ID/ validation Compound management Assay development Screening & Proteomics Lead optimisation Pre-clinical & validation High-end CMC 1) manufacturing Evotec (France) Access to patient-derived ips cell lines Several strategic upgrades CNS and Pain Additional disease area expertise via: Diabetes & Metabolic diseases Anti-infectives Oncology Respiratory & Fibrosis 13 1) Chemistry, Manufacturing and Controls

15 Continued strong growth EVT Execute Key performance indicators 9M 2018 Revenues 1) (in m) Intersegment revenues +53% Adjusted EBITDA 4) (in m) +50% 62.1 Strong upswing in revenues due to growth in the base business and Aptuit contribution Increase in adjusted EBITDA follows revenue growth across all service lines M ) 9M ) 9M M ) 9M ) 9M ) Including intersegment revenues 2) Not adjusted according to IFRS 15 3) 2017 figures adjusted for the first time application of IFRS 15 4) Before contingent considerations, income from bargain purchase & excl. impairments on goodwill, other intangible & tangible assets as well as the total non-operating result

16 Strong and well-balanced customer mix EVT Execute Selected KPIs 9M 2018 Revenues by customer segment ytd 1) (in %) Customer type ytd 1) (in %) Revenues by region ytd 1) (in %) Remaining 39% 100% Mid-sized Pharma Foundations 16% 7% 100% RoW USA 42% 3% 100% Top customers 18% Biotech 38% Top 10 long-term strategic alliances 43% Top 20 Pharma 39% Europe 55% 9M M M ) Third-party revenues only

17 Strong outlook for rest of year and deep into 2019 EVT Execute Expected key milestones 2018 New long-term alliances integrating the offering of Aptuit, strategic launch of INDiGO New performance-based integrated technology/disease alliances Expansion of foundations and biotech network in USA/Europe Milestones from existing alliances 16

18 Agenda Overview EVT Execute EVT Innovate Financials & Outlook 17

19 Addressing major market needs EVT Innovate Fields of core expertise RESPIRATORY NEURONAL DISEASES DIABETES & COMPLICATIONS FIBROSIS Market potential > 100 bn Market potential > 500 bn Market potential > 500 bn Market potential > 100 bn PAIN Market potential > 50 bn ONCOLOGY Market potential > 150 bn ANTI- INFECTIVES Market potential > 30 bn 18 Source: IMS Institute for Healthcare Informatics; IDF Atlas 2015; Grand View Research; Transparency Market Research; Annals of Neurology

20 Building co-owned pipeline with superior platforms and first-in-class targets EVT Innovate Initiatives 19

21 Milestones, new partnerships and accelerated R&D EVT Innovate Key performance indicators 9M 2018 Revenues (in m) Adjusted EBITDA 1) (in m) R&D expenses (in m) +55% % M ) 9M ) 9M 2018 (2.5) (10.7) 9M ) 9M ) 9M M ) 9M ) 9M 2018 Growth driven by milestones in key alliances, new long-term partnerships and solid base revenues Continued strong focus on ipsc, R&D platforms and academic BRIDGEs New strategic efforts in infectious diseases with increased R&D expenses from H onwards (additional ID-related R&D expenses covered by other operating income in context of new agreement with Sanofi) 20 1) Before contingent considerations, income from bargain purchase & excl. impairments on goodwill, other intangible & tangible assets as well as the total non-operating result 2) Not adjusted according to IFRS 15 3) 2017 figures adjusted for the first time application of IFRS 15

22 Approx. 100 co-owned projects across broad range of therapeutic areas Co-owned portfolio Value chain Co-owned Discovery > 60 projects Co-owned Pre-clinical > 25 projects Co-owned Clinical > 10 projects Ø Commercials Ø 1-10 m upfront and substantial research payments Ø 150 m milestones per project Ø 8% royalties Partners 21

23 Discovery Pre-clinical Clinical Strong progress in building co-owned pipeline Partnership portfolio of approx. 100 co-owned, fully invested projects Molecule Therapeutic Area/Indication Partner Discovery Pre-clinical Phase I Phase II EVT201 CNS Insomnia BAY Chronic cough EVT401 Immunology & Inflammation ND 1) Oncology Various Women s health Endometriosis Various Women s health Endometriosis Various Women s health Endometriosis SGM-1019 Immunology & Inflammation CT7001 Oncology Various Respiratory ND 1) CNS Pain ND 1) Immunology & Inflammation ND 1) Pain Various Women s health Endometriosis EVT801 Oncology TargetImmuniT Oncology Immunotherapy Various Anti-infectives >5 programmes Various CNS, Metabolic, Pain & Inflammation >10 further programmes Various ND 1) Nephrology Various ND 1) Immunology & Inflammation Various ND 1) Nephrology Various ND 1) Metabolic Diabetes Various Oncology Various Immunology & Inflammation Tissue fibrosis Various Neurodegeneration ND 1) Anti-bacterial Various All indications ND 1) Dermatological diseases ND 1) Facioscapulohumeral Dystrophy INDY inhibitor Metabolic Various Fibrotic disease Fibrocor Therapeutics TargetPicV Antiviral Various Anti-infectives >5 programmes Various Internal: Oncology, CNS, Metabolic, Pain & Inflammation >40 further programmes Phase II start Phase I start Second Phase I start NEW From ID collaboration NEW milestone achievement NEW partnership NEW milestone achievement NEW Academic BRIDGE NEW partnership NEW In vivo proof of principle NEW From ID collaboration 22 1) Not disclosed Note: Several projects have fallen back to Evotec, where Evotec does not intend to run further clinical trials unpartnered, e.g. EVT302, EVT101,

24 New strategic partnerships Celgene & Evotec Overview of new alliances Strategic oncology partnership (initiated May 2018) Long-term drug discovery and development partnership to identify new therapeutics in oncology Focus on solid tumours, leveraging industryleading phenotypic screening platform with unique libraries & target deconvolution capabilities Targeted protein degradation partnership (initiated Sept 2018) Promising approach addressing undruggable targets via targeted protein degradation Leveraging Evotec s proprietary Panomics platform, including data analytics platform PanHunter Commercials $ 65 m upfront payment, Evotec eligible to receive significant milestone payments as well as tiered royalties on each licensed programme Celgene holds exclusive opt-in rights Commercials Undisclosed upfront payment, significant milestone payments as well as tiered potentially double-digit royalties on each licensed programme Celgene holds exclusive opt-in rights 23

25 Ground-breaking initiative to combat ID Sanofi & Evotec Definitive agreement closed effective 01 July 2018 Pipeline & Innovation Addition of > 100 scientists with significant expertise and capabilities in infectious diseases in Lyon Addition of a pipeline of > 10 research and early-stage development projects Open innovation R&D platform in infectious diseases Financials Initial, one-time upfront cash payment of 60 m and significant further future funding from Sanofi Increased capacity for EVT Innovate in Lyon with minimal Capex investment and dilution to shareholders Next steps Focus on pipeline acceleration Signing of future alliances with business partners 24

26 Strong progress in first-in-class alliances Progress overview (Examples) Chronic kidney disease ( CKD ) Highly innovative therapeutics in diabetic complications (e.g. CKD) Immuno-oncology Small molecule-based cancer immunotherapies to complement checkpoint inhibitors (together with APEIRON Biologics) Commercials 1) Undisclosed upfront payment, potential milestones > 300 m, double-digit royalties Commercials 1) Substantial research payments, potential milestones > 200 m, double-digit royalties Fibrosis Novel mechanisms in multi-organ fibrosis Commercials 1) Undisclosed upfront payment, potential milestones > 100 m Endometriosis/Pain Non-hormonal treatments in endometriosis Commercials 2) 12 m upfront, potential milestones > 500 m, double-digit royalties 25 1) Recognised in EVT Innovate 2) Recognised in EVT Execute

27 Global leadership in ipsc Strong focus on ipsc 1) platform IPS cells can become a powerful tool to develop new drugs to cure intractable diseases because they can be made from patients somatic cells. Shinya Yamanaka Disease-specific drugs Screening Patient Disease in a dish Patientspecific ipscs Disease-affected cell types, i.e. neurons, 26 1) ipsc = Induced pluripotent stem cells

28 Paradigm shifts in neurodegeneration and diabetes ipsc Alliances; Progress overview ipsc alliance in neurodegeneration Development of novel therapies for a broad range of neurodegenerative diseases ipsc alliance in diabetes Development of beta cell replacement therapy and drug discovery based on functional human beta cells Focus on ALS AD HD PD Commercials Amyotrophic lateral sclerosis Alzheimer s disease Huntington s disease Parkinson s disease Upfront $ 45 m, potential milestones > $ 250 m per project, low double-digit royalties Focus on Beta cell replacement therapy Drug discovery Small molecules Commercials Upfront 3 m, research payments, potential milestones > 300 m, double-digit royalties 27

29 Building BRIDGEs over the Valley of death The funding gap Basic Research Applied Research Technology Development and Demonstration Product Commercialisation and Market Development Market Entry & Market Volume Public Market Funding Level Pension Plan Governments Sponsored Research Public Private Consortia Funding Gap Incubator Funds Project Finance Banks/Credit Lines Industry Acquisition Industry R&D Angel Investors Corporate Venture Capital Venture Capital/Private Equity 28 Source: Derived from an article by Sustainable Development Technology Canada (2013)

30 First-in-class innovation via co-investment strategy Innovative building & investing Fibrocor Tx Participation in financing rounds, built on Evotec s platforms, via strategic investments Approx. 22 m investments in 2017; long-term commitments with payback horizon > 5 years Attractive 75 m loan facility available from EIB to also support R&D equity financing 29

31 Just the beginning for EVT Innovate EVT Innovate Expected key milestones 2018 New clinical initiations and good progress of clinical pipeline within existing partnerships Expansion of academic BRIDGE network Strong R&D progress within Cure X/Target X platforms and new Innovate partnerships Strong expansion of ipsc (induced pluripotent stem cells) platform 30

32 Agenda Overview EVT Execute EVT Innovate Financials & Outlook 31

33 Strong performance continues Financial history (e) Selected performance indicators Total Group revenues (in m) R&D expenses (in m) (e) Adjusted Group EBITDA (in m) (e) Gross margin 1) (in %) (e) (e) // 32 1) Gross margin in the future may be more volatile due to the dependency of receipt of potential milestone or out-licensing payments, both having a strong impact on the gross margin, also new mix of business through acquisition of Aptuit. In addition, the amortisation of the purchase price allocation of the recent strategic acquisitions will impact costs of revenue and thus the gross margin.

34 Strong financials with new business mix Condensed income statement 9M 2018 Evotec Group YTD 2018 YTD ) % vs Revenues % Gross margin 2) 31.0% 34.8% R&D expenses (20.9) (12.5) 67% SG&A expenses (40.8) (29.3) 39% Impairment of intangible assets (4.2) (1.2) Income from bargain purchase 3) 15.4 Other op. income (expenses), net Operating income % Adjusted Group EBITDA 4) % Net income Growth in base business, Aptuit contribution (2018: 83.6 m) and milestones Expected increase in R&D following addition of ID SG&A increase due to acquisitions and organic growth One-time effect Bargain purchase with regards to Evotec ID (Lyon); Purchase price allocation (PPA) still preliminary Other operating income increased due to Evotec ID (Lyon), higher R&D tax credits and release of earn-out accruals following impairments 33 1) Differences may occur due to rounding 2) Gross margin in 2018 considers amortisation of acquisitions from Aptuit & Cyprotex. Gross margin in 2017 only considers amortisation from Cyprotex acquisition & approx. 2 months from Aptuit. 3) No impact on adjusted Group EBITDA 4) Before contingent considerations, income from bargain purchase & excl. impairments on goodwill, other intangible & tangible assets as well as the total non-operating result 5) 2017 figures adjusted for the first time application of IFRS 15

35 Strong performance across the board Segment information 9M 2018 Evotec Group in m 1) EVT Execute EVT Innovate Intersegment elimination Not allocated Evotec Group Revenues (35.6) Gross margin 24.6% 48.8% 31.0% R&D expenses (0.6) (24.1) 3.8 (20.9) SG&A expenses (34.5) (6.3) (40.8) Impairment of intangible assets (4.2) (4.2) Income from bargain purchase Other op. income (expenses), net Operating income Adjusted EBITDA 2) Growth in EVT Execute due to strong base business including Aptuit Milestone growth and new partnerships in EVT Innovate R&D increased following infectious disease efforts Bargain purchase not allocated to segments and one-time effect Other operating income increase due to cost coverage in ID by Sanofi and higher R&D tax credits Positive adjusted EBITDA in EVT Innovate following milestone achievements 34 1) Differences may occur due to rounding 2) Before contingent considerations, income from bargain purchase & excl. impairments on goodwill, other intangible & tangible assets as well as the total non-operating result

36 Strong base business & milestones drive strong Q3 Condensed income statement Q Evotec Group in m Q Q ) Revenues Gross margin 34.7% 33.4% R&D expenses (10.9) (4.0) SG&A expenses (13.6) (13.5) Impairment of intangible assets (1.2) Income from bargain purchase 15.4 Other op. income (expenses), net Operating income Adjusted Group EBITDA 1) Net income Strong revenue growth of 43% due to base business, Aptuit contribution and milestones Gross margin reflects milestones and stronger Aptuit contribution R&D expenses increased by addition of ID SG&A similar to prior quarters One-time effect Income from bargain purchase with regards to Evotec ID (Lyon) PPA still preliminary Higher contributing R&D tax credits Increase in adjusted Group EBITDA of 137% 35 1) Before contingent considerations, income from bargain purchase & excl. impairments on goodwill, other intangible & tangible assets as well as the total non-operating result 2) 2017 figures adjusted for the first time application of IFRS 15

37 Strong team and shareholders for innovation Management & shareholder structure 9% Roland Oetker/ROI 10% Novo Holdings A/S 1) 62% Free float >3% AGI 2) >3% DWS 3) >3% Goldman Sachs >3% BlackRock, Inc. 1% Management Number of shares: m Listing: Frankfurt Stock Exchange (MDAX, TecDAX), OTCBB 52 week high/low: 23.36/ Management Board Werner Lanthaler (CEO) Long-time experience in pharma & biotech Enno Spillner (CFO) Long-time experience in finance & biotech Mario Polywka (COO) Strong operational and commercial management track record Cord Dohrmann (CSO) Long-time experience in drug discovery and business development Supervisory Board Wolfgang Plischke Ex-Bayer Bernd Hirsch Bertelsmann Claus Braestrup Ex-Lundbeck Iris Löw-Friedrich UCB Michael Shalmi Novo Holdings A/S 1) Elaine Sullivan Carrick Therapeutics 36 1) Previously Novo A/S 2) Allianz Global Investors GmbH 3) DWS Investment GmbH, formerly Deutsche Asset Management Investment GmbH

38 Guidance confirmed Guidance Doubledigit topline growth More than 30% Group revenue growth 2 Profitable and growing Adjusted Group EBITDA 2) expected to improve by approx. 30% 3 Focused investments Group R&D expenses of m 1) (previously: m) 37 1) Guidance on R&D expenses was updated on 09 August The additional R&D efforts are not expected to negatively impact the adjusted EBITDA since these extra infectious diseases-related R&D expenses will be covered by other operating income recognised in context of the new agreement with Sanofi. 2) Before contingent considerations, income from bargain purchase and excl. impairments on goodwill, other intangible & tangible assets as well as the total non-operating result

39 Your contact: Dr Werner Lanthaler Chief Executive Officer +49.(0) (0) Fax