Innovation Efficiency & Paradigm Shift in Drug Discovery Evotec Company Overview

Transcription

1 Innovation Efficiency & Paradigm Shift in Drug Discovery Evotec Company Overview Evotec AG, Company Presentation, June 2017

2 Forward-looking statements 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 Evotec Overview EVT Execute EVT Innovate Financials & Outlook 2

4 Unique discovery platform and business model Evotec at a glance State of play Profitable & Growing Strong financial performance m revenues (2016), 36.2 m adjusted EBITDA (2016) Strong balance sheet and good strategic position with m liquidity (Q1 2017) EVT Execute Leading innovation efficient drug discovery outsourcing platform Key alliances with leading Pharma companies, foundations and biotech companies for standalone services and integrated projects EVT Innovate Key scientific discovery expertise and platforms in five major disease areas Efficient approaches for participation in first-in-class innovation through BRIDGE from Academia to Pharma Strong platforms & pipeline > 70 co-owned preclinical and clinical candidates Equity participation in selected company formations Industry-leading ipsc 1) drug discovery platform > 1,000 scientists in EU & US 3 1) ipsc = induced pluripotent stem cells

5 Leading the macro trend in R&D productivity Market dynamics in drug discovery Key growth drivers Drug discovery outsourcing is a macro trend Market overview Revenues, in $ bn 1 2 Increasing comfort with outsourcing also in drug discovery Higher R&D capital efficiency through switch from fixed costs to variable business models % p.a Ability to adjust investments proportional to portfolio needs (e) 2018(e) 2019(e) 2020(e) 4 Source: Visiongain Drug Discovery Outsourcing Market Forecast

6 Long-term strategy to co-own products, achieve service revenues, milestones and royalties Strategy overview Restructuring Capital efficiency for sustainability First Cure X investments Business segmentation Investments in discovery service platform Performance-based integrated discovery and clinical alliances Cure X/Target X strategy Royalty income from legacy pipeline Highest quality drug discovery and pre-clinical services Cure X/Target X alliances & Academic BRIDGE strategy Company formations to accelerate drug discovery and product development 5

7 Integrated offering from IP to IND Our Sweet spot : The Pre-clinical Development Candidate ( PDC ) Academia Target ID/Validation Hit- Identification Lead Optimisation Preclinical Phase I Phase II Phase III Approval Market Clinical Phase Duration > 14 years Evotec Approx. 3 6 years PDC Pre-clinical development candidate Partner Approx years Cost Approx. $ 1 3 bn Approx. $ 5 15 m Evotec s core competencies 6 Source: Paul et al. Nature Reviews Drug Discovery, 9 (2010) IP = Intellectual Property IND = Investigational New Drug

8 Our offering close to Pharma, biotech and Academia Evotec s global footprint >1,200 employees, >1,000 scientists in EU & US Princeton, Branford, Watertown and San Francisco, USA ~110 employees Compound ID, selection and acquisition Compound QC, storage and distribution Cell & protein production ADME-Tox, DMPK Abingdon, Manchester/ Alderley Park, UK ~400 employees Medicinal chemistry ADME-Tox, DMPK Structural biology In vitro & in vivo anti-infective platform/screening Toulouse, France ~300 employees Compound management Hit identification In vitro & in vivo oncology Medicinal chemistry ADME & PK Early drug formulation & Solid form screening Cell, protein & antibody production Hamburg (HQ), Göttingen and Munich, Germany ~430 employees Hit identification In vitro & in vivo biology Chemical proteomics & Biomarker discovery and validation Cell & protein production Antibody discovery 7

9 ONE high-quality discovery platform EVT Execute & EVT Innovate Business model 8

10 Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 9

11 No 1 in drug discovery outsourcing services Service offering overview 10

12 Strong growth in EVT Execute EVT Execute Key performance indicators Q Revenues 1) (in m) Intersegment revenues % Adjusted EBITDA 2) (in m) % 12.2 Increase in EVT Execute revenues attributable to growth in the base business and three months Cyprotex contribution In the first quarter of 2017, Cyprotex contributed revenues of 6.0 m Significant upswing of adjusted EBITDA mainly due to the strong growth in revenues at higher gross margin Q Q Q Q Q Q ) Including intersegment revenues 2) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total nonoperating result

13 Well balanced customer mix EVT Execute Selected customer and revenue metrics Revenues by customer segment ytd ) (in %) Customer type ytd ) (in %) Revenues by region ytd ) (in %) Remaining Top Customers 15% 19% 100% Mid-sized Pharma Foundations 9% 13% 100% ROW 2% 100% USA 43% Biotech 35% Top 10 Long-term Strategic Alliances 66% Top 20 Pharma 44% Europe 55% 12 1) Third-party revenues only

14 Cyprotex successful integration Cyprotex Initial achievements & outlook Summary of Transaction 1) Acquisition completed in December 2016 Cyprotex delisted from AIM Final payment of 66.3 m in cash for acquisition and funding of company debt Revenues 2016: GBP 18.8 m EBITDA 2016: GBP 3.1 m Organisation, leadership and systems integration Strong leadership team in place Relocation of UK operations from Macclesfield to Alderley Park completed in Jan 2017 Cyprotex continues to operate and serve its client base in all segments under the brand Cyprotex An Evotec company New business and further opportunities on horizon Very good integration in complete Evotec offering Revenues Q1 2017: 6.0 m Large, strategic contract with major Pharma company signed in Q Approx. 20 m revenues expected in ) Full-year 2016 Cyprotex numbers. Evotec is only eligible for consolidating the last two weeks of 2016 Cyprotex business

15 Trusted partner of foundations Foundations & Evotec Indication (mechanism) Partner Timeline Antibiotic resistance Parkinson s Disease Huntington s Disease Antibiotic Research UK Michael J. Fox Foundation CHDI Foundation Start 2016 Start 2016 Start 2006, extended through to 2018 Disease foundations are increasingly driving science and they are turning to companies like Evotec to pursue novel drug discovery pathways 1) Juvenile Batten Disease Beyond Batten Disease Foundation Start 2015 Muscular dystrophies Jain Foundation Start 2013 Malaria Medicines for Malaria Venture Start ) Over 6,000 rare disease NGOs; more than 10,000 relevant private foundations with more than $ 5 bn funding

16 A good start into the year and a strong outlook EVT Execute Expected key milestones 2017 New long-term deals with large and mid-sized Pharma New performance-based integrated technology/disease alliance Expansion of foundations and biotech network in USA/Europe Milestones from existing alliances 15

17 Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 16

18 Five fields of core expertise with major market need EVT Innovate Overview NEURONAL DISEASES Market potential > 500 bn DIABETES & COMPLICATIONS Market potential > 500 bn PAIN Market potential > 50 bn ONCOLOGY Market potential > 150 bn ANTI- INFECTIVES Market potential > 30 bn 17 Source: IMS Institute for Healthcare Informatics; IDF Atlas 2015; Grand View Research; Transparency Market Research; Annals of Neurology

19 Revenue growth reflects partnering of R&D projects EVT Innovate Key performance indicators Q Revenues (in m) Adjusted EBITDA 1) (in m) R&D expenses (in m) +96% % (3.8) (2.4) Q Q Q Q Q Q Q Q Q Revenue growth of 96% and improved adjusted EBITDA resulting from new partnership with Celgene signed in 2016 as well as milestone achievements Increased R&D expenses due to intensified efforts in metabolic diseases and oncology 18 1) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total nonoperating result

20 Discovery Pre-clinical Clinical > 70 co-owned product opportunities and growing Partnership portfolio Molecule Therapeutic Area/Indication Partner Discovery Pre-clinical Phase I Phase II Phase III EVT302 1) CNS Alzheimer s disease EVT201 CNS Insomnia EVT100 1) CNS Depression EVT401 Immunology & Inflammation ND 2) ND 2) Various ND 2) ND 2) ND 2) Oncology Oncology Women s health Endometriosis CNS Pain Immunology & Inflammation Oncology EVT770 Metabolic Diabetes (type 2/1) ND 2) ND 2) Various EVT801 EVT701 EVT601 ND 2) Various Respiratory Immunology & Inflammation Women s health Endometriosis Oncology Oncology Oncology Nephrology NEW - Key milestones achieved Immunology & Inflammation Various Metabolic Diabetes (type 2/1) Various Metabolic Diabetes (type 2/1) Various Nephrology Various Metabolic Diabetes NEW - Key milestone achieved Various Oncology Immunotherapy Various Immunology & Inflammation Tissue fibrosis Various Neurodegeneration Various Metabolic Diabetes >5 further programmes Various CNS >5 further programmes Various Oncology >10 further programmes Various CNS Pain & Inflammation >5 further programmes 19 1) EVT302 and EVT100: Partner stopped development; Evotec has regained the licence rights (EVT100 series: Patents have been discontinued in 2016) 2) Not disclosed

21 First-in-class alliances with significant upside Key innovation alliances Selection Chronic kidney disease ( CKD ) Highly innovative therapeutics in diabetic complications (e.g. CKD) Immuno-oncology Development of small molecule based cancer immunotherapies to complement current offerings of 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 as targeted anti-fibrotics in multi-organ fibrosis Commercials 1) Undisclosed upfront payment, potential milestones > 100 m Endometriosis/Pain World-leading efforts in non-hormonal treatments in endometriosis Commercials 2) 12 m upfront, potential milestones > 500 m, double-digit royalties 20 1) Recognised in EVT Innovate 2) Recognised in EVT Execute

22 Clear strategy towards global leadership in induced pluripotent stem cells (ipsc) From scientific discovery to strategy Initiation of ipsc 1) platform CureMN (ALS 2) / neurodegeneration) >10 scientists Collaboration with e.g. Broadening of pipeline and first strategic deals Build > 50 scientists and leadership team Strategic alliance in diabetes Strategic alliance in neurodegeneration Outlook Strategic platform development into other disease areas New partnerships Feed clinical stage pipeline together with our partners >100 scientists Key network with: 21 1) ipsc = induced pluripotent stem cells 2) ALS = Amyotrophic lateral sclerosis

23 ipsc alliances represent paradigm shift ipsc Alliances ipsc alliance in neurodegeneration Development of novel therapies for a broad range of neurodegenerative diseases based on Evotec s unique patient-derived ipsc platform 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 ipsc alliance in diabetes Development of beta cell replacement therapy and drug discovery based on functional human beta cells derived from Evotec s unique ipsc platform ipsc alliance in diabetes Beta cell replacement therapy Drug discovery Small molecules Commercials Upfront 3 m, research payments, potential milestones > 300 m, double-digit royalties 22

24 ipsc platform established over the last five years Key elements of drug discovery process with ipsc Screening Disease-specific drugs Disease in a dish Patient Patientspecific ipscs High-quality ipsc cultures at large scale (QC) Industrial processes for generation of patient-derived target cell types Robust disease-relevant phenotypic readouts for screening Panel of disease area focused patient-derived genotypes for patient stratification strategy 23 Figure modified from Nature Reviews Drug Discovery, Vol. 10, (2011)

25 ipsc technology shifts the drug discovery paradigm Advantages & hurdles with ipsc Drug discovery Cell therapy Key advantages Key hurdles Focus on human disease relevance already at screening stage Replacement of rodent cell & in vivo models Novel strategy for patient stratification In vitro clinical trials/precision medicine Novel translational biomarkers Excellent basis for more complex in vitro models Co-cultures/organoids Standardisation Industrialisation Autologous cell therapy can circumvent immune rejection In combination with gene editing technology provides potential cures Functional integration in tissues Regulatory challenges 24

26 Focus on human disease relevance from the start ipsc will shift the drug discovery paradigm Disease relevance OLD NEW with ipsc Key advantage In vitro models for drug screening/profiling Low High Patient-derived disease models for drug screening and profiling confers disease relevance early on In vivo models for drug screening/profiling Low High Efficacy testing in animal models focus more on MoA 1) and PK/PD 2) profiles Pre-clinical patient stratification Not possible Possible Early patient stratification enables better focused clinical development Success rate in clinical testing even in well defined patient populations Low High With increased success rates, cost for development of and prices for medication will decrease 25 1) MoA = Mode of Action 2) PK/PD = Pharmacokinetic/Pharmacodynamic

27 Clinical trial in a dish will become reality Patient-derived ipsc lines available for multiple genotypes (e.g. ALS) 26

28 Various opportunities beyond neurodegeneration and diabetes Initial focus on genetically defined subpopulations Status Partnered Therapeutic area Neurodegenerative diseases, e.g. Amyotrophic lateral sclerosis Frontotemporal dementia Parkinson s disease Alzheimer s disease Huntington s disease Diabetes Drug discovery Cell therapy Unpartnered Lysosomal storage diseases Gaucher Fabry Batten MLIV 1) Myopathies FSHD 2) Duchenne Retinopathy Neurodevelopmental diseases Autism (Fragile X, Angelman, Shank3, TSC1/2) Spinal muscular atrophy Bipolar disorders. 27 1) MLIV = Mucolipidosis Type IV 2) FSHD = Facioscapulohumeral Muscular Dystrophy

29 Academic network continues to grow From Academia to transformative projects More than 30 partnerships 28

30 BRIDGE across the valley of death in drug discovery The Evotec BRIDGE Basic Research Applied Research Technology Development & Demonstration Product Commercialisation & Market Development Market Entry & Market Volume Sponsored Research Public Private Consortia Public Market Funding Level Pension Plan Governments Funding Gap Incubator Funds Project Finance Banks/Credit Lines Industry Acquisition Industry R&D Angel Investors Corporate Venture Capital Venture Capital/Private Equity 29 Source: Derived from an article by Sustainable Development Technology Canada (2013)

31 Upside participation in first-in-class innovation Strategic rationale & examples for Evotec s innovation acceleration Accelerating innovation on EVT platform Spin off valuable platforms outside of Evotec s main areas of interest for potential broader/later stage applications Participate in financing rounds of promising companies, built on Evotec s platforms, via strategic investments Company formations with the aim of developing assets to next value inflection points Panion Ltd 30

32 Improved human genetics enable better translation NURTuRE Consortium Biobanks in Nephropathy (Stiftung) Study centres Access to patient data & Sample material Unique patient sample collection: 3,000 patients with chronic kidney disease 1,000 patients with nephrotic syndrome High-quality patient material and systematic analysis for our goal: Identification of disease-causing mechanisms Expansion of drug discovery in kidney diseases Improving patient stratification Access to patient data 31

33 Strong outlook EVT Innovate Expected key milestones 2017 New clinical initiations and good progress of clinical pipeline within partnerships Expansion of academic BRIDGE network Strong R&D progress within Cure X/Target X initiatives Strong focus on ipsc (induced pluripotent stem cells) platform 32

34 Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 33

35 Continued strong performance Financial history (e) Overview Selected KPIs 1) Total Group revenues (in m) R&D expenses (in m) 2) (e) (e) Adjusted Group EBITDA (in m) Gross margin (in %) 2) (e) (e) 34 1) Including Cyprotex for 2017 (e) 2) Change in presentation for all 5 years: Amortisation reclassed to Costs of revenue and only in 2013 and 2014 to Research & development expenses

36 Growth driven by core business and milestones Condensed income statement Q Evotec AG and subsidiaries in m* Q Q % vs 2016 Revenues % Gross margin 37.4% 33.3% R&D expenses (4.7) (4.4) 6% SG&A expenses (7.3) (5.4) 36% Impairment of intangible assets - (1.4) - Other op. income (expenses), net % Operating income % Adjusted Group EBITDA 1) % Net income (loss) 6.9 (1.2) Group revenue growth due to increase in base revenues, milestones and contribution from Cyprotex ( 6.0 m) Gross margin mainly increased due to higher milestone payments SG&A increased due to Cyprotex and increased headcount from Company growth Other operating income increased due to R&D tax credits in France ( 1.2 m increase) 35 1) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total nonoperating result * Differences may occur due to rounding

37 Adjusted EBITDA continues to grow Segment information Q Evotec AG and subsidiaries in m* EVT Execute EVT Innovate Intersegment elimination Evotec Group Revenues (10.3) 50.2 Gross margin 27.1% 56.9% 37.4% R&D expenses (0.2) (5.8) 1.3 (4.7) SG&A expenses (5.8) (1.5) - (7.3) Other op. income (expenses), net Operating income (loss) Adjusted EBITDA 1) Revenue growth in EVT Execute due to strong base business and three months 2017 contribution from Cyprotex Significantly improved revenues in EVT Innovate due to milestone achievements Higher SG&A in EVT Execute due to expenses of Cyprotex including its move in UK 36 1) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total nonoperating result * Differences may occur due to rounding

38 Critical mass with highly skilled and experienced people Overview Human Resources Highly skilled workforce Scientists >1,200 employees, >1,000 scientists in EU & US >80% of all employees have an academic qualification >1,000 On average 8.5 years of experience in drug discovery per individual >50% of employees are women (e) >40 nationalities Approx. 50% of the employees have worked for the Company for more than five years 37

39 Strong team and shareholders for innovation Management & shareholder structure 10% Novo Holdings A/S 1) ~13.0% 67% Free float 9% Roland Oetker/ROI 5% AGI 2) 3% DAMI 3) 3% JPM 4) 1% Management Number of shares: m Listing: Frankfurt Stock Exchange (TecDAX), OTCBB 52 week high/low: 14.53/ 3.61 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 SE & Co. KGaA Claus Braestrup Ex-Lundbeck Iris Löw-Friedrich UCB Michael Shalmi Novo Holdings A/S 1) Elaine Sullivan Carrick Therapeutics 38 1) Previously Novo A/S 2) Allianz Global Investors GmbH 3) Deutsche Asset Management Investment GmbH 4) J.P. Morgan Investment Management Inc., JPMorgan Chase Bank, National Association, JPMorgan Asset Management (UK) Limited

40 Strong growth and accelerated innovation Guidance ) 1 Doubledigit topline growth More than 15% Group revenue growth 1) 2 Profitable and growing Adjusted Group EBITDA 2) expected to improve significantly compared to Focused investments Group R&D expenses of approx. 20 m 39 1) Revenue guidance from 2017 onwards will be based on total Group revenues and no longer on revenues excluding milestones, upfronts and licences. Due to an increasing number of milestonebearing projects and factoring in a probability of success, total milestone-based revenues become more predictable and contribute more and more to the Company s total revenue and profitability. 2) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result

41 A strong 2017 ahead Expected key milestones 2017 New long-term deals with large and mid-sized Pharma New clinical initiations and good progress of clinical pipeline within partnerships New performance-based integrated technology/disease alliance Expansion of academic BRIDGE network Expansion of foundations and biotech network in USA/Europe Strong R&D progress within Cure X/ Target X initiatives Milestones from existing alliances Strong focus on ipsc (induced pluripotent stem cells) platform 40

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