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Evotec Reports 8% Revenue Growth and a Positive Operating Result of EUR 2.9 m in the First Nine Months of 2012



Evotec Reports 8% Revenue Growth and a Positive Operating Result of EUR 2.9 m
in the First Nine Months of 2012

HAMBURG, Germany, Nov. 8, 2012 (GLOBE NEWSWIRE) -- Evotec AG (Frankfurt:EVT)
(TecDAX) today reported financial results and corporate updates for the third
quarter and first nine months of 2012 ending 30 September 2012.

  * Profitable growth trend continues

  - Nine months revenues +8% to €64.2 m
  - Positive nine months operating result of €2.9 m
  - Gross margin trend continues to improve over H1 2012
  - Strong liquidity of €55.9 m

  * EVT Execute: Continued trend towards outsourcing services for biotech and
    Pharma; important multi-year NIH contract awarded

  - NIH awards major contract to Evotec to manage and operate a small molecule
  repository
  - Evotec extends ongoing collaboration with CHDI Foundation (after
  period-end)

  * EVT Integrate: Significant milestone achievements and new strategic
    multi-target alliance with Bayer

  - €2.5 m milestone payment as part of the collaboration with Boehringer
  Ingelheim
  - Milestone achieved in drug discovery collaboration with Novartis
  - Five-year, multi-target collaboration with the goal of developing three
  clinical candidates for the treatment of endometriosis with Bayer (after
  period-end)

  * EVT Innovate: Good progress in development partnerships and significant
    new collaboration with Janssen for CureBeta

  - DiaPep277 completed patient recruitment in its Phase III clinical trial
  for Type 1 diabetes
  - Roche starts Phase II clinical trial with EVT 302 in Alzheimer's disease
  - Strategic advisory agreement with Aspireo to partner Somatoprim
  - CureBeta: Evotec enters strategic alliance with Janssen Pharmaceuticals to
  license a portfolio of small molecules and biologics developed under the
  collaboration between Evotec and Harvard University

  * COO, CSO and CFO extend contracts until 2016
  * Evotec CEO awarded 'Turnarounder of the Year 2012'
  * Operating result guidance for 2012 adjusted; revenue and liquidity targets
    confirmed

  - Operating result now expected to be below 2011 but positive
  - Double-digit revenue growth to €88 m to 90 m and year end liquidity above
  €60 m confirmed

1. Operational performance

Total Group revenues for the nine months of 2012 increased by 8% to €64.2 m
(2011: €59.7 m). Growth was driven by an increase in revenues within the
Company's drug discovery alliances, significant milestone revenue from
Andromeda/Teva, Boehringer Ingelheim and Novartis, revenues from upfront
payments from the CureBeta partnership with Janssen and contributions from
acquisitions of Evotec Munich and Evotec San Francisco. The third quarter 2012
reported revenues of €22.2 m, a decrease of 16% compared to the prior period.
Revenues in Q3 of the prior year were extraordinarily high as a result of a
€6.9 m upfront payment from Roche in context of the new development
partnership in Alzheimer's Disease. Without this upfront payment in Q3 2011,
Evotec's revenues for the third quarter 2012 would have increased by 14% over
the same period of the previous year. The operating income for the first nine
months of 2012 was positive at €2.9 m (2011: €9.5 m). Liquidity including
cash, cash equivalents and investments at the end of September 2012 amounted
to €55.9 m. The outstanding milestone payments, including DiaPep277 from
Andromeda/Teva (€3.9 m), were not included in this amount.

2. Evotec Action Plan 2016 – Innovation Efficiency

Update on discovery alliances, development partnerships and status of
pre-clinical programmes

A. EVT Execute: Continued trend towards outsourcing services for biotech and
Pharma; important multi-year NIH contract awarded 

The need to improve R&D productivity is increasing pressure on pharmaceutical
companies to outsource drug discovery and development. There is a clear trend
towards large, multi-year contracts. EVT Execute delivers the latest science,
and globally the best-in-class technology infrastructures to Evotec's partners
in long-term relationships. The goal is to optimise the capital and innovation
efficiency of the resources dedicated to each target that our partners are
working on.

NIH awards major contract to Evotec to manage and operate a small molecule
repository

In the third quarter Evotec achieved an important milestone in its compound
management business. In September 2012, the Company signed a multi-year
agreement with the National Institutes of Health (NIH) for the operation of a
Small Molecule Repository (SMR). The NIH SMR contract will continue to provide
services initiated previously under contract N01MH41001. The contract resource
will support NIH-supported screening centres to acquire, store, maintain, and
distribute the current library collection and the library will also be made
available to select outside collaborators. The contract is funded in its
entirety by NIH, covers a period of up to ten years and has a total estimated
value of up to €60 m (approx. $75 m). This long-term contract will be managed
through Evotec's San Francisco subsidiary. The Company is exploring options to
expand its compound management capabilities into the East Coast of the USA and
also into Europe.

Evotec extends ongoing collaboration with CHDI Foundation (after period-end)

In October 2012, Evotec has extended its collaboration with CHDI Foundation,
Inc. (CHDI), a privately-funded not-for-profit research organisation dedicated
to developing therapies for Huntington's disease (HD), until the end of 2015.
This contract extension could be worth up to $ 41 m in research payments for
Evotec.

The collaboration takes full advantage of Evotec's integrated drug discovery
platform and its proficiency in neurological research, including its expertise
in medicinal chemistry, in vitro and in vivo pharmacology, and compound
management.

Evotec and CHDI entered into this alliance in March 2006, and since then the
collaborative relationship has grown significantly. The extension of this
collaboration further validates Evotec's broad expertise in CNS drug discovery
and development.

B. EVT Integrate: Significant milestone achievements and new strategic
multi-target alliance with Bayer 

Evotec is one of the few drug discovery businesses that can execute a
comprehensive outsourcing strategy. EVT Integrate represents the most
comprehensive and systematic integrated drug discovery process for drug
targets in Evotec's key areas of expertise, including metabolic disease, pain,
oncology, and CNS. In this process, Evotec does not simply lower costs for its
customers; most importantly, the Company significantly reduces the time to
go/no-go decision points for these projects. In these integrated approaches,
Evotec shares some discovery risks with its partners in exchange for future
returns.

€2.5 m milestone payment as part of the collaboration with Boehringer
Ingelheim

In September 2012, Evotec announced that its research alliance with Boehringer
Ingelheim has reached a milestone triggering a payment of €2.5 m to Evotec.
The milestone was for the transition of an oncology programme into
pre-clinical profiling. This is the seventeenth milestone achieved as part of
this alliance.

Milestone achieved in drug discovery collaboration with Novartis

In October 2012, Evotec announced that it has received a pre-clinical
milestone from its drug discovery collaboration with Novartis that started in
2008. This is further recognition of Evotec's track record in advancing
compounds towards the clinic with its collaborators.

Five-year, multi-target collaboration with the goal of developing three
clinical candidates for the treatment of endometriosis with Bayer (after
period-end)

In October 2012, Evotec announced it had entered into a five-year,
multi-target collaboration with Bayer Pharma AG, with the goal of developing
three clinical candidates for the treatment of endometriosis. Because
endometriosis affects women in childbearing age, there is an incredible need
for new, non-surgical treatments that will preserve fertility and alleviate
pain.

Both parties will contribute drug targets and high quality technology
infrastructures and will share the responsibility for early research and
pre-clinical characterisation of potential clinical candidates. Bayer will be
responsible for any subsequent clinical development and commercialisation.

Evotec will receive €12 m as an immediate upfront payment. In total, Evotec
may receive pre-clinical, clinical and sales milestones of potentially up to
approximately €580 m, plus potential royalties of up to low double digit
percentages of net sales, depending on which party brought the compound to the
collaboration and the successful development and approval of potential drug
candidates.

C. EVT Innovate: Good progress in development partnerships and significant new
collaboration with Janssen for CureBeta

Evotec is committed to delivering solutions for some of the largest and most
pressing global medical needs. With EVT Innovate the Company brings forward
the most promising scientific ideas to make a difference in key medical areas.
In its research initiatives, Evotec is progressing its pre-clinical assets to
potential entry points for drug discovery alliances and partners those to
pharmaceutical companies for upfront payments, on-going research fees and
milestones and royalties. Through this strategy Evotec is building a pipeline
without bearing the extensive financial risk normally involved in such
projects.

To reduce Evotec's risk further the Company also continues to seek strategic
product development partnerships to fund the further development of its
clinical assets. Evotec's current clinical stage portfolio comprises several
development partnerships fully funded by its partners.

DiaPep277 completed patient recruitment in its Phase III clinical trial in
diabetes Type 1

In September 2012, Andromeda Biotech announced that it has completed patient
recruitment in a double blind, placebo controlled confirmatory Phase III
clinical trial using DiaPep277 for the treatment of Type 1 diabetes. The study
includes 475 patients and is being conducted at 130 medical centres in the
USA, Europe, Canada, South America, and Israel. Patients recruited to the
study include adults (20-45 years old) within 6 months from diagnosis with
residual insulin secreting cells. The primary outcome of the study is the
ability of DiaPep277 to maintain insulin secretion. Results of this trial are
expected at the end of 2014.

DiaPep277 is a novel approach in diabetes treatment modulating natural
pathways to slow the destruction of insulin producing beta cells. This study
is intended to confirm the encouraging results of a previous Phase III trial,
in which DiaPep277 met its primary and secondary endpoints. Subjects in the
treatment arm receiving DiaPep277 subcutaneously, on top of their regular
insulin injections, maintained adequate diabetic control, reported reduced
insulin requirements and reduced hypoglycemic events.

Roche starts Phase II clinical trial with EVT 302 in Alzheimer's disease

Roche has started a Phase II clinical trial with RG1577 (EVT302) to assess the
efficacy and safety of this compound in patients with moderate severity
Alzheimer's disease (AD).

EVT302 is a novel, potent inhibitor of monoamine oxidase type B (MAO-B), an
enzyme that breaks down the chemical messenger dopamine in the brain and
contributes to the production of free radicals. Free radicals are known to
cause oxidative stress, which may contribute to pathogenesis of AD. For these
reasons, EVT302 is targeted to treat AD symptoms and potentially slow disease
progression. Under the terms of Evotec's agreement with Roche Evotec could
receive development and commercial milestone payments of up to $820 m as well
as tiered double-digit royalties on sales.

Strategic advisory agreement with Aspireo to partner Somatoprim

In September 2012, Evotec and Aspireo Pharmaceuticals Ltd. announced that they
entered into a strategic advisory agreement for support in the development and
partnering of Aspireo's Somatoprim, a new molecular entity somatostatin
analogue (SSA) with a unique, potentially best-in-class, pharmacological
profile currently in phase I of clinical development. SSAs have been approved
for the treatment of Acromegaly, carcinoid tumours, and Cushing's disease but
also have demonstrated significant potential in Diabetic Retinopathy.

Under the terms of the agreement, Evotec will provide Aspireo with strategic
and operational advice on the partnering of Somatoprim. In addition, Evotec
will consult Aspireo on matters of clinical and pre-clinical development. In
return, Evotec will retain advisory fees as well as participate in the
economic success of Somatoprim.

This agreement marks a new business model for asset centric biotech companies
who want to combine capital efficiency with access to Evotec's high quality
and often highly specialised pre-clinical, clinical, regulatory expertise and
reach into the pharmaceutical industry.

CureBeta: Evotec enters strategic alliance with Janssen Pharmaceuticals to
license a portfolio of small molecules and biologics developed under the
collaboration between Evotec and Harvard University

In July 2012, Evotec announced that it has licensed to Janssen
Pharmaceuticals, Inc. a portfolio of small molecules and biologics designed to
trigger the regeneration of insulin-producing beta cells.

The small molecules and biologics were identified in collaboration with Dr
Douglas Melton's laboratory at Harvard University and further developed in
collaboration with scientists from Evotec, as part of the CureBeta research
and development programme.

The agreement between Evotec and Janssen triggered an upfront payment of US $8
m. This amount will be recognised straight-line over the three-year term of
the collaboration agreement. Upon achievement of certain pre-clinical,
clinical, regulatory and commercial goals, Janssen would make future milestone
payments, of up to US $300 m per product. In addition, Janssen will pay
royalties on future sales of any products that result from this collaboration.
The upfront, milestone and royalty payments will be shared by Evotec and
Harvard according to pre-agreed terms. Evotec receives ongoing research
support for discovery and early development work that is conducted in
collaboration with Janssen.

This new collaboration is an excellent example of successfully joining forces
across traditional academic and industrial boundaries to rapidly advance
ground-breaking science into medicines.

3. Guidance 2012

Evotec adjusts operating result guidance for the financial year 2012; revenue
and liquidity targets confirmed

Due to a shift in revenues from milestones from Q4 2012 into 2013, Evotec
corrected its operating result guidance published in Evotec's 2011 Annual
Report (page 64) on 20 March 2012. The operating result before impairment and
changes in contingent consideration for the fiscal year 2012 is now expected
to be less than that achieved in 2011. Original guidance was for the adjusted
operating result in 2012 to be greater than 2011 (€5.8 m). 

The 2012 revenue and liquidity targets remained unchanged: Evotec forecasts
double-digit growth of Group revenues to reach €88 to 90 m. R&D expenses are
expected to remain broadly in line with 2011 levels at approximately €10 m and
up to €10 m are planned to be invested in the long-term upgrading of Evotec's
capacities. On that basis, the Company expects to maintain its liquidity above
€60 m at the end of 2012 at constant year-end 2011 currencies, excluding any
potential cash outflow for M&A transactions and related payments.

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: Thursday, 08 November 2012
Time:
09.30 a.m. CET
08.30 a.m. BST
03.30 a.m. US time (East Coast)
 
+49-(0)-69 58 999 0805 (Germany)
+44-207-153-2027 (UK)
+1-480-629-9726 (US)
 
Access Code: 4572580

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 +44 207 154
2833 (UK) and in the US by dialling +1 303 590 3030. The access code is
4572580#. The on-demand version of the webcast will be available on our
website:

http://www.evotec.com/article/en/Investors/Finance/Financial-Reports-2010-2012/188/6/26.

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,
Medimmune/Astra Zeneca, Novartis, Ono Pharmaceutical and Roche. In addition,
the Company has existing development partnerships and product candidates both
in clinical and preclinical development. These include a strategic alliance
with Roche for the development of subtype-selective NMDA receptor antagonists
for use in treatment-resistant depression as well as other partnerships with
Boehringer Ingelheim, MedImmune and with Andromeda (Teva) in the field of
diabetes. 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.

Results for the first nine months 2012

Key Figures of Condensed Consolidated Interim Income Statements

Evotec AG and Subsidiaries 

Euro in thousands except share data and per share data
               Nine months ended 30    Change  Three months ended 30   Change
               September               in %    September               in %
               2012        2011                2012        2011         
                                                                        
Revenues       64,201      59,712      7.5     22,155      26,347      (15.9)
Gross margin   36.4        48.4                38.9        54.8         
in %
                                                                        
Research and                                                            
development    6,091       6,781       (10.2)  2,167       2,116       2.4
expenses
Selling,
general and    12,274                  6.8                             7.9
administrative             11,497              4,248       3,937
expenses
Amortisation
of intangible  1,997       1,152       73.4    780         603         29.4
assets
Reversal of    --          (1,501)     (100.0) --          (1,501)     (100.0)
impairment
Other
operating      (2,505)     (1,283)     95.2    (933)       (249)       274,7
income
Other
operating      2,669       2,705       (1.3)   809         923         (12.4)
expenses
                                                                        
Operating      2,870       9,526       (69.9)  1,537       8,605       (82.1)
result
Operating      1,351       8,025       (83.2)  703         7,104       (90.1)
result*
                                                                        
Net income     7,533       9,172       (17.9)  5,854       8,378       (30.1)
                                                                        
Weighted
average shares 117,170,597 115,691,964         117,459,556 116,982,351  
outstanding
Net result per
share (basic   0.06        0.08                0.05        0.07         
and diluted)
* Before impairment and changes in                                      
contingent consideration.

Key Figures of Consolidated Interim Statement of Financial Positions

Evotec AG and Subsidiaries

Euro in thousands
                                                     30        31       Change
                                                     September December in %
                                                     2012      2011
                                                                         
Cash and investments                                 55,945    62,428   (10.4)
Working capital                                      2,283     (11,095) 120.6
Current and non-current portion of loans and finance                     
lease obligations                                    17,850    15,566   14.7
Stockholders' equity                                 158,423   147,245  7.6
                                                                         
Total assets                                         227,572   218,213  4.3

CONTACT: Dr Mario Polywka
         Chief Operating Officer
         +44.(0)1235.44 16 76
         +44.(0)1235.86 31 39 Fax
         mario.polywka@evotec.com
        
         Evotec AG
         Manfred Eigen Campus
         Essener Bogen 7
         22419 Hamburg (Germany)
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