Evotec AG Reports Results Of First Nine Months Of 2016

- STRONG FINANCIALS REFLECT CONTINUED GROWTH TREND

- EXTENSION OF COLLABORATIONS, START OF NEW ALLIANCES AND ACHIEVEMENT OF MILESTONES

- NEW WAYS OF ACCELERATING INNOVATION EFFICIENCY

HAMBURG, Germany--(BUSINESS WIRE)--Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) today reported financial results and corporate updates for the first nine months of 2016.

FINANCIAL PERFORMANCE - PROFITABLE AND STRONG GROWTH

- Strong revenue growth in both operating segments:

- EVT Execute revenues up 36% to EUR 126.6 m;

- EVT Innovate revenues up 26% to EUR 17.9 m

- Consolidated Group revenues up 37% to EUR 120.6 m (9M 2015: EUR 88.2 m); base revenues up 30% to EUR 105.0 m

- Adjusted Group EBITDA increased to EUR 30.6 m (9M 2015: EUR 3.4 m)

- R&D expenses of EUR 12.8 m

- Strong liquidity position of EUR 120.0 m despite loan repayments

EVT EXECUTE - STRONG OPERATIONAL PERFORMANCE

- Significant milestone achievements in Bayer, Boehringer Ingelheim and Padlock collaborations

- Phase I clinical start for the treatment of endometriosis with Bayer

- Extensions of ongoing collaboration, e.g. with Genentech and Janssen Pharmaceutica NV

- New long-term strategic drug discovery alliances, e.g. with C4X Discovery, Antibiotic Research UK, UCB

- New compound management partnerships, e.g. with Pierre Fabre and UCB

- New licences enhancing existing drug discovery platform, e.g. with CRISPR/Cas9 and Trianni

- Proposed acquisition of ADME-Tox and DMPK specialist company Cyprotex PLC (after period-end)

EVT INNOVATE - NEW PATHS OF ACCELERATING FIRST-IN-CLASS DRUG DISCOVERY

- New multi-target alliance with Bayer in kidney diseases

- First research collaboration under French Academic Bridge with Inserm in oncology

- Acceleration of TargetNASH programme with Ellersbrook GmbH & Co. KG

- Innovation partnership with ex scientia to develop bispecific small molecule immuno-oncology therapeutics

- Formation of spin-off company Topas Therapeutics GmbH in the field of nanoparticle-based therapeutics to treat immunological disorders

- Participation in Series A funding of Carrick Therapeutics

- Establishing of EVT BRIDGE LAB282 partnership with Oxford University, OSI and OUI (after period-end)

ALL ELEMENTS OF GUIDANCE CONFIRMED - PROFITABILITY GUIDANCE RAISED IN JULY 2016

- Adjusted Group EBITDA (before changes in contingent consideration) expected to more than double compared to 2015

- All other elements of financial guidance as of 22 March 2016 and positive outlook confirmed

- Strong initial outlook for 2017

1. FINANCIAL PERFORMANCE

PROFITABLE AND STRONG GROWTH

Evotec's Group revenues for the first nine months of 2016 grew to EUR 120.6 m, an increase of 37% compared to the same period of the previous year (9M 2015: EUR 88.2 m). This increase is due to growth in the core EVT Execute business, a full nine month contribution of the Sanofi collaboration as well as significant milestone payments. Excluding milestones, upfronts and licences, Evotec's base revenues for the first nine months of 2016 were EUR 105.0 m and increased by 30% over the same period of the previous year (9M 2015: EUR 80.7 m). The gross margin in the first nine months of 2016 was strong at 38.5% and improved over the first nine months of 2015 (9M 2015: 27.2%). The margin increase over 2015 is attributable to the same drivers as the trend in revenue growth as well as capacity utilisation and favourable foreign exchange rate effects.

R&D expenses for the first nine months of 2016 decreased by 5% to EUR 12.8 m (9M 2015: EUR 13.5 m) due to successful partnering of EVT Innovate projects in 2015. Total SG&A expenses for the first nine months of 2016 decreased by 7% to EUR 17.8 m (9M 2015: EUR 19.0 m). SG&A expenses in 2015 included one-time M&A and related costs. Adjusted Group EBITDA in the first nine months of 2016 increased significantly to EUR 30.6 m (9M 2015: EUR 3.4 m). Evotec's operating result for the first nine months of 2016 amounted to EUR 20.4 m (9M 2015: EUR 12.3 m).

Liquidity, which includes cash and cash equivalents (EUR 62.4 m) and investments (EUR 57.6 m) amounted to EUR 120.0 m at the end of September 2016 (31 December 2015: EUR 133.9 m). In Q2 2016, Evotec initiated the repayment of loans, which was continued in Q3 2016.

Revenues from the EVT Execute segment amounted to EUR 126.6 m in the first nine months of 2016, an increase of 36% compared to the prior-year period (9M 2015: EUR 93.4 m). Included in this amount are EUR 23.9 m of intersegment revenues (9M 2015: EUR 19.5 m). The EVT Innovate segment generated revenues in the amount of EUR 17.9 m consisting entirely of third-party revenues (9M 2015: EUR 14.3 m). The increase in revenues resulted from EVT Innovate projects which were partnered in 2015. Gross margin for EVT Execute amounted to 32.9% while EVT Innovate generated a gross margin of 45.6%. R&D expenses for the EVT Innovate segment at EUR 16.3 m in the first nine months of 2016 remained largely unchanged (9M 2015: EUR 16.6 m). Due to growth in the base business, milestone achievements and three full quarters of the Sanofi contribution, the adjusted EBITDA of the EVT Execute segment amounted to EUR 41.3 m in the first nine months of 2016 and increased significantly compared to EUR 16.1 m in the prior-year period. The EVT Innovate segment reported an improved adjusted EBITDA of EUR (10.7) m (9M 2015: EUR (12.7) m).