Evotec SE Reports 9M 2024 Results: Strategic Progress and Successful Expansion Amid Challenging Market Conditions

Rhea-AI Summary

Evotec SE reported its Q3 2024 financial results, showing mixed performance. Group revenues decreased by 1% to €575.7m, with Total Shared R&D revenues declining 12% to €447.1m due to challenging market conditions. However, Just - Evotec Biologics segment showed strong growth of 74% YoY, contributing €128.7m. The company reported adjusted Group EBITDA of €(6.0)m compared to €50.2m in 9M 2023.

Notable developments include extended partnerships with Bristol Myers Squibb, Sandoz, and Novo Nordisk, plus a new collaboration with Pfizer. The company's Priority Reset program is on track to deliver €40m in annual EBITDA improvements. Evotec maintains its 2024 guidance with revenue expected at €790-820m and adjusted EBITDA at €15-35m.

Positive

• Just - Evotec Biologics segment revenue grew 74% YoY to €128.7m
• Received US$75m in payments from Bristol Myers Squibb partnership
• Successfully opened new J.POD biologics facility in Toulouse
• Priority Reset program to deliver €40m annual EBITDA improvement
• Secured new partnerships with Pfizer and extended collaborations with BMS, Sandoz, and Novo Nordisk

Negative

• Group revenues declined 1% to €575.7m
• Shared R&D revenues decreased 12% to €447.1m
• Adjusted Group EBITDA dropped to €(6.0)m from €50.2m in previous year
• One-off costs of €62.3m related to Priority Reset measures
• Reduced 2024 adjusted EBITDA guidance to €15-35m (vs €66.4m in 2023)

Insights

Financial Analyst

Evotec's Q3 results reveal mixed performance with concerning trends. Revenue declined marginally by 1% to €575.7m, but the composition shows significant shifts. The core Shared R&D segment dropped 12%, while Just-Evotec Biologics grew impressively by 74%. The adjusted EBITDA turned negative at €-6.0m, down from €50.2m last year, highlighting operational challenges.

The company's transformation efforts through Priority Reset aim to deliver €40m in annualized EBITDA improvements. Notable partnership expansions with BMS brought in substantial payments totaling $150m. However, the need for a strategic review suggests deeper structural issues that need addressing.

The guidance confirmation, while positive, reflects modest growth expectations and significantly lower profitability compared to 2023. The market challenges and cost-base misalignment require careful monitoring.

Biotech Industry Analyst

The expansion of Just-Evotec Biologics and the new J.POD facility in Toulouse represent significant strategic positioning in the growing biologics market. The segment's 74% growth and partnerships with major players like Sandoz, Pfizer and Novo Nordisk demonstrate strong commercial traction in high-value biologics manufacturing and development services.

However, the core Shared R&D segment's decline is concerning, as it traditionally drives innovation and long-term value. The new collaborations in protein degradation and cell therapies show promise but may take time to materialize into substantial revenue streams. The strategic pivot toward biologics manufacturing could help stabilize revenues but might impact the company's historical focus on innovative drug discovery.

• Guidance for 2024 confirmed with full-year 2024 revenue and adjusted EBITDA targets on track, despite challenging market conditions

• Robust growth of Just - Evotec Biologics driven by roll out of projects together with Sandoz and progress of discovery partnerships

• Successful extensions & expansions with BMS and Novo Nordisk; new collaboration with Pfizer to advance cutting-edge therapeutic solutions

• Priority reset on track to deliver annualised adj. EBITDA improvement of over € 40 m and strategic review initiated

HAMBURG, GERMANY / ACCESSWIRE / November 6, 2024 / Evotec SE (Frankfurt Stock Exchange:EVT)(MDAX/TecDAX, ISIN: DE0005664809)(NASDAQ:EVO) today announced its financial results and corporate updates for the third quarter of 2024, highlighting strategic progress across key partnerships and operations.

Dr Christian Wojczewski, Chief Executive Officer of Evotec, said: "We continue to deliver on the successful execution of our Priority Reset and have achieved significant progress across key initiatives. New and extended partnerships clearly underscore Evotec's enduring leadership in R&D and precision medicine. Building on this exceptionally strong foundation, we are now laying the groundwork for an accelerated transformation program that will pave the way for long-term profitable growth. While the challenging market environment has impacted near-term results, we are seeing strong momentum across strategic priorities and look forward to reporting back on our progress in early 2025."

Challenging market conditions weigh on Shared R&D, while Just - Evotec Biologics delivers strong growth

• Group revenues decreased by (1)% to € 575.7 m (9M 2023: € 580.1 m)

• Total Shared R&D revenues decreased by (12)% to € 447.1 m (9M 2023: € 506.1 m, due to a challenging market environment

• Evotec's Just - Evotec Biologics segment saw impressive growth, with revenues rising by 74% year-over-year, contributing €128.7 m (9M 2023: € 74.1 m) to the overall topline

• Adjusted Group EBITDA totalled € (6.0) m (9M 2023: € 50.2 m) driven by a mismatch between revenues and cost base in the Shared R&D segment as well as costs related to the expansion of operations of Just - Evotec Biologics

• Core business activities in Shared R&D as well as Just - Evotec Biologics reached break-even

Transformation Process on track with significant savings realised

• Priority Reset is set to yield an annualised adjusted EBITDA improvement of over € 40 m, starting H2 2024

• Successful implementation of measures to improve liquidity

• One-off costs related to Priority Reset measures recognised at € 62.3 m as of Q3, lower than initial provision of € 68.5 m on 30 June 2024

• Strategic Review process initiated to examine status quo and deliver performance and productivity improvements as part of transformation for long-term profitable growth

New and expanded partnerships

• Extension and expansion of tech partnership with Sandoz for development and commercial manufacturing of biosimilars

• Extension of collaboration with Bristol Myers Squibb ("BMS") based on targeted protein degradation into indications outside of oncology, triggering programme-based payment of US$ 50 m to fund further research

• Further progress made in strategic neuroscience collaboration with Bristol Myers Squibb, payments of US$ 25 m received

• Strong progress in strategic protein degradation partnership with Bristol Myers Squibb, resulted in reception of performance-based and programme-based payments of in total US$ 75 m

• New technology development partnership with Novo Nordisk to support next-generation cell therapies

• New multi-year master research collaboration and option and license agreement with Pfizer, initially focusing on early discovery research for metabolic and infectious diseases

• Collaboration with X-Chem to access DNA-encoded library ("DEL") to expand hit-finding options

Operational milestone achieved

• Opening of cutting-edge biologics facility J.POD in Toulouse, France (EU) on 20 September 2024 marks significant expansion of European production capabilities and strengthens position in the biologics market.

Business Outlook for full-year 2024

• Group revenues¹⁾ expected in the range of € 790 - 820 m (2023: € 781.4 m).

• R&D expenditures are expected in a range of € 50 - 60 m (2023: € 64.8 m).

• Adjusted Group EBITDA¹⁾ is expected to reach € 15 - 35 m (2023: € 66.4 m).

¹⁾ Guidance including future non-core activities

More detailed information and financial tables are available in the half-year report published on the Evotec website under the following link: https://www.evotec.com/en/investor-relations/financial-publications

Webcast/Conference Call

The Company plans to hold a conference call to discuss the results as well as provide an update on its performance. The conference call will be held in English.

Webcast details

Date: Wednesday, 06 November 2024

Time: 2.00 pm CET (01.00 pm BT, 08.00 am ET)

To join the audio webcast and to access the presentation slides, please register via this link.

The on-demand version of the webcast will be available on our website: www.evotec.com/en/investor-relations/financial-publications.

Conference call details

To join via phone, please pre-register via this link.

You will then receive a confirmation email with dedicated dial-in details such as telephone number, access code and PIN to access the call.

A simultaneous slide presentation for participants dialing in via phone is available under this link.

About Evotec SE

Evotec is a life science company with a unique business model that delivers on its mission to discover and develop highly effective therapeutics and make them available to the patients. The Company's multimodality platform comprises a unique combination of innovative technologies, data and science for the discovery, development, and production of first-in-class and best-in-class pharmaceutical products. Evotec provides high value pipeline co-creating partnerships and solutions to all Top 20 Pharma and over 800 biotechnology companies, academic institutions, as well as other healthcare stakeholders. Evotec has strategic activities in a broad range of currently underserved therapeutic areas, including e.g. neurology, oncology, as well as metabolic and infectious diseases. Within these areas of expertise, Evotec aims to create the world-leading co-owned pipeline for innovative therapeutics and has to-date established a portfolio of more than 200 proprietary and co-owned R&D projects from early discovery to clinical development. Evotec operates globally with more than 5,000 highly qualified people. The Company's sites in Europe and the USA offer highly synergistic technologies and services and operate as complementary clusters of excellence. For additional information please go to www.evotec.com and follow us on X/Twitter @Evotec and LinkedIn.

Forward-looking-statements

This announcement contains forward-looking statements concerning future events, including the proposed offering and listing of Evotec's securities. Words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "should," "target," "would" and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding Evotec's expectations for revenues, Group EBITDA and unpartnered R&D expenses. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by Evotec at the time these statements were made. No assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Evotec. Evotec expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Evotec's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

For further information, please contact:

Investor Relations

Volker Braun
EVP Head of Global Investor Relations & ESG
volker.braun@evotec.com

Media

Susanne Kreuter
VP Head of Strategic Marketing
susanne.kreuter@evotec.com

SOURCE: Evotec SE

View the original press release on accesswire.com

FAQ

What was Evotec's (EVO) revenue performance in Q3 2024?

Evotec's group revenues decreased by 1% to €575.7m in Q3 2024, with Shared R&D revenues declining 12% to €447.1m, while Just - Evotec Biologics segment grew 74% to €128.7m.

What is Evotec's (EVO) financial guidance for 2024?

Evotec expects group revenues of €790-820m, R&D expenditures of €50-60m, and adjusted Group EBITDA of €15-35m for full-year 2024.

How much will Evotec's (EVO) Priority Reset program save annually?

Evotec's Priority Reset program is expected to yield an annualized adjusted EBITDA improvement of over €40m, starting H2 2024.

What major partnerships did Evotec (EVO) announce in Q3 2024?

Evotec extended partnerships with Bristol Myers Squibb, Sandoz, and Novo Nordisk, and established a new collaboration with Pfizer for early discovery research.