Evotec SE — Earnings Release 2007

May 10, 2007

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Evotec AG, First Quarter Report 2007

Dear shareholders,

Evotec reports a solid set of quarterly numbers today, inline with guidance for 2007. A positive operating result from the Services Division and lower R&D expenses led to an improvement in the Group operating result. This improvement was achieved despite a modest decline in revenues due to a consequence of the timing of milestones and negative foreign exchange effects. Last year we booked a collaborative research milestone in Q1. This year we expect such milestones later in the year. Group net result was positive at EUR 2.7 million, due to Evotec recording a non-operating profit of EUR 11.2 million in Q1 from the divestment of Evotec Technologies to PerkinElmer, which became effective on 1 January.

Key figures Q1 2007

Euro in millions	01-03/2007	01-03/20061	∆ in %
Total revenue	15.1	15.8	(4)
Operating result	(9.0)	(9.1)	1
– Services Division	0.3	1.5	(81)
Net result	2.7	(8.8)	131
Cash at the end of the first quarter	66.3	41.7	59

¹ Excluding contributions from Evotec Technologies

The highlights of our strategic and operational performance in the first quarter:

In our internal Central Nervous System (CNS) research and development, we started one Phase I study with our MAO-B inhibitor EVT 302, in development for smoking cessation, and a second has received formal approval and will start imminently. We have also submitted, for ethical approval, the protocol for our first dose-finding efficacy study of EVT 101 in cognition. More importantly, we completed the clinical phase of our first Phase II study with EVT 201 in patients with primary insomnia in April. We expect to release headline results towards the end of Q2 2007, earlier than planned. With the acquisition of Neuro3d, effective 1 April 2007, we acquired up to EUR 21.6 million in net cash to further strengthen our CNS pipeline, as well as some early discovery assets.

In our business of collaborative research, we signed a number of agreements with new and existing biotechnology and pharmaceutical partners, both in discovery and development. For example, we have built on our track record in fragment-based drug discovery through two major collaborations with Solvay Pharmaceuticals and an undisclosed partner. We also entered into a new multi-year target identification collaboration with Boehringer Ingelheim in Alzheimer's disease.

We are pleased with our Q1 performance. We are looking forward to sharing with you the headline data of our first Phase II proof-of-concept study with EVT 201 later this quarter.

1. Pipeline approaching major value inflection point

Lead compound EVT 201 to yield Phase II data in insomnia patients by the end of Q2 2007

Insomnia (EVT 201):

Two Phase II studies are currently ongoing in the US to investigate EVT 201's, Evotec's lead programme, efficacy in patients with primary insomnia. The studies are designed to confirm, in patients, EVT 201's promising results and encouraging side-effect profile demonstrated in the two earlier proof-of-principle trials in a model of insomnia in human healthy volunteers.

Data of first Phase II study expected for late Q2 2007

The most advanced of the current trials, a three-way cross-over design study in 66 patients with primary insomnia, has completed its clinical phase and is on track to deliver headline results by the end of Q2 2007, earlier than anticipated.

Results of the second Phase II study in the elderly to be reported in Q4 2007/Q1 2008

In the second trial, a parallel design study with two doses of EVT 201 and placebo in 135 elderly patients with chronic primary insomnia and day-time sleepiness, recruitment is behind schedule. Evotec has taken actions to accelerate recruitment and now target to release headline results in Q4 2007/Q1 2008. Elderly patients (age 65+) represent a poorly served and large segment of insomnia patients with higher prevalence of waking during the night and waking too early compared to other age groups.

Alzheimer's disease & pain (EVT 101): Preparing for shortterm Phase Ib/Phase IIa dose-ranging studies

While these two trials progress, Evotec has also prepared and initiated further clinical studies with its products EVT 101 and EVT 302.

Following successful Phase I safety and tolerability studies for EVT 101 last year, Evotec is now preparing further clinical programmes: Initially Evotec will conduct short-term Phase Ib/IIa studies in cognition and pain. The goal is to determine the therapeutic dose range in man and to obtain early proofof-concept in these indications. The protocol for the first Phase Ib cognition / brain imaging study has been submitted for ethical approval for a start in H1 2007. This study will be a double-blind, placebo controlled, 3-way crossover design study in healthy subjects undergoing fMRI (functional magnetic resonance imaging) while performing cognitive tasks. Its goal is to determine the dose-related changes in neuronal activation or deactivation in specific brain areas produced by two different single doses of EVT 101, comparing the results to placebo. The preparation of two further Phase IIa studies is on track for a start in H2 2007: (i) treatment during the course of third-molar extraction surgery to reduce post-operative pain and the need for post surgical opiates and (ii) a neuropathic pain study in spinal cord injury patients.

Subsequently, Evotec will determine the clinical development strategy for longer-term Phase II studies of EVT 101 based on the results of these three studies, on data from preclinical longer-term toxicology studies, and on aspects of study duration and cost, risk and reward profiles of potential future indications. Due to its subtype selectivity, the compound has the potential for clinical advantages in Alzheimer's disease and a number of pain indications.

In March 2007, Evotec initiated its first Phase I study with EVT 302, a highly selective MAO-B inhibitor, in development for smoking cessation. This study is a PET (positron emission tomography) study, designed to access the occupancy of the monoamine oxidase B enzyme (MAO-B) in brain after administration of single oral doses of EVT 302. This technique helps to determine the therapeutic dose range of EVT 302 for subsequent safety and efficacy studies. A repeat dose safety and tolerability study for 14 days in young healthy volunteers has been formally approved and will start imminently. Should the Phase I results be positive, a Phase II study in smoking cessation is planned to start mid 2008. Smoking cessation (EVT 302): Phase I studies started at Evotec

EVT 302's preclinical and initial clinical profile supports the potential for a superior safety profile over marketed MAO-B inhibitors, better tolerability compared to current treatments and compelling pharmacokinetic properties with prolonged MAO-B inhibition, offering the potential for once a week dosing at very low exposure levels. This could be a significant advantage for a condition where smokers' motivation for quitting can vary from day to day.

There is also clinical validation for a role of MAO-B inhibitors in Alzheimer's disease. Evotec will conduct its Phase I studies such that they can readily

chose to begin Phase II studies in Alzheimer's as well, depending on the competitive landscape and the Company's financial situation at that time.

To strengthen its growing Central Nervous System (CNS) pipeline, Evotec announced the acquisition of all shares of Neuro3d S.A., France, at the end of March, through a share-for-share transaction in which 5,726,012 newly issued shares in Evotec AG were exchanged for 100% of the shares in privately-held Neuro3d. The assets acquired include up to EUR 21.6 million of net cash, CNS target know-how and related proprietary assays as well as a CNS focused compound library. Neuro3d will be consolidated in Evotec's group financial statements as of 01 April 2007. Evotec enhances its strategic position through Neuro3d acquisition

2. Collaborations on track

Evotec reported a strong performance in its collaborations business for Q1 2007, with many customers including Almirall, Boehringer Ingelheim, CHDI, Daiichi Sankyo, Roche and Solvay. In addition to the fragment-based discovery collaborations described in more detail below and a substantial new collaboration with Boehringer Ingelheim in Alzheimer's disease target discovery, several other new contracts or contract extensions/expansions were signed with companies including Cardioxyl, CHDI, Interprotein and Panacos.

With its deep knowledge in CNS related diseases, Evotec has established a strong position in the identification and validation of targets for Alzheimer's disease (AD) and other neurogenerative diseases and has built substantial expertise and IP around novel AD targets. At the beginning of 2007, Evotec signed a new multi-year agreement with Boehringer Ingelheim (BI), now to jointly identify novel AD targets using Evotec's proprietary target identification platform. This is the second major target discovery alliance with a pharmaceutical partner, which Evotec entered into. The contract includes an option to support BI also in the target validation Partnership with Boehringer Ingelheim expanded into another area of strength

process. If BI exercises this option, Evotec is eligible for milestone payments of up to EUR 20 million plus royalties.

Collaboration with Panacos extended and expanded into development

At the end of Q1, Panacos extended its ongoing discovery collaboration with Evotec into its fourth year. Applying its expertise in medicinal chemistry, Evotec has supported Panacos since 2004 in identifying novel compounds for treating viral infection. Based on excellent progress, the work programme has been extended and expanded to include Evotec's development chemistry services. This development support includes the scale-up of selected compounds for development studies and the optimisation of compounds prior to their selection for clinical studies through experiments such as salt screens.

a. Technology differentiation and track record in fragment-based drug discovery translates into two major new alliances

Combining its expertise in fragment screening, structural biology and fragment-to-lead chemistry, Evotec has a powerful and very competitive platform for fragment-based drug discovery. Evotec has validated this platform against various protein targets. The Company has demonstrated that the combination of functional biological results with early threedimensional data provides high value information for medicinal chemistry optimisation, such that the generation of novel lead structures based on fragment hits can be achieved in reduced timelines when compared to industry standards. Evotec has signed two key partnerships in this area in the first quarter:

Evotec announced in January that it had been chosen as Solvay Pharmaceutical's partner for fragment-based drug discovery. Solvay will access Evotec's proprietary fragment-based screening platform and fragment library to identify fragment hits against a high priority target. Evotec will produce three-dimensional structures of the fragment hits bound to the protein and then will use its expertise in fragment-to-lead activities to further optimise the fragments. Evotec wins key contract with Solvay Pharmaceuticals

In March, also an undisclosed partner has signed an umbrella contract for a combined fragment-based and small molecule high-throughput discovery programme. Umbrella contract signed with undisclosed partner

b. Chemical development and formulation continue strong trend

Chemical development and pharmaceutical formulation collaborations continued to perform strongly. Formulation sales were particularly strong. Evotec has excelled along the value chain in collaboration with a number of discovery customers such as Panacos, now providing additional support for their clinical programmes. In addition, it is encouraging that larger pharmaceutical companies return, despite continued strong competition from India and China. During Q1, Evotec successfully delivered on significant pilot plant, custom preparation and process research & development (PRD) projects for customers including Alizyme, AstraZeneca, Astex, Celgene, Epix, Serono, and Vernalis. Many of those as well as Biogen Idec and Achillion also signed new contracts or contract extension in various development disciplines.

Important events after the end of the first quarter

The acquisition of Neuro3d was successfully closed on 8 May. Its accounts have been consolidated effective 1 April.

Financial Report

Highlights	• Q1 revenues of EUR 15.1 m were 4% lower than last year's level (2006: EUR 15.8 m), primarily due to a collaboration milestone which was recorded in the same period of the prior year as well as due to foreign exchange effects; at constant 2006 currencies Q1 2007 revenues would have been EUR 15.6 m. • For similar reasons gross margins decreased to 27% (2006: 37%); at constant 2006 currencies the Q1 gross margin would have been 30%. • The Group operating loss improved over last year's level to EUR 9.0 m (2006: EUR 9.1 m). R&D expenses declined by 14% to EUR 7.4 m (2006: EUR 8.7 m) as o Q1 2006 included the upfront acquisition cost for the MAO-B programme from Roche o The Services Division's operating result was positive at EUR 0.3 m. • The Evotec Group achieved a Q1 net profit of EUR 2.7 m (2006: EUR (8.8) m) based on a non-operating profit of EUR 11.2 m from the divestment of Evotec Technologies to PerkinElmer. • Cash at the end of the first quarter amounted to EUR 66.3 m (Q1 2006: EUR 41.7 m), still excluding cash acquired in the Neuro3d transaction. Following the divestment of Evotec Technologies (ET) to PerkinElmer effective 1 January 2007, Q1 2007 is the first quarter in which ET is no
	longer consolidated. The year 2006 figures used for the analysis of the Q1 results exclude contributions from ET to allow pro-forma comparison.
Revenues	Evotec revenues for the first quarter 2007 were EUR 15.1 million and thereby were 4% short of last year's level (2006: EUR 15.8 million). Last year's number was relatively high because of a significant, single-digit million Euro milestone payment from the collaboration with Boehringer Ingelheim. Also, the lower exchange rate of the US dollar against Evotec's reporting currency Euro affected revenues negatively. At constant 2006 currencies (UK Sterling and US dollar), Q1 2007 revenues would have amounted to EUR 15.6 million.
	Revenues in Evotec's Services Division were EUR 14.9 million (2006: EUR 15.4 million). Excluding the Q1 2006 milestone payment, revenues improved over the same period last year. This is particularly pleasing considering the adverse effects from foreign exchange and the successful completion of Evotec's multi-year compound library collaboration with Merck and Co. Inc. at the end of 2006. Revenues in our Pharmaceuticals Division amounted to EUR 0.3 million (2006: EUR 0.5 million) resulting from ongoing database access fees in the Takeda collaboration.

For the first quarter of 2007, the Evotec Group recorded 55% of total revenues in Europe, 35% in the United States and 10% in Japan and the Rest of the World.

Currency effect on key figures

	01-03/2007	01-03/2007 const. f/x*	01-03/2006
Revenue in €m	15.1	15.6	15.8
Gross margin in %	27.1	29.9	37.3
Operating result in €m	(9.0)	(8.6)	(9.1)

* Currency pro-forma adjustment using UK Sterling and US dollar exchange rates of Q1 2006.

Cost of revenue for the first quarter of 2007 was EUR 11.0 million, yielding a gross margin of 27.1% (2006: 37.3%). The difference from last year is due to two effects: (i) Q1 2006 was positively impacted by the significant, single digit million Euro milestone payment from Boehringer Ingelheim which resulted in a similarly high gross profit, and (ii) multiple currency effects, i.e. the weak US dollar and the strong operating currency UK Sterling, contributed –3% points to the Q1 2007 margin. Operating cost structure

R&D expenditure for the first quarter 2007 decreased by 14% to EUR 7.4 million (2006: EUR 8.7 million) as Q1 2006 included the vast majority of the acquisition cost for the EVT 300 programme from Roche. The underlying operational expenses for ongoing discovery and development programmes, however, increased over Q1 2006 as progress continues as planned and are expected to further increase during the course of the year.

SG&A for the first quarter 2007 decreased by 2% to EUR 4.9 million (2006: EUR 5.0 million). Increased investment in Business Development resources as well as extraordinary fees for legal support in the context of the Neuro3d acquisition were overcompensated by lower administrative expenses resulting from a consulting project, which had increased SG&A expenses in Q1 2006.

Other operating income and expenses in 2007 result from the sublease of facilities and administrative support services rendered to Evotec Technologies/PerkinElmer with a positive profit contribution. The other operating expenses shown in 2006 resulted from the planned unused capacities in the Services Division (Q1 2006: EUR 0.5 million) and are no longer separated out due to expected improvements of pilot plant utilisation and the reduction of facility space. From Q1 2007 going forward, these costs are fully included into cost of goods sold.

The Group operating result for the first quarter 2007 improved slightly over last year's level to EUR (9.0) million (2006: EUR (9.1) million) despite the reduced revenue and gross profit levels, mainly a result of lower R&D Financial results

expenses. The operating result of the Services business continued to be positive at EUR 0.3 million.

For the first quarter 2007, Evotec achieved a net profit of EUR 2.7 million (2006: EUR (8.8) million). This is the result of a non-operating profit of EUR 11.2 million from the divestment of Evotec Technologies to PerkinElmer.

Earnings per share for the first quarter 2007 were positive at EUR 0.04 (2006: EUR (0.14)).

Segment reporting

Services Division

Euro in thousands	01-03/2007	01-03/2006	∆ in %
Total revenue	14,866	15,396	(3.4)
– Thereof 3rd party	14,866	15,330	(3.0)
Gross profit	3,852	5,673	(32.1)
Gross margin	25.9%	36.9%
– Research and development expenses	301	498	(39.6)
– Selling, general and administrative expenses	3,277	3,228	1.5
– Amortisation of intangible assets	8	19	(57.9)
– Other operating expenses	149	491	(69.7)
– Other operating income	(152)	-
Operating income (loss)	269	1,437	(81.3)
Operating income (loss) before amortisation and impairment	277	1,456	(81.0)

Pharmaceuticals Division

Euro in thousands	01-03/2007	01-03/2006	∆ in %
Total revenue	252	453	(44.4)
– Thereof 3rd party	250	453	(44.8)
Gross profit	245	212	15.6
Gross margin	97.2%	46.8%
– Research and development expenses	7,128	8,261	(13.7)
– Selling, general and administrative expenses	1,616	1,398	15.6
– Amortisation of intangible assets	797	798	(0.1)
– Other operating expenses	289	-
– Other operating income	(295)	-
Operating income (loss)	(9,290)	(10,245)	9.3
Operating income (loss) before amortisation and impairment	(8,493)	(9,447)	10.1

Cash flow from operating activities for the first quarter 2007 was EUR (9.4) million (2006: EUR (8.7) million). The decrease over Q1 2006 is primarily a result of more cash being consumed by movements in assets and liabilities. Cash flow and cash equivalents

Cash flow from investing activities was EUR (1.7) million (2006: EUR (0.7) million), thereof EUR (1.0) million due to the purchase of laboratory equipment and EUR (0.7) million due to payments for minority shares in Evotec Technologies, purchased in 2006.

Cash flow from financing activities was EUR (1.1) million (2006: EUR (0.8) million) due to the repayment of loans.

In total, cash and cash equivalents decreased to EUR 66.3 million during Q1 2007 (end of December 2006: EUR 78.7 million). The decrease mainly results from an increase in working capital by EUR 4.7 million compared to the extraordinarily low level of working capital recorded at year-end 31 December 2006 as well as from the continued high level of investment in research and development. The cash position does not yet include the cash balances held by Neuro3d. In the absence of extraordinary working capital changes and with increased contributions from expected milestone payments and revenues, cash burn is expected to reduce sizably towards the end of the year.

At the end of March 2007 the Evotec Group had 538 employees (year-end 2006: 527). The more sizeable increase over end of Q1 2006 (504) is mainly a result of strengthening the Business Development team as well as the formulation and pharmaceutical operations. Employees and management

Outlook: Evotec confirms 2007 financial guidance

Evotec confirms its guidance given at the end of March 2007 with the exception that it now expects an additional positive liquidity impact resulting from the Neuro3d acquisition (2007: EUR 18-19 million). The targeted yearend cash position now ranges between EUR 55 million and EUR 60 million. Evotec continues to invest significantly in R&D. The level of spending in its clinical development programmes is increasing as Evotec advances more drug candidates into the clinic and into Phase II. The Company is also investing in the development of its earlier pipeline projects to support its results-based collaborations and pipeline growth. Evotec's Group operating result for 2007 is therefore expected to decline moderately compared to 2006. With successful out-licensing of clinical candidates and the ability to achieve milestones from collaborations, profitability is expected to significantly improve in 2008 and/or 2009.

Revenues associated with results-based deals and clinical out-licensing are to a significant extent subject to successful completions of milestones in research and development. Therefore, both results-based deals and clinical out-licensing are likely to lead to more revenue and gross margin volatility in the mid-term. In 2007, Group revenues are expected to reach EUR 65 million to EUR 70 million, depending on the contribution from successbased milestone payments in the Services Division planned for the end of the year.

Condensed consolidated statements of operations according to IFRS Evotec AG and Subsidiaries

Euro in thousands except share data and per share data		Continuing	Discontinued	Continuing
		operations	operations	operations
	01-03/2007	01-03/2006	01-03/2006	∆ in %
Revenue:
– Drug discovery products & development of technologies	9	-	2,020
– Drug discovery services	15,107	15,782	-	(4.3)
Total revenue	15,116	15,782	2,020	(4.2)
Costs of revenue:
– Drug discovery products & development of technologies	4	-	884
– Drug discovery services	11,017	9,903	-	11.2
Total costs of revenue	11,021	9,903	884	11.3
Gross profit	4,095	5,879	1,136	(30.3)
Operating costs and expenses:
– Research and development expenses	7,426	8,665	1,216	(14.3)
– Selling, general and administrative expenses	4,886	5,008	1,252	(2.4)
– Amortisation of intangible assets	805	816	175	(1.3)
– Other operating expenses	438	491	-	(10.8)
– Other operating income	(447)	-	-
Total operating costs and expenses	13,108	14,980	2,643	(12.5)
Operating loss	(9,013)	(9,101)	(1,507)	(1.0)
Other non-operating income (expense):
– Interest income	426	297	2	43.4
– Interest expense	(97)	(197)	-	(50.8)
– Other income from sale of subsidiaries	11,165	-	-
– Foreign currency exchange gain (loss), net	203	181	(39)	12.2
– Other non-operating expense	-	-	-	-
– Other non-operating income	34	55	17	(38.2)
Total non-operating income (loss)	11,731	336	(20)	-
Income (loss) before taxes
and minority interests	2,718	(8,765)	(1,527)	131.0
Current tax income (expense)	(4)	(58)	(6)	93.1
Deferred tax benefit (expense)	-	(4)	-	(100.0)
Minority interests	-	-	-	-
Net income (loss)	2,714	(8,827)	(1,533)	130.7
Weighted average shares outstanding	68,078,819	62,759,424	62,759,424
Net income (loss) per share	0.04	(0.14)	(0.02)

Condensed consolidated balance sheets according to IFRS Evotec AG and Subsidiaries

Euro in thousands	31/03/2007	31/12/2006	∆ in %
Assets
Current assets:
– Cash and cash equivalents	66,288	78,723	(15.8)
– Trade accounts receivable	8,249	6,189	33.3
– Accounts receivable due from related parties	482	454	6.2
– Inventories	5,000	4,782	4.6
– Current tax receivables	1,118	1,127	(0.8)
– Prepaid expenses and other current assets	4,873	3,115	56.4
Total current assets	86,010	94,390	(8.9)
Non-current assets:
Long-term investments	-	-	-
Property, plant and equipment	34,085	34,669	(1.7)
Intangible assets, excluding goodwill	3,691	4,461	(17.3)
Goodwill	49,363	50,541	(2.3)
Other non-current financial assets	56	56	0.0
Other non-current assets	1,980	1,980	0.0
Total non-current assets	89,175	91,707	(2.8)
Assets classified as held for sale	-	19,429	(100.0)
Total assets	175,185	205,526	(14.8)

Liabilities and stockholders' equity
Current liabilities:
– Current maturities of long-term loans	1,951	2,586	(24.6)
– Current portion of finance lease obligations	1,131	1,197	(5.5)
– Trade accounts payable	14,149	11,480	23.2
– Accounts payable to related parties	1	4	(75.0)
– Advanced payments received	46	413	(88.9)
– Provisions	4,177	5,232	(20.2)
– Deferred revenues	2,178	2,975	(26.8)
– Current tax payables	-	-	-
– Other current liabilities	1,982	24,553	(91.9)
Total current liabilities	25,615	48,440	(47.1)
Non-current liabilities:
Long-term loans	6,117	6,296	(2.8)
Long-term finance lease obligations	1,624	1,827	(11.1)
Deferred revenues	1,064	1,119	(4.9)
Provisions	1,656	1,653	0.2
Other non-current liabilities	-	1,980	(100.0)
Total non-current liabilities	10,461	12,875	(18.7)

Liabilites classified as held for sale	-	7,035	(100.0)
Stockholders' equity:
– Share capital	68,079	68,079	0.0
– Treasury shares	(142)	(83)	71.1
– Additional paid-in capital	610,071	610,071	0.0
– Reserve	(34,737)	(34,009)	2.1
– Retained deficit	(504,162)	(506,876)	(0.5)
– Minority interests	-	(6)	(100.0)
Total stockholders' equity	139,109	137,176	1.4
Total liabilities and stockholders' equity	175,185	205,526	(14.8)

Condensed consolidated statements of cash flows according to IFRS Evotec AG and Subsidiary

Euro in thousands	31/03/2007	31/03/2006
Cash flows from operating activities:
– Net income (loss)	2,714	(8,827)
– Adjustments to reconcile net income (loss) to net cash used in operating activities	(8,742)	2,617
– Change in assets and liabilities	(3,375)	(2,260)
– Transactions with discontinued operations	-	(190)
Net cash used in operating activities	(9,403)	(8,660)
Cash flows from investing activities:
– Purchase of long-term investments	(695)	-
– Purchase of property, plant and equipment	(991)	(686)
– Purchase of intangible assets	-	-
Net cash used in investing activities	(1,686)	(686)
Cash flows from financing activities:
– Proceeds from increase of loans	38	2,374
– Purchase of own stock	(59)	-
– Repayment of loans	(1,071)	(3,203)
Net cash used in financing activities	(1,092)	(829)
Net decrease in cash and cash equivalents	(12,181)	(10,175)
– Exchange rate difference	(254)	(278)
– Cash and cash equivalents at beginning of year	78,723	52,185
Cash and cash equivalents at end of the first quarter	66,288	41,732

Consolidated statements of changes in stockholders' equity according to IFRS Evotec AG and Subsidiaries

Euro in thousands except share data Reserve Total Additional Unearned Foreign Stock- Share capital paid-in Own compen- currency Revaluation Retained Minority holders' Shares Amount capital shares sation translation reserve deficit interest equity Balance at 1 January 2006 62,759,424 62,759 596,525 - (1,622) (35,856) 1,271 (474,408) - 148,669 Capital increase - - - - - - - - - - Stock option plan - - - - 239 - - - - 239 Foreign currency translation - - - - - (923) - - - (923) Net loss - - - - - - - (10,360) - (10,360) Minority interests - - - - - - - - - - Balance at 31 March 2006 62,759,424 62,759 596,525 - (1,383) (36,779) 1,271 (484,768) - 137,625 Balance at 1 January 2007 68,078,819 68,079 610,071 (83) (1,312) (33,934) 1,237 (506,876) (6) 137,176 Capital increase - - - - - - - - - - Stock option plan - - - - 214 - - - - 214 Purchase of treasury stock - - - (59) - - - - - (59) Foreign currency translation - - - - - (912) - - - (912) Net income - - - - - - - 2,714 - 2,714 Revaluation - - - - - - (30) - - (30) Minority interests - - - - - - - - 6 6 Balance at 31 March 2007 68,078,819 68,079 610,071 (142) (1,098) (34,846) 1,207 (504,162) - 139,109

Notes to the consolidated financial statements

1. Basis of presentation

The accompanying unaudited consolidated financial statements of Evotec have been prepared in accordance with International Financial Reporting Standards (IFRS). The accounting policies used to prepare interim information are the same as those used to prepare the audited consolidated financial statements for the year ended 31 December 2006.

The consolidated financial statements do not include all of the information and footnotes required under IFRS for complete financial statements. As a result, these financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended 31 December 2006.

2. Basis of consolidation

The basis of consolidation changed as of 1 January 2007. Following the divestment of Evotec Technologies GmbH (ET), all numbers reported since that date exclude the results of ET. Therefore the year-to-date financial statements 2006 and 2007 are not fully comparable. The presentation of the Q1 2006 comparisons is changed such that it shows continuing and discontinued operations

accordingly. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included.

3. Segment reporting

Following the divestment of ET the Company's primary segments include from 1 January 2007 onwards two reportable operating segments which are: (i) Pharmaceuticals Division and (ii) Services Division.

Segment reporting according to IFRS

Euro in thousands	Pharmaceuticals	Services	Not allocated	Total
	Division	Division
Revenue:
– Drug discovery products & development of technologies	-	9	-	9
– Drug discovery services	252	14,857	(2)	15,107
Total revenue	252	14,866	(2)	15,116
– Costs of revenue	7	11,014	-	11,021
Gross Profit	245	3,852	(2)	4,095
– Research and development expenses	7,128	301	(3)	7,426
– Selling, general and administrative expenses	1,616	3,277	(7)	4,886
– Amortisation of intangible assets	797	8	-	805
– Other operating expenses	289	149	-	438
– Other operating income	(295)	(152)	-	(447)
Operating income (loss)	(9,290)	269	8	(9,013)
– Interest income	-	-	426	426
– Interest expense	-	-	(97)	(97)
– Other income from sale of subsidiaries	-	-	11,165	11,165
– Foreign currency exchange gain (loss)	-	-	203	203
– Other non-operating expense	-	-	-	-
– Other non-operating income	508	-	(474)	34
Net income (loss) before taxes and minorities	(8,782)	269	11,231	2,718
– Total assets	7,918	98,485	68,782	175,185
– Total liabilities	8,829	15,655	11,592	36,076
– Capital expenditures	235	748	-	983
– Depreciation	118	1,292	(1)	1,409

4. Cash flows

Adjustments to reconcile the reported net loss to net cash used in operating activities (EUR (8.7) million) includes amortisation (EUR 0.8 million), depreciation (EUR 1.4 million), compensation expense (EUR 0.2 million) and the income from sale of subsidiaries (EUR 11.2 million).

5. Shareholdings of the Boards of Evotec AG

	Number of shares	Share options
Management Board
Joern Aldag	298,056	402,600
Dr Dirk H. Ehlers	4,540	231,500
Supervisory Board
Prof Dr Heinz Riesenhuber	132,480	0
Peer Schatz	3,892	0
Dr Hubert Birner	0	0
Dr Peter Fellner	0	0
Dr William Jenkins	0	0
Mary Tanner	46,690	0

31 March 2007

Pursuant to §15a of the German Securities Trading Act (Wertpapierhandelsgesetz), the above table lists separately for each member of our Management and Supervisory Board, the number of Company shares held, and rights for such shares granted to each board member as of 31 March 2007.

6. Stock options programme

In Q1, options were neither granted nor exercised. As of 31 March 2007, the total number of options available for future exercise amounted to 3,697,887 (approximately 5% of shares in issue). Options have been accounted for under IFRS 2 using the fair value method at the measurement date.

Forward looking statements

This press release contains forward-looking statements that involve risks and uncertainties. The forward-looking statements contained herein represent the judgement of Evotec as of the date of this release. These forward-looking statements are no guarantees for future performance, and the forward-looking events discussed in this report may not occur. Evotec disclaims any intent or obligation to update any of these forward-looking statements.