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Evotec SE — Earnings Release 2013
Aug 8, 2013
151_rns_2013-08-08_374f8800-8d41-4f70-9d1b-c426bf376a44.pdf
Earnings Release
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Evotec AG
^< Recommendation: BUY(BUY)
Risk: Medium (Medium) Price Target: EUR 3.90 (3.90)
1H/2013 figures More to come in 2H/2013
- Revenues for 1H/13 decreased to EUR 36.7m (2012: EUR 42.0m; YoY -13%). Excluding milestones, upfronts and licences, Evotec's revenues in 1H/13 would have increased by 6% compared to prior year. Due to the comparatively low milestone revenues (1H/13: EUR 3.4m vs 1H/12: EUR 10.7m), the operating loss for the first half of 2013 totalled EUR 4.4m. Liquidity remains strong and at the end of June 2013 amounted to EUR 56.1m.
- Company's operating result may vary significantly between quarters as a result of the timing of performance-based milestone payments and partnering events which are challenging to predict.
- Evotec confirmed its guidance and expects to achieve increased fullyear profitability over prior year (before impairment and changes in contingent considerations, if any). Group revenues are expected to grow to EUR 90m-100m.
- On this basis, gross margins in 2013 are expected to improve slightly on those achieved in 2012. However, quarterly margins will continue to be volatile, as they are dependent upon the timing of milestone payments. R&D in 2013E is expected to increase to ~EUR 10m.
- For the rest of the year 2013 milestone and upfront payments significantly contribute to the top line of the company. Given that these revenues are better in terms of margins we expect a noticeable profitability improvement in 2H/13. We think that particularly the last quarter should be strong.
- We leave our PT at EUR 3.90 unchanged and confirm our BUY recommendation.
| Y/E 31.12., EUR m | 2009 | 2010 | 2011 | 2012 | 2013E | 2014E |
|---|---|---|---|---|---|---|
| Revenues | 42.7 | 55.3 | 80.1 | 87.3 | 98.6 | 111.4 |
| Gross profit | 18.4 | 24.3 | 35.0 | 31.0 | 40.4 | 53.5 |
| EBITDA | -38.2 | 6.5 | 11.4 | 5.6 | 14.9 | 22.5 |
| EBIT | -42.3 | 1.7 | 5.2 | -3.2 | 4.5 | 13.8 |
| Net income/loss | -45.5 | 3.0 | 6.7 | 2.5 | 4.2 | 12.5 |
| EPS | -0.43 | 0.03 | 0.06 | 0.02 | 0.04 | 0.11 |
| Gross margin | 43.2% | 44.1% | 43.7% | 35.6% | 41.0% | 48.0% |
| EBITDA margin | -89.6% | 11.7% | 14.2% | 6.4% | 15.1% | 20.2% |
| EBIT margin | -99.1% | 3.1% | 6.5% | -3.7% | 4.5% | 12.4% |
| EV/Sales | 5.9 | 4.6 | 3.2 | 2.9 | 2.6 | 2.3 |
| Source: Evotec AG; CBS Research AG |
08 August 2013
| Change | 2012 | 2013E | 2014E | ||||
|---|---|---|---|---|---|---|---|
| new | old | new | old | new | old | ||
| Revenue | - | 87.3 | - | 98.6 | - | 111.4 | |
| EBIT | - | -3.2 | 4.5 | - | 13.8 | ||
| EPS | - | 0.02 | 0.04 | - | 0.11 | ||
| www.evotec.com WKN: 566480 Reuters: EVTG.DE |
Sector: Biotechnology DE0005664809 Bloomberg: EVT GY |
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| Short company profile |
Evotec is a drug discovery alliance and development partnership company focused on rapidly progressing innovative product approaches with leading pharmaceutical and biotechnology companies.
| Share data: | |
|---|---|
| Share price (last closing price, EUR): | 2.59 |
| Shares outstanding (m): | 115.60 |
| Market capitalisation (EURm): | 299.75 |
| Enterprise value (EURm): | 254.23 |
| Ø daily trading volume (3 m., no. of shares): | 297,273 |
Performance data:
| High 52 weeks (EUR): Low 52 weeks (EUR): Absolute performance (12 months): Relative performance: (vs. TecDAX) 1 month |
3.07 2.06 -0.01 -5.4% |
||||
|---|---|---|---|---|---|
| 3 months 6 months |
-15.1% -20.0% |
||||
| 12 months | -23.5% | ||||
| Shareholders: | |||||
| Roland Oetker/ROI | 13.5% | ||||
| TVM V Life Science Ventures | 10.5% | ||||
| Free float | 76.0% | ||||
| Financial calendar: | |||||
| 3Q/13 Figures | 12 November 2013 | ||||
| Igor Kim (Analyst) Author |
|||||
| Close Brothers Seydler Research AG | |||||
| Phone: +49 (0) 69-977 84 56 0 | |||||
| Email: [email protected] |
|||||
| www.cbseydlerresearch.ag |
Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by § 34b WpHG (Securities Trading Law) at the end of this document. This financial analysis in accordance with § 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of others in connection with their trading activities, occupation, or employment.
| Expected newsflow | |
|---|---|
| Event | Timeline |
| Commercialization of one Cure X initiative | 2H/2013E |
| Initiate 3-5 more Cure X/ Target X programmes | 2H/2013E |
| Long-term deals with big/mid-size Pharma and Biotech | 2H/2013E |
| At least one new integrated technology disease alliance | 2H/2013E |
| Operational start of new compound management facility in East Coast. 3Q/2013E | |
| Start min. three clinical trials within existing alliances | Within 18 months |
| DiaPep277: Results from 2nd Phase III trial (recruitment closed) | End of 2014E |
| EVT 302 (Alzheimer's disease): Phase II trial results | 2015E |
| EVT 100 series (Depression): Start of Phase II trial | 2013/2014E |
Source: Evotec AG; CBS Research
Various
EVT100 series
n
| EVT401 | Inflammation (P2X7 inhibiton) |
Conba Group |
Phase I/II | Phase II start | ~EUR 60m milestones; Royalties |
|---|---|---|---|---|---|
| Various | Endometriosis | Bayer | Pre-clinical | Pre-clinical candidate |
Upfront EUR 12m; total value up to ~EUR 580m; Royalties |
| Various | Various / Pain | Boehringer Ingelheim |
Pre-clinical | Phase I start | Undisclosed upfront; Research payments; Milestones; Royalties |
| Various | Inflammation | UCB | Pre-clinical | Phase I start | High margin research payments EUR 183m milestones/ product |
| Undisclosed | Various/Pain | Novartis | Pre-clinical | Successful PoC | Significant royalties Research payments; Milestones; Royalties |
Oncology
| Molecules | Indication (mechanism) Partner | Status | Next milestone | Commercials | |
|---|---|---|---|---|---|
| DG3173 | Acromegaly / NET | Aspireo | Phase IIa | Phase II data in acromegaly |
Consulting fees; Royalties |
| Various | Various | Boehringer Ingelheim |
Pre-clinical | Phase I, First in man | Research payments; Milestones; Royalties |
| Pathw ay screen |
Cbl-B pathw ay |
Apeiron | Pre-clinical | Pharma partnership | Shared research costs; Milestones; Royalties |
| Epigenomics targets |
Various | Belfer Institute |
Pre-clinical | Pharma partnership | ND |
Source: Evotec AG; CBS Research
Research
Schillerstrasse 27 - 29 60313 Frankfurt am Main
Phone: +49 (0)69 – 977 8456-0
| Roger Peeters Member of the Board |
+49 (0)69 -977 8456- 12 [email protected] |
||
|---|---|---|---|
| Martin Decot | +49 (0)69 -977 8456- 13 | Igor Kim | +49 (0)69 -977 8456- 15 |
| (Equities) | [email protected] | (Equities) | [email protected] |
| Gennadij Kremer | +49 (0)69 – 977 8456- 23 | Daniel Kukalj | +49 (0)69 – 977 8456- 21 |
| (Corporate Credit) | [email protected] | (Equities) | [email protected] |
| Ralf Marinoni | +49 (0)69 -977 8456- 17 | Manuel Martin | +49 (0)69 -977 8456- 16 |
| (Equities) | [email protected] | (Equities) | [email protected] |
| Felix Parmantier | +49 (0)69 -977 8456- 22 | Nicolas Pütz | +49 (0)69 -977 8456- 24 |
| (Equities) | [email protected] | (Support) | [email protected] |
| Marcus Silbe | +49 (0)69 -977 8456- 14 | Simone Steymann | +49 (0)69 -977 8456- 25 |
| (Equities) | [email protected] | (Support) | [email protected] |
| Veysel Taze | +49 (0)69 -977 8456- 18 | Ivo Višić | +49 (0)69 -977 8456- 19 |
| (Equities) | [email protected] | (Equities) | [email protected] |
| Sergey Weinberg (Corporate Credit) |
+49 (0)69 -977 8456- 20 [email protected] |
Institutional Sales
Schillerstrasse 27 – 29 60313 Frankfurt am Main
Phone: +49 (0)69 – 9 20 54-400
| Klaus Korzilius | +49 (0)69 -9 20 54-114 | Stefan Krewinkel | +49 (0)69 -9 20 54-118 |
|---|---|---|---|
| (Benelux, Germany) | [email protected] | (Sales Trading, Germany, UK) | [email protected] |
| Bruno de Lencquesaing | +49 (0)69 -9 20 54-116 | Nico Gesthüsen | +49 (0)69 -9 20 54-115 |
| (Benelux, France) | [email protected] | (Germany) | [email protected] |
| Dr. James Jackson | +49 (0)69 -9 20 54-113 | Claudia Jurewecz | +49 (0)69 -9 20 54-106 |
| (UK) | [email protected] | (Germany) | [email protected] |
| Markus Laifle | +49 (0)69 -9 20 54-120 | Michael Laufenberg | +49 (0)69 -9 20 54-112 |
| (Sales Trading, Execution) | [email protected] | (Germany) | [email protected] |
| Angela Leser | +49 (0)69 -9 20 54-111 | Rasmus Mac Donald-Thomé | +49 (0)69 -9 20 54-119 |
| (Germany) | [email protected] | (Scandinavia) | Rasmus.MacDonald-Thomé@cbseydler.com |
| Mirella Mancuso | +49 (0)69 -9 20 54-107 | Carsten Pfersdorf | +49 (0)69 -9 20 54-168 |
| (Sales Support) | [email protected] | (Sales Trading, Execution) | [email protected] |
| Carsten Schlegel | +49 (0)69 -9 20 54-137 | Christopher Seedorf | +49 (0)69 -9 20 54-110 |
| (UK, Ireland) | [email protected] | (Sales Support) | [email protected] |
(UK) [email protected] (Benelux) [email protected]
Holger Schmidt +49 (0)69 -9 20 54-103 Bas-Jan Walhof +49 (0)69 -9 20 54-105
Disclaimer and statement according to § 34b German Securities Trading Act ("Wertpapierhandelsgesetz") in combination with the provisions on financial analysis ("Finanzanalyseverordnung" FinAnV)
This report has been prepared independently of the company analysed by Close Brothers Seydler Research AG and/ or its cooperation partners and the analyst(s) mentioned on the front page (hereafter all are jointly and/or individually called the 'author'). None of Close Brothers Seydler Research AG, Close Brothers Seydler Bank AG or its cooperation partners, the Company or its shareholders has independently verified any of the information given in this document.
Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a security analysis to point out possible conflicts of interest with respect to the company that is the subject of the analysis.
Close Brothers Seydler Research AG is a majority owned subsidiary of Close Brothers Seydler Bank AG (hereafter ´CBS´). However, Close Brothers Seydler Research AG (hereafter ´CBSR´) provides its research work independent from CBS. CBS is offering a wide range of Services not only including investment banking services and liquidity providing services (designated sponsoring). CBS or CBSR may possess relations to the covered companies as follows (additional information and disclosures will be made available upon request):
- a. CBS holds more than 5% interest in the capital stock of the company that is subject of the analysis.
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In this report, the following conflicts of interests are given at the time, when the report has been published: d, f
CBS and/or its employees or clients may take positions in, and may make purchases and/ or sales as principal or agent in the securities or related financial instruments discussed in this analysis. CBS may provide investment banking, consulting, and/ or other services to and/ or serve as directors of the companies referred to in this analysis. No part of the authors compensation was, is or will be directly or indirectly related to the recommendations or views expressed.
Recommendation System:
Close Brothers Seydler Research AG uses a 3-level absolute share rating system. The ratings pertain to a time horizon of up to 12 months:
BUY: The expected performance of the share price is above +10%. HOLD: The expected performance of the share price is between 0% and +10%. SELL: The expected performance of the share price is below 0%.
Recommendation history over the last 12 months for the company analysed in this report:
| Date | Recommendation | Price at change date | Price target |
|---|---|---|---|
| 08 August 2013 | BUY (Company Update) | EUR 2.59 | EUR 3.90 |
| 08 July 2013 | BUY (Company Update) | EUR 2.49 | EUR 3.90 |
| 05 June 2013 | BUY (Company Update) | EUR 2.75 | EUR 3.90 |
| 26 March 2013 | BUY (Company Update) | EUR 2.36 | EUR 3.90 |
| 18 December 2012 | BUY (Company Update) | EUR 2.73 | EUR 3.90 |
|---|---|---|---|
| 08 November 2012 | BUY (Company Update) | EUR 2.82 | EUR 3.90 |
| 26 October 2012 | BUY (Company Update) | EUR 2.69 | EUR 3.90 |
| 28 September 2012 | BUY (Company Update) | EUR 2.71 | EUR 3.90 |
| 11 May 2012 | BUY (Company Update) | EUR 2.37 | EUR 3.70 |
| 20 September 2012 | BUY (Company Update) | EUR 2.67 | EUR 3.90 |
| 08 August 2012 | BUY (Company Update) | EUR 2.69 | EUR 3.80 |
Risk-scaling System:
Close Brothers Seydler Research AG uses a 3-level risk-scaling system. The ratings pertain to a time horizon of up to 12 months:
LOW: The volatility is expected to be lower than the volatility of the benchmark MEDIUM: The volatility is expected to be equal to the volatility of the benchmark HIGH: The volatility is expected to be higher than the volatility of the benchmark
The following valuation methods are used when valuing companies: Multiplier models (price/earnings, price/cash flow, price/book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer group comparisons, historical valuation approaches, discounting models (DCF, DDM), break-up value approaches or asset valuation approaches. The valuation models are dependent upon macroeconomic measures such as interest, currencies, raw materials and assumptions concerning the economy. In addition, market moods influence the valuation of companies. The figures taken from the income statement, the cash flow statement and the balance sheet upon which the evaluation of companies is based are estimates referring to given dates and therefore subject to risks. These may change at any time without prior notice.
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