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Evotec SE — Earnings Release 2014
May 14, 2014
151_rns_2014-05-14_7a35870b-1182-4409-bbb0-b6449a7f4396.pdf
Earnings Release
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Evotec AG
^< Recommendation: BUY(BUY)
Risk: Medium (Medium) Price Target: EUR 4.50 (4.50)
1Q/14 results Solid performance in EVT Execute
- Evotec released 1Q/14 results. Revenues in 1Q/14 increased to EUR 17.6m (PY: EUR 17.1 m; YoY +3%; FX-adj. +5%). In terms of segment breakdown, revenues in the EVT Execute and EVT Innovate segments in 1Q/14 amounted to EUR 19.2m and EUR 2.5m, respectively. As expected, due to the lack of milestone payments, EBITDA in 1Q/14 was negative at EUR -1.3m (PY: EUR -0.4m).
- The company has further strengthened its partnership base having concluded collaboration with Debiopharm Group (oncology), integrated pain alliance with Convergence and new collaboration with Eternygen (metabolic diseases). Also worth mentioning the first milestone in Roche biomarker collaboration.
- An intensive investment strategy in EVT Innovate was reflected in a significantly increased number of R&D projects in 1Q/14.
- We also positively assess that Janssen will resume the development of EVT 100 programme. However, the decision of Janssen to phase out beta cell regeneration program for strategic reasons was a setback. Nevertheless, Evotec and Harvard will continue to invest into CureBeta alliance and try to identify alternative partners.
- In terms of newsflow, we anticipate the read out of a second pivotal phase III trial with DiaPep277 (end of 2014/ beginning 2015). Results from Phase IIb trial with EVT302 (Roche) in Alzheimer's disease are expected in 2015.
- The management has confirmed its outlook for the current year. Revenues (excl. milestones, upfronts and licenses) are expected to see high singledigit percentage growth. Group EBITDA before changes in contingent considerations is expected to be positive and at a similar level to 2013.
- We leave PT at EUR 4.50 unchanged and confirm our BUY recommendation.
| Y/E 31.12., EUR m | 2009 | 2010 | 2011 | 2012 | 2013 | 2014E | 2015E |
|---|---|---|---|---|---|---|---|
| Revenues | 42,7 | 55,3 | 80,1 | 87,3 | 85,9 | 93,0 | 101,2 |
| Gross profit | 18,4 | 24,3 | 35,0 | 31,0 | 31,2 | 35,6 | 39,9 |
| EBITDA | -38,2 | 6,5 | 11,4 | 5,6 | -12,2 | 12,5 | 14,4 |
| EBITDA adj. | n.a. | n.a. | n.a. | 9,4 | 12,9 | 12,5 | 14,4 |
| Operating result | -42,3 | 1,7 | 5,2 | -3,2 | -21,4 | 4,1 | 5,9 |
| Operating result adj. | -24,5 | 1,7 | 5,8 | 1,4 | 1,2 | 4,1 | 5,9 |
| Net income/loss | -45,5 | 3,0 | 6,7 | 2,5 | -25,4 | 2,5 | 4,1 |
| EPS | -0,43 | 0,03 | 0,06 | 0,02 | -0,21 | 0,02 | 0,03 |
| Gross margin | 43,2% | 44,1% | 43,7% | 35,6% | 36,3% | 38,2% | 39,5% |
| EBITDA margin | -89,6% | 11,7% | 14,2% | 6,4% | -14,2% | 13,5% | 14,2% |
| EBITDA margin (adj.) | n.a. | n.a. | n.a. | 10,8% | 15,0% | 13,5% | 14,2% |
| Operating margin | -99,1% | 3,1% | 6,5% | -3,7% | -24,8% | 4,4% | 5,8% |
| EV/Sales | 8,2 | 6,3 | 4,4 | 4,0 | 4,1 | 3,8 | 3,4 |
Source: Evotec AG; CBS Research AG
14 May 2014
| actual | new | old | new | old | ||
|---|---|---|---|---|---|---|
| Revenue | - | 85.9 | - | 93.0 | - | 101.2 |
| EBITDA | - | -12.2 | - | 12.5 | - | 14.4 |
| EPS | - | -0.21 | - | 0.02 | - | 0.03 |
| www.evotec.com WKN: 566480 Reuters: EVTG.DE |
DE0005664809 | Sector: Biotechnology Bloomberg: EVT GY |
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): | 3.64 |
| Shares outstanding (m): | 130.13 |
| Market capitalisation (EURm): | 473.56 |
| Enterprise value (EURm): | 370.55 |
| Ø daily trading volume (3 m., no. of shares): | 556,009 |
Performance data:
| High 52 weeks (EUR): Low 52 weeks (EUR): |
5.08 2.43 |
|
|---|---|---|
| Absolute performance (12 months): | 0.29 | |
| Relative performance: (vs. TecDAX) | ||
| 1 month | -6.4% | |
| 3 months | -11.7% | |
| 6 months | -22.4% | |
| 12 months | 0.0% | |
| Shareholders: | ||
| Roland Oetker/ROI | <15% | |
| TVM V Life Science Ventures | <10% | |
| BVF | <10% | |
| DAWN | >3% | |
| Free float | >65% | |
| Financial calendar: | ||
| 2Q/14 figures | 17 June 2014 | |
| Author | Igor Kim (Analyst) | |
| 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.
| Pipeline overview | |||||
|---|---|---|---|---|---|
| Diabetes | |||||
| Molecules | Indication (mechanism) | Partner | Status | Next milestone | Commercials |
| DiaPep277 | Type 1 diabetes (immunomodulation) |
TEVA/ Andromeda |
2nd Phase III |
Final Phase III data | ~EUR 40m milestones, royalties; potential market ~EUR 500m |
| EVT770 | Type 1 and 2 diabetes (beta cell regeneration) |
MedImmune/ AstraZeneca |
Lead | Phase I | EUR 5m upfront, high margin research payments EUR 254m milestones/ |
| ALM | Type 1 and 2 diabetes (beta cell regeneration) |
MedImmune/ AstraZeneca |
Discovery | Phase I | EUR 2m upfront; High margin research payments EUR 183m milestones/ |
| EVT070 | Type 1 and 2 diabetes (beta cell regeneration) |
Boehringer Ingelheim |
Lead | PDC | EUR 7m upfront; High margin research payments EUR 237m milestones, |
| CureBeta | Type 1 and 2 diabetes (beta cell regeneration) |
Harvard | Target ID/ validation |
Validated Target | TBD |
| CureNephron | Chronic Kidney Disease | Harvard/ B&W Hospital |
Discovery | Pharma partnership | TBD |
| TargetEEM | Type 1 and 2 diabetes (enteroendocrine mechanisms) |
Harvard | Discovery | Pharma partnership | TBD |
| Various | Kidney Diseases | AstraZeneca Discovery | ND | Undisclosed upfront, high margin research payments |
|
| Neurology | |||||
| Molecules | Indication (mechanism) | Partner | Status | Next milestone | Commercials |
| EVT302 (MAO | Alzheimer's | Roche | Phase IIb | Phase II completion, Phase | EUR 10m upfront; USD 820m |
| B) EVT100 |
Disease (MAO-B) Depression (NR2B) |
Janssen | Pre-clinical | III start Confirmation of pre-clinical |
milestones, significant royalties EUR 2m upfront; USD 173m |
| series | study; Phase I/II start | milestones, significant royalties | |||
| EVT201 | Insomnia | Jingxin | Phase II | Start clinical trials | Milestones, royalties |
| Various | Huntington Disease |
CHDI | Target validation |
ND | Research payments |
| Not disclosed | Neurodegenration | Genentech | Pre-clinical | ND | Research payments |
| TargetAD | Alzheimer's Disease (Novel MoA) |
J&J Innovation |
Discovery | ND | Up to USD 10m research payments, ~USD 125-145m milestones, royalties |
| TargetASIC | Multiple sclerosis | BMBF/ undisclosed |
Lead generation |
Lead status | Co-funded |
| CureMN | Amyothropic Lateral Sclerosis (ALS) |
Harvard | ND | Pharma Partnership | TBD |
| Various | CNS/ Multiple Sclerosis | NEU2/ Bionamics |
Pre-clinical/ Various |
ND | ND |
| Pain and inflammation | |||||
| Molecules | Indication (mechanism) | Partner | Status | Next milestone | Commercials |
| EVT401 | Inflammation | Conba Group Phase I/II | Phase II start | ~EUR 60m milestones; Royalties | |
| Various | (P2X7 inhibiton) 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 | Preclinical | Milestones and royalties |
| Undisclosed | Various/Pain | Novartis | Pre-clinical | Successful PoC | Research payments; Milestones; Royalties |
| Undisclosed | Pain | Convergnece Lead | generation | Pre-clinical candidate |
Integrated pain alliance, milestones and significant royalty ow nership |
| Oncology | |||||
| Molecules | Indication (mechanism) | Partner | Status | Next milestone | Commercials |
| Somatropim (DG3173) |
Acromegaly / NET | Aspireo | Phase IIa | Pharma partnership | Consulting fees; Royalties |
| ND | Oncology | Boehringer Ingelheim |
Phase I | ND | Research payments; Milestones; Royalties |
| ND/Biomarker platform |
Oncology | Roche | Phase I | ND | Milestones |
| ND | Oncology | Boehringer Ingelheim |
Preclinical | ND | Research payments; Milestones; Royalties |
| Target ImmuniT |
Various (immunotherapy) | Apeiron | Pre-clinical | Pharma partnership | ND |
| TargetKDM | E Various (Epigenetic targets) p |
Belfer Institute |
Pre-clinical | Pharma partnership | ND |
| TargetDBR | E Glioblastoma (brain tumour) p |
Yale University |
Hit to lead | Pharma partnership | ND |
| TargetCanMet E | Various (Epigenetic targets) p |
Debiopharm Group |
Hit to lead | ND | Research payments; Milestones; Royalties |
| Source: Evotec AG; CBS Research AG |
Income statement
| IFRS EUR 1,000 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014E | 2015E | 2016E |
|---|---|---|---|---|---|---|---|---|
| Total revenues YoY grow th |
42,683 7.8% |
55,262 29.5% |
80,128 45.0% |
87,265 8.9% |
85,938 -1.5% |
93,012 8.2% |
101,171 8.8% |
110,047 8.8% |
| Cost of revenue as % of sales |
-24,262 -56.8% |
-30,916 -55.9% |
-45,143 -56.3% |
-56,242 -64.4% |
-54,715 -63.7% |
-57,442 -61.8% |
-61,231 -60.5% |
-65,272 -59.3% |
| Gross profit as % of sales |
18,421 43.2% |
24,346 44.1% |
34,985 43.7% |
31,023 35.6% |
31,223 36.3% |
35,570 38.2% |
39,939 39.5% |
44,776 40.7% |
| R&D expenses as % of sales |
-20,947 -49.1% |
-6,116 -11.1% |
-8,437 -10.5% |
-8,340 -9.6% |
-9,664 -11.2% |
-11,000 -11.8% |
-11,965 -11.8% |
-13,015 -11.8% |
| SG&A expenses as % of sales |
-16,695 -39.1% |
-15,956 -28.9% |
-15,760 -19.7% |
-16,301 -18.7% |
-16,597 -19.3% |
-17,963 -19.3% |
-19,539 -19.3% |
-21,253 -19.3% |
| Other operating expenses as % of sales |
-23,078 -54.1% |
-559 -1.0% |
-5,581 -7.0% |
-9,584 -11.0% |
-26,313 -30.6% |
-2,519 -2.7% |
-2,584 -2.6% |
-2,461 -2.2% |
| EBITDA as % of sales |
-38,234 -89.6% |
6,480 11.7% |
11,414 14.2% |
5,614 6.4% |
-12,186 -14.2% |
12,540 13.5% |
14,384 14.2% |
16,521 15.0% |
| EBITDA adj. as % of sales |
n.a. n.a. |
n.a. n.a. |
n.a. n.a. |
9,400 10.8% |
12,861 15.0% |
12,540 13.5% |
14,384 14.2% |
16,521 15.0% |
| Operating result | -42,299 | 1,715 | 5,207 | -3,202 | -21,351 | 4,088 | 5,852 | 8,047 |
| as % of sales | -99.1% | 3.1% | 6.5% | -3.7% | -24.8% | 4.4% | 5.8% | 7.3% |
| Operating result adj. | -24,461 | 1,715 | 5,764 | 1,401 | 1,229 | 4,088 | 5,852 | 1,463 |
| as % of sales | -57.3% | 3.1% | 7.2% | 1.6% | 1.4% | 4.4% | 5.8% | 1.3% |
| Net financial results | -2,520 | 2,152 | 49 | -1,812 | -2,297 | -1,258 | -1,258 | -1,258 |
| EBT | -44,819 | 3,867 | 5,256 | -5,014 | -23,648 | 2,829 | 4,593 | 6,789 |
| as % of sales | -105.0% | 7.0% | 6.6% | -5.7% | -27.5% | 3.0% | 4.5% | 6.2% |
| Income taxes | -678 | -882 | 1,395 | 7,492 | -1,785 | -283 | -459 | -679 |
| as % of EBT | 1.5% | -22.8% | 26.5% | -149.4% | 7.5% | -10.0% | -10.0% | -10.0% |
| Net income/loss | -45,497 | 2,985 | 6,651 | 2,478 | -25,433 | 2,546 | 4,134 | 6,110 |
| as % of sales | -106.6% | 5.4% | 8.3% | 2.8% | -29.6% | 2.7% | 4.1% | 5.6% |
| Basic EPS (EUR) | -0.43 | 0.03 | 0.06 | 0.02 | -0.21 | 0.02 | 0.03 | 0.05 |
Source: Evotec AG; CBS Research AG
Research
Schillerstrasse 27 - 29 60313 Frankfurt am Main
Phone: +49 (0)69 – 977 8456-0
| Roger Peeters | +49 (0)69 - 977 8456- 12 | ||
|---|---|---|---|
| Member of the Board | [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 |
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| (Equities) | [email protected] | (Equities) | [email protected] |
| Nicolas Pütz | +49 (0)69 - 977 8456- 24 | Marcus Silbe | +49 (0)69 - 977 8456- 14 |
| (Support) | [email protected] | (Equities) | [email protected] |
| Simone Steymann | +49 (0)69 - 977 8456- 25 | Veysel Taze | +49 (0)69 - 977 8456- 18 |
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| Ivo Višić | +49 (0)69 - 977 8456- 19 | Sergey Weinberg | +49 (0)69 - 977 8456- 20 |
| (Equities) | [email protected] | (Corporate Credit) | [email protected] |
Institutional Sales
Schillerstrasse 27 – 29 60313 Frankfurt am Main
Phone: +49 (0)69 – 9 20 54-400
| +49 (0)69 -9 20 54-104 | Klaus Korzilius | +49 (0)69 -9 20 54-114 |
|---|---|---|
| [email protected] | ||
| +49 (0)69 -9 20 54-118 | ||
| [email protected] | (Head of Sales Execution) | [email protected] |
| +49 (0)69 -9 20 54-113 | ||
| [email protected] | ||
| +49 (0)69 -9 20 54-106 | Markus Laifle | +49 (0)69 -9 20 54-120 |
| (Germany, Austria, Switzerland) [email protected] | (Sales Execution) | [email protected] |
| +49 (0)69 -9 20 54-107 | ||
| (Germany, Austria, Switzerland) [email protected] | (Sales Support) | [email protected] |
| +49 (0)69 -9 20 54-168 | ||
| [email protected] | (Sales Execution) | [email protected] |
| +49 (0)69 -9 20 54-110 | ||
| [email protected] | (Switzerland) | [email protected] |
| [email protected] +49 (0)69 -9 20 54-119 +49 (0)69 -9 20 54-116 [email protected] +49 (0)69 -9 20 54-111 +49 (0)69 -9 20 54-115 +49 (0)69 -9 20 54-137 +49 (0)69 -9 20 54-105 |
(Benelux, Scandinavia) Stefan Krewinkel Dr. James Jackson (UK, Ireland) Mirella Mancuso Carsten Pfersdorf Christopher Seedorf |
(Benelux, Scandinavia) [email protected]
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.
- b. CBS was a participant in the management of a (co)consortium in a selling agent function for the issuance of financial instruments, which themselves or their issuer is the subject of this financial analysis within the last twelve months.
- c. CBS has provided investment banking and/or consulting services during the last 12 months for the company analysed for which compensation has been or will be paid for.
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- g. CBS has a significant financial interest in relation to the company that is subject of this analysis.
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:
CBSR 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%.
This rating system is only a guideline. Therefore, deviations from this system may apply.
Recommendation history over the last 12 months for the company analysed in this report:
| Date | Recommendation | Price at change date | Price target |
|---|---|---|---|
| 14 May 2014 | BUY (Company Update) | EUR 3.64 | EUR 4.50 |
| 02 April 2014 | BUY (Company Update) | EUR 3.88 | EUR 4.50 |
| 26 March 2014 | BUY (Company Update) | EUR 3.83 | EUR 4.30 |
| 13 December 2013 | BUY (Company Update) | EUR 3.94 | EUR 4.30 |
| 13 November 2013 | BUY (Company Update) | EUR 4.06 | EUR 4.50 |
|---|---|---|---|
| 28 October 2013 | BUY (Company Update) | EUR 3.95 | EUR 4.50 |
| 15 October 2013 | BUY (Company Update) | EUR 3.40 | EUR 4.00 |
| 02 September 2013 | BUY (Company Update) | EUR 2.62 | EUR 4.00 |
| 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 |
Risk-scaling System:
CBSR 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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