Evotec SE — Investor Presentation 2005

Jun 1, 2005

Evotec OAI AG

German Corporate Conference, 1 June 2005, Frankfurt

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Agenda

• 01 Evotec OAI Overview
• 02 Building a Proprietary Pipeline
• 03 Contract Research
• 04 Q1 2005 Results
• 05 Strategic Summary and Outlook

Overview of Evotec

• zExcellence in drug discovery and development
  • Industrialised platform from target to proof-of-concept
  • Integrated discovery and development services
  • CNS pipeline approaching the clinic:

zCritical mass

• 625 employees
• Revenues 2004: EUR 73 m
• z Serving > 120 customers
• z FSE Prime Segment

Evotec OAI today

E t o e c v
D i d s c o v e r y a n D l t e e o p m e n v S i ( S ) D D e r c e s v	D i s c o v e r y P r o g r a m s i i i ( ) D D P D s o n v	T l d o o s a n T h l i e c n o o g e s ( E T h l i ) t o e c e c n o o g e s v
	C l N t e n r a e r o s • v u S t y s e m M b l i D i t e a o c s e a s e •	I i t t t n s r u m e n a o n • S W • D i b l s p o s a e s •
R 0 4 e v e n u e s E U R 5 4 1 m	R 0 4 e v e n u e s E U R 0 9 m	R 0 4 e v e n u e s E U R 1 7 7 m

Focus on 3 major value drivers

• z Development of a sustainable CNS-related pipeline
• z Excellence in customer relations
• z Cash generation from Services to support proprietary research

Agenda

• 01 Evotec OAI Overview
• 02 Building a Proprietary Pipeline
• 03 Contract Research
• 04 Q1 Results
• 05 Strategic Summary and Outlook

Building a sustainable CNS related pipeline, solid financial position

• z Acquisition of Evotec Neurosciences (ENS)
  • Share-for-share transaction
  • Pre-clinical portfolio, 1st compound to reach clinic in 2005
  • €20m of cash
• z Equity financing
  • Pre-emption rights of existing shareholders
  • Committed subscriptions to raise €27m

Total funds available: > €60m

Pharma and biotech pressure is our opportunity

Drug discovery pipeline of the combined entity

NMDA receptor antagonists: Compelling science and market potential

• z Extensive studies indic ate role for NMD A antagonists in:
  • Neuropathic pain
  • Parkinson's disease
  • Alzheimer's disease

• z Memantine (non-selective )

• Treatment of moderate-to-severe AD

• Block buster potential (strong sales in US: US\$ 100m in Q4 2004, EU strong growth)
• z Low therapeutic window of non-selective NMDA antagonists due to mechanism related side-effects

02 Building a Proprietary Pipeline

NMDA receptor antagonists: Limitations of non selectivity

• z Block all NMDA receptors in all brain areas

• z Therapeutic window is small (2x recommended dose Æ psychotic effects)

• zMaximum efficacy compromised by dose limitations due to side effects

• zHigh doses impair memory and learning processes

ENS 101: A selective NMDA NR2B antagonist

• zNR2B subunit has a distribution in brain restricted to areas important in:
  • Alzheimer's disease (cortex, hippocampus)
  • Parkinson's disease (basal ganglia)
  • Pain sensation (dorsal horn, thalamus, cortex)

ENS 101: Antagonism of NMDA receptor NR2B subtype limits side effects and increases efficacy

• z Side effects and beneficial effects are separated

• zTherapeutic window is high (>10x preclinically)

• zCan dose to get maximum efficacy

• zHigh doses do not impair memory and learning processes
• z May actually improve memory and learning processes

Drug discovery pipeline of the combined entity

Milestones

Clear goals to build a sustainable CNS pipeline

• z First product in the clinic 12/2005
• z Two further clinical candidates by 2006/2007
• z First product at proof-of-concept by 2008
• z Future acquisitions of companies and / or products to broaden pipeline

Agenda

• 01 Evotec OAI Overview
• 02 Building a Proprietary Pipeline
• 03 Contract Research
• 04 Q1 Results
• 05 Strategic Summary and Outlook

Evotec's differentiating strengths (1) : Fully integrated R&D solutions from Target to Clinic

*PDC = Preclinical Development Candidate; IND = Investigational New Drug; POCD = Proof of Concept Drug

** typically done by customer or subcontracted

Evotec's differentiating strengths (2) : Critical mass in scientific skills and facilities

• z500+ experienced scientific/technical staff
• zHigh quality research facilities:
  • Laboratories: 27 biology labs 5 cell-culture labs >35 chemistry labs 8 analytical labs X-ray crystallography
  • World-class screening factory: 3 uHTS platforms for biochemical and cellular assays
  • Production:
    • 2 cGMP kilo laboratories 2 pilot plants, with 8 vessels (FDA and European standards)
  • Cutting-edge analytical equipment

Page 19

Evotec's differentiating strengths (3) : Excellent customer network, outstanding references

Strategic alliance with Roche strengthens discovery business

• z Long-standing relationship
  • Initiated in 2001 in chemical library synthesis

• z Support of all 4 major R&D sites in the design of high quality chemical compounds for Roche's medicinal chemistry programmes

  • Extended for another year

• z Extension of additional medicinal chemistry contract on a high profile oncology compound signed

• z Extension of substantial hERG testing agreement signed
• z In-licensing of CNS compounds by Evotec Neurosciences

Boehringer Ingelheim collaboration: Higher value outcome-based deal

Strong relative performance Competitor benchmark

*1 EUR = 1.13 \$ in 2003, 1 EUR = 1.24\$ in 2004

*** incl. Organichem pro forma Page 22

Margin impacted by currency

DDS Gross Margins

Milestones

Clear goals for Discovery and Development Services

• z Focus on cash generation
• z Strong commitment to cost reductions and efficiency gains
  • Reduction of headcount in IT, business development and operational management
  • Further reductions in G&A in progress
• zEmphasis on higher value-added contract research
  • More outcome-based collaborations (milestones, royalties)
  • Focus on gross margin rather than revenue maximisation
  • Increase consultancy role to biotech companies

Agenda

• 01 Evotec OAI Overview
• 02 Building a Proprietary Pipeline
• 03 Contract Research
• 04 Q 1 Results
• 05 Strategic Summary and Outlook

Group revenues up 10%, Services up 36%

Revenues in EUR million

04 Q1 Results

Operating loss cut in half, Service Business at break-even

Operating Result before amortisation in EUR million

Agenda

• 01 Evotec OAI Overview
• 02 Building a Proprietary Pipeline
• 03 Contract Research
• 04 Q1 Results
• 05 Strategic Summary and Outlook

Better order book than a year ago

Sales and order book status as of April

in EUR million

• z Discovery: challenging markets, stabilising
• z Development: strong momentum

2005 guidance

• z Group revenues to grow by up to 5%
• z Discovery Services (DDS)
  • Revenues: no change over last year (2004: EUR 54m)
  • Operating Income before amortisation approx. break-even
    • • Improved capacity utilisation
    • • Positive results from restructuring programme (R&D, SG&A)
    • • Significant improvement over 2004 (2004: EUR -7.8m)
• zGroup R&D expenses to increase significantly
  • CNS drug development strategy requires higher R&D efforts
  • Minimum of EUR 12-14m for internal drug discovery and development

Evotec OAI in the future: 3 year plan

• z Clear focus on building a sustainable CNS pipeline
  • First product in the clinic during 2005
  • Two further clinical candidates by 2006/2007
  • First product to proof-of-concept by 2008
  • Future acquisitions of companies and / or products to broaden pipeline
• z Margin and cash driven contract research

• z Strong financial position

• Approximately €60 million cash available

• Supplemented by cash flow from contract research
• Early out-licensing to generate additional cash

Taking the lead

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