Evotec SE — Investor Presentation 2016

Mar 22, 2016

Evotec FY 2015 & Outlook 2016 – Excellent execution meets first-in-class innovation

Forward-looking statements

Information set forth in this presentation contains forward-looking statements, which involve a number of risks and uncertainties. The forward-looking statements contained herein represent the judgement of Evotec as of the date of this presentation. Such forward-looking statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

Welcome

The Management Board

Agenda

Summary 2015/2016 & Strategy update

EVT Execute

EVT Innovate

Financial performance 2015

Outlook & Guidance 2016

Strong operations and partnering success

Highlights & lowlights 2015

EVT Execute

• Important new and extended alliances (e.g. UCB, CHDI, Spero, Padlock…)
• Important milestone achievements (e.g. Bayer)
• Successful integration of new offerings in France and USA
• Successful upgrade of platforms and know-how to further expand global leadership

EVT Innovate

• Partnering of four significant Cure X/ Target X initiatives
• Portfolio of Cure X/ Target X initiatives significantly enhanced
• Important milestones in TargetAD collaboration

Corporate

• Major multicomponent strategic collaboration with Sanofi
• Expansion of global footprint of Evotec in USA and France
• Spin-off and "Series A" funding of Topas Therapeutics (22 March 2016)

Lowlights

• Legacy pipeline did not deliver:
• EVT302 in AD1)
• EVT100 in TRD2)
• DiaPep277® in T1D3)
• Some milestone delays

1) Alzheimer's Disease 2) Treatment-resistant depression 3) Type 1 Diabetes

Strong financial performance

Financial highlights of FY 2015 – Selected KPIs

in € m

2014 2015

5

PAGE

1) Adjusted for changes in contingent consideration as well as for one-time effects with regards to the bargain purchase resulting from the acquisition of Evotec (France) SAS in 2015 and of Bionamics GmbH in 2014 and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result

2) Driven by the one-time effect of the income from bargain purchase resulting from the acquisition of EVT (France)

3) Excluding M&A and related payments (Earn-out Euprotec)

Globally leading service company and first-in-class partnered product pipeline

Strategy overview

in € m

Strong growth and important R&D triggers expected in 2016

Guidance 2016

KPIs	Guidance 2016	Actual 2015
Group revenues1)	More than 15% growth	€ 115.4 m
EBITDA2) Adjusted Group	Positive and significantly improved compared to prior year	€ 8.7 m
R&D expenses	Approx. € 20 m	€ 18.3 m
Liquidity3)	Similar level compared to 2015	€ 134.5 m
Capex investments	Up to € 10 m	€ 11.2 m

1) Excluding milestones, upfronts and licences

3) Excluding any potential cash outflow for M&A or similar transactions

²⁾ Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non operating result

Agenda

Summary 2015/2016 & Strategy update

EVT Execute

EVT Innovate

Financial performance 2015

Outlook & Guidance 2016

Further improved global leadership position

EVT Execute – Major achievements 2015

• New alliances initiated and important collaborations extended
• Successful Evotec (France) integration
• UCB compound management alliance in Toulouse
• Continued strong screening pipeline
• Increased number of integrated projects with US biotechs (e.g. Padlock, Navitor, Spero, …)

Sharp revenue growth and strong EBITDA

EVT Execute – Key performance indicators FY 2015

1) Including intersegment revenues

2) Adjusted for changes in contingent considerations

Very well balanced customer mix

EVT Execute – Selected customer and revenue metrics

Evolving as trusted partner of foundations

Foundations & Evotec

Indication (mechanism)	Partner	Timeline
Parkinson's Disease	Michael J. Fox Foundation	Start 2016
Huntington's Disease	CHDI Foundation	Extended through to 2018
Alzheimer's Disease	Gladstone Institutes	Start 2015
Juvenile Batten Disease	Beyond Batten Disease	Start 2015
Leukemia	The Leukemia & Lymphoma Society	Start 2013
Muscular dystrophies	Jain Foundation	Start 2013
Malaria	Medicines for Malaria Venture (MMV)	Start 2014

Disease foundations are increasingly driving science and they are turning to companies like Evotec to pursue novel drug discovery pathways1)

Integration of Evotec (France) is fully on track

Evotec (France) – Initial achievements & outlook

Organisation, leadership and systems integration completed

• Strong leadership team in place
• Approx. 40 new hires completed
• All systems and processes for external business execution established

Sanofi cooperation performing very well

EVT Execute and EVT Innovate partnerships with Sanofi delivering

New business and further opportunities on horizon

• UCB compound management outsourcing initiated
• Significant discussions ongoing with EU/US Pharma & biotech

Outlook 2016

EVT Execute – Expected key milestones 2016

• New long-term deals with large and mid-sized Pharma
• Expansion of foundations and biotech network in USA/EU
• New performance-based integrated technology/disease alliance
• Milestones from existing alliances

Agenda

Summary 2015/2016 & Strategy update

EVT Execute

EVT Innovate

Financial performance 2015

Outlook & Guidance 2016

Significant expertise established

EVT Innovate – Major achievements 2015

Strong revenue growth

EVT Innovate – Key performance indicators FY 2015

Robust portfolio of product opportunities, despite set-backs in "legacy pipeline"

Partnership portfolio

	Molecule	Therapeutic Area/Indication	Partner	Discovery	Pre-clinical	Phase I	Phase II	Phase III
	EVT3021)	CNS – Alzheimer's disease
al	EVT201	CNS – Insomnia
c	EVT1001)	CNS – Depression
ni	EVT401	Immunology & Inflammation
Cli	ND2)	Oncology
	ND2)	Oncology
	ND2)	CNS – Pain
	ND2)	Oncology
al	Various	Women's health – Endometriosis
c ni	EVT770	Metabolic – Diabetes (type 2/1)
cli	ND2)	Respiratory
e-	ND2)	Immunology & Inflammation
Pr	EVT801	Oncology
	EVT701	Oncology
	EVT601	Oncology
	Various	Immunology & Inflammation
	Various	Metabolic – Diabetes (type 2/1)
	Various	Metabolic – Diabetes (type 2/1)
	Various	Nephrology
y	Various	Metabolic – Diabetes
er v	Various	CNS – Alzheimer's
o c	Various	Oncology – Immunotherapy
s	Various	Immunology & Inflammation – Tissue fibrosis
Di	Various	CNS – Multiple Sclerosis	NEU2
	Various	Metabolic – Diabetes	>5 further programmes
	Various	CNS	>5 further programmes
	Various	Oncology	>10 further programmes
	Various	CNS – Pain & Inflammation	>5 further programmes

1) Sembragiline/RO4602522 and EVT 100: Evotec will regain the licence rights and is currently assessing any potential business opportunities 2) Not disclosed

More than 10 projects primed for partnering

EVT Innovate – Cure X/Target X

2011	2012	2013	2014	2015	2016
CureBeta (Harvard Stem Cell Institute)	CureNephron (Harvard, BWH, USC, AstraZeneca) TargetASIC (BMBF/undisclosed Pharma partner) Somatoprim (Cortendo) TargetPicV (Haplogen) TargetFibrosis (Pfizer)	TargetImmuniT (Apeiron/Sanofi) TargetDBR (Yale) TargetMB (Second Genome) TargetPGB (Harvard) TargetKDM (Dana-Farber, Belfer) TargetIDX (Debiopharm) CureMN (Harvard) TargetEEM (Harvard) TargetAD (NBB/J&J)	TargetBCD (Sanofi) TargetDR (Internal) TargetATD (Internal) TargetFX (Internal) TargetKX (undisclosed) TargetCytokine (DRFZ/BMBF) Fraunhofer Initiative	TargetFRX (Internal) TargetNTR (Internal) TargetKras (OSU) Gladstone Institute Initiative	TargetaSN (MJJF) …

First-in-class approach for tolerance induction in autoimmune diseases

Topas Therapeutics: An Evotec spin-off company

• Topas Therapeutics GmbH is focused on the development of novel tolerizing particles for immune-mediated diseases using proprietary NdL® nanotechnology platform
• Use of nanoparticles to deliver selected antigenic peptides to the liver (Topas = Tolerizing particles)
• € 14 m Series A funding secured with VC consortium
• Pre-clinical development for multiple sclerosis has been initiated; Phase I to start in 2017; strong pipeline
• Evotec will remain the largest shareholder Bionamics

Outlook 2016

EVT Innovate – Expected key milestones 2016

• New clinical initiations, and good progress of clinical pipeline within partnerships
• Expansion of network of top-class academic alliances

Partnering of Cure X/Target X initiatives

Strong focus on iPSC (induced pluripotent stem cells) platform

Agenda

Summary 2015/2016 & Strategy update

EVT Execute

EVT Innovate

Financial performance 2015

Outlook & Guidance 2016

in € m

All elements of guidance achieved

Results and guidance in 2015

	2015	Latest guidance September 20151)	Initial guidance March 2015
Group revenues2)	+57%	Increase by approx. 45%	Increase more than 10%
R&D expenses	€ 18.3 m	€ 15-20 m	Broadly in-line with 2014 levels
EBITDA3)	€ 8.7 m	Positive	Positive and at a similar level to 2014
Capex investments	€ 11.2 m	Up to € 10 m	Up to € 7 m
Liquidity at year-end4)	€ 134.5 m	Well in excess of € 100 m	> € 90 m

1) Evotec has raised its revenue guidance published in Evotec's Annual Report 2014 three times in 2015. It was raised twice as a result of the Sanofi collaboration (on 24 March 2015 and 12 May 2015) and a third time on 15 September 2015 mainly due to the strong business performance of EVT Execute and accelerated growth in the EVT Innovate business .

²⁾ Excluding milestones, upfronts and licences

³⁾ Before changes in contingent considerations and income from bargain purchase

⁴⁾ Excluding M&A and related payments (Earn-out Euprotec)

Growth in top-line and profitability

Key financials FY 2015: Condensed income statement (IFRS)

in € m
	2014 Actual	2015 Actual	% vs. 2014
Revenues	89.5	127.7	+43%	 Base revenues increased
Gross margin	32.8%	29.8%		by € 42.0 m to € 115.4 m (2014: € 73.4 m)
 R&D expenses	(12.4)	(18.3)	+48%	 Impairment charges
 SG&A expenses	(18.0)	(25.2)	+40%	mainly for EVT100
 Amortisation of intangible assets	(2.5)	(2.9)	+16%	(€ 4.8 m)
 Impairment result, net	(8.5)	(7.2)	(15)%	 R&D and SG&A expenses increased due
 Other op. income bargain purchase	0.1	21.4	–	to Toulouse site as well as M&A and related
 Other op. income (expenses), net	5.5	5.9	+7%	costs
Operating income (loss)	(6.4)	11.6	–	 Adjusted Group
Adjusted EBITDA1)	7.7	8.7	+13%	EBITDA for 2015 is positive and increased
Net income (loss)	(7.0)	16.5	–	compared to 2014

¹⁾ Adjusted for changes in contingent consideration as well as for one-time effects with regards to the bargain purchase resulting from the acquisition of Evotec (France) SAS in 2015 and Bionamics GmbH in 2014

Revenues increased due to strong base business

Revenues & Gross margin

Very strong liquidity; continued strong equity ratio

Balance sheet overview

Investment focus on Cure X and Target X initiatives, higher overheads due to expansion of portfolio

R&D expenditure and SG&A overview

Both segments are delivering

Condensed income statement based on segments for 2015

	EVT Execute	EVT Innovate	Inter segment elimination	Not allocated	Evotec Group
Revenues	134.0	21.5	(27.7)	–	127.7	 Strong revenues
Gross margin	23.2%	54.0%			29.8%	contributions of € 134.0 m from EVT Execute
 R&D expenses	(0.5)	(22.4)	4.6	–	(18.3)	(third-party revenues:
 SG&A expenses	(19.3)	(5.9)	–	–	(25.2)	€ 106.2 m)
 Amortisation of intangible assets	(2.5)	(0.4)	–	–	(2.9)	 R&D: Increased invest ments in Cure X/Target X initiatives and oncology projects in Toulouse within
 Impairment result, net	(1.2)	(6.0)	–	–	(7.2)
 Other op. income bargain purchase	–	–	–	21.4	21.4	EVT Innovate
 Other op. income (expenses), net	3.1	2.8	–	–	5.9	 Strong EBITDA of EVT Execute of € 23.8 m
Operating income (loss)	10.7	(20.5)	–	21.4	11.6
Adjusted EBITDA1)	23.8	(15.1)	–	–	8.7

¹⁾ Adjusted for changes in contingent considerations; Group EBITDA was adjusted for changes in contingent consideration as well as for one-time effects with regards to the bargain purchase resulting from the acquisition of Evotec (France) SAS in 2015

Strong EBITDA expected

EVT Execute – Performance outlook

Clear investment strategy in first-in-class assets

EVT Innovate – Performance outlook

Q4 was the strongest quarter of the year

Q4 2015 results

in € m
	Q4 2014 Actual	Q4 2015 Actual	% vs. 2014
Revenues	30.6	39.5	+29%	 Significantly higher base
Gross margin	41.6%	29.9%	–	revenues in 2015 but milestones revenues
 R&D expenses	(3.2)	(4.8)	+50%	lower with € 2.9 m (2014: € 8.4 m)
 SG&A expenses	(5.2)	(6.1)	+18%	 Impairment charges of
 Amortisation of intangible assets	(0.6)	(0.7)	+23%	€ 7.1 m in Q4, mainly for EVT100 (€ 4.8 m)
 Impairment of goodwill & tangible assets	0.2	(7.1)	–	 Finalisation of purchase
 Other op. income bargain purchase	0.0	2.9	–	price allocation for Evotec (France) resulted
 Other op. income (expenses), net	(1.6)	3.4	–	in additional bargain purchase
Operating income (loss)	2.3	(0.6)	–	 Strong Q4 EBITDA in
Adjusted EBITDA1)	7.4	5.3	(28)%	both years

Strong Q4 in both segments

Condensed income statement based on segments for Q4 2015

EVT Execute	EVT Innovate	Inter segment elimination	Not allocated	Evotec Group
40.6	7.2	(8.3)	–	39.5	 Strong momentum in
22.7%	55.1%	–		29.9%	EVT Execute: EBITDA margin of 19% supported
(0.3)	(5.8)	1.3	–	(4.8)	by revenues from
(4.9)	(1.2)	–	–	(6.1)	milestones received in Q4
(0.6)	(0.1)	–	–	(0.7)	 Impairment charges
(1.2)	(5.9)	–	–	(7.1)	(e. g. EVT100, EVT070) mainly hit EVT Innovate
–	–	–	2.9	2.9
1.3	2.1	–	–	3.4
3.5	(7.0)	–	2.9	(0.6)
7.7	(2.4)	–	–	5.3

Agenda

Summary 2015/2016 & Strategy update

EVT Execute

EVT Innovate

Financial performance 2015

Changes in shareholder structure

Overview

Strong revenue growth and accelerated innovation

Guidance 2016

1	Double digit top line growth	 More than 15% Group revenue growth excluding milestones, upfronts and licences
2	Profitable and strong liquidity position	Adjusted Group EBITDA1)  positive and significantly improved compared to 2015 Liquidity is expected to be at a similar level to the prior year2) 
3	Focussed first-in-class investments	 R&D expenses of approx. € 20 m especially in the fields of oncology, metabolic disease franchises and in iPS cell initiatives  Continued capacity and capability building with approx. € 10 m

¹⁾ Before contingent considerations and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result 2) Excluding any potential cash outflow for M&A or similar transactions

Your contact:

Dr Werner Lanthaler Chief Executive Officer

+49.(0).40.560 81-242 +49.(0).40.560 81-333 Fax werner.lanthaler@evotec.com