Evotec SE — Investor Presentation 2019

Aug 14, 2019

First six months of 2019 Expand and accelerate

Forward-looking statement

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.

Note:

The 2018 and 2019 results are not fully comparable. The difference stems from the acquisition of Evotec ID (Lyon) SAS, effective 01 July 2018. The results from Evotec ID (Lyon) SAS are only included from 01 July 2018 onwards. The accounting policies used to prepare this interim information are the same as those used to prepare the audited consolidated financial statements for the year ended 31 December 2018, except for the adoption of IFRS 16 "Leases" as of 01 January 2019. From 01 January 2019 onwards, Evotec applies IFRS 16.

Welcome to H1 2019

The Management Team

Agenda

Highlights H1 & Strategy

Financial performance

Scientific and operational performance

Guidance & Next steps

Strong performance continued and accelerated

H1 2019 – State of play

Highlights

• Multiple new and extended drug discovery and development agreements
• Important milestone achievements, very good progress in co-owned pipeline
• Bayer P2X3 antagonist efficacy against refractory chronic cough in Phase II (after period-end)
• Solid performance along all business lines
• New partnerships in EVT Innovate (immuno-oncology, colorectal cancer, anti-infectives)
• Strategic expansion into biologics through Just.Bio Evotec Biologics acquisition (after period-end)
• Expansion of iPSC and patient-centric approaches; acquisition of Ncardia AG (after period-end)
• New Digital BRIDGE LAB10x, equity participation (Eternygen) and spin-off (Breakpoint Therapeutics, after period-end)
• Successful placement of € 250 m promissory note (Schuldschein)
• New Supervisory Board elected at AGM 2019, Management Board contracts extended
• Conversion into European Company (SE)

Lowlight

Full impairment of SGM-1019 programme after termination by partner Second Genome

Increased guidance based on strong performance and Just.Bio acquisition

Financials H1 2019 & FY 2019 Guidance

Strong financial performance

• Group revenues from contracts with customers up 16% to € 207.1 m (H1 2018: € 178.9 m1))
• Adjusted Group EBITDA2) up 51% to € 58.2 m (H1 2018: € 38.6 m)
• Unpartnered R&D expenses of € 18.7 m (H1 2018: € 10.0 m)
• Strong liquidity of € 341.8 m after issuance of promissory note (Schuldschein) (31 December 2018: € 149.4 m)

Guidance 2019 increased

• Approx. 15% (previously: approx. 10%) growth in Group revenues from contracts with customers without revenues from recharges (2018: € 364.0 m3)) 4)

• 10% (previously: approx. 10%) adjusted Group EBITDA2) growth (2018: € 92.0 m5))

• Unpartnered R&D expenses of € 30-40 m (unchanged) (2018: € 22.9 m)

2) Before contingent considerations, income from bargain purchase & excluding impairments on goodwill, other intangible & tangible assets as well as the total non-operating result 3) 2018 total revenues excluding revenues from recharges according to IFRS 15

¹⁾ 2018 data including reclasses of recharges according to IFRS 15

⁴⁾ Based on current/updated FX rates

⁵⁾ 2018 total adjusted Group EBITDA excluding € 3.5 m one-off effects in 2018

"… just the beginning" of long-term strategy

"Action Plan 2022 – Leading External Innovation"

Co-owned pipeline will gain more visibility

Unique business model

Agenda

Highlights H1 & Strategy

Financial performance

Scientific and operational performance

Guidance & Next steps

Strong performance reflected in financials

Condensed income statement H1 2019 – Evotec SE and subsidiaries

in € m1)

	H1 2019	H1 20183)	% vs. 2017
Revenues from contracts with customers	207.1	178.9	16%
Gross margin	30.8%	28.1%	–
 R&D expenses	(29.3)	(10.0)	192%
 SG&A expenses	(29.9)	(27.1)	10%
 Impairment of intangible assets and goodwill	(11.9)	(4.2)	–
 Other op. income (expenses), net	31.3	12.7	–
Operating result	24.0	21.7	11%
Adjusted Group EBITDA2)	58.2	38.6	51%
Net income	10.7	17.9	(40)%

• Strong base business and performance across all business lines
• Increase in R&D as planned
• One-off impairment of intangible assets and goodwill following termination of SGM-1019 programme with Second Genome
• Other operating income positively impacted by reimbursed partnered R&D and R&D tax credits
• Adjusted Group EBITDA in H1 2019 positively affected by new IFRS 16 (€ 6.4 m)

¹⁾ Differences may occur due to rounding

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

³⁾ 2018 data including reclasses of recharges according to IFRS 15

Growth trend continues, strong base margins

Revenues & Gross margin overview

• Revenue growth due to strong performance in base business, high milestone and licence contributions, and favourable FX rate
• Favourable impact on gross margin following milestone and licence contributions, higher margins in base business, and positive FX effects (+1.4% points)
• Gross margins from H1 2018 onwards represent a different business mix and are affected by increased amortisation resulting from the PPA of acquisitions
• Strong gross margin in H1 2019 despite amortisation of intangible assets

!) Gross margin in the future may be volatile due to the dependency of receipt of potential milestone or out-licensing payments, both having a strong impact on the gross margin, also new business through Aptuit.

2) 2018 data including reclasses of recharges according to IFRS 15

Strong Q2

Condensed income statement Q2 2019 – Evotec SE and subsidiaries

in € m
	Q2 2019	Q2 20182)
Revenues from contracts with customers	103.2	97.2
Gross margin	31.1%	32.7%
 R&D expenses	(14.9)	(5.4)
 SG&A expenses	(15.1)	(13.8)
 Impairment of intangible assets	(10.3)	(4.2)
 Impairment of goodwill	(1.6)	–
 Other op. income (expenses), net	14.8	6.7
Operating result	5.0	15.2
Adjusted Group EBITDA1)	28.2	24.6
Net income	(2.4)	14.3

• Increase in R&D expenses as planned
• SG&A slightly increased due to overall Company growth and transactions (Evotec ID (Lyon))
• One-off impairment charges of intangible assets and goodwill for SGM-1019 programme
• Higher R&D tax credits and reimbursed partnered R&D (not yet existing in H1 2018) affecting other operating income
• Increase in adjusted EBITDA of 15%

¹⁾ Before contingent considerations, income from bargain purchase and excl. impairments on goodwill, other intangible and tangible assets as well as the total non-operating result 2) 2018 data including reclasses of recharges according to IFRS 15

Continued positive momentum in both segments

Segment information H1 2019 – Evotec SE and subsidiaries

in € m1)

	EVT Execute	EVT Innovate	Inter segment elimination	Not allocated2)	Evotec Group
Revenues	196.8	41.2	(37.9)	7.0	207.1
Gross margin	27.7%	33.3%	–	–	30.8%
 R&D expenses	(0.4)	(33.3)	4.4	–	(29.3)
 SG&A expenses	(23.8)	(6.1)	–	–	(29.9)
 Impairment of intangible assets and goodwill	–	(11.9)	–	–	(11.9)
 Other op. income (expenses), net	9.3	22.0	–	–	31.3
Operating result	39.6	(15.6)	–	–	24.0
Adjusted EBITDA3)	60.1	(1.9)	–	–	58.2

• Revenue growth and gross margin in EVT Execute driven by strong performance in the base business
• Increase in R&D expenses in EVT Innovate both in unpartnered and partnered R&D according to strategy
• Impairment charges allocated to EVT Innovate
• Higher R&D tax credits and reimbursed partnered R&D expenses (not yet existing in H1 2018) driving other operating income

PAGE 12 1) Differences may occur due to rounding

2) Revenues in the segments consist of revenues from contracts with customers without revenues from recharges as those are not of importance for the management to assess the economic situation of the segments

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

Successful placement of € 250 m "Schuldschein"

Strategic financing – Rationale and conditions

Promissory Note (Schuldschein)

Debut transaction at highly attractive terms to better utilise strong balance sheet

Use of proceeds	 Strengthen Company's corporate financing structure  Finance the recent Just.Bio – Evotec Biologics acquisition  Re-finance existing loans at more attractive terms
Details of transaction	 after low transaction cost Schuldschein volume: € 249.1 m net –  Initial offer significantly oversubscribed  3, 5, 7 & 10 years with a fixed and variable interest rate of on average below 1.5%  Non-dilutive but debt  Joint lead arrangers: Deutsche Bank, LBBW
Financial effect on Evotec	 Balance sheet significantly expanded with increase in cash and debt positions  Equity ratio: 0.41  Net debt leverage ratio: 0.8 x adj. EBITDA1)

Strong liquidity position to support growth

Liquidity development in H1 2019

in € m

Agenda

Highlights H1 & Strategy

Financial performance

Scientific and operational performance

Guidance & Next steps

Strong progress with our partners

EVT Execute – Major achievements H1 2019

• Multiple new drug discovery and development agreements (e.g. Astex, Exscientia, Yale)
• Excellent scientific progress driving expansion of partnerships (e.g. Dermira, Enterprise Therapeutics, Fibrocor, STORM Therapeutics)
• Important strategic addition of biologics platform Just.Bio – Evotec Biologics
• Milestone achievements (Bayer, Boehringer Ingelheim)
• Strong business performance and efficiency improvements across all business lines

Better biologics with better technologies

Acquisition of Just.Bio – Evotec Biologics effective 02 July 2019

Overview of transaction

• Founded 2014/15, private, based in Seattle, WA (USA), approx. 95 employees, acquisition effective 02 July 20192)
• Partners and customers: Biotech, public institutions, foundations, top-tier Pharma

• \$ 30 m3) revenues in FY 2019; approx. EBITDA break-even

First integration steps

• Agreement with Teva for design and development of highproductivity biomanufacturing process
• Integration of processes, services, and team into Evotec Group ongoing
• New business "cross-selling" opportunities on horizon

1) J.POD are currently under construction for fastest possible initiation to build in USA and potentially also EU – expected 2021

²⁾ Purchase of 100% of shares in Just.Bio – Evotec Biologics: Total consideration of up to \$ 90 m in cash including potential earn-outs upon defined milestones expected in 2019-2022e; initial consideration upon closing is \$ 63.6 m (€ 56.3 m at EUR/USD rate of 1.13) subject to customary net debt and working capital adjustments 3) Including intercompany revenues

Toulouse essential part of Evotec Group

Overview and outlook to 2020

Well-balanced global customer mix

EVT Execute – Selected KPIs H1 2019

Revenues by customer segment ytd1) (in %)		Customer type ytd1) (in %)			Revenues by region ytd1) (in %)
		100%	Mid-sized Pharma	17%	100%	RoW		100% 4%
Remaining	40%		Foun dations	7%		USA	36%
Top 11-30
customers	20%		Biotech	45%
Top 10						Europe	60%
long-term strategic alliances	40%	Top 20 Pharma	31%
	H1 2019			H1 2019			H1 2019

Expanding all core ventures

EVT Innovate – Major achievements H1 2019

• Good pipeline progress, e.g. with positive Phase II results in chronic cough (Bayer; after period-end)
• New agreements (e.g. Galapagos, Indivumed, The Bill & Melinda Gates Foundation, The Mark Foundation)
• Driving anti-infective innovation through alliances with Helmholtz, GARDP1) and GNA Now (after period-end)
• Further achievements in iPSC alliance with Celgene
• iPSC efforts expanded; acquisition of Ncardia AG (effective after period-end)
• BRIDGE expanding (e.g. LAB150, new Digital BRIDGE LAB10x)

Strong progress in fully invested pipeline

Partnership portfolio – Highlights in H1 2019 marked in green

	Molecule	Therapeutic Area/Indication	Partner	Discovery	Pre-clinical	Phase I	Phase II
	EVT201	CNS – Insomnia
	BAY1817080	Chronic cough					NEW data
	ND1)	Chronic cough					Ph. II start
al	CT7001	Oncology					Ph. II start
c	CT7001	Oncology					Ph. II start
ni	EVT401	Immunology & Inflammation
Cli	Various	Women's health – Endometriosis
	Various	Women's health – Endometriosis
	Various	Women's health – Endometriosis
	Various	Respiratory
	ND1)	Oncology
	ND1)	Immunology & Inflammation
al c ni cli e- Pr	ND1)	Pain
	Various	Women's health – Endometriosis
	EVT801	Oncology
	TargetImmuniT	Oncology – Immunotherapy
	ND1)	Oncology (+ several discovery programmes)
	ND1)	Fibrosis					NEW collaboration
	Various	Anti-infectives	>5 programmes
	Various	CNS, Metabolic, Pain & Inflammation	>10 further programmes
	Various ND1)	Nephrology
	Various ND1)	Immunology & Inflammation
	Various ND1)	Nephrology
	Various ND1)	Metabolic – Diabetes
	Various	Oncology
	Various	Immunology & Inflammation – Tissue fibrosis
	Various	Neurodegeneration					NEW milestone achievement
y	ND1)	Oncology – DNA damage response					NEW spin-off
er	ND1)	Anti-bacterial
v	Various	All indications					NEW BRIDGE
o	ND1)	Dermatological diseases
c s	ND1)	Facioscapulohumeral Dystrophy
Di	INDY inhibitor	Metabolic
	Various	Fibrotic disease	Fibrocor Therap. / Galapagos
	TargetPicV	Antiviral
	Various	Anti-infectives	>5 programmes
	Various	Internal: Oncology, CNS, Metabolic, Pain & Inflammation	>40 further programmes
	ND1)	Oncology					NEW collaboration
	ND1)	Novel antibiotics					NEW collaboration
	ND1)	Novel antibiotics					NEW collaboration
	ND1)	Oncology – Colorectal cancer					NEW collaboration

1) Not disclosed

Note: Several projects have fallen back to Evotec, where Evotec does not intend to run further clinical trials unpartnered, e.g. EVT302, EVT101, SGM-1019

Partnering model works and delivers

Bayer & Evotec in chronic cough – Output goals define R&D intensity

Re-defining DD paradigm from patient to patient

Game-changing platforms for better translation

Patient-derived iPSC assays as new gold standard

World-leading iPSC processes and network

First-in-class approach in DNA damage response

Breakpoint Therapeutics GmbH: An Evotec spin-off company

• focused on the development of a DNA damage response ('DDR') portfolio
• Comprising discovery-stage assets and drug targets that promise broad therapeutic application in a variety of cancers
• Virtual company setup highly capital efficient, use of Evotec's platform
• € 30 m Series A funding secured with VC consortium (Medicxi and Taiho Ventures)
• Evotec remains key shareholder with less than 50% equity holding

Further acceleration of BRIDGE concept

Progress YTD 2019

Agenda

Highlights H1 & Strategy

Financial performance

Scientific and operational performance

Guidance & Next steps

Strong year ahead – Guidance 2019 updated

Guidance 2019

1	Double digit top line growth	 Approx. 15% (previously: approx. 10%) growth in Group revenues from contracts with customers without revenues from recharges1)
2	Profitable and growing	 Adjusted Group EBITDA2) expected to improve by more than 10% (previously: approx. 10%) compared to € 92.0 m in 20183)
3	Focused unpartnered investments	 Unpartnered Group R&D expenses of € 30-40 m4)

¹⁾ 2018 total revenues excluding revenues from recharges according to IFRS 15: € 364.0 m / Based on current/updated FX rates

²⁾ Before contingent considerations, income from bargain purchase & excl. impairments on goodwill, other intangible & tangible assets as well as the total non-operating result 3) 2018 total adjusted Group EBITDA excluding € 3.5 m one-off effects in 2018: € 92.0 m

⁴⁾ For better comparison to previous years, Evotec focuses its guidance and upcoming reporting during the course of 2019 on the "unpartnered R&D" part. ID-related R&D expenses will be fully reimbursed by its partner Sanofi ("partnered R&D").

Important next dates

Financial calendar 2019

Annual Report 2018	28 March 2019
Quarterly Statement Q1 2019	14 May 2019
Annual General Meeting 2019	19 June 2019
Half-year 2019 Interim Report	14 August 2019
Quarterly Statement 9M 2019	12 November 2019

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