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Evotec SE Investor Presentation 2024
151_ip_2024-08-14_62fca905-7eb1-4415-9109-f367216fe16c.pdf
Investor Presentation
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Priority Reset underway
Disclaimer
This presentation (including any information which has been or may be supplied in writing or orally in connection herewith or in connection with any further inquiries) is being delivered on behalf of Evotec SE (the "Company", "we," "our" or "us"). This presentation is made pursuant to Section 5(d) and/or Rule 163B of the Securities Act of 1933, as amended, and is intended solely for investors that are qualified institutional buyers or certain institutional accredited investors solely for the purposes of familiarizing such investors with the Company. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy Evotec securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No representations or warranties, express or implied, are made as to the accuracy or completeness of the statements, estimates, projections or assumptions contained in the presentation, and neither the Company nor any of its directors, officers, employees, affiliates, agents, advisors or representatives shall have any liability relating thereto.
Cautionary Note Regarding Forward-Looking Statements
This presentation contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Many of the forward-looking statements contained in this presentation can be identified by the use of forwardlooking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "should," "target," "would" and other similar expressions that are predictions of or indicate future events and future trends, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forwardlooking statements due to a variety of factors. The forward-looking statements contained in this presentation speak only as of the date of this presentation, and unless otherwise required by law, we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
Welcome
The Management Team
Christian Wojczewski
CEO
Craig Johnstone
COO
Laetitia Rouxel
CFO
Cord Dohrmann
CSO
Aurélie Dalbiez
CPO
Matthias Evers
CBO
Agenda
- Business Update \& Financials
- Operational Update
- Priority Reset \& Outlook
- Questions \& Answers
Agenda
- Business Update \& Financials
- Operational Update
- Priority Reset \& Outlook
- Questions \& Answers
Leveraging the power of trust and collaboration in attractive markets
Sharing as basis for success
H1 2024 at a glance
Headline numbers
Revenues
Adj. EBITDA
€ $(0.5) m$
(H1 2023: € 33.9 m)
2024 - Operating in challenging environment
Recovery of market in 2024
Closed sales (fueled by increasing share of strategic multi-year deals)
Revenue phasing / mix for 2024
High fixed cost base
Reset of priorities
Two percent organic top-line growth in first half
Condensed income statement $\mathrm{H}_{1} \mathbf{2 0 2 4}$ - Evotec SE and subsidiaries
Non-core assets accounting for $€(4.1) \mathrm{m}$
Condensed income statement $\mathrm{H}_{1} \mathbf{2 0 2 4}$ - Evotec SE and subsidiaries
Seeing the trough
Condensed quarterly income statement numbers 2024 - Evotec SE and subsidiaries
in $\epsilon m^{1}$
| Revenues | 208.7 | 182.1 | |
|---|---|---|---|
| Shared R\&D | 155.2 | 147.2 | Revenue behind Q1 as anticipated |
| Just - Evotec Biologics (JEB) | 53.5 | 34.9 | Phasing of revenue recognition |
| Gross margin | 16.7\% | 8.6\% | |
| Shared R\&D | 12.8\% | $15.4 \%$ | Impact of immediate actions |
| Just - Evotec Biologics (JEB) | 27.9\% | $(19.3) \%$ | Upfront costs; capacity $\uparrow$ |
| R\&D expense ${ }^{2}$ | 16.2 | 13.0 | Focus on selected platforms |
| Adjusted Group EBITDA ${ }^{3}$ | 7.8 | $(8.3)$ | |
| Shared R\&D | (5.5) | 1.4 | First positive effects of Reset |
| Just - Evotec Biologics | 13.3 | (9.7) | JEB capacity ramp-up |
Conscious management of balance sheet
Balance sheet and Cash-flow items H1 2024 - Evotec SE \& subsidiaries
Balance sheet total / Equity ratio
in $€ \mathrm{~m} /$ vs. 31 Dec 2023
Net Debt Leverage ratio
x adjusted EBITDA vs. 31 Dec 2023
Stepwise
| Operating Cash-flow |
|---|
| in $€ \mathrm{~m}$ vs. H1 2023 |
(72)
(98.6)
CapEx/PPE ${ }^{3}$
in $€ \mathrm{~m}$ vs. H1 2023
(1040)
(75.5)
Key post-period events
- Restructuring of debt completed in July: Revolving Credit Facility of $€ 250 \mathrm{~m}$ replacing majority of old debt structure (including pre-existing covenants)
- Operating cash-flow improvements after period end: Proceeds from BMS Neuro and Onco in July and August of $>€ 100 \mathrm{~m}$
Agenda
- Business Update \& Financials
- Operational Update
- Priority Reset \& Outlook
- Questions \& Answers
Shared R\&D - Discovery of next generation medicines with higher efficacy and probability of success
Strong signal pointing towards business recovery in 2025
Closed Sales in Discovery by quarter, excluding BMS partnership, indexed
Discovery
- 2024 Q2 for Discovery exceptionally strong in terms of Closed Sales
- Mix with growing share of integrated, multi-year partnerships
- Sales momentum demonstrates relevance of value proposition and improves contribution for 2025 and beyond
Development
- Development with increased proposal flow but still behind leveraging full capacity
Scientific and strategic progress
Selected news - update
Alliances / Partnerships
- Extension of 20-year collaboration with CHDI
- Precision medicine partnership in cardiology with Bayer
- Strategic research alliance with Pfizer in France in metabolic and infectious diseases
- Progress in BMS collaborations
- AI-powered strategic partnership with Owkin
- Agreement with the Crohn's \& Colitis in IBD
- Software collaboration with Qiagen (PanHunter)
Co-owned Pipeline / Equity \& BRIDGEs
- Aurobac to advance ATX101 in septic shock
- Breakpoint nominated its first preclinical development candidate, BTX-011
- Carrick announces first patient dosed in Phase Ib/II clinical trial in breast cancer
- Kazia reports successful completion of EVT801 Phase I clinical trial in advanced cancer patients
- Tubulis doses First Patient in Phase I/IIa trial investigating antibody-drug conjugate candidate TUB-040 in ovarian cancer and lung adenocarcinoma
Building a co-owned pipeline in neuro
Long-term partnership with BMS in neuronal diseases
Building a molecular glue-based co-owned pipeline
Long-term partnership with BMS in oncology
Just - Evotec Biologics Design and application of innovative technologies from discovery to commercial supply to dramatically expand global access to biotherapeutics.
Portfolio advancing towards clinical \& commercial manufacturing
High level longitudinal portfolio overview: Just - Evotec Biologics
Solidifying our commitment to providing long-term commercial supply
Expansion of tech partnership with Sandoz
Q2 2023 Launched market-disruptive partnership, leveraging proprietary technology to expand biosimilar access to millions of patients
Scientific and strategic progress
S AND O Z
Q3 2024 Expanded partnership to include commercial supply in Toulouse and additional biosimilar candidates
Additional biosimilars potentially to be added to Sandoz development pipeline
Further guarantees for Sandoz long-term commercial supply security
Summary of operational update
Shared R\&D
- No visible recovery of market, yet
- Only parts of strong Discovery Closed Sales momentum translating into revenues in 2024 (multi-year deals)
- Q2 business mix still impacted by capacity overhang
Just - Evotec Biologics
- Expansion of Tech partnership with Sandoz
- Portfolio expansion
- Secured significant volume commitment for commercial manufacturing well into 2030's
- Growth of order book apart from Sandoz (e.g., U.S. DoD for Manufacturing Optimisation Program)
- Accelerated capacity increase to meet strong demand for manufacturing and ramp-up learnings
Evotec Group
- Further progress to reset the business (e.g. portfolio, productivity, capacity)
Agenda
- Business Update \& Financials
- Operational Update
- Priority Reset \& Outlook
- Questions \& Answers
What has changed?
Key levers of guidance refinement
| Levers | 2024 EBITDA impact | |
|---|---|---|
| Shared R\&D | Delayed market recovery \& part of sales-to-revenue translation in 2025 | $€(50)-(55) \mathrm{m}$ |
| Just - Evotec Biologics | Front-loading costs to meet significantly expanded sales orders | $€ \sim(15) \mathrm{m}$ |
| Evotec Group | Non-core assets identified, but still affecting 2024 | $€ \sim(5) \mathrm{m}$ |
Guidance 2024
| Guidance 2024 $^{1}$ | YE 2023 | Comment | |
|---|---|---|---|
| Group revenues | C 790 - 820 m | € 781.4 m | Strong growth of JEB; Soft market environment in Shared R\&D |
| R\&D expenditure ${ }^{2}$ | C $50-60 \mathrm{~m}$ | € 64.8 m | Focus on scalable first-in-class platforms and projects, safeguarding sustainable growth |
| Adjusted EBITDA $^{3}$ | C $15-35 \mathrm{~m}$ | € 66.4 m | High fixed costs base; balancing efficiency measures with capacity needs for future growth |
Three pillars towards profitable growth
Priority update (mid August 2024)
1 Portfolio adjustments
- Exit Gene Therapy
- Scale back API capacity
- Focused capital allocation to "right" R\&D projects
- Ongoing strengthening of business development
2 Capacity \& External spend
- First reduction in force concluded (100 roles); U.S. and UK done
- Social process ongoing in Germany, Italy and France
- Ongoing global purchasing optimisation programme with first initiatives implemented
- Relocation of projects
3 Footprint
- Site exits (Orth, Halle, \& Marcy)
- Hamburg:
MEC II - closure / transfer to other buildings completed
- Abingdon:
B9o closure / transfer to B95 completed
Cost optimisation plan confirmed and on track
EBITDA contribution of Reset measures (mid August 2024)
Expected adj. EBITDA impact, in $€ \mathrm{~m}$
- De-prioritisation of non-core business Exit of gene therapy and large-scale API manufacturing
- External spend optimisation Reduction of external workers, global purchasing optimisation programme and active demand management
- Headcount review
Identified reduction potential of $\sim 400$ roles ( $7 \%$ of total headcount) across global footprint; first measures effective as of July
- Recuring annual saving exceeding $€ 40 \mathrm{~m}$ with one-off expenses of $€ 68 \mathrm{~m}$
Looking ahead
Strategic review \& accelerated transformation (illustrative)
Leverage through revenue growth - faster than market
Productivity levers
2024
2025
2026+
Upcoming important dates
Financial calendar 2024
| Commerzbank \& ODDO BHF Corporate Conference 2023, Frankfurt/Main | 03 September 2024 |
|---|---|
| Morgan Stanley 21st Annual Global Healthcare Conference, New York | 05 September 2024 |
| Berenberg Goldman Sachs 12th German Corporate Conference, Munich | 23 September 2024 |
| Royal Bank of Canada CDMO Conference, virtual | 24 September 2024 |
| Jefferies Back to School fireside chat, virtual | 11 October 2024 |
| 9M results 2024 \& Capital Market Briefing | 06 November 2024 |
| German Equity Forum, Frankfurt/Main | 25 November 2024 |
Volker Braun
EVP Head of Global Investor Relations \& ESG
+49 (o) 15119405058 (m)
[email protected]
www.evotec.com