Accelerated Positive Trend on Evotec's Revenues and Profits

Thursday, 11. November 2010 08:04
Evotec AG /
Accelerated Positive Trend on Evotec's Revenues and Profits
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Hamburg, Germany - 11 November 2010: Evotec AG (Frankfurt Stock Exchange: EVT,
TecDAX) today reported financial results and a corporate update for the first
nine months of 2010.

Recent Highlights:
   - Strong improvement of key financial results
- Evotec reports continued strong revenue growth of 33% and a positive operating
result of € 1.0 m for the first nine months of 2010 (compared to € 32.9 m loss
in the first nine months of 2009)
- Strong Q3 results with 33% improvement in revenues and a positive operating
result of € 0.7 m (compared to € 3.8 m loss in Q3 2009)
- Following cash flow positive third quarter liquidity improved compared to the
end of H1 2010 to € 70.2 m (+ € 2.3 m)
   - Several new discovery alliances initiated; progress and milestone
achievements in current partnerships
- New ion channel hit identification agreement with Almirall
- Fragment-based drug discovery alliance with Shionogi (after period-end)
- Pain alliance with Apeiron Biologics (after period-end)
- Milestone achievement with Boehringer Ingelheim
- Good progress in many alliances (e.g. Vifor, Genentech)
- Excellent capacity utilisation
   - Proprietary research programmes advancing
- Focused research investments in proprietary platform technologies and selected
discovery programmes
- Evaluation of indication for EVT 401 ongoing
- Increased research commitment to metabolic disease capability since closing of
DeveloGen acquisition
   - Product development partnerships on track; first license agreement for EVT
201
- Phase II with EVT 101 in treatment-resistant depression with Roche on track
- Jingxin Pharma in-licenses Evotec's insomnia candidate EVT 201 for development
in China (after period-end)
   - DeveloGen acquisition completed
- 6,750,014 new shares were issued from authorised capital in Q4 as
consideration for the transaction
   - Financial guidance for 2010 confirmed
- More than 20% revenue growth expected for the full year 2010, leading to
revenues of € 52 to 54 m
- Strong 2010 order book (October 2010: € 51 m; +31% over 2009) supports growth
target
- Liquidity guidance of >€ 64 m at year-end confirmed despite cash required for
the acquisition of DeveloGen
   - Financial outlook 2011 and beyond shows continued growth
- Revenue growth of more than 15% expected into 2011
- Well on track for sustainable profitability latest in 2012


1. Operational performance

Strong improvement of key financial results
During the first nine months of 2010 Evotec's drug discovery alliances continued
to grow significantly. Supported by milestone achievements, revenues increased
by 33% to € 38.8 m (2009: € 29.1 m). Gross margin was strong at 44.0% (2009:
38.3%). Following the implementation of Evotec's Action Plan 2012, and
successful partnering, R&D expenses declined by 79% to € 4.2 m (2009: € 19.5 m),
and SG&A costs by 12% to € 11.6 m (2009: € 13.1 m). On this basis, the operating
result was positive at € 1.0 m (2009: € 32.9 m loss). Liquidity including cash,
cash equivalents and investments at the end of September 2010 increased from end
of June 2010 to € 70.2 m.

2. Discovery alliances update

Several new discovery alliances initiated; progress and milestone achievements
in current partnerships
Due to its scale, strong platform of technologies combined with disease biology
know-how and excellent project management, as well as its strong reputation in
the industry, Evotec is ideally positioned as the partner of choice for
integrated drug discovery alliances with the pharmaceutical and biotech
industry. The Company signed a number of new important contracts during the
third quarter and made good progress in many of its current programmes. Within
its collaboration with Boehringer Ingelheim a third milestone for 2010 was
achieved in July.

New ion channel hit identification agreement with Almirall
In September, Evotec announced a collaboration with Almirall S.A. to identify
small molecule modulators of an ion channel target, selected by Almirall,
involved in respiratory diseases. Evotec will apply its in-depth
electrophysiology and ion channel pharmacology expertise, as well as its state-
of-the-art screening platform, for the identification and validation of novel
modulators of the selected ion channel.

Fragment-based drug discovery alliance with Shionogi (after period-end)
In October, Evotec announced a multiple target drug discovery collaboration with
Shionogi & Co Ltd. to identify small molecule modulators of various protein-
protein interaction targets selected by Shionogi. Evotec will apply its
proprietary and integrated fragment-based drug discovery platform, EVOlution(TM)
to the programme to support Shionogi in finding novel treatments for
inflammation and infectious diseases.

Pain alliance with Apeiron Biologics (after period-end)
Also in October, Evotec entered into a collaboration with Apeiron Biologics to
identify small molecule modulators of DREAM (Downstream Regulatory Element
Antagonistic Modulator), a novel target involved in various pain mechanisms. In
a first instance, Evotec will apply its expertise in cellular assay development
with opportunities for the project to rapidly move into hit identification and
beyond. Further projects will be evaluated to potentially expand this
collaboration in due course.

Milestone achievement with Boehringer Ingelheim
During the second quarter of 2010 strong progress was made in Evotec's discovery
collaboration with Boehringer Ingelheim, with the first compound of this
strategic alliance advancing into clinical trials. In July, a third milestone
for 2010 in the amount of € 2.5 m was achieved for the progression of a
candidate into pre-clinical studies. In total, Evotec has now achieved 10
milestones within this collaboration that was initiated in 2004.

Good progress in many discovery alliances (e.g. Vifor, Genentech); strong
capacity utilisation
During the third quarter of 2010, the Vifor collaboration was expanded to
include a back-up programme to the current one and new screening projects were
initiated with five partners. The Genentech collaboration was expanded in July,
and Evotec commenced work on three collaborations out of its operations in
Thane, India.

3. Status of clinical AND pRECLINICAL programmes and Partnering of assets

Proprietary research programmes advancing; product development partnerships on
track; new license agreement for EVT 201 for Chinese market (after period-end)
In addition to its continuous investment in the development of proprietary
platform technologies for kick-starting discovery alliances Evotec is focused on
obtaining value on a few carefully selected core assets. The Company is
progressing those assets towards their optimal data points for partnering. To
reduce Evotec's risk profile and limit its R&D expenses the Company is seeking
strategic product development alliances to further advance these developments
such as in the case of the partnership with Roche who fully fund the further
development of EVT 100 compound family. The Company's early proprietary
discovery programmes and high value development partnerships are all on track.

Start of Phase II with EVT 101 in treatment-resistant depression with Roche
From 30 June 2010, patient recruitment has begun for the proof-of-concept Phase
II study in treatment-resistant depression with EVT 101. The study has the main
objective of evaluating the safety and tolerability of EVT 101 while also
exploring the efficacy of this intervention. If Roche exercises its buy-back
option after completion of this Phase II trial, Evotec would receive an
immediate $65 m lump-sum payment in exchange for the assignment of the rights
and would be eligible for further development and sales performance milestones
of up $300 m, and scalable double-digit commercial payments.

Jingxin Pharma in-licenses Evotec's insomnia candidate EVT 201 for development
in China (after period-end)
In October, Evotec entered into a license and collaboration agreement with
Zhejiang Jingxin Pharmaceutical Co., Ltd ("Jingxin Pharma") for EVT 201, a novel
potential treatment for insomnia. The agreement grants Jingxin Pharma exclusive
rights to develop and market the drug candidate in China. In return, Evotec will
receive a small upfront payment, together with commercial milestones and
significant royalties.
Jingxin Pharma will initiate clinical trials with EVT 201 in China in 2011. All
development costs will be borne by Jingxin Pharma. Evotec will have the right to
reference clinical data produced by Jingxin Pharma to support potential further
development of EVT 201 in other territories.
This deal allows further progression of the EVT 201 insomnia programme at no
additional cost to Evotec and therefore represents an important step in
realising the drug candidate's intrinsic value.

Good progress with early discovery programmes
In the first half of 2010, Evotec nominated the final development candidate, EVT
501, in its H3 receptor antagonist programme and, in the third quarter, started
API (Active Pharmaceutical Ingredient) production of the compound to support
regulatory (GLP) toxicology and safety pharmacology studies. This programme is
in part funded by the BMBF. The initiation of a Phase I programme is planned
within the next 12 months.
The evaluation of clinical indications for the further development of the Phase
I programme EVT 401 is still ongoing. Following the DeveloGen acquisition, the
Company increased its research commitment to metabolic diseases.

4. acquisition Update

DeveloGen acquisition completed
On 2 September, Evotec announced the closing of the acquisition of DeveloGen as
published in detail on 14 July 2010 (see also page 5 of this report). Following
the successful fulfilment of various closing conditions, the sellers of 99.4% of
the shares in DeveloGen transferred their shares to Evotec. As part of the
consideration for the transaction Evotec issued 6,750,014 new Evotec shares from
its authorised capital in October. Consequently, Evotec's issued share capital
increased to €115,595,129 after the balance sheet date of this report. The
completion of the acquisition triggered payments in October 2010 (after period-
end) in the amount of 2.5 m regarding a repayment of a loan and a bonus payment
to the Management Board of DeveloGen.

5. Guidance 2010 and Outlook

Financial guidance for 2010 confirmed
Evotec confirms its financial guidance for the fiscal year 2010 published on 25
March 2010 and updated on 12 August 2010 with the only minor adjustment that R&D
expenses are now expected to be slightly lower than originally anticipated
(approx. € 8 m instead of € 10 m) due to successful partnering: Total Group
revenues are expected to grow by more than 20% to € 52 to 54 m. This growth
target is supported by a strong 2010 order book of € 51 m in October. Despite
approximately € 2 m cash to be used for the acquisition of DeveloGen, Evotec
also confirms its 2010 year-end liquidity target of comfortably >€ 64 m at
constant year-end 2009 currencies.

Financial outlook 2011 and beyond shows continued growth
The Company expects continuing growth of more than 15% into 2011 and remains on
track to reach sustainable profitability by 2012 at the latest. A detailed 2011
financial guidance will be published in March 2011.

Conference Call
The Company is going to hold a conference call to discuss the results as well as
to provide an update on its performance:

Conference call details:
Date: Thursday, 11 November 2010
Time:
09.30 a.m. CET
08.30 a.m. BST
03.30 a.m. US time (East Coast)

From Europe:
+49 (0)69.2222 3105 (Germany)
+44 (0)20.7784 1036 (UK)
From the US: +1 718.354.1152

Access Code: 7562847

A simultaneous slide presentation for participants dialing in via phone is
available at www.equitystory.com, password: evotec1110.

Webcast details
To join the audio webcast and to access the presentation slides you will find a
link on our home pagewww.evotec.com shortly before the event.

A replay of the conference call will be available for 24 hours and can be
accessed in Europe by dialing +49 (0)69 2222 2236 (Germany) or +44 (0)20
7111 1244 (UK) and in the US by dialing +1 347 366 9565. The access code is
7562847#. The on-demand version of the webcast will be available on our
website:www.evotec.com/Investors/Financial-Reports-2009-2010/


About Evotec AG
Evotec is a leader in the discovery and development of novel small molecule
drugs with operational sites in Europe and Asia. The Company has built
substantial drug discovery expertise and an industrialised platform that can
drive new innovative small molecule compounds into the clinic. In addition,
Evotec has built a deep internal knowledge base in the treatment of diseases
related to neuroscience, pain, oncology, inflammation and metabolic diseases.
Leveraging these skills and expertise the Company intends to develop best-in-
class differentiated therapeutics and deliver superior science-driven discovery
alliances with pharmaceutical and biotechnology companies. Evotec has long-term
discovery alliances with partners including Boehringer Ingelheim, CHDI,
Genentech, Novartis, Ono Pharmaceutical and Roche. Evotec has product candidates
in clinical development and a series of preclinical compounds and development
partnerships, including for example a strategic alliance with Roche for the EVT
100 compound family, subtype selective NMDA receptor antagonists for use in
treatment-resistant depression and an alliance in the field of diabetes with
Andromeda (Teva). For additional information please go towww.evotec.com.


Forward-Looking Statements
Information set forth in this press release contains forward-looking statements,
which involve a number of risks and uncertainties. Such forward-looking
statements include, but are not limited to, statements about our expected 2010
financial results and financial growth in 2011, our anticipated financing needs,
our ability to deliver on our liquidity guidance, our belief that we are on
course to sustainable profitability latest in 2012, our expectations and
assumptions concerning regulatory, clinical and business strategies, the
progress of our clinical development programmes and timing of the commencement
and results of our clinical trials, strategic collaborations and management's
plans, objectives and strategies. These 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. In
particular, the risks and uncertainties include, among other things: risks that
product candidates may fail in the clinic or may not be successfully marketed or
manufactured; the risk that we will not achieve the anticipated benefits of our
collaborations, partnerships and acquisitions in the timeframes expected, or at
all; risks relating to our ability to advance the development of product
candidates currently in the pipeline or in clinical trials; our inability to
further identify, develop and achieve commercial success for new products and
technologies; the risk that competing products may be more successful; our
inability to interest potential partners in our technologies and products; our
inability to achieve commercial success for our products and technologies; our
inability to protect our intellectual property and the cost of enforcing or
defending our intellectual property rights; our failure to comply with
regulations relating to our products and product candidates, including FDA
requirements; the risk that the FDA may interpret the results of our studies
differently than we have; the risk that clinical trials may not result in
marketable products; the risk that we may be unable to successfully secure
regulatory approval of and market our drug candidates; and risks of new,
changing and competitive technologies and regulations in the U.S. and
internationally.

The list of risks above is not exhaustive. Our most recent Annual Report on Form
20-F, filed with the Securities and Exchange Commission, and other documents
filed with, or furnished to the Securities and Exchange Commission, contain
additional factors that could impact our businesses and financial performance.
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.


Third Quarter Report 2010



Key Figures of Condensed Consolidated Interim Income Statements
Evotec AG and Subsidiaries


Euro in thousands except share data and per share data
+---------------+------------------------+------+-----------------------+------+
|   | Nine months ended 30 |Change|Three months ended 30 |Change|
| | September | in % | September | in % |
+---------------+-----------+------------+------+-----------+-----------+------+
|   | 2010 | 2009 |   | 2010 | 2009 |   |
+---------------+-----------+------------+------+-----------+-----------+------+
|   |   |   |   |   |   |   |
+---------------+-----------+------------+------+-----------+-----------+------+
|Revenue | 38,840| 29,135| 33.3| 13,872| 10,396| 33.4|
+---------------+-----------+------------+------+-----------+-----------+------+
|Gross margin in| 44.0| 38.3|  | 42.0| 39.4|  |
|% | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|  |  |  |  |  |  |  |
+---------------+-----------+------------+------+-----------+-----------+------+
|Research and | | | | | | |
|development | 4,175| 19,501|(78.6)| 1,248| 3,208|(61.1)|
|expenses | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|Selling, | | | | | | |
|general and | 11,593| 13,136|(11.8)| 3,891| 4,123| (5.6)|
|administrative | | | | | | |
|expenses | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|Amortisation | 281| 6,924|(95.9)| 21| 113|(81.4)|
|and impairment | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|Restructuring | -| 4,654| -| -| 518| -|
|expenses | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|Other operating| 3,250| 3,485| (6.7)| 1,395| 2,757|(49.4)|
|income | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|Other operating| 3,268| 3,352| (2.5)| 1,390| 2,705|(48.6)|
|expenses | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|  |  |  |  |  |  |  |
+---------------+-----------+------------+------+-----------+-----------+------+
|Operating | 1,014| (32,932)| 103.1| 672| (3,815)| 117.6|
|income (loss) | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|Operating | 1,014| (21,648)| 104.7| 672| (3,297)| 120.4|
|income (loss)* | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|  |  |  |  |  |  |  |
+---------------+-----------+------------+------+-----------+-----------+------+
|Net income | 742| (34,071)| 102.2| 647| (3,655)| 117.7|
|(loss) | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|  |  |  |  |  |  |  |
+---------------+-----------+------------+------+-----------+-----------+------+
|Weighted | | |  | | |  |
|average shares |107,412,660| 106,775,495| |107,508,118|106,935,167| |
|outstanding | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
|Net income | | |  | | |  |
|(loss) per | 0.01| (0.32)| | 0.01| (0.03)| |
|share (basic | | | | | | |
|and diluted) | | | | | | |
+---------------+-----------+------------+------+-----------+-----------+------+
*Before impairment and restructuring expenses.


Key Figures of Consolidated Interim Statement of Financial Position

Evotec AG and Subsidiaries


Euro in thousands
+-----------------------------------+------------------+----------------+------+
|   |30 September  2010|31 December 2009|Change|
| | | | in % |
+-----------------------------------+------------------+----------------+------+
|  |  |  |  |
+-----------------------------------+------------------+----------------+------+
|Liquidity* | 70,202| 70,594| (0.6)|
+-----------------------------------+------------------+----------------+------+
|Working capital | (1,915)| (6,530)|(70.7)|
+-----------------------------------+------------------+----------------+------+
|Current and non-current portion of |  |  |  |
|loans and finance lease obligations| 14,887| 13,205| 12.7|
+-----------------------------------+------------------+----------------+------+
|Stockholders' equity | 132,547| 111,487| 18.9|
+-----------------------------------+------------------+----------------+------+
|  |  |  |  |
+-----------------------------------+------------------+----------------+------+
|Total assets | 178,202| 146,599| 21.6|
+-----------------------------------+------------------+----------------+------+
*as of 31 December 2009 including auction rate securities.


[HUG#1461351]



--- End of Message ---

Evotec AG
Schnackenburgallee 114 Hamburg Germany

WKN: 566480;ISIN: DE0005664809;
Listed: Freiverkehr in Börse Stuttgart,
Freiverkehr in Hanseatische Wertpapierbörse zu Hamburg,
Freiverkehr in Börse Berlin,
Freiverkehr in Börse Düsseldorf,
Freiverkehr in Bayerische Börse München,
Freiverkehr in Niedersächsische Börse zu Hannover,
Prime Standard in Frankfurter Wertpapierbörse,
Regulierter Markt in Frankfurter Wertpapierbörse;


pr_Q32010_e:
http://hugin.info/131215/R/1461351/400582.pdf

Q32010_report_e:
http://hugin.info/131215/R/1461351/400583.pdf




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