Evotec reports nine months results: Upside materialising

Thursday, 10. November 2011 07:27
Evotec AG /
Evotec reports nine months results: Upside materialising
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The issuer is solely responsible for the content of this announcement.

-  Discovery Alliance Business Reports profitable Growth with Revenues up 54%
and a positive operating result of
€ 9.5 m

- Strong Q3 propelled by significant new product Partnering with Roche

Hamburg, Germany - 10 November 2011: Evotec AG (Frankfurt Stock Exchange: EVT,
TecDAX) today reported financial results and corporate updates for the first
nine months of 2011.
Strong improvement on all key financial results
- Nine months revenues +54% to € 59.7 m, Q3 revenues up 90% driven by a € 6.9 m
upfront payment from Roche
- Positive nine months operating result of € 9.5 m
- Strong liquidity of € 60.4 m despite the use of € 15.1 m for acquisitions and
earn-out payments as well as € 6.1 m for technology investments for sustainable
growth

New product development partnership with Roche for MAO-B inhibitor in patients
with Alzheimer's disease (AD)
- Innovative approach to treat AD symptoms and potentially slow disease
progression; Roche to initiate proof-of-concept studies in 2012
- Upfront payment of $ 10 m (€ 6.9 m); development and commercial milestone
payments of up to $ 820 m plus tiered double-digit royalties on sales

Research and development programmes advancing well
- EVT 401 partnered in animal health indication with major animal health company
- Diapep277 Phase III programme on track to deliver data from first Phase III
study in 2012
- Focused first-in-class research investments in proprietary platform
technologies, pre-clinical assets and selected discovery programmes (e.g.
CureBeta); increased partnering efforts

Very good progress in existing and initiation of significant new integrated
discovery alliances
- First integrated discovery collaboration with UCB in CNS signed in July;
second multi-target collaboration in the field of immunology already signed in
October (after period-end)
- Milestone achievement with Boehringer Ingelheim triggering
€ 4 m for initiation of pre-clinical development within oncology portfolio

Acquisition of remaining 30% share in Evotec (India) from DIL
- Acquisition for € 1.7 m in cash
- Transaction closed on 5 October 2011 (after period-end)
- Evotec is now able to operate and accelerate the business with full control

Increased financial guidance for 2011 confirmed
- Approximately 40% revenue growth expected for the full year 2011, leading to
revenues of € 77 to 79 m (original guidance March 2011: € 64 to 66 m)
- Liquidity guidance of > € 60 m at year-end confirmed despite cash required for
the various acquisitions and earn-out payments in respect of  Kinaxo, Compound
Focus, DeveloGen and Evotec (India)
- Order book indicates revenue growth into 2012 and continuing increase in
operating income

Key management additions in scientific management positions
Top-class talent joining Evotec, e.g. Dr Arnd Steuernagel as SVP Biologics,
former CSO of Scil Proteins GmbH, and Dr Dirk Ullmann, as EVP Lead Discovery,
former CSO of Proteros biostructures GmbH

1. Operational performance
Exceptionally strong Q3 results propelled by upfront payment from development
partnership with Roche

Evotec reported an exceptionally strong operational performance for the first
nine months of 2011. Results were positively impacted in Q3 by a $ 10 m (€ 6.9
m) upfront payment from a significant partnering signed with Roche.
Consequently, total Group revenues for the first nine months increased by 54% to
€ 59.7 m (2010: € 38.8 m) including € 8.7 m (2010: € 0.2 m) from the
acquisitions of DeveloGen (Evotec Göttingen), Kinaxo (Evotec Munich) and
Compound Focus (Evotec San Francisco). R&D expenses increased by € 2.6 m (62%),
mainly from the strategic build-up of Evotec's beta cell franchise "CureBeta"
and the inclusion of Evotec Göttingen and Evotec Munich R&D expenses. Despite
the aforementioned acquisitions, SG&A costs declined by 1%. On this basis,
Evotec's operating income for the first nine months was € 9.5 m (2010: € 1.0 m).
The Company continues to operate at a strong gross margin of more than 40%.

Liquidity including cash, cash equivalents and investments including long-term
financial assets at the end of September 2011 amounted to
€ 60.4 m.

2. Status of clinical and pre-clinical programmes


Development partnerships to provide upside potential

Evotec focuses on a number of carefully selected core assets, which the Company
is progressing towards clinical development and for which it is seeking
strategic product development partnerships to fund these developments. To reduce
Evotec's risk profile the Company is not investing in larger clinical trials on
its own. The Company's current clinical stage portfolio comprises several
development partnerships. In Q3, Evotec reported a significant partnering with
Roche:
New product development partnership with Roche for MAO-B inhibitor in patients
with Alzheimer's disease (AD)

In September, Evotec and Roche announced that they have entered into an
exclusive worldwide agreement for the development and commercialization of
Evotec's MAO-B inhibitor in AD patients. Roche paid Evotec an upfront fee of $
10 million and Evotec could receive further development and commercial milestone
payments of up to
$ 820 million as well as tiered double-digit royalties on sales. The addition of
EVT-302 to Roche's CNS pipeline complements other approaches the company is
investigating including tau- and amyloid- targeted therapies. Evotec's compound
(EVT 302) is a novel, potent inhibitor of monoamine oxidase type B (MAO-B), an
enzyme that breaks down the chemical messenger dopamine in the brain and
contributes to the production of free radicals.  Free radicals are known to
cause oxidative stress which may contribute to pathogenesis of AD as
demonstrated by the up-regulation of MAO-B expression in the brain of AD
patients. For these reasons, this selective MAO-B inhibitor is targeted to treat
AD symptoms and potentially slow disease progression. Roche will initiate proof-
of-concept studies in 2012 and will be responsible for all clinical development,
manufacturing and commercialization activities breaks down the chemical
messenger dopamine in the brain and contributes to the production of free
radicals.  Free radicals are known to cause oxidative stress which may
contribute to pathogenesis of AD as demonstrated by the up-regulation of MAO-B
expression in the brain of AD patients. For these reasons, this selective MAO-B
inhibitor is targeted to treat AD symptoms and potentially slow disease
progression. Roche will initiate proof-of-concept studies in 2012 and will be
responsible for all clinical development, manufacturing and commercialization
activities.

EVT 401 partnered in animal health indication with major animal health company

In August, Evotec announced it had entered into a world-wide license and
collaboration agreement with a top tier animal health company that intends to
develop the proprietary Evotec compound EVT 401, a selective, small molecule
P2X7 antagonist, in the companion animal market. Evotec can receive technology
access fees, development and commercial milestone payments, and significant
tiered royalties on net sales. Evotec retains all rights to the programme for
human therapeutic use. This partnering event triggered a reversal of impairment
in the amount of € 1.5 m.

Diapep277 Phase III programme on track to deliver data of first Phase III study
in 2012

DiaPep277, a synthetic peptide in development for the treatment of type 1
diabetes, acquired through the acquisition of DeveloGen, is progressing as
planned in Phase III studies conducted by Andromeda Biotech and Teva
Pharmaceutical. First Phase III data is expected to be published in 2012.
Focused first-in-class research investments in proprietary platform
technologies, pre-clinical assets, partnering efforts and selected discovery
programmes (e.g. CureBeta)

Upgrading the scientific background and the technological infrastructure of
Evotec is a key strategic initiative in 2011. As part of Evotec's unfunded
research initiatives, certain pre-clinical assets (e.g. BetaCell molecules,
etc.) are progressing as potential entry points for drug discovery alliances.
For Evotec's NMDA antagonist EVT 101/103 a partnering initiative is ongoing,
which could result in a partnership for EVT 101/103 within the next 12 - 18
months. The existing product development alliance with Pfizer (VR1) for
neuropathic pain is progressing well, and Pfizer expects to enter into a
clinical trial in 2012. Evotecs partner Jingxin Pharma has filed for regulatory
approval for the first clinical trials in China for EVT 201.

3. Discovery alliances update

Expanding portfolio of discovery alliances leads to significant growth in sales;
good progress and milestone achievements in collaborations

Evotec's strategy is to build sustainable, performance-based drug discovery
alliances. Consequently, Evotec focuses on high value, revenue generating
partnerships with pharmaceutical and biotechnology companies. The Company signed
a number of important new contracts, contract extensions and expansions and made
good progress in many of its current programmes.

First integrated discovery collaboration with UCB in CNS signed in July; second
multi-year, multi-target collaboration in the field of immunology already signed
in October (after period-end)

In July 2011, Evotec entered into a three year integrated drug discovery
collaboration with UCB to identify small molecule modulators of important
biological targets, selected by UCB, involved in CNS disorders. In October,
based on the Company's resource bandwidth and drug hunting expertise, Evotec was
again selected for a second multi-target collaboration in the field of
immunology to complement UCB's internal efforts.

As part of both collaborations, Evotec will apply its integrated drug discovery
expertise and technologies to identify interesting small molecules against a
selected number of targets. The molecules will be further optimised and
progressed through lead optimization to pre-clinical candidates. Evotec will
receive ongoing research funding and will be further rewarded on achieving the
goals of the research collaboration with early stage discovery, pre-clinical and
clinical milestones. In addition, Evotec will receive royalties based on net
sales of any approved drugs from the collaboration.

Milestone achievement with Boehringer Ingelheim within an oncology programme
triggering € 4 m payment


During the third quarter of 2011, Evotec reported the achievement of another
milestone in its collaboration with Boehringer Ingelheim, triggering a payment
of € 4 m to Evotec. The milestone was achieved for the identification and
selection of a compound to be advanced into pre-clinical development within the
oncology programme and represents the fourteenth milestone achieved in this
multi-year, multi-target collaboration.

4. Acquisition update
Continued expansion of scientific and technology leadership

Evotec focuses on augmenting its technology platform to continuously strengthen
its ability to provide integrated drug discovery solutions for customers. At the
same time, the Company is developing early assets in highly innovative areas of
drug discovery such as beta cell biology and technologies to better understand
oncology or metabolic diseases to kick-start new alliances. In line with this
strategy, the Company has acquired Kinaxo and Compound Focus and has announced
another transaction during the first nine months of 2011:

Acquisition of remaining 30% of Evotec (India) from DIL

In September, Evotec signed a Share Purchase Agreement to acquire the remaining
30% of the equity of its successful Indian subsidiary for € 1.7 m. The
acquisition of DIL's 30% outstanding equity in Evotec (India) gives Evotec 100%
ownership of this subsidiary, allowing it to operate and accelerate the business
with full control. Evotec acquired 70% of the equity of Research Support
International Private Limited (RSIPL), in August 2009 which was subsequently
renamed Evotec (India) Private Limited.  The transaction closed on 5 October
2011 (after period-end).
With its now 100% owned Indian subsidiary Evotec has successfully expanded its
global scientific resource to offer the most complete and cost efficient drug
discovery solutions to the pharmaceutical and biotech industry. This transaction
will allow financial optimization and a significant reduction in administration.
The deal also gives Evotec complete freedom to expand its activity in India in
future without any restrictions. Operating out of Thane, Mumbai, Evotec India
has 140 scientists, focusing primarily on Medicinal Chemistry. Going forward the
intention is to further grow and expand this capacity.

5. Guidance 2011

Increased financial guidance for 2011 confirmed

Following the development partnership with Roche in September 2011, Evotec for
the third time in 2011 raised its revenue guidance for the current fiscal year
that was originally published on 24 March: In 2011, total Group revenues are now
expected to grow by approximately 40%, leading to revenues of € 77 to 79 m
(March: € 64 to 66 m; June: € 68 to 70 m; August: € 70 to 72 m).

Evotec also raised its 2011 year-end liquidity target to > € 60 m at constant
year-end 2010 currencies despite € 15.1 m cash required for the various
acquisition and earn-out payments for Kinaxo (Evotec Munich), Compound Focus
(Evotec San Francisco), DeveloGen (Evotec Göttingen) and Evotec (India). All
other financial targets remain unchanged. Focusing on key programmes, especially
in the fields of innovation in metabolic diseases and regenerative medicine, the
Company expects research & development (R&D) expenses to increase to
approximately € 10 m from 2010 levels. On this basis, Evotec's Group operating
result before impairment charges, if any, is expected to be profitable and
improve over 2010. Going forward, the Company's order book indicates revenue
growth into 2012 and continuing increase in operating income before impairment
charges, if any. However, operating income may vary significantly between
quarters and prior year periods as the timing of performance based milestones
and partnering events cannot be predicted within specific quarterly reporting
periods.
Webcast / 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, 10 November 2011

Time:

09.30 a.m. CEST

08.30 a.m. BST

03.30 a.m. US time (East Coast)

From Europe:

+49 (0) 6103 485 3001 (Germany)

+44-207-153-2027 (UK)

From the US: +1-480-629-9726
Access Code: 4483499

A simultaneous slide presentation for participants dialing in via phone is
available at www.equitystory.com, password: evotec1111.

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 69 58 99 90 568 (Germany) or +44 207 154 2833
(UK) and in the US by dialing +1 303 590 3030. The access code is 4483499#. The
on-demand version of the webcast will be available on our website:

http://www.evotec.com /Investors/Financial-Reports-2010-2011


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 | | September | |
| | | in % | | in % |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|   | 2011 | 2010 |   | 2011 | 2010 |   |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|   |   |   |   |   |   |   |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Revenue | 59,712| 38,840| 53.7| 26,347| 13,872| 89.9|
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Gross margin | 48.4| 44.0|  | 54.8| 42.0|  |
|in % | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|  |  |  |  |  |  |  |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Research and | | | | | | |
|development | 6,781| 4,175| 62.4| 2,116| 1,248| 69.6|
|expenses | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Selling, | | | | | | |
|general and | 11,497| 11,593| (0.8)| 3,937| 3,891| 1.2|
|administrative| | | | | | |
|expenses | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Amortisation | 1,152| 281| 310.0| 603| 21|2,771.4|
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Reversal of | 1,501| -| 100.0| 1,501| -| 100.0|
|impairment | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Other | 1,283| 3,250| (60.5)| 249| 1,395| (82.2)|
|operating | | | | | | |
|income | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Other | 2,705| 3,268| (17.2)| 923| 1,390| (33.6)|
|operating | | | | | | |
|expenses | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|  |  |  |  |  |  |  |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Operating | 9,526| 1,014| 839.5| 8,605| 672|1,180.5|
|income (loss) | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Operating | 8,025| 1,014| 691.4| 7,104| 672| 957.1|
|income (loss)*| | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|  |  |  |  |  |  |  |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Net income | 9,172| 742|1,136.1| 8,378| 647|1,194.9|
|(loss) | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|  |  |  |  |  |  |  |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Weighted | | |  | | |  |
|average shares|115,691,964|107,412,660| |116,982,351|107,508,118| |
|outstanding | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Net income | | |  | | |  |
|(loss) per | 0.08| 0.01| | 0.07| 0.01| |
|share (basic) | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+
|Net income | | |  | | |  |
|(loss) per | 0.08| 0.01| | 0.07| 0.01| |
|share | | | | | | |
|(diluted) | | | | | | |
+--------------+-----------+-----------+-------+-----------+-----------+-------+

*Before impairment

Key Figures of Consolidated Interim Statement of Financial Position

Evotec AG and Subsidiaries

Euro in thousands

+----------------------------------+------------------+----------------+-------+
|   |30 September  2011|31 December 2010|Change |
| | | | |
| | | | in % |
+----------------------------------+------------------+----------------+-------+
|  |  |  |  |
+----------------------------------+------------------+----------------+-------+
|Liquidity | 60,408| 70,401| (14.2)|
+----------------------------------+------------------+----------------+-------+
|Working capital | (10,202)| (5,039)|(102.5)|
+----------------------------------+------------------+----------------+-------+
|Current and non-current portion of|  |  |  |
|loans and finance lease | | | |
|obligations | 11,437| 11,997| (4.7)|
+----------------------------------+------------------+----------------+-------+
|Stockholders' equity | 149,205| 132,637| 12.5|
+----------------------------------+------------------+----------------+-------+
|  |  |  |  |
+----------------------------------+------------------+----------------+-------+
|Total assets | 212,919| 191,859| 11.0|
+----------------------------------+------------------+----------------+-------+



Contact Evotec AG:

Dr Werner Lanthaler, Chief Executive Officer, Phone: +49.(0)40.56081-242,
werner.lanthaler@evotec.com


Forward-Looking Statements
Information set forth in this press release 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 report. 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.


--- 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;


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