- STRONG FINANCIAL PERFORMANCE IN H1 2016
- NEW AND EXTENDED COLLABORATIONS, MILESTONE ACHIEVEMENTS AND CLINICAL START IN ENDOMETRIOSIS
- PROFITABILITY GUIDANCE RAISED AND POSITIVE OUTLOOK CONFIRMED
Hamburg, Germany, 10 August 2016: Evotec AG (Frankfurt Stock Exchange: EVT, TecDAX, ISIN: DE0005664809) today reported financial results and corporate updates for the first half of 2016.
FINANCIAL PERFORMANCE -STRONG GROWTH TREND CONTINUES
- Significant revenue growth in both operating segments:
- EVT Execute revenues up 35% to EUR 79.8 m;
- EVT Innovate revenues up 44% to EUR 11.8 m
- Consolidated Group revenues grew by 37% to EUR 75.5 m (H1 2015: EUR 55.0 m); base revenues up 35% to EUR 68.5 m
- Adjusted Group EBITDA increased to EUR 15.8 m (H1 2015: EUR 0.8 m); adjusted EBITDA of EUR 22.5 m for EVT Execute (H1 2015: EUR 9.8 m)
- Increase in R&D expenses of 6% to EUR 9.0 m
- Strong liquidity position of EUR 118.3 m despite initiation of loan repayments in Q2 2016
EVT EXECUTE - STRONG AND PROFITABLE GROWTH
- Milestone achievements in Bayer, Boehringer Ingelheim and Padlock collaborations
- Collaboration extensions e.g. with Genentech and Janssen Pharmaceutica NV
- Multi-year compound management agreement with Pierre Fabre
- Antibiotic Research UK's first research contract awarded to Evotec
- Continued strengthening of existing drug discovery platforms with e.g. Trianni's next-generation transgenic technology and CRISPR/Cas9 licence
- Phase I clinical start for the treatment of endometriosis with Bayer (after period-end)
EVT INNOVATE - ACCELERATION OF FIRST-IN-CLASS TARGETS AND PLATFORMS
- Acceleration of TargetNASH programme funded by Ellersbrook GmbH & Co. KG
- Innovation partnership with ex scientia to develop bispecific small molecule immuno-oncology therapeutics
- Formation of spin-off company Topas Therapeutics GmbH in the field of nanoparticle-based therapeutics to treat immunological disorders; Series A funding of EUR 14 m completed
PROFITABILITY GUIDANCE RAISED (AFTER PERIOD-END)
- Adjusted Group EBITDA (before changes in contingent consideration) expected to more than double compared to 2015
- All other elements of financial guidance as of 22 March 2016 and positive outlook confirmed
1. FINANCIAL PERFORMANCE
STRONG GROWTH TREND CONTINUES
Evotec's Group revenues for the first half of 2016 grew to EUR 75.5 m, an increase of 37% compared to the same period of the previous year (H1 2015: EUR 55.0 m). This increase is due to growth in the core EVT Execute business, the contribution of the Sanofi collaboration as well as milestone achievements. Excluding milestones, upfronts and licences, Evotec's base revenues for the first half of 2016 were EUR 68.5 m and increased by 35% over the same period of the previous year (H1 2015: EUR 50.7 m). The gross margin amounted to 34.5% in the first six months of 2016 and improved over the first half of 2015 (H1 2015: 26.0%). The margin increase over 2015 is attributable to the same drivers as the trend in revenue growth.
R&D expenses for the first half of 2016 increased by 6% to EUR 9.0 m (H1 2015: EUR 8.5 m) due to an increase in the number of projects progressed in the portfolio. SG&A expenses for the first half of 2016 decreased by 5% to EUR 11.8 m (H1 2015: EUR 12.4 m). SG&A expenses in 2015 included one-time M&A and related costs. Adjusted Group EBITDA in the first six months of 2016 increased significantly to EUR 15.8 m (H1 2015: EUR 0.8 m). The EBITDA 2015 was adjusted by EUR 1.0 m for changes in contingent consideration. Evotec's operating income for the first half of 2016 amounted to EUR 8.4 m (H1 2015: EUR 12.9 m).
Liquidity, which includes cash and cash equivalents (EUR 57.9 m) and investments (EUR 60.4 m) amounted to EUR 118.3 m at the end of June 2016 (31 December 2015: EUR 133.9 m). In Q2 2016, Evotec initiated the repayment of loans.
Revenues from the EVT Execute segment amounted to EUR 79.8 m in the first half of 2016, an increase of 35% compared to the same period of the previous year (H1 2015: EUR 59.2 m). Included in this amount are EUR 16.2 m of intersegment revenues (H1 2015: EUR 12.4 m). The EVT Innovate segment generated revenues in the amount of EUR 11.8 m consisting entirely of third-party revenues (H1 2015: EUR 8.2 m). The increase in revenues resulted from EVT Innovate projects which were partnered in H2 2015. Gross margin for EVT Execute amounted to 28.8% while EVT Innovate generated a gross margin of 50.0%.
In line with Evotec's strategy, R&D expenses for the EVT Innovate segment increased from EUR 10.4 m in the first six months of 2015 to EUR 11.9 m in the first six months of 2016 due to an increase in the number of projects progressed in the portfolio. In the first six months of 2016, the adjusted EBITDA of the EVT Execute segment of EUR 22.5 m significantly improved compared to the same period of the previous year (H1 2015: EUR 9.8 m). The EVT Innovate segment reported an adjusted EBITDA of EUR (6.6) m (H1 2015: EUR (9.0) m).
2. EVT EXECUTE & EVT INNOVATE
EVT EXECUTE - STRONG AND PROFITABLE GROWTH
The strong operational performance in the first quarter of 2016 successfully continued into the second quarter of 2016. In the first half 2016, important milestones were achieved in collaborations with Bayer, Boehringer Ingelheim and Padlock.
urthermore, a new multi-year compound management agreement with Pierre Fabre was signed. In addition, various collaborations were extended, such as the drug discovery alliance with Genentech for a further three years. Additionally, Janssen Pharmaceutica NV extended its proteomics collaboration with Evotec, now entering its tenth year. Evotec also continues to benefit from the recent trend of an increasing number of foundations requesting Evotec's drug discovery platforms, e.g. Antibiotic Research UK awarded its first research contract to Evotec.
The Company continued to expand its drug discovery platforms. Evotec acquired a non-exclusive licence to the leading technology on the market for gene editing (CRISPR-Cas9 licence). Trianni's next-generation transgenic technology was also integrated into the offering of Evotec's drug discovery platforms.
After period-end, Evotec was able to announce that the first programme from the strategic alliance between Bayer and Evotec in the field of endometriosis was progressed into Phase I clinical development.
EVT INNOVATE - ACCELERATION OF FIRST-IN-CLASS TARGETS AND PLATFORMS
EVT Innovate showed a strong H1 2016 with very good scientific and commercial progress in the portfolio. EVT Innovate is accelerating its TargetNASH programme together with Ellersbrook GmbH & Co. KG. Ellersbrook and Evotec are committed to investing up to EUR 5 m over an initial three-year period. An innovation partnership with ex scientia (UK) to develop bispecific small molecule immuno-oncology therapeutics was formed. This highly innovative research project is mainly performed on Evotec's oncology drug discovery platform in Toulouse.
In March 2016, Evotec announced the formation of a spin-off company called Topas Therapeutics GmbH, focused in the field of nanoparticle-based therapeutics to treat immunological disorders. The establishment of Topas is the first example of the acceleration of Evotec's business model to take advantage of carving out or investing in promising programmes with additional upside potential.
Furthermore, good progress was reported in existing partnerships and development projects: The clinical studies for EVT201 and EVT401 in China are recruiting according to plan. The partnered pre-clinical oncology projects with Sanofi (e.g. EVT801) are progressing well towards clinical initiation in 2017.
3. PROFITABILITY GUIDANCE RAISED
Evotec's financial guidance was updated in July 2016 due to an increased margin contribution and a positive outlook for the remainder of the year.