Best in Class Drug Discovery solutions Evotec Company Overview Evotec AG, General Company Overview, 30th Annual J.P. Morgan Healthcare Conference, San Francisco, January 2012
Forward-looking statements Information set forth in this presentation contains forward-looking statements, which involve a number of risks and uncertainties. The forward-lo oking statements contained herein represent the judgement ofevotecasof 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 beyondourcontrol,andwhichcouldcauseactualresults 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. PAGE 1
Agenda Evotec at a glance Strategic background Discovery alliances & Development partnershipsp Financial strategy & Outlook PAGE 2
Leader in high quality drug discovery solutions Evotec at a glance 1) 1 Best-in-class in R&D efficiency Complete, systematic, unbiased and most comprehensive infrastructures to significantly reduce costs and accelerate time to discovery decisions 2 3 Profita able & fast growing Double-digit y-o-y revenue growth, profitable, cash generating, strong portfolio of significant strategic alliances First-in-class in targets and deep-pipeline Matured partnered product pipeline includes Phase III, Phase II and Phase I assets, and first-in-class targets for future drug discovery alliances PAGE 3 1) Founded in 1993, Publicly listed on TecDAX (Germany), approx. 70% free float, >600 employees, Headquarter in Hamburg, Germany
Agenda Evotec at a glance Strategic background Discovery alliances & Development partnershipsp Financial strategy & Outlook PAGE 4
Outsourcing delivers higher capital efficiency Key factors underpinning Evotec s mission 1 Need for higher R&D capital efficiency Discovery outsourcing relative to other stages of value chain 1) In bn US$ 2008 2) Not outsourced Outsourced EVT core competence Other EVT competencies 20.2 21.6 2 Need for more variable than fixed costs 10.9 5.0 5.8 3 Faster investment or Stop loss decisions i 1.8 Discovery 8% 7.0 2.7 1.9 2.0 Preclinical Phase I Phase II Phase III 53% 33% 36% 19% % Outsourcing PAGE 5 1) Major players: Wuxi Pharma, Biofocus, AMRI, Syngene, PPD, Evotec, ca. 100 fragmented smaller players 2) WallStreet research 2008; evaluate Pharma; BioWorld
Managing the transition for long-term growth Key strategy elements Revenue growth 1 in EUR m Portfolio of alliances 2 Number of partnerships 42.7 >20% y-o-y 55.3 77 79 6 ~25 2 8 ~30 6 3 12 ~35 Phase III, Phase II, Phase I alliances Strategic long-term discovery alliances Drug discovery alliances 2009 2010 2011(e) 2009 2010 2011(e) 3 Milestones to drive profitability in EUR m 4 Platforms for solutions Number of top scientists 4.6 9.0 significantly improved 380 520 >600 E.g. Proteomics, new target identification technologies 2009 2010 2011(e) 2009 2010 2011(e) PAGE 6
~75% of revenues linked to milestones and royalties Evotec Business model Performance based upside 100 + xy ILLUSTRATIVE z ~40% y 100 60 10 10 10 10 100 x Fix cost Pharma Outcome independent base fee Milestone 1 Milestone 2 Milestone 3 Milestone 4 Cost of successful discovery phase Clinical Milestone 1 Clinical Milestone 2 Clinical Milestone 3 Total cost of successful outsourced product development Royalties single to double digit % Milestones allow for profitable growth and innovation investments PAGE 7
Agenda Evotec at a glance Strategic background Discovery alliances & Development partnerships p Financial strategy & Outlook PAGE 8
Drug discovery alliances & more Our alliance model in drug discovery and product development Core disease biology alliances know-how Metabolics Pain Regenerative Medicine Best-in-class technology platforms & alliances Immunology & Inflammation Oncology CNS PAGE 9
Highest productivity in discovery EVO Discover Best from target to IND Disease biology expertise Key strength 1 Complete value chain, with all value creating steps in house (>100 lead series, es, >50 pre-clinical, ca, and clinical candidates) Target Hit Lead PDC 1) IND 2 Proven target ID platform focusing on disease modifying mecha- nisms, regenerating and protecting key tissues and cell types 3 Industry leader in HTS and other platforms (e.g. FBDD, HCS, compound management, chemoproteomics, phosphoproteomics) 2) 4 High quality medicinal chemistry, supported by leading SGDD 3) and computational chemistry Highly experienced program management 5 Comprehensive compound profiling PAGE 10 1) PDC Preclinical Development Candidate 2) HTS High throughput screening; FBBD Fragment-based Drug Discovery (EVOlution); HCS High Content Screening 3) SGDD Structure based drug design
Strong portfolio of top-class partners Selected integrated drug discovery alliances targets provided by partners Partners Focus area Upside for Evotec Oncology, pain, inflammation +++ Huntington disease + Various ++ Description Performance-based, multi-target long-term alliance Long-term alliance, focused on the fight against Huntington disease Long-term alliance, focused on multiple targets 1. CNS 2. Immunology ++ Performance-based, long-term alliance, focused on CNS / Immunology targets Pain ++ Performance-based alliance, focused on pain Various ++ Performance-based, multi-target long-term alliance PAGE 11
Even higher upside if targets come from Evotec Selected integrated drug discovery alliances targets provided by EVT Partners Focus area Upside for Evotec Description Metabolics, insulin sensitizer Beta cell regeneration factor ++++ ++++ Diabetes, obesity and metabolic syndrome Research funding, 7 m upfront, > 230 m milestones, royalties Type 1 and 2 diabetes, targeting beta cell mass, Research funding, 5 m upfront, > 250 m milestones, royalties Pain +++ Response ++ prediction VR1 Antagonist, Performance-based alliance, $ 10 m upfront, >$ 170 m milestones, royalties Performance-based alliance, focused on development of response predicting biomarkers; undisclosed financials PAGE 12
Deep clinical pipeline without risk Portfolio of product development partnerships Upside Next Indication Partner Status for Evotec milestone Commercials Diabetes 1) Phase III +++ Final Phase III data Milestones, royalties; potential market approx. 500 m Alzheimer s Phase II +++++ + Phase IIb initiation Milestones, royalties; Disease potential market approx. 3 5 bn Treatment resistant Open Phase II +++ New partnering Open depression Insomnia 2) Phase II ++ Phase IIb start Milestones, royalties Pain Phase I ++ Phase II start Milestones, royalties Inflammation in Phase I/II +++ animal health 3) Others 4) Open Pre-clinical +++ Phase II start Partnering Milestones, royalties Open PAGE 13 1) DiaPep277 is being developed by Andromeda Biotech Ltd and has been partnered with TEVA Pharmaceuticals Industries Ltd 2) Chinese rights only; Safety and Phase IIb study planned starting 2012 3) Animal Health (undisclosed) 4) EVT 501 (H3), P2X3,
Novel treatment for type 1 diabetes Example 1: Product development alliance with Andromeda/Teva (Phase III) DiaPep 277 A therapeutic treatment for newly diagnosed type 1 diabetes Type 1 diabetes results from the body s failure to produce insulin, and presently requires life long insulin therapy by subcutaneous injection Today there is no therapy able to slow the destruction of insulin secreting pancreatic beta cells DiaPep 277 is targeted to treat newly diagnosed patients, with residual insulin secreting cells About DiaPep 277 DiaPep 277, is a unique peptide of 24 amino acids, derived from human heat shock protein 60 (HSP 60) The peptide acts by modulating the immune system, thus preventing the destruction of pancreatic cells that secrete insulin in response to elevated blood glucose levels PAGE 14
DiaPep 277 is progressing towards market entry Example 1: Product development alliance with Andromeda/Teva Development background All development, regulatory responsibilities and costs have been transferred to Andromeda/Teva 1) Phase I and Phase II studies were successfully conducted d Two Phase III studies have to be conducted for registration Teva has a world wide exclusive license to DiaPep 277 Status DiaPep 277 met primary endpoint of 1 st Phase III trial (Beta cell funct tion) DiaPep 277 demonstrated a significant preservation of C-peptide level ls, a marker for assessing insulin secretion by pancreatic cells Additional clinical, safety and efficacy analysis ongoing 2 nd Phase III with approx. 500 patients was already initiated Expected key milestones for Evotec Next milestone is triggered upon final completion of 1 st Phase III study and continued clinical development (mid 2012) Final data of 2 nd Phase III in 2014/2015(e) First sales projected for 2015(e)/2016 PAGE 15 1) DiaPep 277 was owned by DeveloGen (Evotec Göttingen)
Novel treatment of Alzheimer s disease Example 2: Product development alliance with Roche (Phase II) EVT 302 an orally active MAO-B inhibitor to slow down progression of Alzheimer's disease (AD) Alzheimer disease (AD) is the most common form of is diagnosed in people over 65 There is no cure for the disease, which worsens as it predicted to affect 1 in 80 people by 2050. dementia, most often AD progresses. AD is RG 1577 EVT 302 is targeted to slow down the sym mptoms of AD. This would be demonstrated in cognitive tests such as ADAS-cog 1). About RG 1577 EVT 302 MAO-B is normally present in brain and is responsiblee for break-down of certain neurotransmitters Activity of MAO-B is linked to production of reactive oxygen species, molecules that can cause neuronal damage Blocking the activity of MAO-B should reduce oxidative stress which is expected to slow progression of AD PAGE 16 1) Alzheimer s disease assessment scale cognitive subsection. Current gold standard in AD clinical trial endpoints
RG 1577/EVT302 high unmet medical need Example 2: Product development alliance with Roche Development background All development, regulatory responsibilities and costs have been transferred to Roche Phase I and Phase II trials have been conducted partially with different therapeutic goals Safety profile is established Development profile can potentially target stand alone application or treatments Licensing agree ement No further costs to Evotec Upfront payment of $ 10 m Milestones of $ 820 m Double digit royalties Status and expected key milestones for Evotec Large Phase IIb trial in preparation for start in 2012 Phase IIb completion and Phase III start (end 2013/2014) PAGE 17
Significant portfolio of high-value assets Examples of other assets Harvard & Evotec beta cell initiative Systematic, unbiased and comprehensive search for novel beta cell targets Identify physiological mechanisms that control beta cell mass Select most relevant targets irrespective of treatment modality small molecules, biologicals P2X7 receptor (partnered for veterenary use only) ATP-gated ion channel which is thought to play important role in inflammatory processes Animal health: partnered with top-tier tier player; milestones and significant royalties Human applications (unpartnered ) NR2B selective NMDA antagonists for depression indications Potent, selective and orally active / NR2B selective NMDA antagonists (EVT 101/103) Completed multiple dose finding studies Solid safety profile Development partnering process ongoing Response prediction platform & other assets Global, quantitative analysis of the cellular Phosphoproteome Biomarker discovery, drug-mode of action analysis in vivo Identification of new drug targets PAGE 18
Upgrading initiatives for future discovery alliances Examples to deliver innovative technologies and even better services CureNephron Systematic, unbiased and comprehensive search for novel targets in nephrology Identify physiological mechanisms and relevant targets irrespective of treatment modality First & Best in class HTScreening Screening for biochemical, functional and/or cellular responses using proprietary technologies Next generation superior detection technology and increased assay sensitivity resulting in higher quality data, less false positives and false negatives CureNeuron Systematic, unbiased and comprehensive search for novel targets in neurology Identify physiological mechanisms and relevant targets irrespective of treatment modality Compound Management High tech compound logistics and data management service for Pharma and NGOs Best in class technology for most efficient data management and compound storage Key customer: NIH (US) PAGE 19
Agenda Evotec at a glance Strategic background Discovery alliances & Development partnershipsp Financial strategy & Outlook PAGE 20
Positioning for sustainable growth Strategic overview Today Build world-class drug discovery capabilities for integrated projects Establish capital efficiency strategy for sustainable profitability latest in 2012 FOCUS & GROW Build global presence with optimal cost leverage Expand disease expertise & upgrade technology platforms Increase upside potential through longterm performance- based alliances INNOVATE Industrialize offerings Integrated risk sharing alliances One-stop-shop solutions Balance innovation with profitability and cash flow generation for op ptimal shareholder value ACC CELERATE & INDUSTRIALIZE Action Plan 2012 Action Plan 2016 PAGE 21
Positive trend of all key metrics reflect strength of underlying business Key metrics in m Strong organic revenue growth Focused R&D investments for first in class innovation 42.7 55.3 77 79 Sales Key trends 6.8 10.0 ca. 10 Gross margin % 2009 2010 2011(e) 2012(e) Accelerated operating profitability significantly ifi improved 1.7-42.3 1) 2009 2010 2011(e) 2012(e) R&D expense SG&A ratio Free cash flow CAPEX investments Top class scientists 2010 2011(e) 2012(e) Strong liquidity despite significant investments 1 Technology 4 India 12 DeveloGen 15 Kinaxo 12 Compound Focus 44 Acquisitions from 2009-2011 >60 Cash status end 11 PAGE 22 1) Including impairment and restructuring expenses
Global reach for global projects approx. 600 scientists Evotec worldwide San Francisco, US ~30 employees Compound Procurement Compound QC and storage Abingdon, UK ~215 employees Medicinal chemistry ADMET Structural biology Hamburg, Germany ~200 employees Screening HTS,NMR in vitro & in vivo biology Munich, Germany ~25 employees Phosphoproteomics Chemical proteomics Göttingen, Germany ~40 employees Metabolics Regenerative Medicine Thane, India ~130 employees Library synthesis & mgmt. Development chemistry Sales representation (Boston, Tokyo) Operations & sales representation PAGE 23
The right team to deliver innovation, growth and industrialisation Management & shareholder structure LBBW AM TVM Management Capital ~3.0% ~10% ~0.5% Roland Oetker / ROI ~15 % Number of shares: 118.2 m Listing: Frankfurt TecDAX, OTCBB 52 week high/low: 3.48 / 1.58 Management Board Werner Lanthaler (CEO) Long time experience in biotech & pharma growth organisations Mario Polywka (COO) 18 years Evotec experience Cord Dohrmann (CSO) Outstanding background in metabolics Colin Bond (CFO) Big industry multi-national background Key scientific Advisors Doug Melton Harvard University / HHMI William Jenkins Ex-Novartis Supervisory Board Flemming Ørnskov Bayer Hubert Birner TVM Capital Mary Tanner Peter J. Solomon Walter Wenninger Ex Bayer Roland Oetker ROI Andreas Pinkwart Dean of Leipzig Graduate School of Management PAGE 24
Strong news flow Outlook 2012 to come Key milestones for 2012 1 Grow discovery alliances Build at least two significant new integrated discovery alliances Expand existing long-term alliances Show synergies from recent acquisitions 2 Generate optimal pipeline progress At least one significant ifi strategic t deal for clinical i l or pre-clinical i l asset Deliver significant pre-clinical/clinical milestones Generate more innovation upsides within academic collaborations 3 Manage profitability Double-digit y-o-y revenue growth Improve profitability ove r 2011, without infringing innovation power Invest in high-tech upgrade CAPEX program Maintain strong strategic cash position > 60 m PAGE 25
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