Leading Innovation Efficiency Evotec Company Overview Evotec AG, Company presentation January 2016
Forward-looking statements Information set forth in this presentation 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 presentation. 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. 1
Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 2
Leading innovation efficiency Evotec at a glance 1 2 3 4 5 Strong growth and financial performance >10% average annual revenue growth rate over the last five years as drug discovery outsourcing partner; estimated revenues of > 120 m in 2015; strong EBITDA; cash flow positive More than 70 partnered product opportunities Significant partnered product pipeline with multiple first-in-class targets in diabetes and diabetic complications, neuroscience, pain, oncology and infectious diseases Unique business model based on top-quality drug discovery platform EVT Execute Integrated service platform for Pharma, biotech and foundations EVT Innovate Bridge between academia and Pharma for accelerated science translation Focused investments with near-term news flow and partnering events Approx. 20 m R&D expenses and around 10 m technology investments leading to more than 15 unpartnered break-through technology assets and early-stage product candidates Strong balance sheet and very good strategic corporate position Cash exceeding 100 m, around 1,000 top-class employees, long-term committed management and shareholders; listing: Frankfurt Stock Exchange (EVT; TecDAX) 3
Leadership in drug discovery Our mission Based on the highest quality drug discovery science, and through innovative collaborations, we are building a partnered product pipeline. 4
Leading the macro trend of R&D productivity Market dynamics in drug discovery Growth drivers Drug discovery outsourcing is a macro trend Market overview Revenues, in $ bn 1 2 Increasing comfort with outsourcing also in drug discovery Higher R&D capital efficiency through switch from fixed costs to variable business models 12.8 14.5 16.6 19.2 5 10% p.a. 21.8 24.5 27.1 29.7 3 Ability to adjust investments proportional to portfolio needs for Pharma and biotech 2013 2014 2015(e) 2016(e) 2017(e) 2018(e) 2019(e) 2020(e) 5 Source: Visiongain; Drug Discovery Outsourcing: World Market 2015
Our Sweet spot Pre-clinical development candidate (PDC) Academia Target ID/-Validation Hit- Identification Lead Optimisation Pre-clinical Phase I Phase II Phase III Approval Market Pre-clinical Phase Clinical Phase Duration > 14 years Evotec Approx. 3 6 years PDC Pre-clinical development candidate Partner Approx. 6 10 years Cost Approx. $ 1 3 bn Approx. $ 5 15 m Evotec s core competencies 6 Source: Paul et al. Nature Reviews Drug Discovery, 9 (2010)
Business model meets partners needs EVT Execute & EVT Innovate 7
Our offering close to Pharma, biotech and academia Evotec s global footprint Approx. 1,000 employees San Francisco, Branford and Princeton, USA ~70 employees Compound ID, selection and acquisition Compound QC, storage and distribution Cell & protein production Abingdon and Manchester, UK ~300 employees Medicinal chemistry ADMET Structural biology In vitro & in vivo anti-infective platform/screening Toulouse, France ~230 employees Compound management Hit identification In vitro & in vivo oncology Medicinal chemistry ADME & PK Early drug formulation & Solid form screening Cell, protein & antibody production Hamburg (HQ), Göttingen and Munich, Germany ~400 employees Hit identification In vitro & in vivo biology Chemical proteomics & Biomarker discovery and validation Cell & protein production 8
Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 9
Broad stand-alone innovation services EVT Execute Comprehensive drug discovery platform No. 1 in drug discovery High-quality service business The strategic outsourcing partner of choice 10
Strong growth Key performance indicators EVT Execute first nine months 2015 Revenues 1) (in m) EBITDA 2) (in m) 93.4 16.1 Growth driven by core business, anti-infective unit, Sanofi collaboration 19.5 m intersegment revenues 61.5 9.9 Strong adjusted EBITDA growth Growth despite low milestone income 2014 2015 2014 2015 11 1) Including intersegment revenues 2) Adjusted for changes in contingent considerations
Very well balanced portfolio EVT Execute Selected customer and revenue metrics Revenues by customer segment ytd 2015 1) (in %) Customer type ytd 2015 (in %) Revenues by region ytd 2015 (in %) Remaining 9 100% Mid-sized Pharma 8% 100% ROW 100% 1% Top 10-30 Customers 15 NFP, Foundations 20% USA 45% Biotech 21% Top 10 Long-term Strategic Alliances 76 Top 20 Pharma 51% Europe 54% 12 1) Third-party revenues only
Strong partner base accessing integrated drug discovery value chain EVT Execute Representative partners Cmpd Management Hit ID Chemistry Structural Biology In vivo Biology In vitro Biology 13
Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 14
Five fields of core expertise Overview NEUROSCIENCE DIABETES & COMPLICATIONS PAIN ONCOLOGY ANTI- INFECTIVES 15
Discovery Pre-clinical Clinical Fast growing portfolio of > 70 product opportunities Partnership portfolio Molecule Therapeutic Area/Indication Partner Discovery Pre-clinical Phase I Phase II Phase III EVT302 1) CNS - Alzheimer s disease EVT201 CNS - Insomnia EVT100 CNS - Depression EVT401 Immunology & Inflammation ND 2) ND 2) ND 2) ND 2) Various Oncology Oncology CNS - Pain Oncology Women s health - Endometriosis EVT770 Metabolic - Diabetes (type 2/1) ND 2) ND 2) Various Various CNS - Pain Immunology & Inflammation Oncology Immunology & Inflammation Various Metabolic - Diabetes (type 2/1) Various Metabolic - Diabetes (type 2/1) Various Nephrology Various Metabolic - Diabetes Various CNS - Alzheimer s Various Oncology - Immunotherapy Various Immunology & Inflammation - Tissue fibrosis Various CNS Multiple Sclerosis NEU 2 Various Metabolic - Diabetes >5 further programmes Various CNS >5 further programmes Various Oncology >10 further programmes Various CNS - Pain & Inflammation >5 further programmes 16 1) Sembragiline/RO4602522; Acquisition of rights under evaluation 2) Not disclosed Investor Presentation Focus
World-leading effort in Endometriosis Bayer & Evotec in Endometriosis Since 2012 Mission Goal of developing three clinical candidates for the treatment of endometriosis within five years Both parties contribute innovative drug targets and high quality technology infrastructures Background Endometriosis affects approx. 200 million women worldwide, 10% of women of reproductive age Agreement with Bayer 12 m upfront payment Up to 580 m in potential milestone payments based on the achievement of pre-clinical, clinical and sales milestones, up to double-digit royalties Integrated collaboration involving more than 30 scientists at Evotec Strategic, five-year multi-target collaboration There is no known cure for endometriosis 17
Identify and develop novel therapies in AD J&J Innovation & Evotec in Alzheimer s disease (AD) Since 2013 Mission Explore genes dysregulated in Alzheimer s disease patients to identify new targets for drug discovery and development Background Approximately 7.7 million new cases of dementia are diagnosed each year. $ 612 bn were spent on the treatment of dementia in 2014 Agreement with J&J Innovation $ 10 m in FTE-based research costs Pre-clinical, clinical, regulatory and commercial payments up to approximately $ 125 m to $ 145 m per programme Significant royalties on future sales of any products that may result from the alliance Integrated three-year collaboration, resources involving more than 20 scientists at Evotec and J&J Innovation AD costs equal about 1% of the world s GDP 18
Small molecule-based cancer immunotherapies Sanofi & Evotec in Immuno-oncology Since 2015 Mission Development of small molecule-based cancer immunotherapies for next-generation immunooncological therapies to complement current offerings of checkpoint inhibitors Background Based on partnership between Apeiron and Evotec initiated in 2012/13 Agreement with Sanofi Significant pre-clinical, clinical and regulatory milestones exceeding 200 m Significant royalties upon commercialisation Integrated collaboration involving more than 20 scientists between Evotec, Sanofi and Apeiron Multi-year research payments for Evotec and Apeiron Immuno-oncology will become a new pillar of cancer therapy Market potential estimated to be $ 35 bn in 2023 19
Novel mechanisms in tissue fibrosis Pfizer & Evotec in Fibrosis Since 2015 Mission Evotec and Pfizer develop novel mechanisms as targeted anti-fibrotics in multi-organ fibrosis Background Tissue fibrosis is a huge unmet medical need Total market value up to $ 100 bn Agreement with Pfizer Undisclosed upfront payment Potential milestone payments based on the achievement of specific development and sales milestones (undisclosed) Integrated collaboration involving more than 10 scientists between Evotec Strategic four-year collaboration Four major indications: liver, kidney, cardiac, lung fibrosis 20
Restoring beta cell function ips cell-based projects Sanofi & Evotec in Diabetes Since 2015 Mission Development of beta cell replacement therapy and drug discovery based on functional human beta cells derived from stem cells Agreement with Sanofi Upfront fee of 3 m Potential pre-clinical, clinical, regulatory and commercial milestones exceeding 300 m Significant royalties upon commercialisation Background Fast growing insulin market already exceeds >$ 22 bn in 2014 Integrated collaboration, resources involving more than 15 scientists at Evotec and Sanofi Diabetes is driven by loss in beta cell function Human beta cells offer only disease-modifying product opportunity 21
Vision for improved development probabilities Evotec s ips cell accelerator Academia 1) Pharma Upscaling ips cell lines Disease modelling Phenotypes Differentiation Generation/ banking Disease modelling/ read-outs Phenotypic screening Hits, leads, PDCs Targets, biomarker Patient stratification Target ID Med Chem 22 1) e.g. HSCI, Gladstone, MPI, CRTD, etc.
Translating first-in-class science to Pharma EVT Innovate Carefully selected discovery stage projects in indications of high unmet medical need Advancing and partnering projects at tangible value inflection points Fuelling Evotec s pre-clinical and clinical opportunities 23
More than 10 unpartnered EVT Innovate projects Cure X/Target X projects The Bridge 2011 2012 2013 2014 2015 CureBeta (Harvard Stem Cell Institute) CureNephron (Harvard, BWH, USC, AstraZeneca) TargetASIC (BMBF/undisclosed Pharma partner) Somatoprim (Cortendo) TargetPicV (Haplogen) TargetFibrosis (Pfizer) TargetImmuniT (Apeiron/Sanofi) TargetDBR (Yale) TargetMB (Second Genome) TargetPGB (Harvard) TargetKDM (Dana-Farber, Belfer) TargetIDX (Debiopharm) CureMN (Harvard) TargetEEM (Harvard) TargetAD (NBB/J&J) TargetBCD (Sanofi) TargetDR (Internal) TargetATD (Internal) TargetFX (Internal) TargetKX (undisclosed) TargetCytokine (DRFZ/BMBF) Fraunhofer Initiative TargetASN (Internal) TargetFRX (Internal) TargetNTR (Internal). 24 = Innovate Pharma partnerships signed since 2011
Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 25
Sharp revenue and profitability increase in EVT Execute Condensed income statement on segments for first nine months 2015 in m EVT Execute EVT Innovate Intersegment elimination Not allocated Evotec Group Revenues 93.4 14.3 (19.5) 88.2 Gross margin 23.4% 53.5% 16.9% 29.7% R&D expenses (0.2) (16.6) 3.3 (13.5) SG&A expenses (14.3) (4.7) (19.0) Amortisation of intangible assets Impairment of intangible assets Income from bargain purchase Other op. income (expenses), net Operating income (loss) (1.9) (0.3) (2.2) (0.1) (0.1) 18.5 18.5 1.8 0.6 2.4 7.2 (13.4) 18.5 12.3 EBITDA 1) 16.1 (12.7) 3.4 Strong adjusted EBITDA of 16.1 m in EVT Execute Increased investments in Cure X/Target X initiatives and oncology projects in Toulouse in-line with strategy 26 1) Adjusted for changes in contingent considerations; Group EBITDA was adjusted for changes in contingent consideration as well as for one-time effects with regards to the bargain purchase resulting from the acquisition of Evotec (France) SAS in 2015
Key figures illustrate clear long-term growth strategy Performance overview EVT Execute & EVT Innovate Nine months 2015 Revenues (in m) Gross margin (in %) EVT Execute EVT Innovate EVT Execute EVT Innovate 93.4 14.3 61.5 10.6 24.8 23.4 32.0 53.5 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 R&D expenses (in m) EBITDA 1) (in m) EVT Execute EVT Innovate EVT Execute EVT Innovate 16.1 16.6 9.9 10.4 9M 2014 9M 2015 0.7 0.2 9M 2014 9M 2015 9M 2014 9M 2015 9M 2014 9M 2015 (9.5) (12.7) 27 1) Adjusted for changes in contingent considerations
Accelerated path to growth and sustainability Key metrics 2010-2015 Revenues (in m) EBITDA adjusted 1) (in m) Alliances >100 >150 39.7 6.5 72 2010 2015e 2010 2015e 2010 2015e R&D expenses (in m) Liquidity 2) (in m) Employees 3) 6.1 15-20 70.4 >100 519 > 950 2010 2015e 2010 2015e 2010 2015e 28 1) Adjusted for changes in contingent considerations 2) Cash and cash equivalents and investments 3) Effective on 01 April 2015, Evotec acquired Sanofi s scientific operations in Toulouse, France; 2015 number including the employees from this transaction
Evotec s team and shareholders for innovation Management & shareholder structure 13% Roland Oetker/ROI ~13.0% 63% Free float 6% TVM Capital 14% BVF 1) 3% AGI 2) 1% Management Management Board Werner Lanthaler (CEO) Long-time experience in Pharma & biotech Mario Polywka (COO) 18 years Evotec experience Cord Dohrmann (CSO) Outstanding background in metabolics Colin Bond (CFO) Big industry multi-national background Supervisory Board Wolfgang Plischke Ex-Bayer Bernd Hirsch Symrise AG Claus Braestrup Ex-Lundbeck Paul Herrling Ex-Novartis Iris Löw-Friedrich UCB Elaine Sullivan Carrick Therapeutics Number of shares: 132.6 m Listing: Frankfurt TecDAX, OTCBB 52 week high/low: 4.31/ 3.10 29 1) BVF Partners L.P. and its affiliates 2) Allianz Global Investors GmbH
Very good performance in 2015 Guidance 2015 1 Doubledigit topline growth Approx. 45% growth excluding milestones, upfronts and licences 2 Profitable Positive adjusted EBITDA 2) Liquidity is expected to be well in excess of 100 m 3) 3 Accelerated investments Increased R&D investments of approx. 15 20 m in strategic Cure X and Target X initiatives to accelerate long-term clinical pipeline building Continued capacity and capability building with up to 10 m 30 1) As a result of the Sanofi collaboration, Evotec raised its revenue guidance that was published in Evotec s Annual Report 2014 two times, firstly on 24 March 2015 and secondly on 12 May 2015. On 15 September 2015, Evotec raised its revenue guidance due to a strong business performance and a positive outlook for the remainder of the year. All elements of the financial guidance 2015 as of 12 May 2015 are confirmed. 2) Before contingent considerations and excluding impairments on other intangible and tangible assets and goodwill as well as the total non-operating result 3) Excluding any potential cash outflow for M&A or similar transactions
Strong initial outlook into 2016 Expected key milestones EVT Execute New long-term deals with large and midsized Pharma, foundations and biotech New integrated technology/disease alliances Milestones from existing alliances EVT Innovate Strong progress of pipeline within partnerships Expansion of network of top-class academic alliances Partnering of Cure X/Target X initiatives 31
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