Leading Innovation Efficiency Evotec Company Overview Evotec AG, Jefferies 2016 Global Healthcare Conference, 08 June 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 Strong growth and financial performance 2 More than 70 partnered product opportunities 3 Unique business model based on top-quality drug discovery platform 4 Focused investments with near-term news flow and partnering events 5 Strong balance sheet and very good strategic corporate position 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
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 5 Source: Paul et al. Nature Reviews Drug Discovery, 9 (2010)
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) 6 Source: Visiongain; Drug Discovery Outsourcing: World Market 2015
Globally leading service company and first-in-class partnered product pipeline Strategy overview 2016 2020 2009 Restructuring Capital efficiency for sustainability First EVT Innovate investments 2012 Business segmentation Investments in discovery service platform Performance-based integrated discovery and clinical alliances Cure X/Target X strategy Royalty income from legacy pipeline Highest quality drug discovery and pre-clinical services EVT Execute Cure X/Target X strategy & Academic bridge EVT Innovate Company formations to accelerate drug discovery and product development EVT Equity 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 Antibody discovery 8
Strong financial performance Financial highlights of FY 2015 Selected KPIs in m Total Group revenues Base revenues EVT Execute revenues EVT Innovate revenues Employees 127.7 115.4 134.0 21.5 1,000 89.5 +43% 73.4 +57% 93.3 +44% 14.7 717 +46% +39% Adjusted Group EBITDA 1) Adjusted EVT Execute EBITDA 1) R&D expenses Operating income 2) Liquidity position 3) 7.7 8.7 18.3 11.6 134.5 22.1 23.8 +8% +13% 12.4 +48% +281% 93.1 +44% (6.4) 2014 2015 9 1) 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 and of Bionamics GmbH in 2014 and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result 2) Driven by the one-time effect of the income from bargain purchase resulting from the acquisition of Evotec (France) 3) Excluding M&A and related payments (Earn-out Euprotec)
Business model meets partners needs EVT Execute & EVT Innovate 10
Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 11
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 12
Above market performance EVT Execute Key performance indicators Q1 2016 Revenues (in m) Adjusted EBITDA 1) (in m) Q1 2016 includes 7.5 m of intersegment revenues 23.1 +67% 38.6 9.6 Revenue growth driven by strong performance of the base business, milestone achievement from the Padlock collaboration and full quarter of Sanofi contribution 3.5 Strong adjusted EBITDA growth mainly due to higher margins in the base business, milestones and the contribution of the Sanofi collaboration Q1 2015 Q1 2016 Q1 2015 Q1 2016 13 1) Adjusted for changes in contingent considerations
Well balanced customer mix EVT Execute Selected customer and revenue metrics Revenues by customer segment ytd 2016 1) (in %) Customer type ytd 2016 (in %) Revenues by region ytd 2016 (in %) Remaining 7% 100% Mid-sized Pharma 9% 100% ROW 1% 100% Top 10-30 Customers 16% Foundations 19% USA 47% Biotech 24% Top 10 Long-term Strategic Alliances 77% Top 20 Pharma 48% Europe 52% 14 1) Third-party revenues only
Evolving as trusted partner of foundations Foundations & Evotec Indication (mechanism) Partner Timeline Parkinson s Disease Michael J. Fox Foundation Start 2016 Huntington s Disease CHDI Foundation Extended through to 2018 Alzheimer s Disease Gladstone Institutes Start 2015 Juvenile Batten Disease Beyond Batten Disease Start 2015 Disease foundations are increasingly driving science and they are turning to companies like Evotec to pursue novel drug discovery pathways 1) Leukemia The Leukemia & Lymphoma Society Start 2013 Muscular dystrophies Jain Foundation Start 2013 Malaria Medicines for Malaria Venture (MMV) Start 2014 15 1) Over 6,000 rare disease NGOs; more than 10,000 relevant private foundations with more than $ 5 bn funding
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 16
Outlook 2016 EVT Execute Expected key milestones 2016 New long-term deals with large and mid-sized Pharma Expansion of foundations and biotech network in USA/EU New performance-based integrated technology/disease alliance Milestones from existing alliances 17
Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 18
Five fields of core expertise Overview NEUROSCIENCE DIABETES & COMPLICATIONS PAIN ONCOLOGY ANTI- INFECTIVES 19
Strong revenue growth reflects new partnerships EVT Innovate Key performance indicators Q1 2016 Revenues (in m) Adjusted EBITDA 1) (in m) R&D expenses (in m) 3.8 +67% 6.4 4.6 4.9 (2.4) Q1 2015 Q1 2016 (3.8) Q1 2015 Q1 2016 Q1 2015 Q1 2016 Strong revenue growth and improved EBITDA due to new partnerships signed in 2015 Increased R&D expenses due to intensified efforts in CNS and oncology Full impairment of EVT100 series ( 1.4 m) 2) 20 1) Adjusted for changes in contingent considerations 2) In Q1 2016, Evotec was informed by Janssen Pharmaceuticals, Inc. that Janssen intends to phase out the licence agreement regarding NMDA antagonist with effect from August 2016.
Discovery Pre-clinical Clinical Constantly growing pipeline of product opportunities Partnership portfolio Molecule Therapeutic Area/Indication Partner Discovery Pre-clinical Phase I Phase II Phase III EVT302 1) EVT201 EVT100 1) EVT401 ND 2) ND 2) ND 2) ND 2) Various CNS Alzheimer s disease CNS Insomnia CNS Depression Immunology & Inflammation Oncology Oncology CNS Pain Oncology Women s health Endometriosis EVT770 Metabolic Diabetes (type 2/1) ND 2) Respiratory ND 2) Immunology & Inflammation EVT801 EVT701 EVT601 Various Oncology Oncology Oncology Immunology & Inflammation Various Metabolic Diabetes (type 2/1) Various Metabolic Diabetes (type 2/1) Various Various Various Various Nephrology Metabolic Diabetes CNS Alzheimer s 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 21 1) EVT302 and EVT100: Evotec has regained the licence rights and is currently assessing potential business opportunities 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 22
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 AD costs equal about 1% of the world s GDP 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 23
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 Immuno-oncology will become a new pillar of cancer therapy Market potential estimated to be $ 35 bn in 2023 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 24
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 Four major indications: liver, kidney, cardiac, lung fibrosis 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 25
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 Background Fast growing insulin market already exceeds >$ 22 bn in 2014 Diabetes is driven by loss in beta cell function Human beta cells offer only disease-modifying product opportunity Agreement with Sanofi Upfront fee of 3 m Potential pre-clinical, clinical, regulatory and commercial milestones exceeding 300 m Significant royalties upon commercialisation Integrated collaboration, resources involving more than 15 scientists at Evotec and Sanofi 26
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 27
More than 10 projects primed for partnering EVT Innovate Cure X/Target X 2011 2012 2013 2014 2015 2016 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) TargetBCD (Sanofi) TargetDR (Internal) TargetATD (Internal) TargetFX (Internal) TargetKX (undisclosed) TargetCytokine (DRFZ/BMBF) Various (Fraunhofer Institute) TargetFRX (Internal) TargetNTR (Internal) TargetKras (OSU) Various (Gladstone Institute) TargetaSN (MJFF) TargetBispecifics (ex scientia) TargetRhoB (undisclosed) TargetEEM (Harvard) TargetAD (NBB/J&J) 28 = Innovate Pharma partnerships signed since 2011
Driving value of hidden assets First-in-class approach for tolerance induction Topas Therapeutics: An Evotec spin-off company Topas Therapeutics GmbH is focused on the development of novel tolerizing particles for immune-mediated diseases using proprietary NdL nanotechnology platform Use of nanoparticles to deliver selected antigenic peptides to the liver (Topas = Tolerizing particles) Licence Bionamics GmbH NdL Principal shareholder Investors & Partners Epidarex, EMBL, GIMV 14 m Series A funding secured with VC consortium Pre-clinical development for multiple sclerosis has been initiated; Phase I to start in 2017; strong pipeline Evotec will remain the largest shareholder 29
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 30 1) e.g. HSCI, Gladstone, MPI, CRTD, etc.
Outlook 2016 EVT Innovate Expected key milestones 2016 New clinical initiations and good progress of clinical pipeline within partnerships Expansion of network of top-class academic alliances Partnering of Cure X/Target X initiatives Strong focus on ipsc (induced pluripotent stem cells) platform 31
Agenda Evotec Overview EVT Execute EVT Innovate Financials & Outlook 32
Group revenues +74%, higher gross margin Key financials Q1 2016: Condensed income statement (IFRS) in m Q1 2015 Q1 2016 % vs. 2015 Revenues 21.5 37.5 74% Gross margin 28.0% 33.3% R&D expenses (3.8) (4.4) 14% SG&A expenses (5.1) (5.4) 5% Impairment of intangible assets (1.4) Other op. income (expenses), net (0.4) 1.4 Operating income (loss) (3.3) 2.7 EBITDA adjusted 1) (0.3) 7.2 Net loss (1.1) (1.2) 9% Revenue increase mainly driven by strong performance of the base business, milestone achievement in Padlock collaboration and three months of the Sanofi contribution Adjusted Group EBITDA strong and significantly increased 33 1) Adjusted for changes in contingent consideration
Strong revenue growth in EVT Execute and increased investments in EVT Innovate Condensed segment information for Q1 2016 in m EVT Execute EVT Innovate Intersegment elimination Evotec Group External revenues 31.1 6.4 37.5 Intersegment revenues 7.5 (7.5) Gross margin 26.1% 46.1% 33.3% R&D expenses (0.1) (4.8) 0.5 (4.4) SG&A expenses (4.4) (1.0) (5.4) Impairment of intangible assets (1.4) (1.4) Other op. income (expenses), net 1.1 0.3 1.4 Strong revenue growth and improved EBITDA for both segments Increased investments in Cure X/Target X initiatives and oncology projects in Toulouse in-line with expectations and strategy plans Impairment of EVT100 series Operating income (loss) 6.8 (4.0) 2.7 EBITDA adjusted 1) 9.6 (2.4) 7.2 34 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 >150 55.3 127.7 6.5 8.7 72 2010 2015 2010 2015 2010 2015 R&D expenses (in m) Liquidity 2) (in m) Employees 3) 6.1 18.3 70.4 133.9 519 1,000 2010 2015 2010 2015 2010 2015 35 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
Strong team and shareholders for innovation Management & shareholder structure 13% Roland Oetker/ROI ~13.0% 77% Free float 3% DAMI 1) 1% Management 3% AGI 2) 3% BVF 3) Number of shares: 132.8 m Listing: Frankfurt Stock Exchange (TecDAX), OTCBB 52 week high/low: 4.31/ 2.86 Management Board Werner Lanthaler (CEO) Long-time experience in Pharma & biotech Mario Polywka (COO) Strong operational and commercial management track record Cord Dohrmann (CSO) Outstanding background in metabolics Enno Spillner (CFO) as of 18 July 2016 Long-time experience in finance & biotech Supervisory Board Wolfgang Plischke Ex-Bayer Bernd Hirsch Bertelsmann SE & Co. KGaA Claus Braestrup Ex-Lundbeck Paul Herrling Ex-Novartis Iris Löw-Friedrich UCB Elaine Sullivan Carrick Therapeutics 36 1) Deutsche Asset Management Investment GmbH 2) Allianz Global Investors GmbH 3) BVF Partners L.P. and its affiliates
Strong growth and important R&D triggers expected in 2016 Guidance 2016 in m KPIs Guidance 2016 Actual 2015 Group revenues 1) More than 15% growth 115.4 m Adjusted Group EBITDA 2) Positive and significantly improved compared to prior year 8.7 m R&D expenses Approx. 20 m 18.3 m Liquidity 3) Similar level compared to 2015 134.5 m Capex investments Up to 10 m 11.2 m 37 1) Excluding milestones, upfronts and licences 2) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total nonoperating result 3) Excluding any potential cash outflow for M&A or similar transactions
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