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What were the key takeaways from Evotec’s earnings call?

- **Landmark Sandoz Deal**: EUR 350 million upfront + EUR 650 million+ future payments for JEB's continuous manufacturing tech, shifting to high-margin licensing.
- **Cost Efficiency**: EUR 60 million+ cost cuts in 2025, with 33% R&D spending reduction to EUR 27.7 million.
- **Pipeline Momentum**: 4 Phase II assets in 2026, EUR 16 billion+ milestone potential, and 100+ partnered projects.
- **AI/Science Leadership**: 90%+ predictive accuracy in safety tox, expanded molecular database, and J.POD licensing to Sandoz.
- **Mixed Market**: JEB non-Sandoz growth 105%, but D&P&D faces softness with cautious biotech spending.

**【CEO Summary Section】**
- Group revenues for the first 9 months of 2025 were EUR 535.1 million, a 7% decline year-over-year, driven by a 12% decline in D&P&D (Drug Discovery and Preclinical Development) business. However, Just-Evotec Biologics (JEB) grew 11% to EUR 143.2 million.
- The company announced a landmark deal with Sandoz, including a EUR 350 million upfront payment and potential future revenues of over EUR 650 million from technology licensing, development, and royalties.
- Cost-cutting initiatives aim to achieve EUR 60 million in 2025 and an additional EUR 50 million in future years. Negative change orders in D&P&D normalized in Q3, with proposals up 20% over the past two quarters.
- The partnered asset pipeline now includes 4 molecules expected to enter Phase II clinical trials in 2026, with a non-risk-adjusted milestone potential of over EUR 16 billion.

**【CFO Financial Commentary】**
- Adjusted EBITDA for the first 9 months was negative EUR 16.0 million, reflecting weaker D&P&D revenues and fixed costs. Free cash flow improved 14% year-over-year despite one-time payments.
- JEB's non-Sandoz and non-DoD (Drug Optimization) business grew 105%, outpacing Sandoz's low-single-digit growth. The transaction with Sandoz is expected to strengthen liquidity post-closure.
- R&D spending decreased 33% to EUR 27.7 million, redirected to strategic partnerships. The company reaffirmed 2025 guidance of EUR 760-800 million revenue and EUR 30-50 million EBITDA.

**【CSO Scientific Update】**
- Evotec's AI-enabled platforms (e.g., E.INVENT, AE safety tools) achieved predictive accuracies of over 90% for liver and cardiotoxicity, driving partnerships and pipeline growth.
- The molecular patient database expanded into kidney, obesity, and immunological diseases, supporting strategic deals and milestone payments.
- The J.POD continuous manufacturing platform was licensed to Sandoz, with potential for further cell line and media licensing. Over 100 partnered assets, 60% in strategic collaborations, target EUR 500 million in returns by 2028.

**【Q&A Highlights】**
- **Sandoz Deal Impact**: The transaction reduces manufacturing CAPEX, shifting to high-margin licensing. 2/3 of future payments will be development-related, with 1/3 from milestones and royalties.
- **D&P&D Outlook**: While green shoots (20% increase in proposals) suggest stabilization,2026 growth remains uncertain, with cautious spending from biotech customers.
- **NAMs Adoption**: Pharma interest in early-stage NAMs is rising, but revenue acceleration is expected in 12-24 months as platforms industrialize.
- **2028 Trajectory**: Mid-term targets of 8-12% revenue CAGR and >20% EBITDA margin are achievable, with JEB leading growth and D&P&D recovery.


Evotec SE (EVO) Q3 2025 Earnings Call Transcript

- **Revenue Split**: D&amp;PD (-11%) vs. JEB (+16%), with JEB non-Sandoz/DOD up 87%.
- **Cost Efficiency**: EUR 60M+ savings, 600 FTE reduction, liquidity EUR 348M.
- **JEB Pivot**: Sandoz deal (USD 300M) transitions to asset-light model, retaining tech upside.
- **Market Trends**: Early-stage R&D cautious, China showing traction, JEB cell line/media market growth.
- **Strategic Tech**: MPD expanded to 27,000+ patients, enabling novel targets in women's health/obesity.

**【CEO Summary Section】**
- **Strategic Progress**: Confirmed on-track execution of 2025-2028 strategy, with D&amp;PD segment revenue down 11% (temporarily impacted by BMS change orders) and JEB up 16%.
- **Market Dynamics**: Early-stage R&D funding remains cautious, with higher change orders in Q1-Q2, but normalized in Q3. JEB non-Sandoz/DOD revenue grew 87%.
- **JEB Pivot**: Transitioning to asset-light model via Sandoz deal (USD 300M consideration), retaining IP and tech upside. JEB cell line/media market growth expected.
- **Technology Leadership**: Molecular patient database (MPD) expanded to 27,000+ patients, enabling novel targets in women's health and obesity.

**【CFO Financial Commentary】**
- **H1 2025 Results**: Total revenue EUR 371M (-5%), D&amp;PD EUR 269M (-11%), JEB EUR 102.2M (+16%). Adjusted EBITDA -EUR 1.9M (vs. +EUR 11.3M prior year).
- **Cost Efficiency**: EUR 60M+ cost-out (EUR 30M from Priority Reset), 600 FTE reduction (vs. target 400). Operating cash flow improved Q2, liquidity EUR 348M.
- **Sandoz Deal**: USD 300M site sale + tech license, with future development, milestone, and royalty revenue streams.

**【Q&A Key Highlights】**
- **D&amp;PD Recovery**: Softness expected to persist, with cautious spending in early-stage R&D. Transactional business more price-sensitive, strategic partnerships less so.
- **JEB Mix**: Current revenue blend of development/production and tech access, shifting to higher-margin licensing. Non-Sandoz growth driven by 3 large pharma customers.
- **Sandoz Strategy**: Monetizes asset while retaining IP and tech leverage. Deal reflects JEB's world-class continuous manufacturing tech.
- **Geographic Trends**: China showing traction, Europe/U.S. mixed. Evotec positioned to benefit from global recovery.
- **AI Integration**: Evotec's omics-driven platforms (e.g., MPD) align with FDA's computational modeling push, enhancing target validation and drug design.

Evotec SE (EVO) Q2 2025 Earnings Call Transcript

- **Revenue Mixed**: Shared R&D down 10% YoY (-€14.6 million), offset by Just Biologics +16% YoY (+€8.3 million). Q1 EBITDA €3.1 million vs. €10.2 million YoY.
- **BMS Collaboration**: €75 million payment received, with expanded molecular glue degrader pipeline driving future work packages.
- **Cost Savings Progress**: €20 million cost out plan 50% implemented, with full impact from Q2+.
- **Strategic Focus**: AI-driven platforms (E.MPD, PanOmics) positioned to benefit from FDA's shift away from animal testing.
- **2025 Outlook**: Reaffirms €30-50 million EBITDA, with H2 Shared R&D recovery contingent on BMS activity and reduced transactional work.

**【CEO Summary Section】**
- **Q1 2025 Revenue**: €200 million (-4% YoY), with Shared R&D declining 10% YoY to €140.6 million due to soft market conditions, while Just-Evotec Biologics grew 16% YoY to €59.4 million.
- **Strategic Highlights**: Expanded collaboration with BMS in molecular glue degraders, receiving €75 million in performance-based payments. Secured a Korean government grant for lung fibrosis research.
- **Technology Leadership**: Emphasized platforms like E.MPD (molecular patient database), iPSC, PanOmics, and PanHunter, generating 500 billion data points from 20,000 patients.
- **Market Outlook**: Maintains 2025 guidance of €30-50 million EBITDA, expecting Shared R&D recovery in H2 2025 driven by BMS work packages and reduced transactional work.

**【CFO Financial Commentary】**
- **Financial Performance**: Adjusted EBITDA of €3.1 million (vs. €10.2 million in Q1 2024), driven by Just Biologics' €10 million contribution. Operating cash flow improved due to BMS payments and reduced working capital.
- **Cost Optimization**: Reduced R&D spending by 33% YoY, with 50% of planned cost savings (€20 million) implemented by Q1. Full impact expected in Q2+.
- **Liquidity**: €371 million cash, net debt €107 million (5.97x EBITDA), with covenant waivers until Q3 2025.
- **Guidance**: Reaffirms 2025 targets: €840-880 million revenue, €40-50 million R&D, and €30-50 million EBITDA.

**【Q&A Key Highlights】**
- **Market Softness**: CEO attributes Shared R&D decline to cautious pharma/biotech spending, but notes Just Biologics is diversifying customer base beyond Sandoz.
- **BMS Impact**: €75 million BMS payment in Q1, with additional work packages expected to stabilize Shared R&D in H2.
- **FDA & Tariffs**: CFO highlights Evotec's AI-driven platforms (e.g., iPSC, PanOmics) as compliant with FDA's shift away from animal testing. U.S. manufacturing expansion may benefit from tariff-related demand.
- **Layoffs & CRO Demand**: CEO sees potential for increased outsourcing as pharma/biotech layoffs reduce in-house capacity, but notes market remains cautious.


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