Thank you all for being here. Welcome to the Evotec SE half-year report for 2023. During this presentation, all participants will be on mute. We will have a question-and-answer session afterwards. Now, I will hand it over to our CEO, Werner Lanthaler. Please proceed.

Thank you very much. Welcome to all of you. Welcome to our half-year presentation, first half of 2023. Emerging stronger, that's the theme that we have given this presentation, which will become very clear throughout the presentation why we chose this topic. We have uploaded a presentation and invite you to follow it throughout this presentation, which I will give, together with my management team who is here with me. Here is Laetitia, our CFO. Here is Cord, our CSO. Here is our Chief Business Officer, Matthias, and we have to apologize, Craig, this time, is on a customer visit. I'm very happy to have my whole team around here because you see that all efforts coming together at Evotec are efforts of teams. We are strong as a team. We go through crises as a team, and we emerge stronger as teams. And if you go to page number five of your presentation, let me directly bring you into the highlights, and also some of the lowlights of the first half of 2023. You see that in a year where Q2 was heavily impacted by the cyberattack, we nevertheless grew by more than 14% in 2023. There are not many companies who can talk about double-digit growth in general, and definitely, there are not many companies who can talk about 30% growth, which we show in Q1 of 2023. This is of course all driven by fantastic collaborations that we have closed in 2022, but also at the beginning of 2023 that are now running forward. Let me mention a few of them: our collaboration with Janssen, our collaboration with BMS, expanded and extended in neurodegeneration, and of course, a strong progress in our ongoing protein degradation partnerships with BMS. You will see later in this presentation, the continued validation of Just-Evotec Biologics and multiple agreements that we have signed that have carried over from 2022 and are enlarged and expanded in 2023. So, you see highlights are coming together from many fronts, but also let me highlight that our pipeline-building efforts will gain traction visibility in the next couple of months. And you have seen a first highlight here with, for example, a transition and a highly attractive indication in kidney disease together with Bayer. Of course, you've heard about our lowlight of the year already enough, so let me skip this and go forward into the future because that's what it's all about. When we talk about the future on action plan 2025, which you see illustrated on the next page, you should be aware that we have our guideline. We follow our guideline, and it is a wonderful orientation for us, despite that sometimes there are external challenges that we have to master and are mastering every time when there is one and where we are every time emerging stronger. So, that's why we are very happy that also today we can feed back to you that we feel that we are on a very good track on action plan 2025. Action plan 2025 is not only growing a fantastic shared R&D platform, which we describe as the shared economy for research and development in our industry, but it's also growing and building a massive royalty pool. So, if you go to page number 20, page number seven of your presentation, sorry about that, you see that we have grown our co-owned pipeline assets to more than 140, which used to be still below 130 at the beginning of this year. We have grown up to 19 clinical assets that we co-own, which was 18 at the beginning of the year. You have seen that our portfolio is coming together with very balanced programs in all disease areas. And you should appreciate that there are more than 15 billion of potential partnership milestones in the company that we have accumulated and which will drive our milestones and profitability into the next years to come. And don't forget, a royalty pool consists of royalties that once these products are registered, will come to us. On average, we have between 8% and 10% royalties on all the co-owned assets. This is just to start our royalty pool and to illustrate that with many aspects that we are doing, we are just at the beginning. And when it comes to the beginning, I'm also very happy that Laetitia, who started recently in the company, is for now giving you the first time Q2 presentations in a full setting that she has prepared. With this, I hand over to Laetitia.

Thank you, Werner. It's my pleasure to walk you through half-year financials and the guidance for 2023, which we, as you all know, updated on 27th of July. We had a very strong start to the year, with revenues in Q1 at €213.6 million, which implies a growth of 30% versus Q1 of the prior year. A robust underlying base business, as well as a new strategic collaboration with Janssen, and the expanded collaboration with BMS, have contributed to this excellent performance. The cyber incident in the first week of Q2 led to a deliberate shutdown, however deemed necessary to protect all the company's partners and stakeholders at Evotec, could ensure that integrity of scientific data remains unaffected, which led to a missed revenue of around €100 million, of which €30 million were compensated for with higher than anticipated advance payment. Despite this massive event, Evotec continued to expand its operational activities and entered into a new partnership, notably the new multi-year tech partnership Between Just-Evotec Biologics and Sandoz. All this contributed to group revenue amounting to €383.8 million in H1 2023, increased by 14% compared to the previous half-year in 2022, which amounted to €336.9 million. Moving to Page 10, gross revenue grew by 14%, plus €46.9 million to achieve €383.8 million within the first six months, of which about €214 million were generated in Q1, and €170 million in the second quarter of 2023. Growth of the base business was also 14%. We achieved milestone upfront and licenses revenue of €4.3 million versus €6.8 million the year before. Just-Evotec Biologics more than doubled its revenue share year-over-year to €59 million during the first six months of the year. The cost of revenue during the six months ended 30th of June amounted to €284.3 million, yielding a gross margin of 25.9%. The significant increase in margin was attributable to recently signed beneficial cooperation and partnerships with BMS, Sandoz, and the milestone revenue of €2 million from Bayer. Excluding Just-Evotec Biologics, total gross margin amounted to €25.3 million versus 27.3% during the same period last year. The cost of revenues of the group was divided into €160.3 million in Q1, gross margin 24.9% versus €124 million in Q2, gross margin of 27.2%. The decrease in unpartnered R&D expenses by 11% to €29 million versus €33.3 million the prior year, and partnered R&D expenses by 64% to €1.9 million versus €3.5 million the year before, was primarily related to the impacted business activity in Q2, leading to a temporary reduction of R&D cost in Q2 2023 to €12.2 million, after €18.7 million in Q1. Our adjusted group EBITDA for the first six months totaled €26.1 million, which compares to €33.6 million the prior year. The decrease was caused by missed revenues, as well as higher costs to manage adverse effects of the incident. Business dynamics were fully intact until 6th of April, resulting in a strong start to the year, yielding an EBITDA of €34.3 million in Q1. One of the burdens due to the incident in Q2 were partially mitigated due to the signing of the technology partnership with Sandoz. Still, adjusted EBITDA in Q2 was in a negative territory of €8.2 million. Moving to Page 11, summarizing selected balance sheet and cash flow items for Evotec. With an equity ratio of 51% compared to 52.6% as of December 2022, we remain with a very solid basis for future investments, as it provides us with considerable financing flexibility. Cash flow used in operating activities in the first six months amounted to minus €5.6 million. The comparable figure last year was a cash flow of €240 million and was largely driven by a €200 million upfront payment from BMS in H1 2023. This figure is impacted by the cyber incident and does not yet reflect payments in connection with the BMS collaboration and the agreement with Sandoz, which were received in July after Q2 ended. The net debt leverage ratio amounted to minus 0.9 times of adjusted EBITDA, which means we still maintain a net cash position. The group liquidity as of end of June amounted to €620.8 million. We continue to invest significantly into the growth of our sites and our offering into J.POD facilities in Toulouse in the first semester. This is reflected in CapEx, which amounts to €104 million in H1. Furthermore, we financed our equity and minority shareholding with €9.2 million. Moving to Page 12. As presented in our business update at the end of July based on our regular review of our economic situation and our order book status, our guidance was adjusted with revenue now expected to come in a range of €750 million to €790 million, and partner R&D expenses to reach €60 million to €70 million, and adjusted EBITDA in a range of €60 million to €80 million for the full year. Slide 13 shows the bridge amount between the original guidance and the revised one. We estimate revenues net of €70 million missed in Q2 due to the cyberattack. We see the visible partnering pipeline as strong, but are seeing Bayer’s dynamic in more service-oriented business. Overall, we think we will be able to catch up and generate additional revenue of €20 million to €40 million in Q3 and Q4. Earlier and better than anticipated effects from advance payments are mitigating part of the negative effects. With slide 14, I would like to introduce to you our initiative to bounce back ever better after Q2. With the so-called value protection plan, which includes a variety of activities, we aim to secure liquidity and profitability. The identified savings potential for 2023 represents €25 million. Furthermore, we continue to improve processes and systems as well as improve GMP compliance, good manufacturing practice. We are preparing for a focused ERP build-out in the UK and for the J.POD site in Toulouse in Europe. A strategic review has been started, which targets a portfolio realignment, including capabilities and capacities. Finally, we will continue to invest in focus areas for technology leadership. Moving to Page 15, we estimate the net impact of one-off costs to rebuild the business together with missed revenues of €80 million to €85 million. As mentioned before, with the value protection plan, we aim to build a leaner and safer organization, targeting €25 million in cost savings. This will also result in recurring savings in 2024 and beyond. The new strategic collaboration with Janssen and Sandoz, as well as the expanded collaboration with BMS, contributes significantly and helped to mitigate the missed revenue and profitability resulting from the cyberattack so that we updated adjusted EBITDA guidance to €60 million to €80 million. With this, I hand over back to you, Werner.

Thank you very much, Laetitia. We are building the shared research and development economy in our industry. With this, it is essential to also build leading platforms in this industry to drive progress. So, we pride ourselves not only to have the most cost-efficient and cost-effective platforms, these are also the most innovative platforms at this stage available in our industry. Let me name them: it's PanOmics, so Omics-driven discovery and drug development. It's iPSCs in cell therapies, so using induced pluripotent stem cells for off-the-shelf solutions, and it's Just-Evotec Biologics, and we bring this all together in an end-to-end shared R&D platform, which is accessible for more than 800 partners in our industry. Here are just a few examples of what we can do when we apply this. So, Page 17 illustrates to you how we are building this massive royalty pool with our partners by fully leveraging these technologies. Going strong with Bristol, going strong with Janssen, going into a tech partnership with Sandoz, and also building with iPSCs a cure for diabetes together with Sanofi, just highlights the potential of these platforms in all four areas. And if you go one page forward, you see how every building block is bringing this into a portfolio in several disease areas where we're very strong and along the full value chain from clinical projects to a massive iceberg of preclinical and discovery projects that is growing over time. So, yes, this is the long game that so many people have asked us to build, and yes, this is the idea of going in the same direction with a very clear strategy to build these co-owned assets. And yes, if you go to the next page, you see that this comes with a massive cascade of milestones where we are just starting to collect and to come to the data points of the milestone cascade that already exists. So, behind action plan 2025 and into the future, you see illustrated here into the year 2040 that we have already built a massive pool of opportunities which biology will decide how much we can collect from these more than €15 billion that are visible here. Now going to the next page, and let me step back here for a second because it comes to Just-Evotec Biologics, and I'm often thinking back to our Capital Markets Day, which we held in November in Seattle last year, where the key question was, will you ever find partners for this platform? Where we were just starting to create a sales order book, which was stretching itself to reach $100 million in sales. Now, only a few months later, we are approaching €1 billion in committed sales into Just-Evotec Biologics. This is why I really think we are witnessing an iPhone moment in this industry in terms of fully continuous manufacturing for biologics because higher degrees of automation and fully continuous manufacturing will bring down costs of goods and with this, fulfill the original mission of Just-Evotec Biologics to gain access with novel products for massively more people on this planet. So, watch out for Just-Evotec Biologics. This is just the beginning of a technology that will change the world and also the access to biologics. And that's why we are preparing what you see on Page 21 for a capacity build, which is not driven by simply more capacity, but which is driven by a sort of paradigm shift in technology to really allow novel technology to build better biologics. And we are so happy that this paradigm shift is happening and is validated by the strongest and best partners in the industry, for example, with Sandoz and also in public governments or in public institutions like with the Department of Defense in the United States. And again, this is just the beginning of what we will do in the US and increasing in Europe where J.POD 2 is in full swing very soon because we are keeping our timelines in building our J.POD in Toulouse where we have just recently installed our pods to establish manufacturing processes here. I couldn't be more excited about Just-Evotec Biologics as I am right now. Having said that, I also couldn't be more excited about PanOmics, about iPSC cell therapies, and about our R&D end-to-end platform. When it comes to our next chapter on this presentation, let me please guide you to Page 23 because it is so important for us not only to build a company, but it is important for us to contribute with our company to the planet. And with this, we are keeping our promise regarding our contribution to the environment, our contribution to social welfare and social well-being on this planet, and when it comes to our contribution to better governance. With this, we are showing you our goals for 2023, and are happy to report back that all goals for 2023 will be operationally executed as planned. If you go to Page 24, let me when it comes to operational execution, also tell you one more time that we will increase our pace in the second half after a stop we had to take to protect data and our partners. And with this, I think we are really just at the beginning for the start of a very strong second half where you will see Omics, iPSCs, Just-Evotec Biologics, and our end-to-end shared R&D platform deliver to contribute to the growth of 2024, where we still think that despite a softer funding environment, our market offering is intact. And also, let me highlight on Page 25, that you will see several pipeline projects emerging from this pipeline into visibility by transitioning from one phase to the next. This is where we go from Phase 3 projects, for example, in Asia, to very exciting preclinical projects going into the clinic with our partners. At this point in time, let me thank you for following Evotec and that you are ready to also understand what we are doing and also translate this into your environments. We are very happy to discuss and to make our story more visible to even more of you. Therefore, you will see us at several conferences in the second half of 2023, which we have illustrated here on Page 26 for you, and would be great to see you there, or otherwise, please be invited to our second Capital Markets Day, which we’ll hold on the 15th of November. With this for H1, let me summarize. It is really a half-year with two sides at this stage, a great start, an unexpected stop, but we are coming out of this stronger than ever, with more energy than ever, and with the most impressive technologies to bring our platforms forward together with our partners. And with this, I want to thank my team. I want to thank the company for all the help that we have received, also many of our outside partners, and we are looking forward to your questions.

The first question comes from Peter Verdult with Citigroup. Please go ahead.

Thank you. Peter Verdult here, Citi. Two questions. Werner, could you talk a bit more about characterizing the funding environment that you're seeing? I think you noted softness, but you say it will hold its own. What are you seeing in terms of large, medium, small customers and their behavior? Secondly on just biologics post Sandoz, I realize you can't go into huge detail, but could you characterize whether you are seeing a lot more incoming inquiries in terms of partnering with Evotec as it relates to just biologics going forward? Thank you.

Hi, Peter. Great to hear you. On both questions, I'll hand over to Matthias, who is the person who is closest to the market as our Chief Business Officer, and therefore best positioned to share his observations.

Thank you, Werner, and thank you, Peter. Thanks for the question. Regarding the funding environment, this is obviously something we watch very carefully and we have developed a certain view, which is as follows. A, we see starting in the year with the Silicon Valley Bank incident, leading to interest rate impacts. I don’t need to tell you that the biotech environment is stiffer and that we face a more limited funding environment. On the other hand, you have an outsourcing partnering market that is large in nature. By our account, at least $20 billion with a conservative measure, not including all the adjacent areas that we see. So, by default, it’s a large market with a long-term demand, which is clearly unbroken in terms of therapeutic areas with high unmet needs. And why do I open up both vectors? Short-term funding challenges for small companies, as well as an environment of a very large market and profit pool for us because we are well-positioned with a value proposition that targets the premium end in terms of scientific problem-solving, in terms of end-to-end solutions, and in terms of high-end products. This market affects us a bit, requiring us to adjust our tactics. You have seen in the numbers presented by Laetitia that we are adjusting our growth for the second half-year by something like 7%. Yes, we are definitely looking forward into a market environment where the value proposition of Evotec is part of this solution in this environment. So far, I've spoken only about small companies, but for those, in a funding-constrained environment, accessing a highly efficient R&D platform and leveraging variable costs is beneficial. A similar argument applies to large customers. If I draw a line, we remain reasonably optimistic and comfortable with our growth outlook while recognizing that particularly for more commoditized services and solutions, the world has become a bit tougher.

If I may add, especially in our development and manufacturing API business, we see a more competitive market. Otherwise, the market for drug discovery and high-end quality services is very strong.

This is indeed a fair observation. Regarding the question on Sandoz, I take the same arc of the story as Werner started because as we presented at the Capital Markets Day, we highlighted feasibility projects in the biosimilar space, which have given us a certain focus and we observe the realization of a very large tech partnership with Sandoz. This has made quite an impact on the market. We see an early partnering pipeline with more momentum. Our priority now is to properly launch and expand existing partnerships and build into the next two years, meaning 2024 and 2025, that pipeline is growing. We are observing increasing momentum around this technology platform.

Very clear. Thank you.

Next question, please.

The next question comes on the line of James Quigley with Morgan Stanley. Please go ahead.

Hello. Thank you for taking my questions. I've got some clarification questions. In the report, I think it says there's €38 million in milestones at the EBIT execute level. Then it seems to move up into service fees and FTE revenues at the group level. Does this fully relate to Sandoz? How much of the additional amount is Sandoz or the other effects in there? I know you mentioned the Bayer milestone as well. When I look at the guidance, can you remind us of some of the headwinds in the second half of 2022 base in terms of milestones or anything that could impact the headline growth rates? And what does the guidance imply for the underlying growth rates? Finally, on the previous call, you highlighted €20 million to €40 million in revenues from a catch-up perspective. How do you expect that to be recognized between the third quarter and fourth quarter? Also, there are a lot of pushes and pulls for the second half of the year. So, could you give us an idea of the cadence of third quarter and fourth quarter revenues? That'd be awesome. Thank you.

Pleasure. On the guidance question into the second half, I will then hand back to Laetitia. But let me first give you some color on what we have seen as milestones coming in. There is nothing recognized from Sandoz; that's only upfront that we have recognized. The milestones that are coming into the company at this stage are largely driven by the existing partnerships with BMS onco, BMS neuro, and here we have a very good visibility on a significant pipeline of these two partnerships to come. Bayer, as the milestone contribution, which was small but scientifically very important, is a big contributor. High FTE rates and high exposure to these partners show our strong growth in what we show as innovative revenues in the first half. And that’s why also Innovate had a very good first half despite the cyber incidents in Q2. The catch-up effect and when it comes to “headwinds” of the second half, I think again, you will not see many headwinds everywhere where we are back to productivity as we wanted to have it, with the exception of our API manufacturing business. Due to the fact that we simply were not able to show when exactly we will have the platforms back, there was a kind of gap in our business development, which will, by the end of 2023, beginning of 2024, then kick in again. So, effectively, that’s where the headwind from our growth comes because all other areas in drug discovery are, I would say, almost back to normal and almost back to how we expected them to be at above double-digit growth for 2023. The development business, meanwhile, is on a below double-digit growth. That's how you could gauge that out. When it comes to a better illustration of how to come to the catch-up effect of €20 million to €40 million, I will hand back to Laetitia.

So, James, thank you for your question. Coming back on the guidance and on what is included as milestones and key payments we had: in the first half of the year, we had BMS 3.1 that counted for two times €11 million, let's say rounding €22 million to €23 million in March; and then we got the Sandoz coming in June 2023 for €36 million. So, these are the two major elements that have come as a big bonus this year. That is factored into the guidance that we share.

The rest will be considered as potential upfront and very unlikely recognized revenues from the execution of projects if we deliver by the end of this year. Otherwise, they will be recognizable profitable milestones to come. However, as you know, we never guide for them because they depend on the timelines our partners are executing. I hope that gives you clarity on your question, and we are looking forward to the next question.

The next question comes from the line of Michael Ryskin with Bank of America. Please go ahead.

Hi, this is Wolf Chanoff on for Mike. Thanks for taking the questions. On the first one, I wanted to build off of an earlier question. I know that you talked about activity among smaller biotech customers, but a lot of your peers have also called out seeing signs of budget tightening or prolonged decision-making among larger Pharmas. Is this something that you're seeing as well, or are your conversations with your larger pharma customers having a different tone? Then I have a follow-up.

Yes, let me do the following: Matthias will provide a short answer on large pharmas in our end-to-end platform services, and Cord will describe a bit how we are making our long-term innovation deals with large pharma and why this is less impacted than other things. So, let's split this into two parts.

Thank you for the question. Let me dig a little bit deeper compared with my previous answer because I touched on larger pharma. Just to be clear: across the industry, there is some R&D budget tightening going on. I don’t believe we have a different view. What we’re addressing is that in these situations, the demand for high-end innovation is unbroken, and we see that in many selective deals that are made at this point of time, despite the environment. The difference between how people look at commodity services versus solutions that are more pipeline-building provides us with a unique position. I will hand over to Cord on this.

Yes, thank you very much, Matthias. Picking up where Matthias left off: pipeline-building type deals usually have a more strategic character for the pharmaceutical industry. These types of deals take more time to generate, finalize, and sign compared to more tactical fee-for-service deals. However, they are not as much affected, I would say, as tactical fee-for-service outsourcing. These are strategic, driven by high differentiation in technology and pipeline opportunities. We still see strong interest, especially in our PanOmics-based drug discovery efforts and platforms, as well as in our iPSC-based cell therapy focus area, where we have multiple discussions on projects we've been working on for quite some time. Overall, we remain optimistic about continuing to sign deals that are strategic in nature, and at this point in time, we don’t see any significant slowdown in industry dynamics.

Thank you. You should consider that all these transactions typically close over timelines ranging from three to seven years. This allows us much better visibility and planning capabilities for these partnerships compared to short-term tactical outsourcing. Therefore, these two elements should not be mixed up. They represent different efforts: long-term pipeline-building collaborations versus tactical funding-driven challenges in pharma and biotech.

Got it. I appreciate all the color. As a quick follow-up, it's good to hear that most of your businesses are online after the cyberattack. I did notice, however, that your API manufacturing is still kind of suffering from some aftereffects. I wonder if you would size that business for us just as a percentage of revenue. Have you lost wallet share here as customers have moved their time-sensitive projects elsewhere? Or, given the nature of these processes, are you confident you've maintained it?

Before I hand over for numbers to Matthias, we are fully back on all our platforms, and we were not bottlenecks here. We had to validate everything with external authorities, which we are ticking off as we speak. Therefore, we are open for business again and feel very good about it. Regarding the total dimension of the business, Matthias can provide additional insight.

Thank you for the question, Werner. To frame it more, I would say: when we look at our development businesses, it is in the range of €150 million to €170 million. We discuss the GMP affected areas, which still need some work; this is about a third of it. This would dimension the overall impact. However, we are bringing that part back online as we speak, rebuilding momentum on the business development side, as Werner articulated earlier.

Also, coming back to a question from James at the beginning: the Indigo business is something you will see in Q4, Q3 very strong. Indigo is leading into the development manufacturing business, and we're optimistic about that business for 2024, as Matthias pointed out, reaching a total capacity of about €200 million.

The next question comes on the line of Steven Mah with TD Cowen. Please go ahead.

Great. Thanks for taking the questions. I've got a three-part question on Just-Evotec Biologics. Firstly, the €1 billion sales book order: can you help us define exactly what that is? Does that include potential work that hasn't yet been committed? Secondly, how has that order book compared to your internal projections for just biologics? Lastly, has the macro environment impacted your plans for multiple J.PODs beyond Toulouse? Thank you.

Great questions. Let me start with the third one. The beauty of Just-Evotec Biologics is the highest productivity holding platform in the industry. That’s why two metric tons of output from a J.POD provides enormous output potential for a J.POD in the US and another one in Europe. We've designed these two geographies to nearshore our biologics capacity. When it comes to defining the order book and its comparison to our original assumptions, I’ll hand it over to Matthias.

Thank you, Steven, for the questions. Regarding the sales order book, we are talking about closed sales. This means committed work. There are no guarantees due to milestones and decisions, but we are tracking this committed work carefully. Prior to the last Capital Markets Day, we were nearing €100 million in that area. Now we are almost at €1 billion, which gives us momentum in J.POD 1 and 2. Regarding outlook, I will not comment on projections. The third question has already been answered. So, you should see the sales order book as a metric determining the committed work for the next two, three, or four years, and that’s what we will continue to monitor as we build business momentum.

Furthermore, don't view Just-Evotec Biologics merely as additional capacity in the realm of antibodies or bispecifics. This represents a paradigm shift in how we will manufacture biologics in the future. It’s astounding to witness a new technology attracting €1 billion in committed sales in such a short time. That is truly remarkable.

The next question comes on the line of Joseph Hedden with Rx Securities. Please go ahead.

Good afternoon. Thanks for taking my questions. Just on - just it's clear, Q2 was a great quarter, with Sandoz a strong contributor. Regarding the rest of the year, do we expect that to be the standout quarter? Or do you see other significant contributions from Just-Evotec Biologics being EBITDA positive for the first half? What might we expect when the full year is concluded? Secondly, thinking about how you account for revenues, particularly the full-time employee rates from your major collaborations, especially with BMS. We’ve always traditionally thought of those as innovative collaborations. Does that mean that the bulk of those revenues are being booked as FTE revenues under the innovate segment, or is it a bit more complex than that? Thanks very much.

Unfortunately, we cannot deliver a tech partnership with an industry leader like Sandoz every quarter. Our exclusivity provisions would probably not allow that. Q2 was exceptional in terms of the upfront and revenue impact. However, the momentum in getting the technology and paradigm shift into the industry is just beginning. That's why it's so important. But you should not expect significantly more revenues for Just-Evotec Biologics to come right away because first, we operationally have to build the capacity to deliver. Both J.PODs must be fully operational for us to leverage capacity from one to the other, and that will not happen before the end of 2024, beginning of 2025. This aligns with the vision of Action Plan 2025 in Just-Evotec Biologics. Regarding your second question, you are correct. Expect high FTE rates and milestones as revenues recognized from neuro or from BMS onco to appear within the innovate lines.

Sorry for the delay there. I have three questions, please. First, regarding the competitive landscape, which you said is tougher in more commoditized services. How is that impacting the market? Is there price cutting that you have to do to maintain your share, or are you maintaining your higher pricing and willing to lose some share? What might that mean in terms of your revenue mix between higher-margin and lower-margin business?

First question goes to Matthias.

Yes. As I hinted earlier with changing tactics, there’s not leading us to respond with price cutting. I would emphasize value-based pricing: what is a fair price responding to the values we provide. It is a more competitive environment in more commoditized services, and we’re assessing our full toolbox here. It does not imply we see the necessity to undertake price cutting, which would not be supportive in the market.

That's perfectly clear. Thank you. My second question is regarding your own ability to offset some of the pressures seen, particularly on funding slowdowns. Are you able to slow down hiring rates or undertake other cost-cutting measures in order to protect the anticipated EBITDA progression?

As Laetitia has outlined, we have implemented what we internally call a value protection plan to review our expenditures. Again, never waste a crisis; the cyber incident crisis has sparked a good opportunity for us to react and rebuild while reassessing everything we're building at this stage. Looking at our website, you will see that we are currently looking for more than 250 open positions—most of them focused on process development in Just-Evotec Biologics. This further indicates the strong operational demand for capacity we are building. We are pleased to have maintained a steady workforce growth over the years. We have slowed down hiring in some areas, but retention rates are improving. Therefore, we believe the platform is growing with top talent at this time. It’s a healthy mix of robust hiring in Just-Evotec Biologics and very selective hiring in other areas, though with a bit more caution than before.

Thank you very much. My last question relates to the bridge from 2023 to 2025. Should we expect that progression on EBITDA to be more backend-weighted? Could you give us a sense of how backend-weighted it is likely to be? You’ve provided expectations for 2023 and 2025, and it would be helpful to get a general sense of how we should think that trend over these two years.

You see a company that has been growing double digits on its base business revenues for the past 14 years. This trend is clear. For 2024, we expect double-digit revenue growth in our base business, which is a capacity we can showcase, along with a close to 10% budget outlook. There are two factors to consider that are backend-loaded for 2025. One is how many milestones will the EBITDA contributions fall into place? That’s why I illustrated this massive pool of existing pipeline events with high milestones today. Our goal is not to slow down our R&D efforts; we believe that PanOmics-driven drug discovery and iPSC cell-based drug discovery will open numerous doors, just as Just-Evotec Biologics does now. But 2025’s potential milestones will be significantly higher than those of 2023, but they must be validated through biology. The second element is the EBITDA contribution coming from Sandoz plus other Just-Evotec Biologics components, where both J.PODs must be fully operational by the end of 2025, while we need to deliver on our existing contracts. We remain confident here. These three elements combined will facilitate the bridge from today above €1 billion in sales and toward €300 million in EBITDA.

Hi, good morning and congrats on the progress. Regarding the iPSC and the PanOmics business, Werner, how scalable do you see those businesses? And how much of a limitation is it to find high-quality talent? You've been very successful at it so far.

In terms of scaling PanOmics and iPSCs, I would like to hand it over to Cord.

It’s a good question. We are confident that both platforms are highly scalable. The PanOmics approach to drug discovery represents a paradigm-shifting effort in the industry, using PanOmics as a guiding principle throughout the drug discovery process—from understanding diseases at the molecular level through profiling patient samples to translating this into drug screening techniques. We see this as a new end-to-end platform applicable to most disease areas. Currently, we utilize it primarily in neuro and oncology. However, various other indications are equally suitable, and we believe they will come. Similarly, iPSC cell therapy offers a myriad of opportunities beyond diabetes, which is currently our most advanced project, set for clinical introduction by the end of 2024. We’re also active in the oncology space, with many other opportunities on the horizon. The platform remains largely consistent, with approximately 75% to 80% of it being reusable across varying areas, enabling faster scaling elsewhere. I hope that answers your question.

Thank you, Cord. I think it’s clear: Yes, this model is scalable, particularly as it’s platform-driven. In closing, thank you very much for following us during this exciting first half of 2023. We are optimistic about only seeing business excitement in the second half of 2023, and we appreciate your support. We look forward to seeing you soon. If you have any further questions, please don't hesitate to reach out to Volker or any member of our team. We are here to discuss. All the best.