Ladies and gentlemen, welcome to the Evotec SE Quarterly Statement Q1 2025 Conference Call. I am George, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by Q&A session. At this time, it’s my pleasure to hand over to Volker Braun, Head of IR and ESG. Please go ahead.

Thank you, George. And good day, good afternoon to all of you following our Q1 2025 results webcast today. Only three weeks after the presentation of our strategic review in April, we will be picking up on the discussions we had in the meantime with some of you, and with that, I think I can move on to Slide 2 in the presentation. As usual, it’s my duty to point to the disclaimer and the cautionary note regarding forward-looking statements which you find on that slide. And with that, I hand over to Christian Wojczewski, our CEO. The floor is yours.

Good afternoon and thank you for taking the time to dial in. During our last call on April 17th, we shared our revised strategy, we talked about our value creation levers, we explained the components of our mid-term plan, and we provided guidance for 2025. The latter is based on our understanding of the current underlying market dynamics and Evotec specific business development. Today, we will focus on Q1 results. Our group performance in Q1 was in line with our expectations and along what we indicated three weeks ago. Therefore, we’ll keep today’s presentation short. Nevertheless, we have earmarked sufficient time for the dialogue with you after the presentation. So let me start giving you an overview of the first quarter. Over the past couple of months, we have been able to close a few exciting deals. We are particularly proud of the news around our protein degradation collaboration with BMS which has made further progress. We’re expanding the number of high value molecular glue degraders. I will get back to this topic a bit later since this collaboration is an excellent showcase for how our strategy of technology leadership translates into superior business opportunities. Another highlight to mention is the reception of a grant from the Korean Government to develop novel antibody treatments for lung fibrosis. The signing of new expanded programs is a strong testament to our differentiated capabilities in drug recovery and will contribute to future revenue streams. Short-term and as outlined in April, the market in Shared R&D remains soft resulting in revenue decline versus Q1 2024 and the overall revenue development of the first three months stays slightly below expectations. In contrast, Just - Evotec Biologics has again delivered strong growth against an already outstanding Q1 2024 result. We see a growing customer list which is extending from generic providers and smaller biotech to big pharma and biotech. The revenue development in the first three months is slightly ahead of our expectations and shows a very encouraging trajectory for the future. Three weeks ago I spoke about our new strategic direction. At Evotec, we strive for technology and science leadership in everything we do. We’re pioneers in drug discovery. Together with our partners, we accelerate the journey from concept to cure. We achieve this by leveraging cutting-edge technology, disruptive science, and AI-driven innovation. We’re focusing on two business pillars: drug discovery and preclinical development, as well as Just - Evotec Biologics. Following our conversation from last call, let me share some insights on how technology leadership leads to superior business opportunities. Not in theory, but in real life. In Shared R&D, our scope is sharply defined from early-stage target ID to IND. We offer essential CRO services to our clients such as synthetic chemistry, in vitro biology, protein sciences, DMPK services, and others. We provide the services on a standalone transactional basis. This is shown in the upper blue part of this chart. In our more advanced commercial model, exemplified in the lower part of this chart, we help our customers to accelerate the journey of drug discovery to improve probabilities of success and to reduce risk. We provide access to our proprietary tools, next-generation technology, disease expertise, and mass data to support a selected number of partners in strategic collaborations. These CRO essentials then become a strong supporting element of those collaborations. When it comes to our next-generation platforms, I would like to highlight four, which are shown on the right side: our molecular patient database, iPSC, PanOmics, and PanHunter. First, E.MPD, our molecular patient database, has been built over years and is constantly expanded. It not only covers clinical data, phenotypic data, and biopsies, but in particularly also multi-omics data, such as genome, transcriptome, and proteome data. Based on these data sets, Evotec is uniquely positioned to identify and validate disease signatures and novel targets to intervene very effectively with disease processes. Our iPSC platform enables us to take insights out of the E.MPD, forward into the drug discovery process, and builds disease relevant models directly based on patient cells and tissues. Our high-performance PanOmics platform seamlessly allows us to profile patient samples at high throughput and to comprehensively profile compounds in vitro and in vivo models using omics technologies. Finally, our PanHunter platform is a unique AI-supported analytics tool to effectively process and analyze these multi-dimensional data sets. The amount of data that our platforms generate is huge. For example, we’ve gathered over 500 billion data points from over 20,000 patients. This represents the most complete data set for quite a large number of patient cohorts. Our iPSC platform allows us to model diseases in over 25 cell types. Within these cell types, we can cover over 250 genetic disease models. Finally, using our PanOmics platforms, and here in particular, our transcriptomics and proteomics platform, we have generated over 3 million transcriptome and over 500,000 proteome profiles. All three platforms operate at an unprecedented industrial scale and are made accessible to our strategic partners. Of course, we’re applying AI-supported state-of-the-art data analytics to separate real signal from noise and thus to support our customers in the drug discovery journey. So how are we generating value with this technology? For example, both of our BMS collaborations are originally based on these platforms and they continue to thrive. We launched a strategic partnership in the field of neurology almost 10 years ago. For this partnership, molecular patient data and the iPSC platform have and continue to be an important driver. In the beginning of March, we announced significant progress in this collaboration, which triggered a $20 million payment. While our neurology partnership originates from molecular patient data and the iPSC platform, our oncology collaboration hinges more on our omics platform. It is progressing very successfully. Just recently, we announced key scientific achievements, expanding the pipeline of high value molecular glue degraders. The performance-based payments amount to €75 million. Furthermore, in the second half of last year, we announced a further expansion of the collaboration into a new area. In summary, our technology and science leadership in drug discovery is giving us access to business opportunities beyond the essential CRO services. It broadens our addressable market and it provides superior value generation potential since Evotec not only is paid for services but also participates significantly in the successful development of programs by milestones and royalties. Let me now hand over to Paul who will speak about our Q1 results.

Thank you, Christian, and a warm welcome from my side. Let me guide you through our first quarter financials in more detail. Our Q1 2025 Group revenues reached €200 million, a 4% decrease versus the first quarter of 2024. Our revenue performance in the first quarter reflected two counterbalancing effects. Firstly, our Shared R&D revenue declined from €155.2 million in the first quarter of 2024 to €140.6 million in the first quarter of 2025 in a persisting soft market. The year-over-year decline in revenues largely comes from our BMS activities and softer transactional discovery work. This follows the trend that we saw in 2024. As mentioned in our prior call, lower BMS revenue is a temporary effect with a partner where we’ve seen very strong continued growth over recent years and which is expected to continue in the mid-term. As you heard in Christian’s opening, looking forward we have a strong BMS work packages and an excellent asset pipeline. In contrast, Just - Evotec Biologics continued to grow strongly in the first quarter, reaching €59.4 million of revenue, which compares favorably to a tough comparison in the first quarter of 2024 and is slightly ahead of our expectations. The majority of the first quarter 2025 year-on-year growth in Just - Evotec Biologics came from expanded contracts with existing non-Sandoz customers and our new customer base as we expand the reach of our technology. Our R&D spending has reduced by 33% versus prior year as we direct our investments to those most relevant for our partners. Our first quarter spending is now broadly in line with our new expected run rate for the year as we continue to focus on our R&D activities. Adjusted Group EBITDA reached €3.1 million, driven by the stronger than expected contribution of €10 million from Just, offsetting the lower operational leverage from the softer revenues in the Shared R&D segment. Continuing with our cash flows, operating cash flow in the first quarter of 2025 has improved versus the prior year of first quarter due to favorable changes in working capital. Operating cash flow should further improve in the second quarter as we see the effect of receipts for the completed piece of the BMS oncology work packages highlighted by Christian earlier in the call. Investing cash flow is largely driven by our CapEx spending of €18 million in the first quarter of 2025. Our CapEx spend represents a substantial reduction versus the first quarter of 2024 and reflects the planned ramp down of the Just - Evotec Toulouse site investments and the move towards the new CapEx base level I mentioned in the last call. Overall, our liquidity has been developing as expected, decreasing by €26 million to €371 million by the end of March of 2025. Our liquidity was supported by a drawdown of an existing R&D financing facility with proceeds of €44 million, which reduced the cash outflow from operating and investing activities. Our net debt consequently increased to €107 million, translating to a net debt leverage of 5.97 times adjusted EBITDA. As indicated during our April 17th call, we expect a temporarily elevated net debt leverage during the period of our covenant waivers. You may recall that in the April 17th update, we provided a waterfall containing the building blocks for our full year 2025 guidance of €30 million to €50 million of adjusted EBITDA. One of those building blocks is incremental cost-out measures in our Shared R&D business that will contribute on top of the priority reset program. We have already made significant progress on the implementation of those cost out initiatives and we will see the accruing impact over the coming quarters. Today, I want to provide you with details of the implementation progress of three key measures. Firstly, we have completed the closure of our Cologne site at the end of February, and have completed the remaining target role reductions by the end of the first quarter. While some of those savings are already visible in our first quarter financials, we should see the full run rate effect in the second quarter and following quarters. Secondly, we are carefully evaluating the need to rehire open positions based on our existing capacity and business need. The combination of restricted hiring activities and organic attrition in Shared R&D FTE will reduce by an additional 180 FTE on top of those announced in the priority reset, with much of this impact already in effect. Finally, we continue to challenge all areas of discretionary spend. We are already seeing the first reductions on external spend versus 2024. However, as our external spend is spread across the full year, the progress will unfold over the remainder of 2025. In summary, our incremental cost savings measures are well on track, with more than 50% of the planned savings already having been implemented by the end of the first quarter of 2025, with the full benefit on our cost baseline seen over the remaining quarters. Finally, a reminder of our full year 2025 guidance, which we reconfirm with Group revenues of €840 million to €880 million, R&D expenditure of €40 million to €50 million, and adjusted EBITDA of €30 million to €50 million. And lastly, another housekeeping item, our unchanged midterm outlook. As presented on April 17th, we expect the average annual growth rate over the coming four years to be in the range of 8% to 12%, and EBITDA margin is expected to exceed 20% by 2028. As always, we are now happy to answer your questions. So, George, please start the Q&A session.

Thank you very much. Our first question comes from Christian Ehmann with Warburg Research. Please go ahead.

Questions, I have two at the moment. Given that you mentioned that your segment performance was deviating from your expectations, so that Shared R&D was worse and Just - Evotec Biologics was better than expected, do you see or what’s your gut feeling about the course over the year? Do you think this will persist in the coming months or quarters? What is your stance on this right now? And my second question would be towards, there’s a lot of chatter online about various biotech layoffs in the space of biotech and also big pharma. Do you see an impact of those layoffs in terms that you see a stronger incentive for those companies to really engage you in additional CRO activities over the next months or years? Thank you.

Thanks, Christian. And maybe I’ll start and we’ll see if we need Paul to jump in. On the first question, as Paul was alluding to, the guidance remains for good reasons. As we said, we are slightly below expectations on Shared R&D, slightly above on Just in the mix. We are aware we’re probably a bit better on revenues than we expected and that’s also why we see there’s no need to change the outlook for the year. Obviously, when it comes to Shared R&D, as we already alluded to in the last call, there is right now a very soft market environment and everyone is observing what’s happening. Yes, frankly, from a market perspective, no news to report. So that’s why we remain confident with our guidance that we gave in the last meeting. On the biotech layoffs, well, it’s obviously two sides of the coin, right? On the one hand, more cautious spending, that’s not helping. On the other hand, if you see layoffs, and particularly also in pharma, that ultimately the work needs to be done by someone. And I guess that’s your question. So we’re happy to pick up work that is then not being done anymore in-house. Let’s put it that way.

Thank you very much.

Our next question comes from Charles Weston with RBC. Please go ahead.

Hello. Thanks for taking the questions. Three, please. The first is, could you provide some color on your pipeline in each of Just - Evotec Biologics and Shared R&D, specifically around customer concentration, product concentration, perhaps outside of BMS and Sandoz, which are obviously very big. Secondly, on the covenant, you said, I think, you have a waiver until Q3. Does that mean it’s tested in Q3 or is the first test in Q4? And what are the key levels that we should be looking at here? And then lastly, you mentioned working capital should improve in the second quarter. Could you perhaps provide a little bit more color about what that means? Obviously, there’s the BMS payment, but what else might be happening in working capital for the remainder of the year and are there any major payments for the rest of the year expected from your collaborations? Thank you.

Thanks, Charles. Let me briefly touch upon the first question and I’ll hand over covenant and working capital to Paul. The mix has changed over the last couple of years. We’ve seen in previous years, a bit of a trend towards more concentration towards larger accounts, particularly in the year 2023, I would say, where it’s fair to say we peaked on the BMS side. The more recent trend is that this has softened a little bit. So the concentration hasn’t necessarily increased with regard to the super large accounts. And that is also the case for our Just business, where I mentioned earlier that we’ve been quite successful in lining up new accounts and expanding our business with those new accounts. So I would almost want to say that 2023-2024 was probably the peak in terms of concentration that has come down a little bit. Paul?

Hey, Charles. Yeah. Just on your question around covenant, just as a reminder, no active financial covenants in place. We’ve got covenant waivers for drawn lines until third quarter 2025, as you rightly say. And what I would say to answer your specific questions, testing will be on in the fourth quarter on the third quarter results. And in terms of development of working capital receipts, you heard at the beginning of the call around BMS payments. So we would expect those to come in over the course of the remainder of the year, much of which will be in the second quarter. And then in addition, as you appreciate, we have a number of Just-related work order payments, as is usual for us in that business.

Oh! Thank you.

Thanks.

George?

The next question comes from Joseph Hedden with Rx Securities. Please go ahead.

Good afternoon. Thanks for taking my question. You continue to highlight the soft environment for Shared R&D and I think a few weeks ago, discussing the continuation of the kind of declining across the first half of the year, with perhaps some recovery in the second half. Can I just ask what’s giving you confidence of this recovery? Perhaps if you can talk in terms of metrics that you conversion of closed sales. I’m just interested in also how much these future BMS work packages factor in. Does that alone return you to an upward trend or is there a certain amount of recovery in the other elements of Shared R&D that is also required? Thank you.

Thanks, Joseph, for the question. On the overall market and you may recall in April, our message was we see a soft market environment and we expect the business to be around 2024 levels at the top end of our expectation. We see a recovery towards the end of the second half, right? And that hasn’t changed. There is actually no indication in either direction that the market is either going south or all of a sudden going north. And that is based on the conversations that we’re having with our clients, which continue to be very fruitful. And we also see business coming in. But as I said earlier in the April call, it comes in smaller chunks, and there is more slicing of work, which indicates that there is more conservativeness in spending at the customer side. With regard to the BMS work packages, I’d like to remind you that, obviously, this is a large multiyear program. And throughout the year and also over the years, we are moving along scientific progress in a discovery process and that means that we’re touching target identification, hit identification, lead optimization, and so forth. And those work packages, they come with different amounts of work or site, and hence they also come with different amounts of intensity and they come with different revenue profiles. That profile changes also depending on what on a quarterly basis we discuss with our partner here, whether we should go back to the drawing board, change the profile a little bit, do some more testing, or accelerate the work on other parts of the business. So it’s a bit of a partnership that is changing over time, but growing in the long run, and that’s why you also can't sort of draw a single line a month-over-month with this collaboration. That said, we mentioned that over the last 10 years, and over the last five years, we’ve seen this partnership growing substantially and we also expect given the work in the midterm future.

Okay. Thank you. And perhaps if I could have one on Just, you talked a few weeks ago about how the ramp-up for Toulouse is going to subdue EBITDA relative to 2024 and of the ramp-up costs over the rest of the year, please?

Paul will cover this one.

Yeah. Hi, Joseph. So, yeah, you’re right. So first quarter, as we said, was stronger than expected. There’s a little bit of phasing of those work packages that we expected within the year. But again, remain very confident on the full year landing for Just - Evotec. In terms of the ramp-up of costs, you are also correct. We started ramping up those costs in the fourth quarter for readiness of EU over the rest of the year, again, as we described in the April call.

Okay. Thanks very much.

Our next question comes from Fynn Scherzler with Deutsche Bank. Please go ahead.

Yes. Hi and thanks for taking my question. I also have a couple on the FDA development and in particular the phasing that you just mentioned. So, can you maybe help us a bit with the magnitude of the phasing in the JEB business? So, what I’m trying to get at is will the absolute for the segment, and then it would be interesting to hear on the remaining headcount reduction you had in the Shared R&D business, how much was there still in 1Q? So I’m trying to bridge, again, the different moving parts and trying to get at where 2Q could end up, so if you could expand it. So, if you could expand a bit on that, that would be great.

Okay. Just a general comment, obviously, while there were a few movements in the first quarter on the different segments, overall, the outlook remains. I mean, that’s the most important message, but Paul, maybe a few more details.

No. Thanks for the question. First of all, our full year guidance remains unchanged and is in line with our expectations. As I mentioned earlier, we experienced some timing differences and better than expected performance in the first quarter for Just - Evotec compared to our initial plans. Overall, the segment is doing well and is aligned with our plans for the year. Regarding headcount reduction, we have been closing the site in Cologne and reducing our workforce primarily during February and March. Additionally, we expect to finish 2024 with a lower net attrition rate, which is already considered in our run rate for this year. There has also been an increase in net attrition outflow in the first quarter, but we are on track and in alignment with our guidance shared during the April 17th call. The full impact of these changes will become apparent in the coming quarters.

Okay. Thank you.

Back to George, please.

Thank you very much. We continue with the question of Douglas Tsao with Wainwright. Please go ahead.

Hi. Good morning. I think that’s me. This is Doug from Wainwright. Okay. So I guess obviously there’s been questions about the overall environment, especially focused on industry and sort of the potential negative impact. I’m curious, as you look at the U.S., and I know this is potentially a very dynamic situation and there could be changes, but the prospects for significant cuts to NIH funding, does that potentially create opportunities for you with a pullback in some of that very early stage research? Thank you.

Yeah. As you rightfully say, it’s not straightforward to project what’s going to happen next. That’s why we also remain a bit cautious on statements. On the exposure side, we already mentioned last meeting, last call, that our exposure to NIH and other governmental bodies from the revenue perspective is fairly limited. So we’re not expecting any direct impact, obviously, then the question becomes a footprint in the U.S., does it actually support? And also that one we addressed last meeting, we have research facilities at the East Coast to serve our clients from the Shared R&D perspective with manufacturing facilities, West Coast, for our Just clients. So we’re prepared, but we also recognize that things are not moving that quickly, given that everyone is still a bit on the parking lot and waiting for how this all will be sorted out in the midterm.

And I guess as a follow-up on Just - Biologics, just given, so obviously, so far, pharmaceuticals have been excluded from tariffs or proposed tariffs. I’m just curious, have you had conversations with clients who might be interested in perhaps shifting manufacturing, if there does seem to be some kind of implementation of tariffs and does that make the U.S. side more attractive? Thank you.

Thanks, Doug. And as I mentioned, we’re not short of conversations, let’s put it that way, that Just business is growing fast and we see a lot of inbound request support, whether it’s ultimately triggered by tariffs or our great technology, doesn’t really matter. But what I don’t see or what we don’t see is that on a weekly basis, people come and leave. This is so dynamic right now, that’s really difficult also for our clients to make ultimate decisions. That said, as I mentioned, there is sufficient inbound activity here to make a bold statement that the Just business will continue to strive for the next couple of quarters. George?

Thank you. There are no more questions at this time. I now hand over back to Mr. Braun for any closing remarks.

Thank you, George. And thanks to all of you who participated in this call and thank you for the questions. In case you want to discuss more details in the coming days, feel free to reach out to me. The line is, as usual, always open. Next opportunity for all of us to meet in person is our AGM on the 3rd of June in Hamburg. We are looking forward to seeing as many of you as possible there to continue the dialogue. Thank you very much for now. Have a great rest of the day and goodbye.

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