Evotec SE (EVO) September 21, 2026 Conference Transcript

Hello, good morning, and good afternoon. My name is Charles Weston. I cover European life sciences here at RBC, and I am delighted to welcome Christian Wachewski, CEO at Evotech. Christian, thanks very much for joining us. You took over as CEO in 2024 during one of the most turbulent stretches in Evotech's history, and since then, you've launched a major transformation, overhauled the management team, Including, unfortunately, with three different CFOs, and sold the Toulouse site to Sandoz. So we're now three quarters of the way through the year, which you've positioned as a transition year. So it feels like a good moment to take stock of where the rebuild stands and what investors should expect from here. So my first question focuses on the base business and the recovery there. So at the Q2 update, you shared that the D&PD-based business net orders were up 28% in the first half. Now, since you had a very low 2025 comparator, where are we as a percentage of what we might consider normal?

First of all, thanks, Joss, for having us here, and welcome, everyone. With regard to this space business, our market and our business has structurally evolved over the last years, including changes in customer behavior, funding dynamics, and also our own portfolio. When you look at the net sales, we troughed mid of 2025, and that was based on, I would say, the old parameters of our business. When you look at 2023 to 2025, very little activities in integrated and strategic deals. We began to recover meaningful in the fourth quarter of 2025, and then strengthened in the first half of 26. The result is 26 growth over 25, and we mentioned there's 28%. So you could argue that this is taking us on the trajectory we've seen historically. Basically, the 20%, 28% net sales order growth we highlighted is also part of our broader commercial revamp. So we have built a new team. We have actually simplified processes, and that's why we believe it's also based on better customer engagement, higher proposal activities, faster processes. So not only back to all dynamics, but also, I would say, we have become better on the commercial side.

And you did talk about those inbound inquiries up 30% and proposals up over 45%. Is that a change in the way that you measure them? Is it better that commercial discipline and that commercial team? And in terms of converting them, is it simply just time?

Largely, yes. What is encouraging is that we're seeing improvement across the entire commercial funnel, so from inquiries to proposals to net sales across the whole funnel. The timing of the conversion of net sales into revenue then depends on the mix of business. And I'd say unlike the traditional CIO models, our revenue streams that they spend standalone services, integrated and strategic partnerships, they all have very different conversion cycles. So when you look at standalone services, typically they convert into revenue within approximately three to six months, whereas integrated programs would be approximately nine to 24. And then the large strategic partnerships could be 12 to 24 months or even longer. And that is affected in, but largely for us, this is a timing aspect, as you rightfully say.

And you talked about the sales cycle shortening in the first half. So again, you've got two different dynamics going on here. You've got your horizon changes around the commercial team and structure. And then you've also got the customers themselves buying smaller units of work. So how should we think about the dynamic of those? Are they both contributing to that, or is it mainly driven by one or the other?

I would say this improvement is mostly driven by the ongoing commercial transformation, which is also part of Horizon. Over the last couple of quarters, we have strengthened the organization and added new leadership, as you've probably seen under the new chief commercial officer. Most notable, we have streamlined internal processes and created faster proposal turnaround times and shorter sales cycles. So, yes, there is also an aspect around buying, but process-wise, as I said earlier, we're better now than historically. Okay.

Within this business and strategic partnerships, I wanted to ask you about NAMs, you know, these novel approach methodologies. Regulators seem to be more encouraging, increasingly positive towards them. And clearly, you have a track record in IPSCs. So, and I'm asking this partly because it's an industry theme that we're seeing across multiple different companies, but is this a material driver that we should be thinking about in a near to medium term, or is it more of a long-term driver?

Yes, absolutely. The regulatory momentum behind the NAMS is a meaningful long-term tailwind for the industry, and it aligns well with our capabilities that we've built in-house. So you've seen the announcement from the FDA. All of that is supporting a broader adaptation of alternative approaches that can improve the prediction of preclinical testing and the reduced reliance on animal models. So positive impact for sure on timelines and productivity. IvoTech already today has a complete and I would say unique toolbox to tackle this. One is the high throughput atmetox that we're doing at Cyprotex. The other is what you mentioned, IPC-based disease models, but then also organ aid models to mimic real human organs, our advanced in vitro systems, AI-enabled approaches, human-relevant translational biology, and so all of that is in our toolbox, and that's why we believe we are well positioned to serve the market. It's not going to happen overnight. That's also clear.

Okay. I mean, I don't want to delve too much in this in a half-hour fireside chat, but I hadn't heard you talk about organoids before. Is that something that you have been spending time developing, or is that part of your history that I hadn't really been aware of?

We have been developing it since quite a while. And when you think about our stem cell technology, it's actually the natural next step, right, to move from one cell to 2D to 3D. Yes, there's a lot that we should be talking about. This is one element where we think that we can make a change when it comes to NAMS because it's the natural next step between a single cell and a real organ.

So let's move from that base business. And I appreciate we sort of moved off that base business anyway, but think about the strategic partnerships that you have. You have talked about the BMS as being a sort of wave up to 2023, 2024, and then declining through 2026 and troughing and then sort of growing from here. But you've also said that you have 10 to 20 other strategic partnership opportunities in the tunnel. What is the biggest variable that determines whether these close now in H2 or in 2027 or beyond?

So, clearly, the pipeline is rich, but the strategic partnerships are highly individualized deals. So, when you think about the components here, there are technical aspects. There is typically deep scientific diligence, legal negotiations, IP matters, governance discussions. That's the technical piece. Then there are commercial aspects, bespoke deal structures, the question around exclusivity that typically comes up. And then thirdly, our partners have their own internal processes, like funding, right? As a pharma company, should we start this partnership small to use existing remaining R&D funds? Should we do a big bang? How does it fit into our annual review of strategy? And the TA focus, sometimes it's reorganization that's happening. So the biggest variable is clearly the pace at which both partners, Iwotech, and the pharma company complete the technical aspects, but then internal decisions that the pharma partner, they can have an impact on the timeline as well, which we can't influence. That we remain highly confident in our ability to close new partnerships.

Okay. So what I'm hearing is we have to kind of wait and see as to when these things drop, and it could be like buses. Okay. Yeah. So slightly overly colloquial. So can I just check, then, one of the things I mentioned as an assumption is, because you've talked about it before, this BMS collaboration, we're in that sort of pipeline refill year of earlier stage work. Is everything still on track to re-accelerate?

So we already discussed this during our last earnings calls. The BMS collaborations, they are naturally moving through investment and realization phases as program progresses. Following earlier harvesting periods in previous years, we now see the oncology collaboration The new generation being renewed in a renewed investment phase. You've also seen that one of those molecules have actually entered into a clinical phase. So this is good news. There's high activity and productive science partnership here going on. So we feel that this is in good shape with regards to the progress. You know that this is early science, so we learn while we run and we also adapt the program while we run. We've done this in the previous years. We're also doing it in 26, but by and large, we feel that this is a strong partnership that will continue to be strong in the next couple of years.

Okay. Let's move on to Justifotech Biologics and JTrain. The sort of the JEB-based business, excluding Sando, excluding the DoD, has been growing very strongly. And you started talking about Jtrain, officially launched, I think, in June. With the Toulouse site now transferred and EvoTech pivoting to this asset lighter model, what do you think is the right level of manufacturing capacity versus technology licensing revenue going forward? Or is it too early to tell?

Well, first of all, the pivot here to the new strategy means that there will not be a fleet of manufacturing sites across the globe at EvoTech, right? But it doesn't mean that manufacturing is not an essential part of our offering. It does remain an essential part because it demonstrates and validates the capabilities of the platform in a real-world operating environment. At the same time, we are increasingly seeing long-term value by extending beyond the pure manufacturing into technology licensing, engineering solutions, strategic technology partnerships. Right now, we are preparing for an expansion of our Redmond site. So after the divestiture of Toulouse, we have Seattle and we have Redmond. Redmond is the large manufacturing site. We're preparing for that. It's not going to be a big thing here, but it will give us a third train. We have two trains there already. It's expected to come online next year, and it will then support continued growth the following years. I still want to make clear that this is understood not as a new J-Port here, because it is a completely different magnitude of investment. It's a small expansion. That's the nice thing about the concept here. With little money, you can do an expansion. But that means that we're moving from basically two trains to three trains and gives us leeway into further expansion. At the same time, we expect a revenue mix to evolve as offerings such as J-Train and G-Media gain traction. But it also means that we expect a shift in the profitability profile because these new business lines come with a more attractive margin.

And when I think about those licensing deals, J-Train, J-Media, what is the decision-making process? What does it look like for a customer? When could we realistically see a first deal under these new business model?

Yeah. So when you think about J-Train, think about a highly customized offering here. And that's the nice thing about the modular aspect of the business. The structure of the deal would depend on, I would say, the customer's existing manufacturing capabilities, internal expertise, but also their long-term biologics strategy. And I would see two stereotypes of customers. One with significant in-house capabilities already today. Then the discussion would focus primarily on the tech transfer and process deployment. And then there's another stereotype of customers that are earlier in their manufacturing journey, where the scope is then significantly broader, would include process design, implementation training. Those are stereotypes, but these are real conversations that we're having with interested parties today. So, clearly, I should not present you with a definite timeline when to strike these deals, but given the focus is really on building long-term partnerships and relationships, and you've seen how long the Sandoz deal actually took us, you should not be thinking of timelines that are considerably shorter than 12 months.

Okay. And we talked in the past a little bit about the regulatory process associated with manufacturing commercial drugs associated with FDA and other regulatory inspections. Can you give us any update in terms of Redmond and its capability and capacity to manufacture commercial drugs?

I'd love to today, Charles. I'm sure you will hear from us, Charles. But given that this is in close collaboration with a partner, we will find the right time to talk about it.

Okay, I guessed as much. I thought I'd throw that one in there just in case. Okay, let's talk about Horizon, because clearly EBITDA is very important. The evolution of that is very important. You're targeting 75 million of run rate savings by the end of next year, and 20 to 30% of this in 2026. But I can imagine that employment law might slow things down. Can I just confirm, is everything on track in that savings plan?

In short, yes. If you want to feel a bit more flavor, the whole project program is fully on track. We also see the savings materialize in line with our plans. We remain confident in delivering the 20 to 30 percent of the 75 million run rate in 26 as well. Headcount savings on track, footprint reduction on track. And maybe on a personal note, I'm very pleased to say that the discussions with our employee representatives have all been conducted in a very constructive, timely manner with the joint goal to do what is the best for the company and all shareholders. So a full yes. Okay.

And that, to some extent, plays an important part in the guidance, the sort of 570 to 610 million revenue, the 70 to 105 million EBITDA loss. You described high confidence in these numbers. There is a reasonable range there. What is the biggest risk to the low end and the biggest upside driver to the upper end of that EBITDA guide?

Yeah, so we did say high confidence during our half-year earnings call. Now there's September, and I can confirm what we said there. When you think about where we are today, it's obviously less about generating new sales orders because it's already September and there's a certain conversion rate. And the key risk would be the timing and pace at which the sales that we've already landed convert into recognized revenue. Pretty simple.

And that's all about internal execution at the same time as you're doing this big adjustment of your footprint and people. So are you, I mean, you just said you're confident in the EBITDA range, but how are you managing that risk execution within this quite turbulent time for EvoTech?

So one is indeed internal processes, but the customers also playing a role here because for some of the deals we're hinging on, for example, asset development that is coming from a partner. And so we're also not completely independent when it comes to the conversion of sales into recognized revenues. But on the customer side, and maybe that's something that I should have actually said when you asked me about Horizon being on track, I should have also said that on the customer side. This has worked out incredibly well so far. And all the risk mitigation here on the customer side has panned out well. We haven't lost any business. And that gives us also confidence with regard to the remaining year.

Okay. So that's 2026. Now let's look a little bit further out, that medium-term path, the strategic review that you've talked about. So the framework in March targeted over a billion euros in revenue by 2030, and a 20% adjusted EBITDA margin by 2028. Does the 2026 guidance cut affect how ambitious that is? Is it more about timing? How can we put those two things together?

So I guess it makes sense. And we also stated that in our H1 earnings call that we are reviewing our midterm framework in light of the updated 2026 outlook. Look, given that work is ongoing, we're not reaffirming or updating this at this stage. In 26, we have taken steps to increase financial transparency. I think this is an important context here because our objective is to provide a clear view of the total financial performance of the business, But also allow greater visibility into the underlying components and drivers and their respective impact on the outlook. We just talked about base business and strategic partnerships. Those were terms that we didn't use a year ago. We appreciate that we've historically lumped it all in one number, and that certainly will be more helpful to find a way to make this more transparent for investors. So we will update the market when the work has progressed sufficiently. But the intention clearly is that financial transparency is not just used for internal purposes, but also helps people understand better what is happening underneath the roof if you look at the strategic deals versus the base business.

You mentioned the strategic review. Clearly, you can't talk about what an outcome is going to be. But can you help me understand what a successful review would look like from your perspective? What do you really aim to get out of it in terms of an action plan?

So, really, as we said, everything is on the table. The review is ongoing. We haven't made any decisions to pursue any specific transaction or strategic alternatives. So, it's very objective, and as communicated, we are evaluating these opportunities, ultimately, with the objective of maximizing long-term shareholder value. But we're also looking at the best possible outcome for other stakeholders. So, yeah, we've done the business strategy review last year. Now we're taking it one level higher. And, yeah, if you ask me about what's the successful outcome, the intention is to maximize long-term shareholder value. Timing-wise, we can't comment at this stage, as previously communicated, but it's also fair to say that the revised guidance has certainly required us to regroup a little bit, and that has taken a bit more time than we anticipated initially.

Yeah. Okay. So this is going to be a tough question given the strategic review point, but on the assumption that EvoTech continues along its current path, Horizon has been actioned, maybe Horizon 2 is in place, and both sides of the business, the DMPD and the Just EvoTech Biologics, are still progressing as you hope and expect. So what do you think the mix looks like in a sort of three to five year view? And which aspect of VivaTech's business do you think is the most underappreciated by the market today?

So when you look at the dynamic that we've seen the last two or three years, a super dynamic just business with high growth rates and declining revenues on the DNPD, right, that already tells you that the just business has been on a very successful journey. We do also anticipate that the mix is increasingly shifting towards just EvoTech Biologics from a revenue perspective the next three to five years. In general, to your second part of your question, we're convinced that the current market view does not reflect the true value of the company. You're probably not surprised about this statement. And I just want to highlight two things. The just business offers significant margin upside from where we are here. As the model evolves, we said we're pivoting to an asset lighter model. We said that we're adding business lines that are highly profitable. So you will see a greater contribution from licensing and royalties. At the same time, you will see higher return on invest because we don't have to build out these J-pods over and over again. That's one side of the equation. On the other side, when you look at the D&BD business, it retains the full upside here through, on the one hand, the turnaround on the cost side, on the commercial side, but also through new strategic partnerships. We have not communicated a whole lot of new strategic partnerships the last 24 months, but we see a pipeline that is actually growing. So both parts of the business will benefit from the actions that we've taken the last 12, 18 months.

Well, that, without asking for it, was actually quite a good sort of closing comment. Is there anything you wanted to sort of add to that before we close the session? Christian?

As if we would have crafted the closing, Charles, and no, actually not. Well, I think we covered it all.

I think we did. Well, look, thank you, Christian, for coming to the conference, for attending, for participating in this fireside. Thank you to the investors who are watching and listening to this fireside chat. And with that, I'd like to close the session.

Thank you for your time.