Conference Transcript - EVO 2026-09-21

Charles Weston, Analyst — RBC

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. um christian thanks very much for joining us uh you took over as ceo in 2024 during one of the most turbulent stretches in evitex 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 of the way through the year uh 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

Christian Wojczewski, CEO

focuses on the base business and the recovery there so at the q2 update you shared that the dnpd based business net orders were up 28 percent 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 oh first of all thanks joss for having us here and welcome everyone uh 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 23 to 25 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 this 28 percent so you could argue that this is taking us on the trajectory we've seen historically the 20 percent 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% um is is that is that a change in the way that you measure them if it is it better that commercial discipline and that commercial team and in terms of converting them is it 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 uh to net sales um 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 co models our revenue streams that 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.

Charles Weston, Analyst — RBC

And that is affected in, but largely for us, this is a timing aspect, as you rightfully say. and um you you talked about um the sales cycle shortening um in the first half so again you've got two different dynamics going on here you've got your horizon changes around the commercial or 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?

Christian Wojczewski, CEO

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 to probably seen under a 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.

Charles Weston, Analyst — RBC

Within this business and strategic partnerships, I wanted to ask you about NAMS, these novel approach methodologies. um regulators seem to be more uh encouraging uh increasingly positive towards them um and clearly you have a track record in uh ipscs so um 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 the in a near to medium term or is it more of a long-term driver?

Christian Wojczewski, CEO

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 ADMITOX 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.

Charles Weston, Analyst — RBC

OK, 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 is that something that you have been spending time developing or you is that part of your history that I hadn't really been aware of?

Christian Wojczewski, CEO

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. But 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.

Charles Weston, Analyst — RBC

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 and then sort of growing from here but you've also said that you have 10 to 20 other strategic partnership opportunities in the in the in the tunnel um what is the biggest um variable that determines whether these close now in h2 or in 2027 or beyond so uh clearly um the the pipeline is rich uh um but the strategic

Christian Wojczewski, CEO

partnerships are highly individualized deals so when you think about the components here there are technical aspects um there is typically deep scientific diligence uh 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 um 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 uh and the ta focus sometimes it's reorganization that's happening so the biggest variable is clearly the pace at which both partners evotech 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 okay so we remain highly confident in in our ability to to close new partnerships okay so so what i'm hearing is we have to kind of wait and see um as to when these things drop and

Charles Weston, Analyst — RBC

it could be like buses um okay um yeah um so it's slightly overly colloquial So can I just check then that 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 reaccelerate?

Christian Wojczewski, CEO

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 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 peers okay um let's move on to uh just evitech biologics uh and jtrain um the uh the the sort

Charles Weston, Analyst — RBC

of the the jeb based business excluding sando excluding uh the dod um has been growing very strongly um and you started talking about jtrain officially launched i think in june um with the Tulu's 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?

Christian Wojczewski, CEO

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. 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 is the large manufacturing site we're preparing for that it's not going to be a big 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 the 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.

Charles Weston, Analyst — RBC

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?

Christian Wojczewski, CEO

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 uh 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 uh 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 sendos uh deal actually took us you should not be thinking of timelines that are considerably shorter than 12 months okay um and um we talked in the past a little bit about uh the regulatory process associated with manufacturing commercial drugs

Charles Weston, Analyst — RBC

associated with fda and other regulatory inspections um can you give us uh any update in terms of uh redmond and uh its capability and capacity to manufacture commercial drugs I'd love to today, Charles.

Christian Wojczewski, CEO

I'm sure you will hear from us, Charles.

Charles Weston, Analyst — RBC

But given that this is in close collaboration with a partner, we will find the right time to talk about it. okay i i guessed as much i thought i'd throw that one in there just in case okay let's talk about horizon because clearly um EBITDA is very important that the evolution of that um is very important you've got uh you're targeting 75 million of run rate savings by the end of next year um and 20 to 30 percent of this in 2026 um but uh i can imagine that employment law uh might slow things down it can i just confer you know is everything on track in in that uh

Christian Wojczewski, CEO

cost in that savings plan in short yes if you want a few a bit more flavor uh the whole project program is fully on track we also see the savings materialize in line with our plans uh we remain confident in delivering the 20 to 30 percent of the 75 million run rate in 26 as well uh headcount savings on track footprint uh reduction on track and uh 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

Charles Weston, Analyst — RBC

the company in all shareholders so a full yes okay um and that to some extent plays an important part in the um uh in the uh in the guidance um uh the sort of 570 to 610 million revenue the 70 to 105 million um EBITDA loss what you um 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?

Christian Wojczewski, CEO

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. 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 and that's all about internal execution at the same time as you're doing this big adjustment of your footprint and and people so so are you I mean you just said you're confident in the EBITDA range but but how are you managing that risk execution within this quite turbulent time for uh time for evotech so one is uh indeed uh internal processes but the customers also playing a role here because for some of the deals we're hinging on for example uh asset development uh that is coming from a partner 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 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 um uh all the risk mitigation here um on the customer side um has penned out well uh we haven't lost any business um and that gives us also confidence with regard to the remaining year okay so that's that's 2026 now let's look a little bit further out that medium term path uh the strategic review that you've talked about um so the the framework in march targeted over a

Charles Weston, Analyst — RBC

billion euros in revenue by 2030 um and a 20 adjusted a bit dull margin by 2028 um does the 2026 guidance cut uh affect how ambitious that is is it more about timing how can we how can we put those two things together?

Christian Wojczewski, CEO

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 26 outlook. 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.

Charles Weston, Analyst — RBC

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?

Christian Wojczewski, CEO

So really, as we said, Yeah, 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 it's 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 all 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.

Charles Weston, Analyst — RBC

Yeah. OK. 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. um what do you think the mix looks like in a sort of three to five year view and which aspect of eva tech'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

Christian Wojczewski, CEO

business with high growth rates and a declining revenue side on the dnpd um 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 that 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 a 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. 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 is there anything you wanted to sort of add to that before we close the session uh as if we would have crafted the closing jars and no actually not um well

Charles Weston, Analyst — RBC

i i think we 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 uh who are watching and listening to this uh fireside chat and uh with that i'd like to close the session.

Christian Wojczewski, CEO

Thank you for your time.

Charles Weston, Analyst — RBC

Goodbye.