Evotec SE (EVO) 12 Apr 222021 Q4 Earnings call transcript

Dear ladies and gentlemen, welcome to the conference call of Evotec SE. At our customers’ request, this conference will be recorded. [Operator Instructions] May I now hand you over to Dr. Werner Lanthaler, CEO who will lead you through this conference? Please go ahead.

Thank you. Evotec. from Werner is This Welcome from Hamburg. sunny

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to the report Furthermore, liquidity In support investments a like addition, invest CapEx J.POD again, I together as and to These projects much. anticipated. can with from allowing And XXXX, over and strategic indicate into flexibility million Thank at Europe the capacities November this, factors position into Craig. Toulouse you plenty expansion million. €XXX.X very equity general of headroom to further of such various Total existing new continue And of this the us as listing equity engagements increased following to XX%, good to therefore holdings overview. net NASDAQ of up would year, well our as cash J.POD the very a ratio consequently we to are €XXX and in EVOequity hand organic and Yes. across growth. stepped to completes planned Redmond financial the sites. our and end

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you, you, you, Enno. Thank Thank Cord. Craig. Thank

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is [Operator Quigley, Instructions] the question James Morgan first Stanley. from And

now is open. line Your

my taking questions. for two, please. got I’ve Thanks

Obviously, you give in what So guidance should us XXXX first the midterm bit the So going on got for You’re you’ve focus think of targets? ramp-up people, how we a growth. and of But margin. the in we But J.PODs was should investing little is expect the forward? trajectory the about up for the can the hiring below expectations. an to – lots all, EBITDA overview on well. trajectory of the as the

short-term but for a of the sort target? this end strong. particularly the a year expect with momentum And you of revenue a we stick margin the more mentioned into in was secondly, the guidance should hit XXXX coming So hockey and back

with the on that’s of the the be us as since give commentary book, had activities year? reopening from order that you you how you. can So partnership great. start well? of COVID sort would improved new Any an the That overview Thank of

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largely years, it number portfolio price coming this not digest. chain at milestone a the get can larger of are potentially we up stage, transactions So on the is can but And there largely we in all digest, that bearing as that, of increases gone last see have our there. that example, supply for

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Securities. Rx Hedden, Joseph from is question next The

open. Your now line is

afternoon. two. questions. my Good taking got for I’ve Thanks

for tell in could growth, XX% could much could Thank was I we Firstly, been a similar the of second we in attribute the that much whether you online please question, invested Washington only Just-Evotec that expect and since XXXX how has growth appreciate EVOequity activities? And Biologics you. how in November, in the ‘XX? us J.POD level but to J.POD

Great.

second goes First Enno; to question to question Craig. goes

is question first And relatively easy. equity. we €XX invested Yes. the were that We close into to million

In ‘XX.

‘XX. In

the we for of also and pipeline one operational a is to continue where basis, also case investments. to reasons the our give we a And ourselves forget, the for strong synergistic for look potential of these NASDAQ on don’t this don’t NASDAQ year. but listing ‘XX proceeds on we was see equity because right, in guidance one opportunities a listing of of use case-by-case And also, engagements

question to goes Craig. Second

Yes. Thanks. Yes.

that milestone the in coming in But other absolutely terms strong to increase in business, there we’re right. four November, attract of indeed particularly We pleased to contributions and tremendous and the to – in did main quarter uptick very particularly quarter overall quarter in performance The and actually, was milestones growth J.POD the and online, of quarter other performance, aspects four. quarter. base due recognize the four had business in elements which a were some contribution base in of the you’re December. the the that four revenue, November So

Okay.

Just could I your from the guidance expectations that, sorry, ‘XX. give I to just of you for was follow if think contribution for wondering just any kind – in to on

Craig?

Yes.

expansion, the yields capacity in Just and later manufacturing of So, revenues development terms additional for out this year in because will track. contribute But occupied a The the of substantial trains course we as as are nevertheless, break trains are Just-Evotec well of feeds the two the runs increase first the Biologics well course, XXXX, process and well usually of don’t during two down revenue which occupied. contribution. over

in digit terms XXXX are into looking percentage growing So, XXXX. again Biologics forward Just-Evotec from to we well into double

we mean just color. doesn’t you expecting on digit Biologics doesn’t here to XX%, XX%, than here, a double bit more growth that XX% And of Just-Evotec mean significantly growth are here give means

Okay. helpful. That’s Thanks very much. very

from Deutsche is Falko Bank. question next The Friedrichs,

Your line is now open.

Thank you questions, Good have much. very everyone. please. I afternoon three

funding are lot discussion a slowdown is one first for funding. of People there. potential environment on out in the There is about the obviously concerned biotech. The

So, perspective I the question, partnership flow BMS there from news second few was was your that months. Then with last your wondering of what regard? you over in seeing my plenty business are about

pretty news your substantial company. came items to with of Some these payments

stand wondering is what And expect now months? flow just third was if you this news summarize of we we can I partnership during can for your then question And balance. utilize that kind us would hand year? that on So, my like with and where sort plan level XX pretty Thank what do to XX impressive is of essentially? you the always cash on that How you next the months to over you. keep to

Yes.

second question the on Cord in So, second. BMS will go to a

bit. which we in first And hopefully hand on you comment bank third the not Enno. keep allow The go question, our question will and will on a if me, cash, the to I

with don’t and the forget impact relevant. So, very markets these because after in our said typically, really that slower far well-funded of XXXX, funding also in forget see still the X of happened situation. are not that of bottom so years is the books NASDAQ Having compared in don’t of Europe, these see companies an between and U.S., to on companies that that, many impact markets don’t line their course, on that the X to the us we see, we also top funding to substantial in of that, and in has see environment U.S. U.S. the environment cooperating impact companies years line especially we NASDAQ our public that it’s order we

uptick So, of of doesn’t companies something think course too second funding we funding the within gene of but for XXXX stage at this also in be is we, environment much therapy should again. which in environment, this operationally example, see, that’s stage. at us why the the the slowdown U.S. the that an And affect half

so be reason any not for concerned. that’s by think, – I So, us that’s far, to

has more also here The private organizations compensated by the should slowdown by been also cooperating with into second Evotec. of is funding significantly more and element like industry that public partly public biotech see platforms you funding the

we see that’s And a that the public that of have mission-driven of business partners, whole us course, a we mission-driven to with are So, the third here only pandemic portfolio partnerships them. some that have you slowdown And very the very just with when at preparedness for partners having well-balanced with course, not any elements biotechs, we the and fallen foundations, have element, but it we nice look also gained, always the don’t of pharma some at foundations comes of of private stage is compensation academic this if especially that and away. – institutions.

picture. the Cord funding for question. BMS it’s With for concerning. I a a this, long concerning short if increase is on answer overall the doesn’t mid-term the hand over to environment So, It in not us, short-term in

Happy bit of to an give here. a little overview

So, are also particular. with BMS target BMS, a we still partnerships in productive area have at the we the early essentially. And highly in also second that the – that, particular, course, but of in collaboration, what an partnerships, call beyond multiple field neuro protein degradation degradation, additional the of of stage targeted protein but in collaboration then

neuro XXXX collaboration the do target predictions milestones I and the based we generated productive But that see accelerate pipeline that collaboration key portfolio ago, filling achievements are milestones. the has actually projects has filled here, see of been XXXX degradation highly lead can’t achieved be BMS quite are in to data seen particular, neuro and have lead And achieved. year is of stages, pipeline before in always here we a number You for make well the We for Based overall, of opportunities an well. additional as we It’s excited stages on here opportunity do on the and even have additional only the – and course, milestones these of on last that. about. partnership year a X optimization hard BMS have milestones, initiation first delivered years here. number where we in further. these would any milestone-driven the for in started say collaboration. quite additional last The very to that, we added even substantial very programs But year BMS were protein a in

they And so don’t many, essentially. And our then at want targeted neuro collaboration the are But see we BMS the stage add see go to degradation quite as detail in more mix in early opportunities stage. future as here to the overall, we here, probably collaborations, if because collaboration. I still earlier also in this into not opportunities protein to

And so positive but overall for quite essentially, beyond the even view is XXXX, that.

back much. you With Thank to cash we this, question so Enno. to go and the

Yes. Falko. call, you having Pleasure on the

detailed our like is valid make use that cash of still principle. had That the from one to in in of context a prospectus last year principle, to proceeds. and to our I activities where in our position, So, FX would first, we breakdown is of reference investment

up general, invest. facilities what past. To the equipment. also that scaling and our to as we particular, another to ramping our is we are continue existing in into take least, but ticket look of of not it all expanding to of lab people the our threshold, have is is question, build details. about to the work And our expansions what of the of further but second driving will platforms activities very trains year, business into in In want you threshold The half of building we before X were our spoke investment facility big we as U.S. in starting bring capacity and That’s is our general sites, building we to J.POD capacity into acceleration our and the the and in potentially labs, R&D Technically, referring low. where the second forward go in about EVOequity into will additional definitely will if investments, this terms to so engagement to So, some say. last the our block. investing equity and the J.POD our lowest biggest

covenants million the a it’s from low in mid-double to So, digit euros. perspective,

least above that And not €XXX reserve. whether at serious we is we be say topic. as a it internal then calculation, So, million have a should

internal cash for us. not That’s if is And this forget driven Evotec why may have that time where comment out more this flow been rewarding into a now. is Don’t is maybe worked There I positive for here, platforms for of our number cash been has relevant operational has investing add in than our never years. company. a the now future XX it one so right I as

it spend by you there why also not is be balance into you see major acquisitions. a see we that’s gained will our today So, lot of as see that to we than very really own also also our else. better look external Because anywhere will course, We but the is exclude here, things, platform at of never on and external many threshold investing of cash acquisitions these high.

lot. a Thanks Okay.

Falko, go next to We the question. that’s okay for you? would

Kim, Igor is question Berenberg. next The from

open. now is line Your

side. of Berenberg. have questions got Yes. this from from I my is a couple Hi, Igor

That’s you that inflation one you in is inflation of of fronts you your of for of half is in the factored guidance? year, your to you much year is CapEx, I second or plan say, does kind guidance Toulouse? in so expect how inflation? you? Second let’s pricing, it given so terms question look J.POD for And possible on start the in think margin and other cost think And second do of how mentioned energy factors more in wage relevant cost to this, Thank But cost maybe wage it current the yes, or margin. that quantify impact EBITDA you. that that is much I impact of energy how prices the is could far. also the inflation general, if see it year-over-year energy do far

Yes.

So, to cost inflation Enno. Enno, goes and and cost on also, first question to CapEx energy on

That up that upper I of end it have all. very the the our I in for you probably the Werner Europe. Things CapEx. expectations. as progress depend X total. of on much. of is J.POD the the start will And of So, said the in our XXXX construction already year particular, in to before, mentioned could million it range with in very Thank be will I €XXX

So, are from it that’s realistic perspective. today’s could at also but be that range it comes out looking we at the end €XXX of that a million,

costs, budget as of be XX% gas, we will energy assumed electricity On the will we cost have this and on. roughly have things currently to current continue. monitor and so increase develop in whether sufficient our increase And for energy,

we having is that’s So, expected. that clearly something base that on our are from radar, what the but we have

development and salaries Of time, over is are course, that are there parts influencing which average. increasing monitoring the other – to the here, on clearly also influencing you were And we cost cost also referencing are this. wages, and

therefore, in the have been measures we our what what have line XXXX. past that budget to monitoring close increase the for But So But we have per needs far, in as to X% in within doing have make currently stand we this well. bandwidth, with years, which always the been market pretty X% competitive and much that’s we was sure internally year. obviously,

Thank Okay. you.

to question. Igor. Pleasure, hand we With this, back next

next is Bank of question The Michael from America. Ryskin,

open. line Your now is

be to try given quick will I the Thanks. time. Great.

on follow-up for detail R&D are this on particular you on the a in give questions business. or touched number technologies but you to have really little prioritizing? bit you reinvestment been focusing on back years, the it’s regarding what already want of step-up pretty platforms a I still Could have you of mean year. I some more sizable First, partnered a

about So, in you if of €XXX on opportunities million then for And targeting spend color that, still provide you make best incremental seeing are you going are more sort XXXX. following up on the to just XXXX? are where in you are could that

couple a of step-up? growth I this is the more slower. So, guess incremental bit little to in mean say I one-time of to the that next be years seems a

right the for investment? through us is that and to the time walk that year just make So, timing this why

Yes.

essential omics-based can handled which drug platforms goes, the the to the this answer very invest that right up. first was also And hand. right be clearly example, but be example, said when collection, priority That’s I one you omics-driven are only is, So, the platform. on building if we drug tool And want PanHunter referring clear what platforms have investment fully for will be as, we at doing future of massive which in analysis quick of And our very that’s data that that Cord into to PanOmics driving data think discovery, discovery. success have an in he technologies probabilities omics-based this. and tools are for for

when molecular is is functions out of are probabilities discovery a drug comes drug a building point but for making second go And molecular effort, patient to investments derived this long-term patients gradually step is which The with over really success massive time, of up will starting databases it development our also data. everything this year. and some which we

For I&I speak, molecular molecular patient we our we patient disease database, database, building neuromolecular kidney want have fully our speed database, here. is, that to to example, up our massively as immunology starting liver-driven up and after database we patient been to our build gain up

for because platforms that a stem this is to are here. going modeled say cell ‘XX, indications. investment stem of project strategy driving would making a step drug with are key And platforms on return we and number you now. where is are forward pluripotent translate is if and here the is €XXX you oncology, this in growth in investments And we we selection on And that’s these into stage. right it certain also comes I doing on and but at here cells is absolutely but gives monitor discovery, of cell to what cells absolutely we we platforms and on have Why, therapy to do success year-by-year change probabilities why just are right this basis and this to something say really to this a beta organic forward when area. right driving modality these where invest what really technologies. example, out, question cell will also So, from on this therapies for induced to put therapy, that that’s while cells this up pluripotent that mention the us, mix organic we we want and third induced your million as in CureBeta but and continue the our for in investment we Like the one

think because So, other into that. people and that behind build opportunities, investments there number show that slow discovery the go top you should of exceed would growth number is of are the or behind like the number investments to on R&D more growth other people for of compared it’s to most simply build drug to number here we with probably in I drug accelerate the that numbers where the comes example, it probably qualified speed be the that it just development that people are to of the When hard easy to tools, number, higher. If not to automatization that than could number.

€XXX follow-up, adjusted the to heard million a could million EBITDA If Thanks. here, I squeeze I €XXX guidance on Okay. sure to make correctly. I want quick in you

sort You comment through payments that could indicate Did play some mentioned big healthy remarks at flow million to levels? that those a is how amount you upside upfront prepared and in really, margin €XXX payments that make of milestones healthy a million a from really and got correctly. €XXX that, milestones, of of sure role. that I upfront assumes obviously that the to the already or want I

every and you here. of risk the the this we expected of achievable year, X milestone. corrected digital Phase out adjust it’s milestones, drops milestones number. into always PXXX the At And milestones. our a process of there of are drop pool any to potential to later Just bring That’s the potential stage at for we look out, beginning pool if the then milestone example, then achievable like updated

a I milestones, view So, of year the see but on we see. think not milestones is milestones that exceptional year you on from what risk-adjusted achievable expected good here a an expected potential

and the But also full year to potential there year that yes, is the then number. for second example, that’s sometime you be in come. half would that hit outperformance portfolio just, on of of typically middle milestones that one. in it or guide a the So, really on of happening If the this

you. Thank Great.

please. question Next

Zoe from Markets. in question is RBC line Karamanoli, last Capital The

is open. Your line now

Hi. Thank me. left my One taking you for for question.

top understand line the in to growth. we further expand think I order R&D investment in and improve

you And how for that that progress wondering achievable. So, for confidence segment? I this action any longer can XXXX color are Innovate be lead term gives over provide the more plan will you you track assess you on am growth if there near-term the indicators that

For example, is would of helpful. to Thank you want this year? very number any there Any here that KPI particular you. partnerships form be

X these years, that even we investing at, mature following harvesting but makes first, increasing confident of come and course, go, look into individual way over over long situations. short. – only us to these to the behind question. so why why And that’s outperformed. sales course, see KPIs especially achieved single is growth Lilly Innovate in it example, the the royalty-bearing investments on the if because that that for very Why, their of right to controllable alliance the time. partnerships J&J you back example, long-term, And later. say, for you everything if alliance, have once of come milestones higher to or Innovate then our, milestone-bearing look and our alliance every example, That’s in and And not BMS they XXX and are typically at on attached think projects Yes. are every portfolio is Great you not milestones the our you do KPI, last we or And in size then that generating are royalties product for KPIs.

that’s the that KPIs to So, the we business to and It very on make that’s investment. it it only our is track, this when base not comes KPIs us also Innovate investments. KPIs comes when comfortable that that right monitor, right comes to

expansion one then follow is business. here margin KPI are the you our look the of that just, if business key then that as of part and of look we business this flow And development following business, see you pipeline or into is our if safety development with prediction. this this the at feeding growth our also business, a driving our at cross-selling and of example, co-owned our And business. If trajectory investments that see you for the you here you right

right direction. answer So, we short yes, the could I think KPIs expand is the this many here in time, long but point a for

Thank you.

where this, happily for thank a the year. the me With hesitate And our, this, And today, our questions, you out team, was answering important questions. thank staying bit IR start I any hour if it which but think of for to to than the team. is Volker you Pleasure. longer is further have with usual don’t update reach let your our

our we making this can thank full team and also me of Let that together puts fantastic effort who report the you. to year-end results into give all put complete the a version a

number You can much in listing. imagine after a how is work year this one starting NASDAQ

company you as effort external you And to Have and much. a great to it you Thank day. the with was from team. So, partners. the to big our great also team the so thank a and this, whole

gentlemen, and been your you This for concluded. Ladies has call attendance. thank

You may disconnect.