Evotec Se · XETR:EVT
Evotec — FY2006 Earnings Presentation
54 slides from Evotec's earnings presentation, Mar 29, 2007
Slide 1: Evotec AG FY 2006 Results Presentation
Evotec AG FY 2006 Results Presentation, 29 March 2007 Translating Innovation into Results
Slide 2: Agenda
Agenda 01 Highlights 2006 02 Pipeline 03 Collaborations 04 FY 2006 Results 05 Outlook 2007 3/28/2007 Folie 2
Slide 3: Highlights 2006
01 Highlights 2006 Highlights 2006 O CNS pipeline - value inflection points ahead Phase I/II study for insomnia candidate EVT 201 confirmed findings of previous study 2 US Phase II patient studies for EVT 201 - results expected in Q3/2007 O Strong performance of service business New partnershi
Slide 4: Financial guidance for 2006 fully achieved
01 Highlights 2006 Financial guidance for 2006 fully achieved Evotec Group including ET (in €m) 2005 2006 ∆ Guidance Revenues 80 85 +6% 0 – 5% growth - Continuing business 64 67 +5% Services 0% growth R&D expenses 14 33 +137% 30 – 35 Net income (34) (32) +3% - Cash at year end 54 81 +51% > 30 3/28/2
Slide 5: Focus on future business – migrating to a biopharmaceutical business
01 Highlights 2006 Focus on future business – migrating to a biopharmaceutical business Evotec Services Pharmaceuticals • Tools and Technologies Division Division division (ET) sold to PerkinElmer for €23m • Total valuation of former technologies incl Olympus deal €30m • Increases Evotec’s cash posi
Slide 6: Small molecule machine to build internal pipeline and partnership business
01 Highlights 2006 Small molecule machine to build internal pipeline and partnership business €67m partnership business Servi Phar Development Discovery ces mace Divis utical ion s Divisi € 63 m€ on 3m EVT 201 EVT 101 EVT 302 Proprietary CNS pipeline 3/28/2007 Folie 6
Slide 7: Pipeline progressed during 2006
01 Highlights 2006 Pipeline progressed during 2006 O EVT 300 In-licensed 2 MAO-B inhibitors, EVT 301 and EVT 302 Changed focus to EVT 302 from EVT 301 following Phase I results O EVT 100 Successful completion of Phase I studies for EVT 101 Progressed EVT 103 towards clinical trials O EVT 201
Slide 8: Our CNS pipeline
01 Highlights 2006 Our CNS pipeline Discovery Preclinical Phase I Phase II Phase III EVT 201 GABAA receptor partial positive allosteric modulator Insomnia EVT 101 NMDA NR2B subtype selective antagonist Alzheimer‘s disease / Pain EVT 302 MAO-B inhibitor Smoking cessation EVT 102 EVT 103 Follow-up to
Slide 9: Agenda
Agenda 01 Highlights 2006 02 Pipeline 03 Collaborations 04 FY 2006 Results 05 Outlook 2007 3/28/2007 Folie 9
Slide 10: EVT 302: Smoking cessation and Alzheimer's
02 Our Pipeline EVT 302: Smoking cessation and Alzheimer’s O Orally active, potent, highly selective MAO-B inhibitor O Potential in neurodegenerative diseases (AD, PD) and addiction Phase II clinical validation in smoking cessation (selegiline, lazabemide) Phase III clinical validation in AD O C
Slide 11: Smoking cessation: Enormous market potential
02 Our Pipeline Smoking cessation: Enormous market potential O Nicotine replacements - market value ~ $1bn today O Large market, consumer driven and agile 44.5 million smokers in the US 70% of smokers desire to quit = 30 million Average smoker will make 6 – 9 attempts to quit during their life
Slide 12: EVT 302: Strong product characteristics
02 Our Pipeline EVT 302: Strong product characteristics O Smoking cessation - lower development risk and cost, strong competitive potential Clinically effective MAO-B mechanism Superior competitive safety profile over first generation MAO-B inhibitors with potential for no food restriction and b
Slide 13: EVT 101: Selectivity provides key differentiation
02 Our Pipeline EVT 101: Selectivity provides key differentiation O Oral NR2B subtype selective NMDA receptor antagonist O Potential in neurodegenerative diseases and pain O ‘Memantine’ - a non-selective NMDA competitor drug - shows blockbuster potential in Alzheimer’s disease O Clinical status Ph
Slide 14: Multi indication potential (Alzheimer, Pain, other indications)
02 Our Pipeline Multi indication potential (Alzheimer, Pain, other indications) O Symptomatic Alzheimer’s disease treatment, potential for disease modification NR2B selectivity should translate into clinical advantages over ‘memantine’ O Novel approach for treatment of neuropathic pain Clinical
Slide 15: EVT 201: Insomnia candidate with differentiated mode of action
02 Our Pipeline EVT 201: Insomnia candidate with differentiated mode of action O Potential novel insomnia treatment on GABAA receptor complex (partial positive allosteric modulator) O Differentiated profile Partial agonism Ideal T1/2: approx. 3.5 hrs Similar PK in young and elderly Strong pr
Slide 16: Insomnia market: Under-penetrated and consumer driven
02 Our Pipeline Insomnia market: Under-penetrated and consumer driven O Symptoms of insomnia very frequent (2005 Sleep in America Poll Survey, Nature Reviews / Drug Discovery) 54% encounter symptoms at least 1x per month, Only 7% use RX sleep aid O Significant consumer driven growth potential (M
Slide 17: GABAA modulation is Gold Standard for Insomnia
02 Our Pipeline GABAA modulation is Gold Standard for Insomnia > 90 % of drugs use this mechanism, incl. market leaders US market share data according to IMS, January 2007 TRX Others Rozerem 5% 2% GABAA modulation: Phenobarbital 6% Gold Standard mechanism Clinically validated Ambien Temazepam 41% 15
Slide 18: Significant unmet needs remain
02 Our Pipeline Significant unmet needs remain “One of the major challenges is to develop a drug that induces sleep quickly, helps individuals remain asleep and allows them to awaken feeling refreshed rather than hung over.” Datamonitor, Pipeline and Commercial Perspectives: Insomnia, 12/2005 “The e
Slide 19: Road traffic noise model in a sleep laboratory
02 Our Pipeline Road traffic noise model in a sleep laboratory: Good model to measure sleep maintenance 3/28/2007 Folie 19
Slide 20: EVT 201 shows efficacy in sleep maintenance in both halves of the night
02 Our Pipeline EVT 201 shows efficacy in sleep maintenance in both first and second half of the night O EVT 201 (1.5, 2.0 & 2.5 mg) significantly reduced WASO over the whole night O Significant reduction in Wake after Sleep Onset in hours 0-4 and hours 5-8 O No subjective residual effects 35 30 WAS
Slide 21: EVT 201 insomnia drug: Potential for differentiation
02 Our Pipeline EVT 201 insomnia drug: Potential for differentiation O “Gold Standard” clinical mechanism in insomnia O High affinity, α1 preferring partial positive allosteric modulator Potentially also reducing symptoms of anxiety Low potential for dependence O Sleep inducing, but not a “knock
Slide 22: Agenda
Agenda 01 Highlights 2006 02 Pipeline 03 Collaborations 04 FY 2006 Results 05 Outlook 2007 3/28/2007 Folie 22
Slide 23: Research results for a top quality customer network
03 Our Collaborations Research results for a top quality customer network 3/28/2007 Folie 23
Slide 24: Partnering at all stages of the value chain
03 Our Collaborations Partnering at all stages of the value chain Collaborative with research funding covering cash costs, preclinical & clinical milestones/royalties Delivery-based fee-for-service e.g. Boehringer Ingelheim collaboration e.g. screening of 200,000 compounds kg amount of pilot plant m
Slide 25: Value of early stage projects significantly increased
03 Our Collaborations Value of early stage projects significantly increased O Pharma‘s late stage pipelines remain weak O Pressure to in-license continues to rise O Increased demand not matched by supply O Terms for products have increased significantly High prices for early stage projects Incre
Slide 26: Small molecule engine allows to build significant early stage product equity
03 Our Collaborations Small molecule engine allows to build significant early stage product equity Discovery Preclinical Phase I Phase II Phase III EVT 201 GABAA receptor partial positive allosteric modulator EVT 101 NMDA NR2B subtype selective antagonist, oral EVT 302 MAO-B inhibitor EVT 102 EVT 10
Slide 27: R&D networks – the future of pharmaceutical research
03 Our Collaborations R&D networks – the future of pharmaceutical research Joint Ventures Equity investments Technology PharmaCo partnerships Discovery partnerships Academic, public to private partnerships R&D spin-offs Licensing agreements 3/28/2007 Folie 27
Slide 28: High-value added, results-based collaboration
03 Our Collaborations High-value added, results-based collaboration: Research payments, milestones, royalties, rights back O Goal of collaboration Deliver preclinical candidates Exploit Evotec’s GPCR and other target class expertise O Scope Duration 5 years 76 FTE committed Expanded scope an
Slide 29: Expanding the partnership into another area of strength
03 Our Collaborations Expanding the partnership into another area of strength O Multi-year collaboration to identify novel Alzheimer‘s disease targets O Applying Evotec‘s proprietary and well validated disease models O Boehringer Ingelheim (BI) will select and further validate target candidates O Co
Slide 30: Global high-value, results-based collaboration
03 Our Collaborations Global high-value, results-based collaboration High-value, results-based collaboration O CNS project initiated at Evotec Undisclosed target Assay development, initial screen, identified chemical matter Innovative business model O Joint research in areas of strength allows m
Slide 31: Evotec's road to success
03 Our Collaborations Evotec’s road to success The leading R&D Network company Bring innovation! Translate medicine - from academia to practice Create products in Central Nervous Systems Share benefit and risk in collaborative research based on unique skills and technologies 3/28/2007 Folie
Slide 32: Traditional Services: A strong year for chemical and pharmaceutical development
03 Our Collaborations Traditional Services A strong year for chemical and pharmaceutical development O Strong pilot plant and formulation sales O Moving down the value chain with a number of discovery customers e.g. Panacos lead project moved into preclinical development O Large pharmaceutical com
Slide 33: Agenda
Agenda 01 Highlights 2006 02 Pipeline 03 Collaborations 04 FY 2006 Results 05 Outlook 2007 3/28/2007 Folie 33
Slide 34: Key financials 2006: Strong performance
04 FY 2006 Results Key financials 2006: Strong performance Condensed Profit & Loss Statement (IFRS) in €m 2005 2006 % vs. Actual Actual Act 05 Revenues 64.1 67.4 +5% Gross margin 33.0% 34.1% - R&D expenses 9.3 30.3 +226% - SG&A expenses 15.5 18.6 +20% - Amortisation & impairment 27.1 9.2 -66% - Othe
Slide 35: Evotec Technologies, sold to PerkinElmer: Discontinued Operations
04 FY 2006 Results Evotec Technologies, sold to Perkin Elmer effective 1 January 2007 : Discontinued Operations Consolidated key financial figures – Discontinued Operations in €m 2005 2006 % vs. Actual Actual Act 05 Revenues 15.7 17.3 +11% Gross margin 50.0% 44.2% - R&D expenses 4.8 3.1 -34% - SG&A
Slide 36: Solid revenue growth from Services Business
04 FY 2006 Results Solid revenue growth from Services Business Revenues, continuing business in €m 70 67.4 64.1 +5% 3.2 3.2 60 50 40 Pharmaceuticals 64.2 60.9 Services 30 20 10 0 2005 2006 3/28/2007 Folie 36
Slide 37: Gross margin: Product mix managed for improved margin
04 FY 2006 Results Gross margin: Product mix managed for improved margin Group gross margin, continuing business in % Key drivers: O Positive effects from revenue mix 35 Milestones with Boehringer 34.1 % Ingelheim and Takeda 34 High utilisation in asset intensive 33.0 % 33 chemical and pharmaceu
Slide 38: Focused R&D investments in proprietary research programmes
04 FY 2006 Results Focused R&D investments in proprietary research programmes Group R&D spend, continuing business in €m 35 30.3 O Pharmaceuticals Division: 30 €28.1m for proprietary 25 research and development 20 O Services Division: platform R&D small and stable 15 9.3 10 5 0 2005 2006 3/28/2007 F
Slide 39: Volatility in R&D expenditure between quarters
04 FY 2006 Results Volatility in R&D expenditure between quarters Segmental R&D spend, continuing business in €m 9 8.3 8.2 8 7 O Key drivers for quarterly 6.2 6 5.4 variances 5 Clinical trials 4 License costs / 3 2 milestones 0.5 0.9 0.8 0.5 1 0 Q1 Q2 Q3 Q4 Pharmaceuticals Services 3/28/2007 Fol
Slide 40: Increased R&D leads to increase in net loss
04 FY 2006 Results Increased R&D leads to increase in net loss Group net income, continuing business in €m -7,6 -3,5 0 -4.1 -5 -10 Amortisation & impairment -15 -27.1 -27.1 Net income bef. amortisation -20 & impairment -25 -30 -9.2 • € 3.2 m regular amortisation -31.2 -35 • € 6.6 m goodwill impairme
Slide 41: Pharmaceuticals Division: R&D expenses up, mainly due to clinical trials
04 FY 2006 Results Pharmaceuticals Division: R&D expenses up, mainly due to clinical trials P&L Pharmaceuticals Division (Segment) in €m 20 COGS 10 0.9 3.2 3.2 Revenues 0.6 1.0 0.4 R&D 0 0.9 6.0 1.6 4.0 SG&A -2.1 incl.COH -10 allocation* -7.7 28.1 -20 4.0 -30 Operating income -29.4 before amortisati
Slide 42: Services Division: Segment operating result before amortisation +67%
04 FY 2006 Results Services Division: Segment operating result before amortisation +67% P&L Services Division (Segment) in €m 70 61.0 +5% 64.3 Revenues 60 54.5 50 COGS 44.0 40 42.0 GM:31.6% R&D 38.5 GM:31.1% 30 GM:29.3% Other SG&A 20 2.7 incl.COH 3.9 1.6 allocation* 8.1 2.2 10 13.5 3.6 11.4 0 14.1 O
Slide 43: Services business continued to be cash generative
04 FY 2006 Results Services business continued to be cash generative Services Division 2006 (pro-forma calculation) in €m Operating income before amortisation & impairment 2.5 Depreciation +5.9 “Operating cash flow”* 8.4 Capex** -3.1 Cash flow before lease finance* 5.3 * Not including change of work
Slide 44: Cash development 2006: Capital increase and divestment of ET improve cash level
04 FY 2006 Results Cash development 2006: Capital increase and divestment of ET improve cash level in €m Changes/effects 2006 vs. 2005 90 +22.2 -8.9 78.7 80 +17.8 -1.8 -2.8 70 60 52.2 50 Incl benefit from reduced working capital 40 30 20 10 0 31.12.2005 Capital increase Net debt Investments ET dives
Slide 45: Increase of operational headcount post 2004 restructuring
04 FY 2006 Results Increase of operational headcount post 2004 restructuring Employees as of 31/12, continuing business 600 560 555 547 550 O Growing clinical 527 development team and 512 formulation operations 500 450 400 2002 2003 2004 2005 2006 3/28/2007 Folie 45
Slide 46: Significantly increased cash position strengthens balance sheet
04 FY 2006 Results Significantly increased cash position strengthens balance sheet Balance sheet – Assets in €m 205.5 186.1 Cash and cash equivalents 78.7 52.2 Other current assets 16.9 15.7 Intangible assets + other long-term assets 62.8 57.0 Property, plant and equipment 36.4 34.7 Assets classifie
Slide 47: Strong equity ratio reduced only temporarily (67%)
04 FY 2006 Results Strong equity ratio reduced only temporarily (67%) Balance sheet – Liabilities & stockholder‘s equity in €m 205.5 186.1 Stockholders‘ equity Long-term liabilities 137.2 and deferred taxes (67%) 148.7 thereof €22.2m Other short-term liability to deliver (80%) liabilities ET (equiv.
Slide 48: Agenda
Agenda 01 Highlights 2006 02 Pipeline 03 Collaborations 04 FY 2006 Results 05 Outlook 2007 3/28/2007 Folie 48
Slide 49: Sales and Order Book
05 Outlook 2007 Sales and Order Book 2007 Sales and Order Book status as of January in €m 40 30 27 28 20 10 0 2006 2007 3/28/2007 Folie 49
Slide 50: Financial guidance 2007
05 Outlook 2007 Financial guidance 2007 O Revenues are expected to reach €65m - €70m Depending on success-based milestone payments Results-based deals and clinical out-licensing are likely to lead to more revenue volatility in the mid-term O Operating result expected to decline slightly compared
Slide 51: Our research plan 2007
05 Outlook 2007 Our research plan 2007 Budget 2007 Milestone EVT 201 9 Completion Phase II studies EVT 101 9 Phase Ib/IIa studies EVT 302 9 Completion Phase I EVT 102 9 Further toxicity studies EVT 103 9 Completion of preclinical Discovery 9 3 lead optimisation projects by year-end 2007 resulting fr
Slide 52: Significant clinical news flow in 2007
05 Outlook 2007 Significant clinical news flow in 2007 H1 2007 EVT 302: Start of further Phase I studies EVT 101: Start of Phase I cognition studies H2 2007 EVT 101: Start of Phase IIa in third molar extraction (TME) pain EVT 201: Results from Phase II trial in primary insomnia patients EVT 201: Res
Slide 53: Major milestones 2008+
05 Outlook 2007 Major milestones 2008+ EVT 201 Partnering with positive proof-of-concept data EVT 302 Start of Phase II in smoking cessation Headline results in smoking cessation by early 2009 Decision about development for Alzheimer’s disease EVT 100 series Start of Phase IIb trials for EVT 101 EVT
Slide 54: Tomorrow's Drugs Today
Tomorrow’s Drugs Today™ Your contacts: Jörn Aldag President & CEO P: +49.(0)40.56081-375 joern.aldag@evotec.com Anne Hennecke SVP, Investor Relations P: +49.(0)40.56081-286 anne.hennecke@evotec.com 3/28/2007 Folie 54