Quarterly Statement 9M 2026 - EVOTEC SE

Financial Performance:

• Q3 2026 Group revenue was €164.9 million, broadly stable year-over-year (YoY) despite constant exchange rate headwinds; first nine-month revenue totaled €465 million, a 13.1% YoY decline driven by the first half's weakness and the non-recurring €25 million Sandoz license sale in Q1 2025.
• Adjusted Group EBITDA improved significantly in Q3 to -€1.6 million (from -€15 million in Q3 2025), approaching break-even, while the nine-month adjusted EBITDA stood at -€44.3 million.
• DMPD segment Q3 revenue was €120.1 million (-2.3% YoY), but net sales grew 24% in the first nine months as commercial activity began translating to revenue; GEB (Just EvoTech Biologics) revenue was €44.8 million in Q3 (+9.4% YoY) and €117.1 million for nine months (-18.2% YoY, primarily due to the Sandoz sale).
• R&D expenses decreased to €29.7 million (6.4% of revenue) for the first nine months, down from €42.3 million (7.9%) in the prior period.
• Total liquidity was €401 million as of September 30, 2026; Capital Expenditure (CapEx) was reduced to under 10% of revenue, with selective high-value investment focused on the third manufacturing train at the Redmond facility.

Guidance and Future Outlook:

• Evotech reaffirmed its full-year 2026 guidance: Revenue €570–€610 million and Adjusted EBITDA -€105 to -€70 million, expecting results to land toward the upper end of both ranges due to Q3 momentum.
• Long-term 2030 ambition targets €1 billion in Group revenue and an Adjusted EBITDA margin above 20% by end-2030.
• The 2030 revenue mix is projected to be 40% DMPD base business (€400M), 20% DMPD strategic partnerships (€200M), and 40% GEB (€400M).
• GEB is expected to grow at a ~20% CAGR to €400 million by 2030, driven by commercial manufacturing and licensing, while DMPD partnerships are projected to grow at ~5% CAGR to €200 million.
• Cost reduction "Horizon Execution" targets €75 million in annual run-rate savings by end-2027; >20% of this target was achieved by September 2026, ahead of plan.

Business Segments and Product Lines:

• Just EvoTech Biologics (GEB): Secured a key commercial manufacturing agreement with Vertex Pharmaceuticals for the biologic POV-Tasecept at the Redmond facility; expanding capacity with a third manufacturing train in 2027, which requires a temporary production pause but positions the segment for accelerated growth.
• DMPD: Strengthened commercial execution with a 45% increase in inbound leads, a 10% growth in customer base, and a €1 billion pipeline of potential deal value; first candidate from the Jazz Pharmaceuticals sleep disorder collaboration advanced to Phase I.
• Scientific Leadership: Appointed Dr. Joanna Hobrook as Chief Scientific Officer (effective November 1, 2026), replacing Cord Dorman, to strengthen AI and data-driven drug discovery capabilities.
• Collaborations: New partnerships announced with Plektronic (oncology) and Odyssey Therapeutics (AI-enabled drug discovery); Phase I trial initiated for the Department of War's Orto-Pox antibody program.

Market and Competitive Landscape:

• The DMPD base business is recovering from a trough in net sales (2025) and revenue (2026), with orders stabilizing and contributing to expected growth over the next 12–24 months.
• AI and data science are becoming tangible revenue drivers, with active customer work on chemical compound generation, DMPK, and tox safety profiling.
• The strategic partnership business, though volatile, offers an attractive margin upside of >15 percentage points over the base business through milestones and royalties.
• The company maintains a "base business + platform" model to ensure structural strength, balancing stable CRO/CDMO flows with higher-margin, risk-adjusted partnership revenues.

Risks and Challenges:

• Revenue recognition timing remains volatile, particularly in GEB, where the non-recurring Sandoz sale created a base effect; Q4 2026 is expected to have lower milestone contributions compared to Q3.
• A planned pause in manufacturing activities in 2027 for the third train installation will temporarily impact GEB revenue, though this is already factored into the 2030 mid-range plan.
• The strategic partnership business is subject to binary outcomes and delays; the outlook is risk-adjusted and excludes future royalty income until 2030.
• A strategic review is currently ongoing, the outcome of which could potentially alter near-term strategic elements, though the 2030 framework remains intact.

Management Commentary and Tone:

• Management expressed a confident and encouraging tone, describing Q3 as the point where transformation "pieces come together" to improve performance.
• CEO Christian Wojciechowski emphasized that 2026 is a transition year, with the "inflection point" for DMPD net sales occurring, and 2025/2026 representing the trough from which recovery is underway.
• CFO Claire Hinshelwood highlighted that the strong Q3 EBITDA improvement is broad-based and that the company is ahead of schedule on cost-saving measures.
• Tone regarding the Vertex deal and AI initiatives was positive, citing them as key anchors for future growth and margin expansion.

Analyst Questions and Answers:

• Milestones: Clarified that Q3 included approximately €30 million in milestone revenue, but Q4 is expected to be significantly lower; no clinical development milestones without associated work were received in Q3 or expected in Q4.
• Vertex Timeline: Confirmed Vertex's planned "purdue" date for manufacturing validation is November 30; commercial supply is expected to commence shortly thereafter without major additional investment beyond the third train.
• AI Utility: Confirmed AI is not just a theoretical concept but is actively generating business; specific focus is on accelerating drug discovery (e.g., Phase I candidates) and data generation for tox models, with in-house molecular patient databases serving as a key asset.
• Strategy Pivot: Denied any strategic pivot back to a capital-heavy CDMO model; the Redmond investment is a necessary, relatively small fraction of historical CapEx levels to fulfill existing growth plans, while the licensing strategy continues.
• 2027 Guidance: Indicated that 2025 was the trough for net sales and 2026 the trough for revenue; a rebound is expected in subsequent quarters, with the 2027 guidance to be issued in early 2027 reflecting the latest revenue phasing.

Other Key Points:

• Footprint consolidation is on track, with three of four planned site closures expected by year-end 2026 and the fourth in Q1 2027; approximately 400 of 800 planned workforce reductions have been implemented.
• The company plans to complement regular reporting with "virtual deep dives" into specific business areas to provide greater transparency on growth drivers and value potential.
• The "Horizon" transformation program is moving from implementation to tangible delivery, with structural savings now visible in the cost base (OpEx and SG&A).