Quarterly Statement 9M 2026 - EVOTEC SE

Explicit Guidance:

• Full Year 2026: Reaffirmed guidance; revenue expected between €570–610 million (reported) / €595–635 million (constant exchange rates); Adjusted Group EBITDA expected between −€105–70 million (reported) / −€90–60 million (constant exchange rates). Management expects both metrics to land toward the upper end of their respective ranges based on Q3 performance and current visibility.
• Horizon Execution Savings (Run Rate): Target of €75 million in annual savings by the end of 2027.
• 2026 Savings Delivery: Plan to deliver 20–30% of the 2027 target by year-end 2026; >20% achieved by end of September 2026 (ahead of plan).
• Capex 2027: Expected to remain broadly in line with 2026 levels (goal under 10% of revenue), with the third manufacturing train at Redmond representing the largest individual investment within that envelope.

Business-Segment Outlook:

• DMPD (Drug Discovery & Development Services):
  • 2026–2030 Mix: Base business (CRO services) expected to contribute ~40% of revenue by 2030; Strategic partnerships (GMPD) expected to contribute ~20% of revenue by 2030 with margins >15 percentage points higher than base.
  • Revenue Trajectory: Base business revenues projected to reach ~€400 million by 2030 (CAGR <del>10%); Strategic partnership revenue (risk-adjusted) projected to reach **</del>€200 million by 2030** (CAGR ~5%).
  • Gross Margins: Horizon and productivity measures expected to drive DMPD gross margin above 20% by 2030.
  • Commercial Momentum: Net sales increased 24% (YTD 2026); inbound leads up >45%; proposal turnaround time improved ~20%; customer base up ~10%. Pipeline of strategic opportunities represents ~€1 billion in potential deal value.
• JEP (Just EvoTech Biologics):
  • 2026–2030 Mix: Projected to contribute ~40% of revenue by 2030.
  • Revenue Trajectory: Expected to reach ~€400 million by 2030 (CAGR ~20%).
  • Commercial Manufacturing: Selected by Vertex for commercial manufacturing of POV-Tasecept (kidney disease). Third manufacturing train at Redmond to be installed in 2027; revenue pause in 2027 reflected in mid-range plan; growth acceleration expected once capacity comes online.
  • Gross Margins: Move into commercial manufacturing and licensing expected to drive gross margin above 30% over time.
  • Vertex Deal Timeline: Manufacturing validation/inspections expected to complete around November 30; commercial supply expected to start shortly thereafter.
• Segment Margins (Long Term):
  • JEP Licensing: Expected to provide higher margin income via J-Train, J-Ch, and J-Media licensing platforms.

Market and Competitive Outlook:

• AI & Data: AI and data-driven approaches are driving tangible revenue in DMPD, particularly in chemical compound generation, DMPK, and tox safety profiling. Existing "molecular patient database" cited as a high-value, non-replicable asset attracting partners.
• Strategic Partnerships: Pipeline includes 20 opportunities valued at ~€1 billion. New collaborations active with Jazz Pharmaceuticals (sleep disorder, now in Phase 1), Plektronic (oncology), and Odyssey Therapeutics (AI-enabled drug discovery, autoimmune).
• Demand Trends: Early drug discovery market expected to normalize and recover; DMPD base business showing stabilizing work orders with BMS contribution growth expected over the next 12–24 months.
• Business Model Evolution: Moving toward a "balanced" business structure with distinct base businesses (DMPD CRO, JEP CDMO) and high-margin premium pools (partnerships, licensing, royalties).

Macro / Industry Outlook:

• Cost Environment: Focus on structural cost reductions (Horizon Execution) to achieve €75m run-rate savings; footprint consolidation and workforce measures reducing overhead.
• FX/Exchange Rates: Guidance ranges provided for both reported and constant exchange rates; currency impacts considered in mid-range planning.
• Economy: 2025 identified as the trough for net sales; 2026 identified as the trough for revenue, with a rebound anticipated in subsequent quarters due to the delay between order books and revenue recognition.

Strategic Initiatives:

• Horizon Execution (Transformation):
  • Savings: €75 million run-rate target by end of 2027.
  • Workforce: ~400 of 800 planned positions cut (50% complete); full reduction targeted for 2027.
  • Footprint: Three of four planned site closures to be completed by end of 2026; fourth closure in Q1 2027.
  • Scientific Footprint: Consolidation of omics, infectious diseases, and protein science capabilities underway.
• Capacity Expansion:
  • Redmond Facility: Adding a third manufacturing train in 2027 for Vertex and other customers; requires a temporary pause in manufacturing.
  • Investment: Initial CapEx incurred in 2026; remainder in 2027.
• Leadership Change: Dr. Joanna Hobrook joined as Chief Scientific Officer on November 1, 2026, focusing on AI, data science, and novel technologies.
• Sandoz License (Historical Context for Future): Mid-term phase (2026–2028) involves joint development; long-term royalties (10 molecules) eligible starting 2029–2030.
• Reporting: Plan to release granular DMPD component insights starting in 2027 and hold virtual deep dives on key business areas in coming months.

Risks and Headwinds to Outlook:

• Volatility: Strategic partnership revenue is volatile; risk-adjusted trajectory excludes future royalty income until 2030. Actual revenue may deviate from straight-line growth due to program timing and progression.
• Operational Phasing: Q4 2026 expected to see lower milestone contributions compared to Q3, impacting quarterly profitability.
• Manufacturing Pause: Temporary halt in Redmond manufacturing in 2027 to install the third train will impact 2027 revenue (already factored into mid-range plan).
• Guidance Caveats: Management does not guide on quarter-by-quarter profitability due to inherent variability in revenue recognition and milestone timing.
• Strategic Review: Ongoing strategic review may alter future directions (specifics not disclosed).

Management Tone on the Future:

• Confidence: High confidence in the "direction of the business," citing "encouraging progress" and transformation being "ahead of plan."
• Turnaround Narrative: Framing 2025/2026 as transition/trough years with clear visibility to "sustainable growth" and "structurally stronger earnings profile" by 2030.
• Discipline: Emphasis on "capital discipline," "selective investment," and "rigorous cash flow management."
• Transparency: Commitment to providing greater visibility into the 2030 framework, revenue stream economics, and segment-level progress starting in 2027.

Miscellaneous:

• Liquidity: Total liquidity at €30 million as of September 30, 2026 (down €65 million from Q2 2026).
• Sandoz Deal Economics: Deal provided short, mid, and long-term benefits; current phase focuses on joint development with royalties expected to contribute to 2029–2030 results.
• 2030 Financial Ambitions: Target €1 billion in group revenues by 2030; Adjusted EBITDA margin target >20% by end-2028 and rising further by 2030.