Quarterly Statement 9M 2026 - EVOTEC SE

Financial Performance:

• Q3 2026 Group Revenue: €164.9 million (stable YoY; €165.9M at constant rates).
• YTD 2026 Revenue (9 months): €465 million (down 13.1% YoY; -10.8% at constant rates).
• Segment Breakdown (9 months): DMPD revenue €348M (-11.2%); JEP revenue €117.1M (-18.2%, impacted by one-time Sandoz license in Q1 2025).
• Q3 Adjusted EBITDA: -€1.6 million (significant improvement from -€15M in Q3 2025, approaching breakeven).
• YTD Adjusted EBITDA: -€44.3 million (improved from -€16.9M in 2025; -€39.1M at constant rates).
• R&D Expenses: €29.7 million (6.4% of revenue) for first nine months, down from €42.3 million (7.9%) previously.
• Liquidity: €401 million as of September 30, 2026; Capital Expenditure (CapEx) reduced to under 10% of revenue.
• Milestone Recognition: ~€30 million included in Q3 revenue, expected to be significantly lower in Q4.

Guidance and Future Outlook:

• Full Year 2026 Guidance Reaffirmed: Revenue €570–610M; Adjusted EBITDA -€105 to -€70M.
• Outlook Direction: Expect revenue and Adjusted EBITDA to finish toward the upper end of the guidance range.
• 2030 Mid-Range Framework: Target €1 billion in Group Revenue; Adjusted EBITDA margin >20% by end of 2028, rising further by 2030.
• Revenue Mix 2030 Projection: DMPD Base (40%), DMPD Strategic Partnerships (20%), JEP (40%).
• CAGR Projections 2026–2030: DMPD Base (~10%); DMPD Partnerships (~5%); JEP (~20%).
• Structural Goals: Horizon Execution target of €75M annual run-rate savings by end of 2027; 20% delivered by end of Q3 2026.
• Cost Structure: Aim for DMPD gross margin >20% and JEP gross margin >30% by 2030.

Business Segments and Product Lines:

• DMPD (Discovery & Medicinal Process Development): Net sales up 24% YoY (9 months); commercial execution strengthening with 45%+ increase in inbound leads and 10% growth in customer base.
• JEP (Evotec Biologics): Q3 revenue €44.8M (+9.4% YoY); confirmed Vertex Pharmaceuticals selection for commercial manufacturing of POV-Tasecept (kidney disease).
• Capacity Expansion: JEP adding a third manufacturing train at Redmond facility in 2027; requires a temporary production pause impacting 2027 revenue.
• New Partnerships: Vertex deal (commercial manufacturing); Jazz Pharmaceuticals (sleep disorder, Phase 1); Plektronic (oncology); Odyssey Therapeutics (AI-enabled discovery).
• Clinical Progress: Orto-Pox antibody program (Dept of War collaboration) advanced to Phase 1; Sleep disorder candidate (Jazz) in Phase 1.
• Technology Focus: Expansion of continuous manufacturing platform; increased utilization of AI and data science in drug discovery.

Market and Competitive Landscape:

• Commercial Pipeline: 20 active opportunities with combined potential deal value of ~€1 billion.
• AI Integration: Actively generating revenue with AI-focused drug discovery companies; leveraging proprietary molecular patient database for data generation and tox training.
• Market Trends: Early drug discovery market expected to normalize; demand for AI-driven data generation and tox studies is high.
• Strategic Positioning: Differentiation through proprietary technology platforms (e.g., J-Train, J-Media) and continuous manufacturing capabilities.

Risks and Challenges:

• Revenue Volatility: Strategic partnership revenues are milestone-driven and subject to delays; timing of deal maturation may fluctuate.
• One-off Events: YTD results impacted by a €25M Sandoz license revenue in Q1 2025 which will not repeat.
• Operational Disruption: Third manufacturing train installation at Redmond will cause a temporary production pause in 2027.
• Conversion Lag: Historical delays in converting sales to revenue in DMPD, though 2026 is expected to be a transition year.
• Strategic Review: Ongoing strategic review may lead to future adjustments (specifics not disclosed).

Management Commentary and Tone:

• Tone: Confident and positive regarding the "turning point" of the business; emphasizing that the transformation is "ahead of plan."
• Leadership Change: Dr. Joanna Hobrook appointed Chief Scientific Officer (Nov 1, 2026), succeeding Cord Dorman; focus on AI, data science, and drug discovery acceleration.
• Cost Discipline: Horizon program delivering savings ahead of schedule; workforce reductions 50% complete (400/800 positions); site consolidations on track.
• Strategic Clarity: Clear articulation of the 40-20-40 revenue mix strategy to demonstrate path to structural profitability.

Analyst Questions and Answers:

• Milestones: Q3 included ~€30M in milestones; Q4 expected to be significantly lower, contributing to the variance in quarterly profitability.
• JEP Growth Confidence: Vertex deal provides anchor customer for 2027 capacity expansion; Sandoz royalties expected to contribute in 2029-2030; new licenses and partnerships support long-term growth.
• Q4 vs Q3 EBITDA: Quarterly volatility is expected; Q4 will likely show wider losses than Q3 due to non-recurring milestone recognition in Q3 and phasing of work (Vertex/Sandoz).
• Vertex Timeline: Commercial manufacturing supply expected to begin shortly after November 30th, following inspections; no major additional investments required beyond the third train.
• AI Monetization: AI is currently driving tangible revenue in discovery (e.g., JAS, Odyssey partnerships) via data generation and virtual screening; internal operational AI is secondary to drug discovery acceleration.
• 2027 Guidance: DMPD base business expected to rebound post-2025 trough; 2027 revenue will reflect stabilizing order books and maturing strategic deals (not all deals land in 2027).
• Strategic Direction: No pivot back to a heavy asset model; third train investment is capital-efficient and necessary for growth; licensing strategy remains active.

Other Key Points:

• Horizon Savings: €20-30M savings target for 2026; ~€15M+ delivered by end of Q3, ahead of the 20-30% annual plan.
• Footprint Consolidation: Three of four site closures to be completed by year-end; fourth in Q1 2027.
• Future Reporting: Plans to introduce "virtual deep dives" to provide granular insight into business segments and value drivers starting in 2027.
• Forward-Looking Statements: Management reiterated standard disclaimer regarding risks and uncertainties inherent in projections.