Quarterly Statement 9M 2026 - EVOTEC SE

Explicit Guidance:

• FY2026 Revenues: Reaffirmed range of €570–610 million (reported) and €595–635 million (constant exchange rates); expected to land toward the upper end of the range.
• FY2026 Adjusted EBITDA: Expected range of –€105 to –€70 million (reported) and –€90 to –€60 million (constant exchange rates); expected to land toward the upper end of the range.
• CapEx: Targeted at under 10% of revenue; FY2027 expected to remain broadly in line with FY2026 levels, with the third manufacturing train at J-POD Redmond representing the largest individual investment within this envelope.
• Run-rate Savings (Horizon Execution): Targeting €75 million in annual run-rate savings by end of 2027; FY2026 delivery planned at 20–30% of target (already >20% delivered as of September).
• Mid-Range Framework (2030 Ambition): Projecting €1 billion in group revenues by 2030 with potential upside; targeting an adjusted EBITDA margin above 20% by end of 2028, rising further above 20% by end of 2030.

Business-Segment Outlook:

• DMPD Base Business: Expected to contribute ~40% of total revenue by 2030; forecast CAGR of ~10% to reach ~€400 million by 2030, driven by market normalization, commercial execution, and AI integration.
• DMPD Strategic Partnerships: Expected to contribute ~20% of total revenue by 2030 (CAGR ~5%); includes milestone/royalty income with attractive margin upside >15 percentage points vs. base business (risk-adjusted outlook excludes royalties until 2030).
• JEP (Just EvoTech Biologics): Expected to contribute ~40% of total revenue by 2030; CAGR ~20% to reach ~€400 million by 2030, driven by commercial manufacturing (Vertex program) and technology licensing (J-Train, J-Choice, J-Media).
• Margin Trajectories: DMPD base gross margin >20% by 2030; JEP gross margin >30% by 2030 driven by commercial scale and licensing.
• JEP Revenue Phasing: Revenue growth expected to accelerate post-2027 following the temporary pause in manufacturing activities required for the third train installation; 2027 revenues reflect near-term impact of this pause.
• JEP Commercial Readiness: Vertex commercial supply for POV-Tasecept (povutacicept) expected to begin following FDA submission scheduled for November 30th; manufacturing validation/inspection steps anticipated to conclude shortly thereafter.

Market and Competitive Outlook:

• DMPD Commercial Activity: Net sales in DMPD-based business up 24% YoY for first nine months; inbound leads up >45%; proposal turnaround time improved ~20%; customer base up ~10%.
• Pipeline Value: Current strategic partnership pipeline represents ~€1 billion in potential deal value, with opportunities maturing into late stages.
• AI Demand: Strong customer inquiries and active work on data generation (chemical compound generation, DMPK, tox safety profiling); AI is a primary driver for positive sales dynamics in Discovery and Cyprotex.
• Market Structure: Anticipated shift to a more balanced business mix (40-20-40 split between DMPD base, DMPD partnerships, and JEP) with a structurally stronger earnings profile.

Macro / Industry Outlook:

• Drug Discovery Environment: Expectation of continued normalization and recovery in the early drug discovery market.
• Currency: Financial targets and guidance provided on both reported and constant exchange rate bases; FX impacts explicitly separated in reporting.
• Industry Trends: Continued structural shift toward data-driven drug discovery and continuous manufacturing platforms.

Strategic Initiatives:

• Vertex Partnership: Commercial manufacturing agreement secured for Vertex's investigational biologic (povutacicept); serves as anchor customer for capacity expansion.
• Capacity Expansion: Third manufacturing train being added at J-POD Redmond facility; installation to commence next year (2027) with initial CapEx incurred in 2026; requires temporary pause in manufacturing.
• Horizon Execution (Transformation): Workforce reductions implemented for ~400 of 800 planned positions; footprint consolidation (three of four site closures) to complete by end of 2026, fourth closure in Q1 2027.
• Scientific Leadership: Dr. Joanna Hobrook appointed Chief Scientific Officer (Nov 1, 2026) to strengthen data science/AI application in drug discovery.
• Partnership Expansions: Advancement of Orto-Pox antibody program (Dept of War) to Phase 1; Sleep disorder candidate (Jazz) to Phase 1; collaborations with Plektronic (oncology) and Odyssey Therapeutics (AI).

Risks and Headwinds to Outlook:

• Revenue Recognition Phasing: Q4 2026 expected to have significantly lower milestone/contribution revenue compared to Q3, causing sequential quarterly volatility and impacting profitability bridges.
• Manufacturing Pause: Temporary halt in JEP manufacturing activities in 2027 for the third train installation will negatively impact near-term revenue.
• Deal Volatility: Strategic partnership revenues are volatile; timing of milestones and royalty income may deviate from the risk-adjusted trajectory.
• Commercial Execution: Conversion of sales orders to revenue involves a lag effect (orders from 2024–2025 built 2026 revenues; 2027 revenues will rely on 2025–2026 order book).
• Strategic Review: Ongoing strategic review leaves certain future aspects of the plan undetermined.

Management Tone on the Future:

• Confidence: High confidence in the "direction of the business," citing improved commercial execution, tangible savings delivery, and the Vertex partnership as validation of the JEP strategy.
• Transformation Status: Transformation program ("Horizon") described as "ahead of plan" and moving from implementation to tangible delivery; full structural benefits expected by end of 2027.
• Guidance Stance: Reaffirmed full-year guidance with expectations to finish at the "upper end" of ranges; no change to underlying assumptions since July update.
• Strategic Pivot: Management explicitly denies a pivot back to a capital-heavy CDMO model; the third train investment is framed as a necessary, capital-efficient expansion for growth rather than a strategic reversal.

Miscellaneous:

• Dividends/Buybacks: No mention of new dividend or share buyback plans in the outlook.
• Reporting Changes: Plan to provide selected virtual deep dives into key business areas (capabilities, growth drivers, value potential) starting in 2027.
• Leadership Transition: Cord Dorman departed as CSO at end of September 2026; succession completed.
• Sandoz Legacy: Remaining economic benefits from the Sandoz license deal (royalties from 10 molecules) expected to contribute starting 2029–2030.