Evotec SE: fiscal year 2020 results
FINANCIALS REFLECT GREAT PERFORMANCE
- Group revenues exceed revenue target - up 12% (+14% at constant fx rates) to € 500.9 m (2019: € 446.4 m)
- Strong performance in base business (+16%)
- Adjusted Group EBITDA in line with guidance by € 106.6 m (€ 110.8 m at constant fx rates) (2019: € 123.1 m); adjusted EBITDA for EVT Execute shows increase of 6% to € 129.3 m in 2020, despite planned loss of Sanofi subsidy.
- Unpartnered R&D expenses of € 46.4 m (2019: € 37.5 m)
- Very strong liquidity position with € 481.9 m.
STRONG PERFOMANCE DESPITE ONGOING PANDEMIC
- Important clinical trial initiations and significant progress in co-owned pipeline
- Milestone achievements within strategic collaborations with Bayer and BMS
- New and extended partnerships in e.g. kidney disease, protein degradation, rare diseases, and oncology
- Focus on “omics”, machine-learning and artificial intelligence platforms in all modalities
- Strong year for Just – Evotec Biologics with several new collaborations signed and J.POD® 1 US on track to open in H2 2021; Initiation of J.POD® 2 EU in Toulouse still in H1 2021
- Multiple new and extended drug discovery collaborations
- Successful step into gene therapy with new gene therapy R&D centre Evotec GT
- Good progress of equity-based co-ownership engagements and BRIDGEs
- Expansion of alliance with US Department of Defense (“DOD”) for Just – Evotec Biologics (after period-end)
- Multi-RNA target alliance with Takeda (after period-end)
- Mubadala Investment Company and Novo Holdings A/S endorse strategy, together investing € 250 m through capital increase
- Acquisition of land, buildings and full takeover of staff from “Biopark by Sanofi SAS”, now “Campus Curie Toulouse” (France)
- Expansion of infrastructure for growth in Abingdon (UK), Goettingen (GER); Munich (GER)
- Implementation of Action Plan 2025 “The data-driven R&D Autobahn to Cures”
FINANCIAL GUIDANCE 2021 – CONTINUED STRONG ORGANIC GROWTH
- Group revenues expected to be in a range of € 550 - 570 m (€ 565 – 585 m at constant exchange rates) (2020: € 500.9 m)
- Adjusted Group EBITDA expected to be in the range of € 105 - 120 m (€ 115 – 130 m at constant exchange rates) (2020: € 106.6 m)
- Unpartnered research and development expenses expected to be in a range of € 50 - 60 m (2020: € 46.4 m)
Given current global insecurities surrounding the pandemic, a likely negative impact – though less pronounced than in 2020 – is already estimated within the guidance for revenues and adjusted EBITDA stated above.
FINANCIALS REFLECT STRONG GROWTH
In 2020, Evotec’s Group revenues increased by 12% to € 500.9 m (€ 507.7 m at constant exchange rates) (2019: € 446.4 m), despite the difficulties arising from the global COVID-19 pandemic, which led to delays in milestone payments, and despite the absence of payments from Sanofi for the Toulouse site since April 2020 (loss of € 18.0 m). This increase resulted primarily from the growth performance in the base business (+ 16%), and the revenue contribution from Just – Evotec Biologics (including J.POD®) of € 39.3 m (2019: € 16.1 m, as the company was acquired in July 2019), which strongly accelerated in H2 2020. Revenues from upfront, milestone and licence payments were lower than in the previous year (2019: € 39.0 m) at € 30.1 m.
In 2020, Evotec focused its unpartnered R&D expenses of € 46.4 m (2019: € 37.5 m) primarily on initiatives in platform projects, in particular on “omics”, artificial intelligence (“AI”), machine learning and data analytics platforms as well as on its cell therapy platform. Its partnered R&D expenses declined to € 17.5 m (2019: € 20.9 m). This is related to its infectious disease portfolio as R&D expenses are costs fully reimbursed by its partner Sanofi, but also recognised under other operating income, and thus do not negatively affect the operating result or adjusted EBITDA. The split into unpartnered and partnered R&D expenses has only been applied since July 2018 when the infectious diseases portfolio and Lyon site was acquired from Sanofi.
In 2020, the Group’s selling, general and administrative (“SG&A”) expenses increased by 16% to € 77.2 m (2019: € 66.5 m). This increase resulted primarily from higher personnel costs arising from the continued expansion in all areas, as well as from start-up costs for the planned launch of J.POD® 1 US in the current year as well as increased IT costs.
Adjusted Group EBITDA declined to € 106.6 m in 2020 (€ 110.8 m at constant exchange rates) (2019: € 123.1 m), but were fully in line with guidance. One of the main reasons for the anticipated lower adjusted EBITDA was the planned loss of the subsidy from Sanofi for the Toulouse site as well as planned start-up costs for the commissioning of J.POD® 1 US. In addition, lower milestone payments (due to pandemic-related delays), higher unpartnered R&D expenses, the loss of R&D tax credits in Italy due to changes in legislation, and the increase in SG&A costs due to expansion also had a negative impact on the adjusted EBITDA and the adjusted EBITDA margin. However, the EVT Execute adjusted EBITDA still shows an increase above 6% to € 129.3 m (2019: € 122.5 m).
Evotec recorded an operating result for 2020 of € 48.5 m (2019: € 62.6 m), mainly due to lower gross profit, higher R&D expenses and the loss of R&D tax credits in Italy. Evotec recorded a net result for the financial year 2020 of € 6.3 m (2019: € 37.2 m).
Evotec ended the year 2020 with a net debt position of € 10.0 m versus € 143.1 m at the end of 2019. The massive improvement is mainly due to the capital increase by Mubadala Investment Company and Novo Holdings of € 250 m in October more than compensating for higher investments related to the ramp up of capacity, for Just – Evotec Biologics and Evotec Innovate.
STRONG PERFOMANCE OF BOTH EVT INNOVATE AND EVT EXECUTE, GREAT START OF JUST – EVOTEC BIOLOGICS
EVT Innovate was characterised in 2020 by multiple important clinical trial initiations, continued milestone income in its strategic partnerships (iPSC neurodegeneration and oncology protein degradation alliances with Bristol Myers Squibb (“BMS”); kidney disease and endometriosis/chronic cough alliances with Bayer) as well as the signing of multiple new partnerships (e.g. Novo Nordisk)
Evotec made significant progress towards building the globally leading precision medicine platform, based on the proprietary industrialised data generation PanOmics technology and a unique AI/ML-driven data analytics software PanHunter. Additionally, Evotec expanded its leading position in iPSC (induced pluripotent stem cells).
In the field of anti-infectives, Evotec is involved in a number of activities in the global fight against COVID-19, virology, and antibiotic resistance and closed additional collaborations. Evotec initiated multiple partnerships with the Bill & Melinda Gates Foundation (especially in Tuberculosis). Furthermore, after period-end, Evotec started the clinical development of a therapeutic antibody for the treatment of chikungunya virus infection with NIAID and a leading academic research organisation.
In 2020, Evotec’s academic BRIDGE model was accelerated through the launch of Autobahn Labs and the first spin-off of Lab282, Dark Blue Therapeutics. The Company made further new investments in promising Biotech companies, Curexsys, leon-nanodrugs, panCELLa, Quantro Therapeutics, and participated in follow-on financings of e.g. Eternygen, Exscientia, Facio, and Topas.
Despite the circumstances of COVID-19, the EVT Execute segment continued to demonstrate strong progress in 2020 with new and extended alliances. In 2020, Evotec was involved in 829 alliances and recorded a repeat business of 90%. With the opening of the gene therapy R&D centre Evotec GT and a multi-year gene therapy research alliance with Takeda in April 2020, Evotec added an important component to its fully integrated, modality-agnostic drug discovery & development platform. Just – Evotec Biologics continued its strong growth with important new partnerships, e.g. ABL, Ology, OncoResponse, US DOD. The building of J.POD® 1 US in Redmond remains on track to start operations in H2. Furthermore, the decision to initiate J.POD® 2 EU in Toulouse has been taken, and will be put in action still in H1 2021.
“THE DATA-DRIVEN R&D AUTOBAHN TO CURES”
The updated strategy roadmap of Evotec is called Action Plan 2025 "The data-driven R&D Autobahn to Cures", and will be implemented in 2021. Action Plan 2025 consists of eight strategic building blocks. These building blocks perfectly fit to the strategy to increase innovation and accelerate growth of Evotec towards 2025 and beyond. Most elements within Evotec’s strategy start with human databases and modern artificial intelligence instruments to accelerate drug discovery & development projects. More detailed information on the Action Plan 2025 can be found in the Annual Report 2020 on our website.
Dr Werner Lanthaler, Chief Executive Officer of Evotec, commented: “Excellence in all modalities from discovery to commercial manufacturing, human databases and modern artificial intelligence to accelerate the drug discovery & development are the key drivers for for Action Plan 2025. 2020 was a key year to generate the strategic evidence and data for our long term vision.”
FINANCIAL GUIDANCE 2021 – CONTINUED STRONG GROWTH
In 2021, Evotec expects Group revenues to grow in a range of € 550–570 m. At unchanged exchange rates compared to 2020, this range is € 565 m to € 585 m. This assumption is based on current orders on hand, foreseeable new contracts and the extension of contracts as well as prospective milestone payments.
Regardless of the challenges arising from COVID-19, Evotec still expects the adjusted Group EBITDA to grow to € 105 – 120 m. At unchanged exchange rates in 2020, this would represent a growth to around € 115 – 130 m. This projection takes account of increasing expenses for promising R&D projects and the ramp-up of the Just – Evotec Biologics business via investments, the expansion of the J.POD® 1 US capacities, and plans to initiate J.POD® 2 EU in Toulouse still in H1 2021.
Evotec’s activities are all related to research and development (“R&D”). Aside from the partnered and funded R&D, Evotec will invest in its own unpartnered R&D more than ever before to further expand its pipeline of first-in-class projects and platforms. Evotec expects unpartnered R&D investments in this area between € 50 and 60 m in 2021. Revenues, research and development expenses, and adjusted EBITDA remain the financial key performance indicators of the Evotec Group.
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