Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Evotec SE (EVO, Financial) has made significant progress in its protein degradation collaboration with BMS, showcasing its strategy of technology leadership.
- The company received a grant from the Korean government to develop novel antibody treatments for lung fibrosis, highlighting its capabilities in drug discovery.
- Just Evotec Biologics delivered strong growth in Q1 2025, with revenues slightly ahead of expectations.
- Evotec SE (EVO) is leveraging cutting-edge technology and AI-driven innovation to accelerate drug discovery and improve success probabilities.
- The company has implemented significant cost-saving measures, including site closures and headcount reductions, which are expected to positively impact future financials.
Negative Points
- Evotec SE (EVO) experienced a 4% decrease in group revenues in Q1 2025 compared to Q1 2024, primarily due to a decline in shared R&D revenue.
- The market for shared R&D remains soft, resulting in revenue decline and performance slightly below expectations.
- The company faces temporary lower BMS revenue, which is expected to continue in the midterm.
- Evotec SE (EVO) has a temporarily elevated net debt leverage, with a net debt of EUR107 million.
- The company is operating in a cautious market environment with conservative spending from clients, impacting revenue growth.
Q & A Highlights
Q: Given the deviation in segment performance, with shared R&D underperforming and Just Evotec Biologics (JEB) overperforming, do you expect this trend to persist? Also, how might biotech and pharma layoffs impact your CRO activities?
A: (Christian Wojczewski Wojczewski, CEO) The guidance remains unchanged as the overall revenue is balanced by the performance of both segments. The shared R&D market remains soft, but we are confident in our guidance. Layoffs in biotech and pharma could lead to more CRO activities as companies outsource work.
Q: Can you provide details on your pipeline for Just Evotec Biologics and shared R&D, particularly regarding customer and product concentration? Also, what are the details of your covenant waiver and working capital improvements?
A: (Christian Wojczewski Wojczewski, CEO & Paul Hitchin, CFO) Customer concentration peaked in 2023-2024 but has since softened. We have a covenant waiver until Q3 2025, with testing in Q4. Working capital improvements are expected from BMS payments and Just-related work orders.
Q: What gives you confidence in a recovery for shared R&D in the second half of the year? How do future BMS work packages factor into this?
A: (Christian Wojczewski Wojczewski, CEO) Conversations with clients remain positive, though spending is cautious. BMS work packages are part of a large, multi-year program with varying revenue profiles, contributing to long-term growth.
Q: Regarding Just Evotec Biologics, how will the ramp-up costs for Toulouse be phased over the year?
A: (Paul Hitchin, CFO) The first quarter was stronger than expected, and ramp-up costs will continue throughout the year to support future growth.
Q: How might potential cuts to NIH funding in the US impact Evotec, and could this create opportunities for you?
A: (Christian Wojczewski Wojczewski, CEO) Our exposure to NIH is limited, so direct impact is minimal. We are prepared to serve clients in the US with our facilities, but the situation remains dynamic.
Q: With the FDA's intention to phase out animal testing for biologics, how is Evotec positioned to adapt to these changes?
A: (Paul Hitchin, CFO) Evotec is well-positioned with patient-centric approaches, iPSC technology, and PanOmics. The FDA's announcement is welcome, and we expect increased traction in discussions about these technologies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
